Over-investment destroys capital, while capital-starved industries & regions tend to outperform.
VP’s Capital Cycle Score aggregates company financials to proxy structural supply-demand imbalances within profit pools.
Coverage
All global equity sectors and regions.
Inputs
CapEx and R&D/Assets: Lower ratio indicates underinvestment in the sector, leading to constrained supply.
Depreciation and Amortization/Assets: Higher ratio indicates aging or depleted asset base with investment required to maintain.
Operational ROIC: When ROIC starts inflecting higher, it shows constrained supply is gaining demand traction.
2014-2019
VP Capital Cycle Score increases for energy sector, reflecting scarcity and potential for future supply constraints.
April 20, 2020
Oil prices go negative, causing highly bearish positioning.
September 2020
Chinese growth leading indicators and liquidity show recovering demand, causing us to publish our report on the next Commodity Supercycle.
Macro Snapshot Report
Summarizes the most important macro factors and our high conviction views each month.
Leading Indicator Watch Report
Reviews our growth, inflation and liquidity indicators for changes in the cyclical outlook across major geographies.
Portfolio Watch Report
Reflects on market action, reviewing ideas and making tactical recommendations.
Thematic Report
Hunting for the next big idea. Examples include: Structural Limits of Fiscal Policy; Shale; Biotech; Commodity Supercycle.
VP Understanding Report
Get familiar with key VP concepts and methods that drive our predictive investment models. Frameworks, methodology,