Absolute Return Letter - December 2020
Zombies are firms that are neither dead or alive. They are in so much debt that virtually all their free cash is used to service their debt, and that is very damaging to GDP growth. This month, we explain why there are more and more zombies all over the world, and why they do immense damage to the global economy.
Buyout Titans Fire Up LBO Machine With $1.6 Trillion to Spend
The biggest private equity firms in the U.S. are unleashing a flurry of new leveraged buyouts and debt-funded dividends, seeking to make up for lost time after staying on the sidelines for much of 2020.
Virus Surge Threatens Newfound U.S. Corporate Profit Optimism
In a year that saw corporate forecasts canceled faster than travel plans, the third-quarter U.S. earnings season brought a sense of normalcy with better-than-expected profits and rising forecasts. Now a second wave of Covid-19 infections and renewed lockdowns threaten to cloud those views.
Demystifying the False Choice of Value and Growth Investing
Value managers often use static point in time multiples such as Book to Price to identify attractive companies. P/B is a “cheapness” indicator rather than a measure of a company’s intrinsic value, as it does not include the essential components to value a company: profitability, growth, competition, and risk. On the other hand, growth managers focus on a companies ability to growth their business assuming it will lead to creating shareholder value.
US 2020 Election Investment Pulse: Why Fixed Income Now
With yields near zero, many investors may question the value of fixed income within a portfolio. Western Asset’s Head of Product Management, Doug Hulsey, joins our Head of Equities, Stephen Dover, to discuss fixed income investing with an active-management lens. He makes a case for the asset class for investors in light of market uncertainties and outlines where he sees opportunities today.
Exploring Defined Outcome ETFs
Defined outcome ETFs have quickly gathered almost $5 billion in assets; Not unexpected given their much lower drawdowns when the market crashed in March 2020; However, they are complex and expensive products and there are viable alternatives.
US 2020 Election Investment Pulse: Neutral to Positive for Municipals
In coming years, US Congress and the Biden administration could implement spending programs and tax reforms at the national level that trickle down into state and local government policies too. Our Katie Klingensmith joined Muni Bond Team Research Director Jennifer Johnston to discuss the potential implications for the municipal bond market, against a backdrop of COVID-19.