We are “The Independent Variable”  Why?

It is simple:

As is true in a mathematical equation, the independent variable drives the value, changes the value of the dependent variables.  Knowing the independent variable, allows you to solve for the value of not only the dependent variables but the value of the overall equation.  We know that through good fundamental research, high quality data, and years of industry experience, we can literally change the value of an equity, a company’s access to capital (debt and equity), ability to merge or acquire, and even a management team or their behavior.  We know that if we do our job well, we become the Independent Variable in a company’s future. 

 

We are “The Independent Variable”

Why? Two reasons:

 

  1. We are Independent.  We do not work for a large commercial bank.  We are not beholden to lending relationships, or our firm’s investment holdings, or even worse – our firm’s investment bankers.  While we pride ourselves on being independent from emotion and influence, we are aware of, and guarded against falling victim to, the cognitive biases inherent in the human brain.  We are dependent on math and the power of back tested multivariable analysis, especially when balanced with wisdom of experience from those who have made decades of mistakes.

 

  1. We are Variable.  Over the last several decades, we have been everything from strongly positive about to strongly negative about almost every single equity in the transportation universe.  We have built our reputation upon having an opinion, and being clear about that opinion (i.e., no one ever finishes a conversation with us and says, “I wonder what they really think?”).  We know that our opinions and outlooks may be everything from slightly flawed to completely wrong.  As a result, we consider it our professional duty to change our opinions and outlooks as the statistics, data, or evidence warrant.

 

#dowtransporttheory

Transportation stocks have the reputation for predicting the overall stock market because the underlying goods flow is heartbeat of the economy.  That goods flow becomes increased (or decreased) levels of asset utilization for asset intensive transportation companies, which becomes increased (or decreased) levels of financial returns, which becomes stock price.  We understand that the stock price performance of transportation companies is only symptomatic of the underlying goods flow.

Our lifelong mission has been to gather the freight flow data which predicts the financial results of transportation companies. In the process, we have found many methods to also use this data to predict the trend of the overall economy. It has also proven useful to predicting trends in segments of the economy – more useful in predicting some segments, while only correlating with others, but it is always an alternative non-traditional incremental indicator which investors find valuable.

 

Important Disclosures

Broughton Capital, LLC is an independent, privately held, deep-data driven quantimental economics balanced with fundamental equity research, firm. Headquartered in St. Louis, with personnel in Boston, Dallas, Chicago, Nashville, and Philadelphia, we travel the globe to meet with companies, their customers and vendors, and clients, as we strive to be the single best resource for transportation data and understanding the trends driving the future of the commercial transportation of goods.

The material contained herein is based upon sources we believe to be reliable, but is not guaranteed to be accurate or complete.  It is published for informational purposes only and should not be construed as an offer, or the solicitation of an offer to buy or sell any security.  Opinions expressed are solely those of the author and subject to change as new data becomes available.