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November 30, 2022
Last issue, we discussed our financial subsidiary adjustment. This adjustment helps rectify the incongruence in balance sheet accounting between operating companies and their bank-like financial subsidiaries.
For a bank, its assets are akin to a normal operating company’s liabilities and vice versa. This is because traditional loans (which represent liabilities to a retail company, as an example) are actually the bread and butter of how banks conduct business and make profits....
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November 30, 2022
Featured Top Idea
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UBER – Uber Technologies, Inc.
Action: Buy 2026 8.000% Bonds, CUSIP: 90353TAD2 (7.434% YTW, 4.494% iYTW)
Buy 2027 7.500% Bonds, CUSIP: 90353TAE0 (7.077% YTW, 4.477% iYTW)
Buy 2028 6.250% Bonds, CUSIP: 90353TAG5 (7.192% YTW, 4.502% iYTW)
Buy 2029 4.500% Bonds, CUSIP: 90353TAK6 (7.180% YTW, 4.327% iYTW)... -
November 28, 2022
HOLX – Base Case iCDS 88bps, Negative Case iCDS 122bps
2028 4.625% Bond YTW of 5.847%, iYTW of 4.907%
Ba1 Rating from Moody’s, IG4 (equivalent to Baa1) Rating from Valens
Low Refinancing Need...
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November 28, 2022
LPI – Base Case iCDS 234bps, Negative Case iCDS 425bps
2028 10.125% Bond YTW of 10.180%, iYTW of 6.310%, B2 Rating from Moody’s
IG4+ (equivalent to Baa1) Rating from Valens
Low Refinancing Need...
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November 20, 2022
- The Most Important Yield Curve Inverted, Confirming Medium-Term Recession Risk. Credit signals continue to point to a significant tightening of lending availability. Healthy corporate and consumer balance sheets limit the risk that leads to a credit rout. Tighter credit availability is likely to reduce investment going forward.
- U.S. management teams still are bullish about investment, but return growth is slowing. U.S. corporate investment has finally been showing signs of growth. This can help earnings surprise on the upside but returns and credit headwinds may reduce that growth going forward.
- After the recent rally, sentiment is neutral while valuation indicators remain negative. This appears to signal we’re in the middle of a sideways market.
- Monthly inflections:
- Credit (55% of macro outlook): Negative (no change)
- Earnings Growth (30%): Bullish (no change)
- Momentum/Sentiment (10%): Neutral (downgrade)
- Valuations (5%): Positive (no change)
- Timetable Recommendation: 50/50 Split for 5-10 Year Money and 18 Month Dollar Cost Averaging.
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November 18, 2022
UAA – Traded CDS 246bps, Base Case iCDS 150bps,
Negative Case iCDS bps, 2026 3.250% Bond YTW of 7.041%, iYTW of 5.396%,
Ba2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens,
Low Refinancing Need...
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