“Investing in copper and copper miners represents a significant opportunity for investors over the next ten to fifteen years, but the market is more complicated than most believe, and success will require not only an understanding of the entire supply chain but also a willingness to be active,” writes Massif Capital’s Will Thomson [VII, August 31, 2022] in introducing this report on “the role smelters play in the copper value chain.” Read Now
While discount airlines in the U.S. endure a rough patch, the long-term investment case for Europe’s leading discounter Ryanair is fully intact, argues this research report on the company from Andrew Hollingworth of U.K.-based Holland Advisors. Read Now
This post from the New York Federal Reserve Bank’s Liberty Street Economics blog highlights research on the extent to which the rapid rise in nonbank financial institutions is separate from, or dependent on, the traditional banking system. Read Now
This research by David Dunning and Yuyan Han from the University of Michigan examines the extent to which even experts are prone to overconfidence. One conclusion: “It appears that expertise is associated with knowing with more certainty what one knows but conceals awareness of what one does not know.” Read Now
Morgan Stanley investment strategist Michael Mauboussin in this podcast interview examines the subject of pattern recognition in investing, particularly around when it’s more likely to be effective and when it isn’t. Listen Now
Richard Bernstein Advisors in this report explains that while it is broadly bullish in its outlook for most U.S. equity-market sectors, it doesn’t believe now is the time to be heavily overweight stocks as an asset class. Read Now
At a time when U.S. megacap technology stocks continue to take market “share,” Morgan Stanley’s Michael Mauboussin and Dan Callahan in this report ask “how much is too much” when it comes to stock market concentration. Read Now
Matthews Asia’s Sean Taylor and Hardy Zhu in this report describe the positive reasons for maintaining a long-term commitment to investing in China. Read Now
This paper written by University of Kansas law professor Alexander Platt argues that activist short-sellers’ participation in the SEC’s whistleblower bounty program can be considered “a new way for the SEC to pay private professionals to do work that traditionally has been done by SEC staff.” Read Now
Polen Capital’s Daniel Fields and Todd Morris [VII, January 31, 2024] in this report describe the “compelling long-term investment opportunity” they see in companies such as Medtronic, Siemens Healthineers and ICON that are adroitly combining medical and technology expertise. Read Now
In assessing the plausible explanations for the divergence in returns since 2022 of typically correlated high-yield bonds and small-cap stocks, Richard Bernstein Advisors concludes that all of them imply a more favorable outlook for small cap stocks over high yield bonds and large-cap stocks. Read Now
U.S. regional bank Axos Financial is the latest company in the crosshairs of Hindenburg Research, as described in this bearish report published last month. Read Now
In likely one of the more obvious findings of an academic study out there, this paper published as part of the Federal Reserve Board’s Finance and Economics Discussion Series concludes: “Evidence from comprehensive supervisory data reveals improved credit quality for newly originated M&A-related loans under enhanced lender scrutiny. Our findings highlight the importance of lender scrutiny in corporate M&A activities.” Read Now
“With investors piling into passive strategies and chasing many of the best performing stocks, the current bull market in conformity appears invincible,” writes Palm Valley Capital’s Eric Cinnamond [VII, April 30, 2020] in this recent blog post. He argues for taking a different path. Read Now
This academic study argues that the use of large language models such as ChatGPT can help analysts “unveil the veiled” in corporate earnings calls, to better “penetrate the information layers and unearth hidden insights.” Read Now
This study from researchers at Northwestern and the University of Michigan examines what impact the abolition of retail trading commissions in 2019 may have had so far on corporate governance: “Firms with positive abnormal returns in response to the abolition of commissions subsequently saw a decrease in institutional ownership, a decrease in shareholder voting, and a decrease in corporate governance scores.” Read Now
While the barriers to entry in starting an investment fund are low, the barriers to scale are many and problematic, explains Alix Pasquet of Prime Macaya Capital Management in this investor letter. Read Now
Firms with “atypical” messaging in earnings calls often earn higher earnings estimates from analysts, according to recent research highlighted in this Stanford Business article. Whether they deserve such estimates turns out to be another question. Read Now
Using the 1990s Internet bubble as a guide, Research Affiliates in this report offers insights for investors hoping to capitalize on the transformative potential of generative artificial intelligence. Note: Access may require registration, which is free. Read Now
Morgan Stanley investment strategist Michael Mauboussin in this report takes a detailed look at valuation multiples, including “what they miss, why they differ, and the link to fundamentals.” Read Now
Investment manager Lindsell Train in this report provides detailed analytical support for their agreement with one of Warren Buffett’s famous quotes: “When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable.” Read Now
While conscious investors may find it difficult to make their forecasts pay off in investment results, according to this academic research their unconscious brains would likely to a better job. Read Now
“Today’s value stocks offer a magnificent mix of quality, forward-looking profitable firms,” argue the authors of this AllianceBernstein blog post, citing as examples Lowe’s, Builders FirstSource, ArcBest and Blue Bird. Read Now
Prompted by an article in The Wall Street Journal titled “Chess Teaches the Power of Sacrifice,” Oaktree Capital’s Howard Marks in this memo applies similar thinking to investing, where the “risk of loss is borne in pursuit of gains that are neither immediate nor tangible.” Read Now
In a current investment environment “fraught with peril,” GMO’s Tom Hancock and Lucas White detail in this quarterly letter their firm’s history in investing in high-quality companies and explain why they believe now is a particularly opportune time to do so. Read Now
“The goal of net-zero greenhouse gas emissions by 2050 is environmentally thoughtful – but, in our view, it’s not economically possible,” write Massif Capital’s Will Thomson and Chip Russell in this blog post. Read Now
GMO’s asset allocation team in this recent report describes the “extraordinary opportunity” it sees today in international deep value equities. Read Now
Prompted by what its authors call the unsolved puzzle of whether “narcissistic leaders hinder or benefit their organizations,” this academic study attempts to explain why the subject has proven to be so hard to figure out. Read Now
Noting up front the “incredible cheapness of deep value stocks today,” GMO’s Ben Inker in this white paper examines what he considers the common market misperception that value stocks are more vulnerable to an economic downturn. Read Now
GMO asset-allocation strategist James Montier revisits and updates a paper he wrote over a decade ago predicting a normalization of corporate profit margins. One pessimistic conclusion for U.S. stocks: “Even on the most bullish case, that of no mean reversion in valuations or margins, investors look set to earn a fraction of the compensation that has historically been demanded for the risk of owning equities.” Read Now
The current imbalance in the market between “highly speculative growth sectors” and “virtually everything else” is quite bullish for that “everything else,” says Richard Bernstein Advisors in this recent market commentary. Read Now
Polen Capital’s Jeff Mueller in this “Beyond Fundamentals” interview describes his firm’s long-held interest in the global beauty care and cosmetics industry and leaders in it such as L’Oreal and Estee Lauder. View Now
This academic study analyzes the extent to which the presence of meme-stock investors had an impact on how well and democratically such impacted companies were governed. Read Now
As might have been expected, there’s been some back and forth since Hindenburg Research issued its short report on Icahn Enterprises on May 2, as described in this follow-up from Hindenburg on May 11. Read Now
Palm Valley Capital’s Eric Cinnamond in this blog post expresses skepticism over companies’ ability to continue raising prices without negatively impacting economic activity: “Like many of the drivers of the current market and profit cycle, we believe the strategy of making less to make more is unsustainable. The willingness and ability of certain customers to pay higher prices should not be confused with a healthy economy. It’s not.” Read Now
Using their recent review of Brazilian state-run oil company Petrobras as a case study, Will Thomson and Chip Russell of Massif Capital describe how they incorporate the assessment of political risk into their investment deliberations. Read Now
Following Bed Bath & Beyond’s recent bankruptcy filing, Wharton Marketing Professor John Zhang in this interview describes why he believes the concept of the retail “category killer” has become decidedly passé. Listen Now
University endowments, according to this study, are more likely to invest in private-equity funds managed by alumni of their school. The study further examines whether that turns out to be a good idea. Read Now
In what is still an unfolding story, Howard Marks of Oaktree Capital in this memo to investors distinguishes between what he considers the more and less significant aspects of recent turmoil in the banking industry. Read Now
Richard Bernstein of Richard Bernstein Advisors offers some historical perspective on tight monetary policy and bank failures and warns against getting caught up in what he calls constant hyperbole: “Investors who listen to Henny Penny seem likely to both over-assess the risks within the market and miss future opportunities. Rather than structuring portfolios against any risk that could ever occur, the key to rational investing is following an intellectually sound and well-tested investment process.” Read Now
Short-seller Hindenburg Research takes on Carl Icahn in this report on the long-time activist investor’s Icahn Enterprises: “Overall, we think Icahn, a legend of Wall Street, has made a classic mistake of taking on too much leverage in the face of sustained losses: a combination that rarely ends well.” Read Now
Horizon Kinetics’ Murray Stahl and Steve Bregman in their latest typically wide-ranging quarterly letter discuss, among other topics, banking turmoil, investment decision-making, business models, real estate, gold and cryptocurrencies. Read Now
“We suggest investors remove their blinders and be open-minded when it comes to screening for stocks across growth and value factors,” write Liz Ann Sonders and Kevin Gordon of Charles Schwab in this recent market report. “It’s particularly important in today’s market environment; during which we continue to emphasize ‘quality.’” Read Now
This academic study examines the impact on companies from perceived activism by their CEOs with respect to gun control. Read Now