U.S. Equities: ChatGPT, Banks, and Earnings | EP134
Why management teams matter, energy companies rarely meet our investment criteria, and JPMorgan and State Street differ from many regional banks.
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Extra Credit: Why Not Just a “Little” High Yield?
High yield spreads continue to tighten. As risk premiums fall, and economic and political conditions appear positive for corporates in general, it is tempting to reach for yield in credit markets. As Howard Marks of Oaktree points out, the all-in yield (benchmark yield plus risk premium) on high yield is 7.0% and who doesn’t love a 7.0% return? What could possibly go wrong?
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Extra Credit – Fallen Angels: Boeing on the Precipice
When this piece was being written, Boeing had not filed their US$25 billion shelf prospectus and the company was a downgrade candidate to high yield (HY) at both Moody's and S&P which would qualify them as a "Fallen Angel". The term “Fallen Angel” is often paired with its opposite, a “Rising Star”. We decided it would be interesting to highlight the importance and impact that a Fallen Angel has on both the IG market, and, more importantly, the HY or "Junk" bond market.
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Elections: Noise or Signal?
While speculators fuss over the cacophony of political campaigns and election forecasts, savvy investors recognize that the true impact of elections on financial markets is mostly short-term noise irrelevant to long-term financial strategies.
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Public and Private Credit: Where investors should focus
Private credit assets have surged to $2-3 trillion USD over the past decade, but investors might benefit from shifting some focus back to public credit, which offers attractive returns, transparency, and liquidity. While both credit types share common features, the current strong tilt towards private credit may overlook the strategic advantages of a well-diversified public credit allocation.
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The Power of Latent Earnings
Current profit levels for fast-growing companies might not necessarily be representative of their true earnings power or “latent earnings power.” When it comes to large businesses, we believe this concept may be underappreciated because they are generally assumed to be operating closer to a mature, steady state.
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A Case for Investing in U.S. Mid Caps
The U.S. equity market is the largest and deepest in the world. As such, it has been analyzed in many ways to determine the optimal means of gaining exposure.
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Pricing Strategies: Upside Capture Versus Downside Protection
A company’s pricing strategy can help reveal insights into how a company's business model works, its sensitivity to elevated inflation, and why certain pricing strategies work better than others in different operating and economic environments.
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Getting Out There: Investing in Firsthand Knowledge
There's something highly worthwhile in seeing a company's operations with our own eyes.
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Rising Debt and its Potential Consequences: Canada’s New Normal?
We need to understand where we are in the debt super cycle to inform our investment decision making.
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Artificial Intelligence: The Return of The Centaurs
Recent AI breakthroughs are underscoring the power of the centaur model—humans + machines—creating something more potent than either model operating independently.
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The Case for Non-Predictive Decision Making
In our view, market participants systematically underestimate the importance of vulnerabilities while correspondingly overestimating the importance of triggers. Why?
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Inflation’s One-Two Punch
It’s inflation’s second punch that can deliver a blow that investors may not be expecting.
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‘Twas the week before Christmas
'Twas the week before Christmas, thus time to review—the economic story of 2022.
-
Extra Credit: Why Not Just a “Little” High Yield?
High yield spreads continue to tighten. As risk premiums fall, and economic and political conditions appear positive for corporates in general, it is tempting to reach for yield in credit markets. As Howard Marks of Oaktree points out, the all-in yield (benchmark yield plus risk premium) on high yield is 7.0% and who doesn’t love a 7.0% return? What could possibly go wrong?
November 19, 2024
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Extra Credit – Fallen Angels: Boeing on the Precipice
When this piece was being written, Boeing had not filed their US$25 billion shelf prospectus and the company was a downgrade candidate to high yield (HY) at both Moody's and S&P which would qualify them as a "Fallen Angel". The term “Fallen Angel” is often paired with its opposite, a “Rising Star”. We decided it would be interesting to highlight the importance and impact that a Fallen Angel has on both the IG market, and, more importantly, the HY or "Junk" bond market.
November 7, 2024
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Elections: Noise or Signal?
While speculators fuss over the cacophony of political campaigns and election forecasts, savvy investors recognize that the true impact of elections on financial markets is mostly short-term noise irrelevant to long-term financial strategies.
October 31, 2024
-
Public and Private Credit: Where investors should focus
Private credit assets have surged to $2-3 trillion USD over the past decade, but investors might benefit from shifting some focus back to public credit, which offers attractive returns, transparency, and liquidity. While both credit types share common features, the current strong tilt towards private credit may overlook the strategic advantages of a well-diversified public credit allocation.
June 20, 2024
-
The Power of Latent Earnings
Current profit levels for fast-growing companies might not necessarily be representative of their true earnings power or “latent earnings power.” When it comes to large businesses, we believe this concept may be underappreciated because they are generally assumed to be operating closer to a mature, steady state.
March 27, 2024
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A Case for Investing in U.S. Mid Caps
The U.S. equity market is the largest and deepest in the world. As such, it has been analyzed in many ways to determine the optimal means of gaining exposure.
February 14, 2024
-
Pricing Strategies: Upside Capture Versus Downside Protection
A company’s pricing strategy can help reveal insights into how a company's business model works, its sensitivity to elevated inflation, and why certain pricing strategies work better than others in different operating and economic environments.
January 18, 2024
-
Getting Out There: Investing in Firsthand Knowledge
There's something highly worthwhile in seeing a company's operations with our own eyes.
January 4, 2024
-
Rising Debt and its Potential Consequences: Canada’s New Normal?
We need to understand where we are in the debt super cycle to inform our investment decision making.
May 31, 2023
-
Artificial Intelligence: The Return of The Centaurs
Recent AI breakthroughs are underscoring the power of the centaur model—humans + machines—creating something more potent than either model operating independently.
May 3, 2023
-
The Case for Non-Predictive Decision Making
In our view, market participants systematically underestimate the importance of vulnerabilities while correspondingly overestimating the importance of triggers. Why?
April 5, 2023
-
Inflation’s One-Two Punch
It’s inflation’s second punch that can deliver a blow that investors may not be expecting.
January 4, 2023
-
‘Twas the week before Christmas
'Twas the week before Christmas, thus time to review—the economic story of 2022.
December 21, 2022
