Investors Continue to Rely on Alternative Assets for Their Long-Term Strategies

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Pixabay CC0 Public Domain. El 66% de los gestores europeos de gran capitalización superaron a su índice de referencia

COVID-19 is having a sizeable impact on the business operations of both fund managers and investors, according to Preqin’s latest release, disruption caused by travel restrictions and social distancing will lead to dampened activity through the remainder of 2020, and possibly into 2021. However, they believe that alternatives funds proved to be resilient in previous cycles, and in the longer term, investors seem set to increase their allocations as a result of the pandemic, accelerating future AUM growth.

“A dispassionate analysis based on previous financial crises would suggest that we will see three major outcomes for alternative assets,” said Preqin CEO, Mark O’Hare. “A significant short-term slowdown in activity; a medium-term resumption of the established growth trend; and a long-term outperformance of those funds which were able to capitalize on advantages being presented now. We are already seeing this start to be borne out, with activity in 2020 down from previous years and operators telling us they expect this to characterize the year ahead. Overall, it’s unlikely that COVID-19 will fundamentally alter investors’ attitudes to alternatives, but it may well accelerate some long-term trends and moderate others.”

The alternatives industry is not a single entity, and within each asset class the pandemic is likely to be felt to different degrees and in different ways. Preqin has been surveying and interviewing fund managers and investors across the industry, looking at 2020’s activity so far, and drawing comparisons with previous financial cycles. For this edition, the firm notes:

  • Private Equity: Accelerating Digital Transformation. Private equity firms have almost $1.5tn in dry powder to deploy into deal opportunities, so they are well-placed to take advantage of opportunities presented by a downturn. However, in the short-term the reality of social distancing will hamper deal closing. Retail, leisure and hospitality assets are set to be hit hard, although supermarket retail specifically will benefit. Digital technologies will benefit, particularly in non-cyclical sectors like healthtech and remote working – accelerating interest in already-growing areas.
  • Private Debt: The Difficult Second Album. The 2008 Global Financial Crisis was the making of the modern private debt industry, putting the spotlight on distressed debt funds and spawning the direct lending sector. 2020 will see if the asset class can repeat that feat – interest in distressed debt has spiked in Q1, and more than a third of investors are now targeting the strategy. Direct lending, meanwhile, is untested in the face of a crisis, and COVID-19 may put a stumbling block in the path of the sector’s expansion.
  • Real Estate: Logistical Opportunity. Rental income from businesses and private housing has seen a sharp drop since the start of March, impacting the short-term cash flow of real estate fund managers. Deal activity is likely to be particularly depressed through the rest of 2020, given the practical challenges in evaluating properties. In the longer term, COVID-19 will exacerbate the challenges already faced in the retail sector, and may deflate the market for city-center offices. Demand for logistics assets, though, is likely to spike – last-mile delivery has emerged as a particular opportunity for expansion.
  • Real Assets: Do Not Pass Go. Toll-based assets and travel-related assets have been hit hard by travel restrictions, with the impact increasing the longer that restrictions are in place. Government-backed bailouts in the travel and shipping sectors are currently aimed at operators rather than asset-owners, so recompense is uncertain. Conversely, social and digital infrastructure have significant growth opportunities as demand for healthcare infrastructure and broadband networks rises. Oil price volatility continues to disrupt the natural resources industry, and more than a quarter of investors are avoiding conventional energy investments in 2020 as a result.
  • Hedge Funds: Time to Shine. Losses in Q1 2020 wiped out gains made by hedge funds in 2019. But the asset class did act to protect investors from worse downturns in equity markets, showing their value as a defensive strategy. This may reverse recent negative sentiment from investors as the downturn extends. However, it will also likely lead to a flight to safety, benefiting large managers and prompting more consolidation in the sector. New launches will fall as new managers are deterred from raising vehicles to seek investment. Strategy-wise, equities funds are more likely to see outflows, while macro and multi-strategy funds could benefit on the basis of their defensive credentials.

Howard S Marks Believes That a Good Investor is Confident in His Views, And His Are All About Distressed Assets

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Foto cedidaHoward S Marks, director y co-presidente de Oaktree Capital Management.. Howard S Marks (Oaktree Capital Management): "Estamos ante un mercado respaldado artificialmente por las compras de la Fed”

In order to be a good investor you have to be confident in your views says Howard S Marks from Oaktree Capital Management.

In the 1980s, he became one of the first investors to specialize in beaten-down bonds. He is now trying to raise $15 billion for what would be the biggest-ever fund to invest in distressed debt. He is also raising a separate $3.5 billion fund designated for underwater real estate assets.

During the 73rd annual CFA Institute conference, he also mentioned that in this environment, where returns will be lower for longer, the secret to prevailing is to produce better returns than your peers. “The market is what it is, rates, and the return environment is what it is, so superior investors control their emotions to deviate from the herd and outperform.”

 The billionaire contrarian investor reminded the viewers that “in order to combat the virus we put the economy into a deep freeze… Investors are not experts on the virus, we are just taking ideas from experts which you have to pick according to your bias, but all are cautious to varying degrees.”

Although he agrees with Mr Powell in that extreme and unprecedented actions are called for, he is also aware that stocks and bonds are selling at prices they wouldn’t sell at if the Fed were not the dominant force.

More than once he has quoted that “capitalism without bankruptcy is like Catholicism without hell” and he believes that today’s, is a market which is artificially supported by Fed buying, so he expects plenty of debt defaults and bankruptcies when corporate borrowers start running out of cash in the months ahead.

Marks is not alone, according to Preqin, as of mid-May , distressed real estate funds have already accumulated nearly $10 billion worth of dry powder, waiting to invest once the Fed inevitably steps back.

The US Economy Will Not be Able to Recover Until Q3 2021

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CC-BY-SA-2.0, Flickrtimetrax23 . Peakpx CC0

Nearly 3 million Americans filed first-time unemployment claims last week, bringing the total to 36.5 million since mid-March. That represents 22.4% of the March labor force.

It was the eighth week in a row that the number for initial claims decreased after peaking at 6.9 million in the final week of March. Economists say this is relatively good news because it means things aren’t getting worse, but their expectations for a quick recovery are not optimistic.

    Janwillem Acket, Chief Economist, Julius Baer mentions that “April 2020 has become a historical month, revealing the most dramatic monthly erosion of US jobs since the Great Depression of the 1930s. driven in particular by massive job cuts, e.g. from the largely closed-down leisure and hospitality sectors. It comes as no surprise that the brunt of the US jobs erosion is born by the services sectors.  The most bizarre figures for April concerns wages, showing very strong, positive (!), average growth rates. Overall, the April data could, in hindsight, stand out as an absolute low in job losses, because small-and-medium-sized businesses are receiving fiscal support with loans that could be partially forgiven if used for employee salaries. The Federal Reserve has also provided businesses credit lifelines. In addition, 30 of 50 US states are reopening their lockdowns, allowing businesses to operate again. Therefore, we can expect a wave of re-employment once the economy recovers in the wake of a further loosening of the lockdowns in the second half of 2020. However, consumption, in particular of services, has suffered a severe blow in the current quarter and therefore an overall contraction of US real GDP, by approximately an annualised 30%, is in the cards. However, looking ahead, it is highly likely that consumer behaviour could become rather cautious, given the lasting insecure backdrop. Many companies will cease to exist or are already bankrupt, and others, which survive the Covid-19 crisis, could wait longer before hiring new people. It will take time to get most of the unemployed back to work, and the US economy will not be able to recover to the GDP levels of the end of 2019 until Q3 2021.“

    Ranko Berich, from Monex Europe says that “Today’s jobs figures are catastrophic on a human and economic level, but from a policy or a markets perspective, they simply confirm what both central banks and market participants have been reacting to since at least March. We know the covid-19 shock will be extraordinarily bad, and today’s data confirms it. The finer details of the report are interesting, but largely beside the point when compared to the sheer scale of job losses. After accounting for the vagaries of survey responses, it seems roughly one sixth of the US workforce has been made unemployed in the space of a month... Today’s data is merely confirming what markets, governments, and central banks have been bracing for since at least March: a global recession of unprecedented suddenness and depth.”

    James McCann from Aberdeen Standard Investments, adds: “The challenge today is for the Federal Reserve and Congress to get ahead of this crisis as it unfolds. After a strong start, there is a great risk that they will be left behind and the abrupt stop of the economy will turn into a prolonged fall that would be ruinous. Avoiding this scenario will require the Federal Reserve to adopt new tools like helicopter money.”

    Dave Lafferty from Natixis warns about the fact that “equities continue to rally on the idea that the economy is slowly re-opening and that the economic damage will be largely transitory. For now, investors are running with every morsel of good news and dismissing the bad news. However, in the coming months, the deeper scars of the recession will reveal themselves. We expect the unemployment rate will top out between 17% – 20% in the coming months. Yes, it will recede quickly, but may remain stubbornly above 8% through 2021. Will equity investors still want to pay over 22x earnings for growth that still looks recessionary by any historical standard?”

    Nate Hurst Joins Wells Fargo to Lead Corporate Responsibility, Philanthropy, and Sustainability Efforts

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    Nate Hurst, foto cedida. Nate Hurst se une a Wells Fargo

    Nate Hurst will join Wells Fargo on June 1 to oversee a newly combined organization that includes Corporate Responsibility, Philanthropy, Community Relations, and Sustainability. He will also serve as president of the Wells Fargo Foundation.

    “Nate brings a wealth of corporate citizenship, charitable giving, public affairs, and sustainability experience in the private, public, and nonprofit sectors to Wells Fargo,” said Bill Daley, vice chairman of Public Affairs at Wells Fargo. “We look forward to having Nate continue to advance Wells Fargo’s commitment to addressing the needs of underserved communities, particularly as we work to ensure housing security, small business stability, and consumer financial health in the wake of the COVID pandemic.”

    In his new role at Wells Fargo, Hurst will oversee the alignment of Wells Fargo’s sustainability and corporate responsibility efforts with corporate philanthropy and community relations. The combined organization will drive innovation and maximize the positive societal, environmental, and economic impact that Wells Fargo brings to the communities it serves. Under Hurst’s leadership, the company will further integrate sustainability and corporate responsibility into all aspects of its business and explore how to further utilize business expertise to help solve societal problems.

    Hurst joins Wells Fargo from HP Inc., where he was chief Sustainability & Social Impact officer responsible for driving HP’s global giving, environmental stewardship, and social responsibility into its core businesses. Hurst led a global team of experts to innovate sustainable solutions in collaboration with customers, partners, governments, and nonprofits. In 2019, HP climbed to No. 1 on Newsweek’s Most Responsible Companies list.

    Previously, Hurst served as the director of Sustainability, Public Affairs & Government Relations for Walmart, where he helped integrate sustainability into the business and align the community giving strategy with core customer needs. As a member of The White House Council on Environmental Quality for former U.S. President Bill Clinton, he helped develop the administration’s environmental policy agenda and executed a stakeholder engagement plan on leading issues such as climate change; and as national spokesperson for The Ocean Conservancy, Hurst spearheaded big ideas to reduce ocean plastic and led communications strategies, international coastal cleanups, and community grassroots campaigns.

    A strong advocate for diversity and inclusion, Hurst has a proven track record of being inclusive of diverse perspectives. He was an executive ally for HP’s LGBTQ community and has led efforts to advance gender equality programs and ensure access to learning for women and girls. He served on the United Nations’ Women Global Innovation Coalition for Change, and while at HP he championed technology products and external programs that focus on gender equality, education and achievement, youth entrepreneurship, and socially responsible business.

    Wells Fargo recently received an “Outstanding” rating from the Office of the Comptroller of the Currency for its work in addressing underserved communities through the Community Reinvestment Act.

    In recent years, Wells Fargo has deepened its commitment to philanthropy in low- to moderate-income communities. In June 2019, the company committed $1 billion in philanthropy alone through 2025 to address the country’s housing affordability crisis. Also in 2019, Wells Fargo invested $455 million through corporate philanthropy and the Wells Fargo Foundation in grants, funding national organizations to deliver programs at scale and nonprofits that specifically address the needs of local markets. In March, the company announced $175 million in aid for COVID-19 relief to help address food, financial health, small business, and housing stability, as well as to provide help to public health organizations.

     

    BlackRock Launches Four International Equity ETFs in Mexico

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    Pixabay CC0 Public DomainPhoto: Jools-Black . Piqsels CC0

    BlackRock has developed an innovative range of products with currency hedging to Mexican pesos.

    “A year ago we launched international fixed income products and now we are launching 4 international equity ETFs so that Mexican investors can invest in shares of companies in the United States, Europe and Japan without exchange rate volatility,” explained Giovanni Onate, Director of the Institutional Segment at BlackRock in Mexico.

    The 4 ETFs are:

    • CSPXX – US Equities (S&P 500)
    • IJPAX – Japanese Equities
    • CEUX – European Union Equities
    • IMEAX – Developed Europe Equities

    Another advantage that Onate highlights is that the products have the UCITS structure, so the cost to the Mexican investor is attractive.

    “We are expanding the universe of options so that the Mexican investor has access to instruments through which they can materialize their investment perspective, including the exchange rate variable. As trustees to our clients, it is part of our obligation to help our clients navigate stormy waters, not just calm ones, “he added.

    Giovanni Onate

    According to Onate, the current scenario presents important challenges for large institutional investors.

    Volatility has increased dramatically, with the VIX index rising to levels close to 12% in February, above 80% in March, and currently at 35%. This volatility has been even greater in emerging countries, where currencies have depreciated significantly against the dollar, as is the case in Mexico, where the peso has depreciated more than 30% in less than a month.

    “In Mexico, for example, Afores have 80% of their assets concentrated in Mexico, which limits the possibility of accessing the benefits of a more resilient portfolio with greater international diversification. Furthermore, one of the key factors in the Investment in international assets is the level of the exchange rate and exchange rate volatility. An investment in an international asset that has performed well in a given year, but that currency of that asset has depreciated through the Mexican peso, will affect our performance in Mexican pesos,” concludes the manager, who considers that “in times of volatility, there are things that we can control.”

     

     

    Americans Giving Up Citizenship Faster Than Ever Before

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    Foto: Mozaico. Foto:

    Americans are renouncing their citizenship at the highest levels on record, according to research by Bambridge Accountants New York.

    During the first 3 months of 2020, the IRS reported that 2,909 Americans renounced their citizenship, far more than the total of the four quarters for 2019 (when 2,072 Americans renounced), and a 1,104% increase on the prior 3 months to December 2019 where only 261 cases were recorded.

    Alistar

    Alistair Bambridge, partner at Bambridge Accountants New York, explains “The surge in U.S. expats renouncing from our experience is that the current pandemic has allowed individuals to get their affairs in order and deal with an issue they may have been putting off for a while.”

    “For U.S. citizens living abroad, they are still required to file U.S. tax returns, potentially pay U.S. tax and report all their foreign bank accounts, investments and pensions held outside the U.S. For many Americans this intrusion is too much and they make the serious step of renouncing their citizenship as they do not plan to return to live in the U.S.”

    “There has been a silver lining for U.S. expats that they have been able to claim the Economic Impact Payment of $1,200, but for some this is too little, too late.”

    Americans must pay a $2,350 government fee to renounce their citizenship, and those based overseas must do so in person at the U.S. Embassy in their country. 

    However, as Bambridge tells Funds Society, “you do still need to pay an exit tax if your net worth is $2m or more when you renounce.” If you are at the $2m threshold or over, the IRS will calculate a deemed sale of all your assets and will charge you on the capital gains that would be realized.

    “Speaking to our clients, a lot of them feel nervous and worried about U.S. taxes and the current situation has added to that anxiety. So I think for many, by renouncing it is a way to reduce that worry and take back some control in their life.” He concludes.

    Tikehau Capital Appoints Raphael Thuin as Head of Capital Markets Strategies

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    Raphael Thuin, courtesy photo. Tikehau Capital nombra a Raphael Thuin responsable de su división Capital Markets Strategies

    Tikehau Capital, an alternative asset management and investment group, appointed Raphael Thuin as Head of its Capital Markets Strategies offering, as of 11 May 2020.

    Thomas Friedberger, CEO and Co-Chief Investment Officer of Tikehau Investment Management, said: “We are delighted to welcome Raphael Thuin to our team. His experience and deep understanding of equity and fixed income markets perfectly complement our long-term fundamental management approach. We look forward to him making a significant contribution to further development of our Capital Markets Strategies business”.

    Raphael will oversee the management of Tikehau Capital’s bond, equity and flexible investment strategies. This range of funds provides access to long-term conviction-based management of investment grade and high-yield corporate bonds, financial bonds and equities of all capitalisations with investment capacity across Asia, Europe and North America. Assets under management of Tikehau Capital’s Capital Markets Strategies activity amounted to EUR 3.8 billion at 31 December 2019.

    A graduate of the HEC School of Management, Raphael Thuin began his career in 2005 as a portfolio manager for Topaz Fund in New York. In 2008, he joined the capital markets business of Société Générale, also in New York. Since 2014, he was Head of Fixed Income Management at TOBAM in Paris.

     

    AXA IM and XP Investments Partner to Bring Digital Economy and Automation Strategies to the Brazilian Market

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    Pixabay CC0 Public Domain. AXA IM y XP Investimentos se asocian para llevar economía digital y estrategias de automatización al mercado brasileño

    In an environment characterized by heightened market volatility and a sharp rise in employees working from home, AXA Investment Managers (“AXA IM”), a leader in active, long-term investing and XP Investments (“XP”), a top-tier financial services platform, announce they are partnering to offer Brazilian-based investors access to innovative, global equity and fixed income strategies via new local products focused on the digital economy,  automation and the US high yield markets.

    XP recently launched three local feeder funds for qualified individual and institutional investors, which invest directly into three AXA IM strategies: AXA IM US High Yield Bonds, AXA IM Framlington Digital Economy, and AXA IM Framlington Robotech.

    The partnership comes during an era of significant market disruption caused by the COVID-19 pandemic and the ensuing accelerated evolution of technology and digitalization. This is characterized by a growing number of global companies with employees working from home, the prevalence of e-commerce and companies that continue to generate revenues from their customers in lockdown via social media, video-streaming and video-gaming. To help meet these challenges, XP and AXA IM are providing investment opportunities that were historically difficult to access for Brazilian-based investors seeking exposure to these types of companies that are typically based outside of Brazil. Launching these strategies in the local market will make them readily available in Brazilians Reais, eliminating concerns about any potential fluctuations with the U.S. dollar.

    “The pandemic has had a profound impact on the digital economy, with so many employees working from home. The digital economy, a fast-growing trend last year, has now become a reality and is here to stay. Our partnership with XP comes at the right moment to provide Brazilian investors with greater opportunities to diversify their portfolios abroad and have access to companies whose businesses are not in lockdown but are in fact growing,” said Rafael Tovar, Director, US Offshore Distribution, AXA Investment Managers.

    In an effort to provide its clients attractive investment options and diversification, XP is seeking partnerships with the best global asset managers, spanning numerous products and asset classes. As a result, XP chose AXA IM due to its successful and long-term expertise in high yield strategies, in addition to its leadership in investing in several overarching themes where technology and the evolving consumer are reshaping industries and sectors such as automation/robotics and e-commerce.

     “There are many attractive opportunities in the international markets and Brazilian investors deserve better access to top-tier global managers as well as strategies that can help them improve the risk/return ratios in their portfolios,” explains Fabiano Cintra, Funds Specialist at XP Investments. “We are very pleased to partner on this client-focused initiative with AXA IM, one of the leading managers in the world with recognized expertise in active investment management.”

    The strength of XP as a fast-growing financial powerhouse, combined with the innovative, global investment management capabilities and expertise of AXA IM, provides Brazilian investors global access to some of these dynamic and growing sectors, which are of particular relevance during the current market environment. Technology has facilitated a world in lockdown to continue to operate thanks to connectivity tools for home office and tele-medicine, as well as the capabilities of e-commerce, social media, digital advertising and video streaming to allow people to continue consuming content. The behind-the-scenes technological infrastructure to support these solutions has become critical. This includes the cloud, network broadband capacity, cybersecurity, payment technologies and the physical infrastructure to support the delivery of products and services, such as warehouse automation, semiconductors and robotics. As a result, equity strategies focused on technology disruption will be able to capture these long-term themes.

     

    Financial Flexibility and Rigorous Capital Allocation Procedures, the Ingredients for Financial Success

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    Warren Buffett 2020 . wb

    At the livestreamed Berkshire Hathaway annual shareholders meeting in Omaha on Saturday May 2, Chairman Buffett offered his frank and erudite views on the unprecedented human and economic challenges of the pandemic crisis.  In his characteristic plain spoken style he gave these thoughts: “I’m convinced nothing can stop America”… “We haven’t faced this particular problem in the past” …”We’ve faced tougher problems and the American miracle, the American magic, has always prevailed”… “This is quite an experiment”…”We don’t know what happens when you voluntarily shut down a portion of your economy”…”I’m learning about this the same way that you are…There’s an extraordinarily wide range of possibilities on the health and economy sides and nobody really knows.”  He also stressed why dry powder (lots of cash) and unused corporate debt capacity are important since the unexpected is to be expected.  On the topic of potential M&A with Berkshire’s current record over $130 billion in cash, he said: “We’re willing to do something very big.” Possibly in the $30-50 billion transaction range as mentioned in the financial press.  Stay tuned.

    U.S. stocks looked through COVID-19 and economic driven gloom during April as unprecedented central bank easing and government fiscal policy stimulus spurred the best monthly gain since January 1987 and the best April return since 1938.  Widespread fragile world economic conditions, a continuation of dour earnings, rising bankruptcies, and a potential second wave of virus contagion are likely to provide some sizeable potholes for the financial markets for a while.

    We are focusing our stock research efforts on the long term beneficiaries of the digital revolution – speed, pipes, content, direct to consumer, telemedicine, remote health care, AI, automated vehicles, and warehouse logistics dynamics.  Financial flexibility and rigorous capital allocation procedures are the long term ingredients for financial success for both companies and investors. This is the core strength of of the Gabelli Private Market Value (PMV) with a Catalyst™ stock selection process and its goal to find stocks selling below intrinsic value.

    Column by Gabelli Funds, written by Michael Gabelli

    __________________________________

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    GAMCO MERGER ARBITRAGE

    GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.

    Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.

    Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.

    Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of  approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.

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    GAMCO ALL CAP VALUE

    The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.

    GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise.  The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach:  free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.

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    Disclaimer:
    The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.

    Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.

    Juan Pablo Galán: LatAm´s Appetite for Global Investment Solutions From the USA is Increasing

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    Juan Pablo Galán. Fabiola Peñaloza

    Credicorp Capital Advisors, until this May Ultralat Investment Advisors, is better positioned than ever to serve Latin American clients who want to invest in the United States. According to CEO, Juan Pablo Galán, due to the current situation, “the appetite for this type of global investment solutions from the USA is increasing. We have been experiencing growing interest in recent weeks, given the uncertainty that is lived in the economies of Latin America due to this pandemic.”
    Their RIA, which has already made its connection with Credicorp Capital, hired two portfolio managers, Fabiola Peñaloza and Gustavo Sorzano.

    “With these appointments we complete strengthening the RIA team, with the aim of promoting and receiving from the different countries the different businesses related to this platform in the United States,” says Galán, adding that “Credicorp Capital is extremely interested in that its US Operation is a robust platform that allows serving all the clients that we currently have in the region, especially Colombia, Peru and Chile, in international investments.”

    Peñaloza, who started her new role in early May told Funds Society that she feels “very happy to be back in the Credicorp group, it is going back home with old colleagues… I am very proud to have the opportunity to work again at a leading Latin American company in the financial industry, especially being part of the great team already present in Miami with the acquisition of Ultralat Securities.”

    Fabiola PeñalozaFabiola Peñaloza, who joined the firm as Portfolio Manager of the Multi-Family Office in the USA, within the Wealth Management unit, has 17 years of experience. She is a graduate of Finance and International Business from Nottingham Trent University (Italy) and has a Master’s Degree in Art History from Jorge T. Lozano University (Colombia). She previously worked at AMCS Group, Credicorp Capital Colombia, Standard Chartered Bank, Credit Agricole, BankBoston and Morgan Stanley.

     

     

     

     

     

    Gustavo

    Gustavo Sorzano, who joins as US Mandates Portfolio Manager, within the Asset Management unit, has 13 years of experience. He is an economist from the Javeriana University (Colombia), a treasury specialist from the IEB  (Spain) and is an MBA candidate from the University of Miami (USA). The last 4 years he worked in the Investment Solutions unit of Ultralat Capital Markets (the broker-dealer). He was previously linked to Helm Comisionista de Bolsa, Credicorp Capital Colombia and Helm Bank.

     

     

     

     

     A company ready with contingency plans

    According to Juan Pablo Galán, “work at home has not affected the operation of the broker-dealer nor the RIA. We are companies in an industry and region that usually have solid contingency plans that make working at home an everyday thing.”

    The manager adds that in these extraordinary times, they have maintained a very fluid communication with clients, “we have organized online events for clients, with external speakers to discuss topics of various kinds. We use traditional electronic channels and clients are even having more time to review their investments. That has made it easier for them to make investment decisions with a cool head and proper analysis.” He points out.

    Advances with the merger process

    Although, after Credicorp Capital made the purchase of Ultraserfinco in Colombia (which included Ultralat in Miami), the RIA did not require a merger, and as of May, Ultralat Investment Advisors changed its name to Credicorp Capital Advisors, Galan comments that ” the preparation of the merger of the two broker-dealers in Miami (Credicorp Capital Securities and Ultralat Capital Markets) has not been affected by this period of social distancing either.”

    “Proceedings with the regulator continue as planned within what was established a few months ago, only remotely. The merger of the broker-dealers will still take a few months to be carried out. We are preparing everything the regulator requires for its review.” concludes Galán.