Category: Financial Services

Cheap Debt: The Gift that Kept on Giving

Cheap Debt: The Gift that Kept on Giving

Policy makers have held interest rates artificially low since the 2008 financial crisis. This unnatural act - preventing interest rates from finding a natural equilibrium - made it difficult for investors to find yield and equity market valuations ballooned as a result. The cheap debt train has pulled into the station. (See the debt issuance … Continue reading Cheap Debt: The Gift that Kept on Giving

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High Yield Is High Yield No Matter How You Securitize It

High Yield Is High Yield No Matter How You Securitize It

High Yield debt is High Yield because of the underlying risk profile of the issuer. "Whole Business" securities masked this risk - and won High Grade status - by pledging additional assets. Guess which security type is blowing up? High Yield debt is High Yield no matter how you package it. High Yield issuance exploded … Continue reading High Yield Is High Yield No Matter How You Securitize It

Public Service Message to VC’s: Time to Write Down Your Portfolios

Public Service Message to VC’s: Time to Write Down Your Portfolios

Time for VC's to write down their portfolios. The same holds true for Private Equity portfolios. We led with VC's in the title because venture-backed valuations bear little resemblance to any economic reality whereas private equity valuations are largely grounded in reality. Public company valuations are not going to snap back to normal. The U.S. … Continue reading Public Service Message to VC’s: Time to Write Down Your Portfolios

Battle-Tested Software CEOs

Battle-Tested Software CEOs

We created a list of Software CEOs that operate durable businesses and that successfully led their companies through the 2008 downturn (the closest comp to COVID-19). CEO profiles from our CEORater database. Andy Florance. Founder & CEO of CoStar Group (tkr: CSGP).Bill Stone. Founder & CEO of SS&C Technologies (tkr: SSNC).Henry Fernandez. Founder & CEO … Continue reading Battle-Tested Software CEOs

Take Personal and Corporate Income Tax Rates to Zero

Take Personal and Corporate Income Tax Rates to Zero

Count TEK2day in the group that is not in favor of quantitative easing after having lived through the 2008 QE period. We favor a reduction of federal corporate and personal income tax rates. In fact, take income tax rates to zero. Institute a "pay-as-you-go" national Sales tax on finished goods and services for both corporations … Continue reading Take Personal and Corporate Income Tax Rates to Zero

Let It Bleed

Let It Bleed

Bloodletting is thought to have originated in Egypt several thousand years ago. Bloodletting became standard medical treatment in medieval Europe to treat various conditions including plague, smallpox, epilepsy and gout. Investors continued the bloodletting in Thursday's trading session. Despite the blood and emotions, there is plenty of room for stocks to drift further downward. Many … Continue reading Let It Bleed

Now Would Be A Good Time To Execute That Stock Buyback

Now Would Be A Good Time To Execute That Stock Buyback

We prefer dividends, investment in R&D and M&A programs to share repurchases. However, for those companies that include share repurchases as part of their capital allocation strategy, today would be a good day to exercise a portion of that repurchase authorization. Markets hate uncertainty. Markets like it when companies and insiders step-up and buy their … Continue reading Now Would Be A Good Time To Execute That Stock Buyback

History Repeats Itself and Often Rhymes

History Repeats Itself and Often Rhymes

We have seen this movie before. The economy is slowing. This Coronavirus-led slowdown feels much like 2003's SARS outbreak exacerbated by the social media echo chamber. When entering an economic slowdown investors would be wise to understand the level of exposure that portfolio holdings have to discretionary revenue. In Software & Services land this primarily … Continue reading History Repeats Itself and Often Rhymes

Advice to CEO’s: Pick One. It May Save Your Job

Advice to CEO’s: Pick One. It May Save Your Job

Elliot Management is moving to acquire Board seats at Twitter. CEO Jack Dorsey would have done well to have followed our December 2017 advice offered in the TEK2day article: "Distracted CEOs and CEO Overreach." Our position has always been that CEOs have a fiduciary responsibility to shareholders in that they owe 100% of their focus … Continue reading Advice to CEO’s: Pick One. It May Save Your Job