Institutional Investor (August 14)
“A public market downturn and an abundant supply of private equity stakes have culminated in an unmissable opportunity for secondaries investors.” Favorable “supply/demand imbalances and market dynamics” have arisen due to “the dramatic outperformance of private equity thanks to lagged marks and flat or marginally down valuations in 2022,” causing “asset owners to become overweight PE as public equity markets declined materially.” Pensions, endowments, foundations and other asset owners have become “forced sellers of private equity stakes to return to their strategic weights,” and “because of illiquidity, overhang, supply/demand imbalance, and forced selling, buyers require a material discount to transact.”
Tags: Asset owners, Discount, Downturn, Endowments, Forced selling, Foundations, Illiquidity, Imbalances, Market dynamics, Opportunity, Outperformance, Overhang, Overweight, Pensions, Private equity, Secondaries investors, Supply, Valuations
Institutional Investor (July 18)
“The cyclically adjusted price-to-earnings ratio for emerging market equities is 15x, compared to 27x for those in developed markets and 34x for those in the U.S.” At just above 10x, “China is trading at a significant discount,” but investors can also easily “steer clear of China.” Other emerging market opportunities “worth considering” include Korea, Brazil, Malaysia, Hungary, Thailand, Mexico, and much of Latin America where P/E ratios range from 10x to 25x.
Tags: Brazil, China, Cyclically adjusted, Developed markets, Discount, Emerging markets, Equities, Hungary, Investors, Korea, Malaysia, Mexico, P/E ratio, Thailand
Wall Street Journal (July 13)
“U.S. consumer inflation accelerated to 9.1% in June, a pace not seen in more than four decades, adding pressure on the Federal Reserve to act more aggressively to slow rapid price increases throughout the economy.” But there are also reasons to think inflation will be coming down as “investor expectations of slowing economic growth world-wide have led to a decline in commodity prices,” consumer spending is shifting, and excess inventory has retailers warning “of the need to discount goods, especially apparel and home goods.”
Tags: 9.1%, Aggressively, Commodity prices, Consumer spending, Discount, Economy, Excess inventory, Expectations, Fed, Growth, Inflation, Investor, June, Price increases, Retailers, Slowing, U.S.
Wall Street Journal (November 4)
“Humble CEOs don’t inspire much confidence among financial analysts—but that might be good news for people who invest in the CEOs’ companies.” According to a recent study, “analysts tend to significantly underestimate the earnings potential of companies run by humble chief executive officers. That leads to artificially low earnings forecasts from the analysts, which the firms can then more easily meet or beat.” On average, this “humble discount” results “in at least a 7% increase in total shareholder returns annually.”
Tags: Analysts, Beat, CEOs, Confidence, Discount, Earnings forecasts, Earnings potential, Humble, Inspire, Shareholder returns, Underestimate
Bloomberg (November 25)
“Surging U.S. crude stockpiles that have filled storage tanks near capacity are widening the discount on immediate oil deliveries.” Known as contango, this discount may reach the stage of “supercontango” and is unlikely to go away soon.
Tags: Contango, Crude, Discount, Immediate deliveries, Oil, Stockpiles, Storage, U.S.
The Economist (July 26)
“ONE trillion dollars. That may be the cost to Russian investors of Vladimir Putin’s rule…. The calculation stems from the fact that investors regard Russian assets with suspicion. As a result, Russian stocks trade on a huge discount to much of the rest of the world, with an average price-earnings ratio (p/e) of just 5.2. At present, the Russian market has a total value of $735 billion. If it traded on the same p/e as the average emerging market (12.5), it would be worth around $1.77 trillion.”
Tags: Assets, Cost, Discount, Emerging market, Investors, Market, P/E, Putin, Russia, Suspicion, Trillion
