Technology, Capital Markets, Corporate Governance, Leadership, Entrepreneurship
Category: Investing
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
This is a stock picker's market. The table seems to be set for a return to active management. It seems the equity markets have traded in synchronicity over the past number of weeks during the COVID outbreak. There has been little differentiation between individual Technology stocks on the way down and on up days. This … Continue reading The Return of Actively-Managed Funds
Many companies took steps to protect earnings during the 2008 financial crisis (see our recent Battle-Tested Software CEOs article). We expect companies who lived through that period to exercise their muscle memory to a similar effect during this COVID crisis - GE Aviation did so today. We covered that and more on a recent edition … Continue reading Companies Will Protect Earnings
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
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
Disney's Parks business is preventing the "Content" side from realizing its full valuation potential. Look no further than Netflix as a proxy. Disney's (tkr: DIS), "Content" business is significant. "Parks" is large enough to stand on its own. A simple run rate calculation on Disney's December quarter "Content" Operating Income figure of $1.9 billion implies … Continue reading Disney Ought to Spin Off the Parks Business
We 100% disagree with Barron's that General Electric's deal to sell its BioPharma business to Danaher (tkr: DHR), for $21.4 billion (original deal announced February 2019), should close soon. This is precisely the type of large deal struck at a peak market that will either get delayed indefinitely or negotiated down. Danaher has the upper … Continue reading GE’s BioPharma Deal Is at Risk
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
Today's bloodletting is the result of a spate of negative news over the weekend concerning escalating COVID-19 cases, restaurant closures, limits on large groups, school closures, dramatic action by the Fed and more. There is yet another wave of bad news looming that is likely to arrive in the next couple of weeks. The next … Continue reading More Room For Markets To Drift Down. Software As A Safe Haven.
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
