Allianz SE (ADR) (OTCMKTS:AZSEY) is a megacap financial services conglomerate in Germany. The stock has been trending higher aggressively and we wanted to take a look at it to get a feel for some of the more important global trends in play right now. The story here is about politics in the EU more than anything. As we have discussed recently in several other pieces, the French elections that took place in April and May were a defining event for EU financials because there was a real risk of a win by Marine Le Pen as the new French President, running on a ticket of “Frexit”, or a French Exit from the European Union.
Such an event would have implied a strong chance of sovereign debt defaults by Italy, Greece, and possibly Portugal because it would have clearly implied a potential unwinding of the entire EU. Financial institutions in the region like Credit Suisse, Allianz, Deutsche Bank, and BNP Paribas had been massively discounted in share price in the wake of the UK’s Brexit. However, as the French vote approached, it became more and more clear that Le Pen’s route to the Presidency would be extremely unlikely, and the stocks went into a massive rally phase.
Allianz SE (ADR) (OTCMKTS:AZSEY) bills itself as one of the leading integrated financial services providers worldwide. With over 140,000 employees worldwide (as of December 31, 2016),
Allianz serves 86.3 million customers in more than 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence. In fiscal 2016, the Allianz Group achieved total revenues of approximately 122.4 billion euros.
The Allianz Group is also one of the world’s largest asset managers, with third-party assets of 1,361 billion euros under management. In 2006 Allianz SE, the parent company, became the first company in the Dow Jones EURO STOXX 50 Index to adopt the legal form of a Societas Europaea, which is a new European legal form for stock corporations.
Allianz SE is headquartered in Munich, Germany.
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With the French elections no longer a threat, money has poured into the EU equities market, with financial services stocks outperforming. But sentiment in bonds has also improved. And this is the other big prong to the Allianz story: PIMCO.
Allianz bought PIMCO a few years ago. PIMCO is the world’s biggest active bond fund by assets under management. As the Fed looks to shrink its balance sheet (announced yesterday), it is a move that is widely perceived as deflationary. That shift was hinted at the Fed’s March meeting and represents a strong bullish tailwind behind the bond market. With sentiment improving there (the CFTC notes that net long positioning among bond futures traders has pushed to a 3-year high in recent action), money is flowing back into PIMCO.
That’s another key driving theme for Allianz at present. Paired with improved sentiment on the EU financial sector, the stock has been red hot. In all, we have seen shares of Allianz rip higher over 50% in the past 11 months, regaining valuation levels last seen in mid-2008, before the most brutal stretch of the global financial crisis.
Recent action has seen 3% piled on for shareholders of the listing during the trailing month. Market participants may want to pay attention to this stock. AZSEY is a stock who’s past is littered with sudden rips. Furthermore, the listing has witnessed a pop in interest, as transaction volume levels have recently pushed 5% above its longer-run average levels.
At this time, carrying a capital value in the market of $88.33B, AZSEY has a significant war chest ($14463M) of cash on the books, which must be weighed relative to virtually no total current liabilities. AZSEY is pulling in trailing 12-month revenues of $104615M. However, the company is seeing recent declines on the top line on a sequential quarterly basis, with revenues falling at -0.5% as of its latest reporting period. We will update the story again soon as further details emerge. For continuing coverage on shares of $AZSEY stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!