By Nigam Arora & Dr. Natasha Arora
Signal(s) to enter, add, reduce, exit, hold or change.
UBS Group (UBS) is a major global bank based out of Switzerland. To understand this investment, the following sections from the Morning Capsule are pertinent.
From the Morning Capsule:
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The chart shows a close in UBS stock of $18.20 on Friday, an early morning drop to $15.50, and a rise to $17.58 as of this writing. In Europe, the stock traded as low as $14.36.
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The price action is in response to the shotgun marriage orchestrated by the Swiss National Bank between UBS and Credit Suisse over the weekend.
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UBS will pay $3.3B in its stock for Credit Suisse stock.
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Also from the Morning Capsule:
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As far as UBS is concerned, here are the key points:
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The crown jewel of the combined operation will be a $5T global wealth management business.
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UBS is getting these assets dirt cheap. That is good for UBS in the long term.
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In the near term, there is significant execution risk.
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There was very limited due diligence, and thus, there may be additional risks that are not priced in.
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The deal will become accretive only by 2027, assuming there are no additional risks.
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Prudent investors should keep an eye on how UBS stock behaves. There will be a buy signal on UBS stock in ZYX Buy for a very long term position but at a much lower price and with strict risk controls.
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Buy Zone
The buy zone is 🔒 (To see the locked content, please take a 30 day free trial). Consider scaling in only on down days in small tranches. To understand scaling in, please see the Trade Management Guidelines. The Trade Management Guidelines are billionaire and hedge fund techniques that all prudent investors should learn and use.
The maximum quantity is 🔒 of the full core position size.
The plan is to buy more if the stock goes lower, assuming the data at that time justifies it. However, for those who want to take less risk and want a stop, the mental stop zone is 🔒.
This is a very long term position. The very long term target is 🔒.
Risk Control
The best risk control is a combination of the following:
- Total quantity. Please see the section “The First Line Of Risk Control” in the Trade Management Guidelines.
- Scaling in with small tranches.
Patience
This is an investment and not a trade. This is suitable only for those with patience.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
