Glen Finegan. Emerging Markets Equities: Positioning And Opportunities in Henderson's View
Glen Finegan, Head of Emerging Market Equities at Henderson, provides a detailed update on his strategy covering recent market drivers, performance and activity, and his outlook for the asset class.
How have the emerging markets performed so far this year?
A sharp decline for the MSCI Emerging Markets Index in January was followed by a strong rally during February and March, leading to a gain for the asset class overall during the first quarter of 2016.
Against this backdrop the Henderson Emerging Markets Strategy, outperformed a rising market. The investment in gold producer Newcrest Mining and significant exposure to companies listed in the unpopular Brazilian, Polish and South African markets helped. The strategy’s Egyptian and Nigerian holdings performed poorly and fell during the quarter. Over the last year the strategy declined less than the benchmark. Our approach of owning high-quality companies with properly aligned controlling shareholders and strong track records of delivery aided relative performance.
What can you tell us about your portofolio allocation?
We added to the strategy’s Brazilian positions during January’s market fall only to reduce these somewhat towards the end of the quarter following a rapid increase in valuation. We are confident the strategy owns high-quality businesses with strong franchises that will enjoy cyclical recovery when it comes. Predicting the timing of this is, however, impossible, meaning we remain extremely valuation sensitive.
Emerging consumption ¿Cómo ha funcionado el tema del consumo en los mercados emergentes?
We fully disposed of the strategy’s SABMiller position during the first quarter. The discount to Anheuser-Busch InBev (ABI)’s takeover offer has narrowed considerably and the deal still has to clear a number of regulatory hurdles. In the unlikely event it should fail there would be substantial downside in this stock.
Our search for high-quality, reasonably-valued consumer companies in India resulted in the purchase of a new holding in leading cement producer Ultratech.
Cement consumption in some less developed markets shares the same fundamental driver as basic fast moving consumer goods, namely improving living standards. Indian cement sales are conducted mostly in cash and demand is largely driven by the need for improved housing. Housing in India is primarily financed by savings and construction is often as wholesome as adding a small room to an existing property. More than 90% of cement sold in India still comes in bags rather than in bulk, indicative of this being a consumer-driven market. Furthermore, per capita consumption of cement remains low, meaning there is scope for this to increase over time.
What is Ultratech’s appeal?
A unique feature of Ultratech is its network of over 50,000 dealers throughout India selling “Ultratech” branded cement. This network is far larger than any of its competitors and has enabled the company to reach an almost 40% market share in rural India.
Ultratech is one of the crown jewels in the Aditya Birla Group, accounting for approximately 10% of group revenues. Aditya Birla is a family-controlled industrial group led by Kumar Mangalam Birla. Since becoming Chairman in 2004, after the passing of his father, Kumar has shown an ability to take a long-term approach to building strong franchises in a number of industries, including cement. He is also recognised as a leading advocate for strong corporate governance in India.
With the backing of the Birla family, we believe Ultratech will continue to take a leading role in the consolidation of India’s fragmented and overly-indebted cement industry.
What about China?
We have continued building a position in Fuyao Glass following a meeting with its Chief Financial Officer. Fuyao is China’s leading auto glass manufacturer and serves well-known carmakers in China and now also in the US and Europe. The company is a governance leader in China thanks to its far-sighted controlling shareholder who has insisted on global auditing standards since listing in 1993 and emphasised research and development investments to protect the long-term profitability of the franchise. We find the company’s current valuation undemanding given its opportunities for growth.
What is your strategy going forward?
Weak rule of law combined with many undesirable political and business leaders mean there are parts of the emerging markets universe that are cheap for a reason. We are not deep value investors and aim to avoid being seduced by low-quality companies trading cheaply. Neither are we outright growth investors and we continue to avoid what we believe are overvalued but growing South Asian consumer businesses. Instead, as bottom-up stock pickers our focus is on combing unpopular markets for good-quality companies trading at reasonable valuations.
CC-BY-SA-2.0, FlickrSharon French . Sharon French, New Head of Beta Solutions at OppenheimerFunds
OppenheimerFunds has hired Sharon French as Head of Beta Solutions. In this role, French will be responsible for growing the firm’s smart beta business by building on the success of Oppenheimer Factor Weighted ETFs as well as developing new multi-factor products to help meet client demand. French will be based in New York and will join the firm’s Senior Leadership Team, reporting directly to Art Steinmetz, Chairman and CEO of OppenheimerFunds.
“We’re delighted to have Sharon join the team,” said Steinmetz. “As we build our smart beta business, we are focused on product development that will continue to differentiate us in the marketplace and complement our long-term, active approach.”
French joins OppenheimerFunds from BNY Mellon, where she was Senior Strategic Advisor to the CEO and President of Investment Management, focusing on ETF and multi asset business growth. Previously, she served as President of F-Squared Capital. Before that, she was Head of Private Client & Institutions at BlackRock for its iShares business. French spent nearly a decade at AllianceBernstein, and held prior roles at mPower, Smith Barney, and Chase Manhattan Bank.
“OppenheimerFunds is a widely respected global asset manager that recognizes the importance of providing innovative products and solutions that address clients’ needs,” said French. “I’m excited to join the team and look forward to building on OppenheimerFunds’ demonstrated commitment to its smart beta offering.”
Vince Lowry, Lead Portfolio Manager for the Oppenheimer Revenue Factor Team, and his team will report to French.
As it is becoming increasingly clear that the central banks’ expansive monetary policy is not leading to a sustainable recovery in economic activity, the recent rally on the equity markets is based yet again on fragile foundations. This is the view of Guy Wagner, Chief Investment Officer at Banque de Luxembourg, and his team, published in their monthly analysis, ‘Highlights.’
The global economy is continuing to grow at a modest pace. In the United States, growth is largely due to the increase in personal disposable income spurred by weak oil prices, the favourable job market and a slight increase in wages, whereas corporate investment is diminishing. In Europe, economic growth rates are weak but positive. In Japan, the expected escalation in wages has not materialised, increasing the likelihood of a fresh government stimulus programme despite the already excessive level of public debt. The extension of the quantitative easing programme in Europe and Fed Chairman Janet Yellen’s reticence on future interest-rate hikes in the United States have led investors back into risk assets again.
The US S&P 500 index even closed the first quarter in the black, although the other indices lingered in the red. “As it is becoming increasingly clear that the central banks’ expansive monetary policy is not leading to a sustainable recovery in economic activity, the recent rally on the equity markets is based yet again on fragile foundations,” says Guy Wagner, Chief Investment Officer at Banque de Luxembourg and managing director of the asset management company BLI – Banque de Luxembourg Investments.
Further quantitative easing measures in Europe Given the weakness of inflation in Europe, the President of the European Central Bank, Mario Draghi, announced further quantitative easing measures in March: the ECB’s headline rate is being cut from 0.05% to 0%, the volume of its debt purchases has been ratcheted up from 60 to 80 billion euros per month, and the programme has been extended to include buying up investment-grade corporate bonds. The ECB also cut its deposit rate and launched a new bank-lending programme to enable banks to refinance on very favourable terms provided they then lend it on to revive economic activity.
Despite their weak yields, bond markets remain attractive Bond yields saw little change in March. Over the month, the 10-year government bond yield inched up in Germany and in the United States, but dipped in Italy and in Spain. “In Europe, the main attraction of the bond markets lies in the prospect of interest rates going, because the ECB’s negative interest policy could be expanded during 2016,” believes the Luxembourgish economist. “In the United States, the higher yields on long bond issues give them some residual potential for appreciation without having to factor in negative yields to maturity.”
No strengthening of the euro in the near future Against the dollar, the euro appreciated in March. Janet Yellen’s dovish words on future interest rate rises in the United States weighed on the dollar and nudged the euro/dollar exchange rate to the upper end of the last 12 months’ fluctuation bracket. “The expansion of the ECB’s quantitative easing programme does nothing to suggest a strengthening of the euro in the near future,” concludes Guy Wagner.
CC-BY-SA-2.0, FlickrPhoto: T-Mizo. Negative Rates Have Overstayed Their Welcome
Low rates are a problem. An article las week in The Wall Street Journal notes that more than $8 trillion of sovereign debt now trades at negative rates. But negative rates have now overstayed their welcome, and policymakers need to consider the unintended consequences.
This problem is something the Federal Reserve is already aware of, though it is unclear if other central banks are too, points out Kathleen Gaffney, Co-Director of Diversified Fixed Income, and Henry Peabody, Diversified Fixed Income Portfolio Manager at Eaton Vance, in the company´s blog.
Both belive that there was a time for emergency measures. While the global economy is not out of the woods, and an adjustment to higher rates would be painful for a few groups, marginally higher rates would likely be a positive at this point. However, explain the managers, this would require central bankers to admit that they are not central planners and there are limits to monetary policy.
“When global central banks began their march to zero, it was well-intentioned. Lower rates spur investment and increased money supply lead to inflationary pressures as the cost of capital is reduced. But something has changed. It’s unclear what precise threshold was crossed, but incentives and risks have shifted. This brought with it unintended consequences that outweigh the benefits of 0% rates”, say.
The cost of capital is artificially low and distorting the capital markets. Corporations, at least partially at the behest of the short-term nature of many shareholders, began to embrace the low risk-adjusted return by buying back their own shares. So yes, an extended period of emergency monetary policy has benefitted some.
However, Gaffney and Peabody highlights that this has come at the expense of savers. “Savers have been forced out of bonds and into equities in order to pick up lost return. Now, the volatility in the equity market has an outsized impact on psychology and, perhaps, spending. The impact on savers has been so severe that many are highlighting the ironic and sad increase in “liabilities” associated with low returns; attaining goals is that much harder”.
According to the experts, the Fed (and other central banks) would be well-served to increase rates and generate both a more meaningful cost of capital, as well as improve income for savers. Higher rates would likely ease the pressure on consumers, allowing them to spend. This, along with well needed infrastructure spending and fiscal expansion could lead to a greater demand for credit. Higher rates would be supported by fundamentals. A higher rate would also be an affirmation of growth, and would also likely bring a focus back to long term projects and capital expenditure.
This thinking, along with relative value, is behind Eaton Vance positioning in commodity related credit as well as currencies that will benefit from the combination of supportive policy and private capital inflow, and away from interest rate risk.
“The adjustment to get to higher rates will potentially be painful for some, particularly those expecting a low volatility world to persist. Capital will likely flow toward sectors of the market that offer a cushion against higher rates, and credit with improving fundamentals”, they conclude.
European Smart Beta ETF market flows continued to be strong in Q1 2016. Net New Assets (NNA) year to date (until 31/03/2016) amounted to EUR 2 billion. Total Assets under Management are up 4% vs. the end of 2015, reaching EUR 16.7 billion. Smart Beta assets have doubled since the end of 2014. Year to date, ETF flows were sustained especially in the Risk based & Factor allocation categories as investors looked for defensive strategies and alternative sources of return in an uncertain environment.
Smart Beta definition: Smart Beta indices are rules-based investment strategies that do not rely on market capitalization. To classify all the products that are included in this category we have used 3 sub segments. First, risk based strategies based on volatility, and other quantitative methods. Secondly, fundamental strategies based on the economic footprint of a firm – through accounting ratios- or of a state – through macroeconomic measures. Then factor strategies including homogeneous ranges of single factor products, and multifactor products designed for the purpose of factor allocation.
Q1 2016 flows were positive for Smart Beta ETFs at EUR 2 billion, with a one-year record high at EUR 907 million in February 2016, and a strong month of March at EUR 807 million. The quarterly figure is equal to the amount gathered in Q1 2015, in a context where equity ETFs globally registered significant outflows. Year to date, risk based ETFs registered the highest inflows with a record high on Minimum volatility ETFs at EUR 1.2 billion.
Due to high uncertainties on the economic and monetary environment worldwide,low volatility ETFs continued to attract significant interest especially on US and global indices. In the factor allocation space, multifactor ETFs continued to gather inflows, EUR 357 million year to date, mainly on European indices as investors are looking for diversification in a context of poor equity market performance. In the fundamental space, quality income ETFs benefited from the low yield environment due to their attractive yield/risk profile.
Foto: Yoshihide Nomura
. Broker dealers, banca privada y trusts controlan el 72% del mercado de los grandes patrimonios
Wirehouses and banks control nearly three-quarters of all high-net-worth assets in the United States, according to the research “High-Net-Worth and Ultra-High-Net-Worth Markets 2015: Understanding and Addressing Family Offices”, published by Cerulli Associates.
“As of year-end 2014, wealth managers controlled approximately $8 trillion inHNW and UHNW client assets,” states Donnie Ethier, associate director at Cerulli. “The longtime market leaders – the wirehouses, private banks, and trust companies – have maintained their reign with a collective marketshare of 72%.”
The wirehouses and banks must stop relying on intra-channel recruiting (e.g., wirehouse-to-wirehouse) or these channels will likely experience moderate growth. Moreover, heirs of their existing clients may be the biggest wildcard as they will likely boost growth within the independent and direct channels.
State-chartered trust companies and multi-family offices have experienced significant growth. These are exclusive, independent practices focused on sophisticated estate planning. These firms are often established around the softer elements of wealth, including family governance and succession planning.
Traditional registered investment advisors are also now included in Cerulli’s HNW asset sizing because, similar to several broker/dealers and investment councils, they may not qualify as MFOs but are successful among HNW families.
“Wirehouses, private banks, and trust companies remain the three largest HNW channels, respectively,” Ethier explains. “Wirehouse assets lessened from past years; however, this is not always due to a loss of assets. Instead, it can be due to a change in Cerulli’s methodology, including redistributing a wirehouse’s assets to an affiliated channel. An example is separating U.S. Trust’s marketshare from Merrill Lynch.”
The times when chocolate was a luxury good are long gone. Consumption has increased continuously and amounts to about 5.2kg per person and year in Europe. While demand has been on the rise, climate change and social problems in production constitute challenges that cause an imbalance of supply and demand. For the cocoa farmers, the chocolate dream can easily turn into a nightmare. We talked to Stefan Rößler, quantitative analyst in the ESG team of Erste Asset Management, about how this situation could be changed.
Mr Rößler, many of us have a sweet tooth for chocolate. However, most people are not aware that the cultivation of cocoa and its processing can cause problems. Rößler: That’s right. Our analysis clearly shows two main problemat- ic areas, i.e. the environment and the social impact. With regard to the latter, we are specifically talking about child labour and low work- ing and social standards. Initial steps have been taken to remedy the situation, but the implementation leaves a lot to be desired. The vast number of cocoa farmers in West Africa makes organisation difficult.
As far as the purchase of cocoa goes, the producers are also faced with structural challenges. There are eight global companies that buy almost the entire crop. The nontransparent and convoluted supply chain adds to the difficulties of implementing adequate measures in terms of social and environmental standards.
You just mentioned the environmental aspect – what are the challenges in this area? Rößler: It is important to bear in mind that cocoa is not the only in- gredient used in the production of chocolate. Other raw materials such as sugar, hazelnuts, and palm oil are also required; and they cause problems similar to those of cocoa. The high demand for chocolate and thus cocoa has led to a status quo where investments are largely funnelled into higher productivity. However, this strategy is extremely one-sided. What would be necessary and preferable is a double-edged strategy: investment in know-how that facilitates a rise in productivity, but also investment in sustainable cultiva- tion skills. According to forecasts climate change will make it impossible to cultivate cocoa in West Africa by 2050. This will also affect the chocolate producers down the road, as their security of supply will be taken away from them.
Investments are always also a question of what price can ultimately be charged. What are we looking at from this angle? Rößler: That is correct, more funding is necessary for investments in know-how and the modernisation of pro- duction in order to facilitate sustainable cultivation. From our point of view, the cocoa price would have to dou- ble in order to compensate the cocoa farmers fairly, make education possible, and modernise cultivation.
Your prediction: will we still be able to indulge our longing for chocolate in the future, or will we at some point run into a supply shortage? Rößler: We have spoken with various research agencies, NGOs, and market participants. The good news is: there will be cocoa in the future – and therefore chocolate as well. Numerous initiatives and certificates such as FairTrade, UTZ, and Rainforest Alliance are going in the right direction. Everybody should support this on an individual basis by buying chocolate with such labels. And we as investors, Erste Asset Management, can do the same thing: we only invest in the shares of companies that maintain certain minimum standards and that do not violate labour laws or human rights in the supply chain. Environmental controversies are also criteria that we take into account. Thus, everyone can contribute to the best of their abilities to ensure that cocoa farmers make a decent living and that they therefore have a future.
If the transformation to sustainable cocoa cultivation fails, the perspectives for the cocoa farmers will be gloomy. Because then production will be moved to regions where cocoa cultivation is still possible in spite of the climate change.
For more on cacao and chocolate, you can read Erste AM’s ESG Letter on Environmental, Social and Governance issues, which focuses on this commodity, following this link.
CC-BY-SA-2.0, FlickrFoto: RCRW. La francesa Orange compra el 65% de Groupama Banque
French telecom company Orange has signed an agreement with Groupama Banque to develop a full mobile banking service that will be launched in France at the beginning of 2017.
The deal, subject to regulatory approval, will also lead to the acquisition by Orange of a 65% stake in Groupama Banque. Groupama will retain the remaining 35%.
Following the completion of the transaction, expected during Q3 2016, Groupama Banque should become Orange Bank.
This service will be marketed under the Orange brand within Orange’s own distribution network and under the Groupama brand within Groupama’s distribution networks.Services provided will cover current accounts, savings, loans and insurance services, as well as payment.
Orange and Groupama seek to attract two million customers in France.
Stéphane Richard, Chairman and Chief Executive Officer of Orange, said: “This agreement is a major step forward in our ambition to diversify into mobile financial services as we outlined in our Essentials2020 strategy. Groupama Banque will bring an existing banking structure as well as considerable experience in managing customer relations remotely within a banking context. This will enable us to move forward rapidly in order to provide our customers with an innovative, 100% mobile banking service, first in France and then in Spain and Belgium. By leveraging the power of its brand, its distribution network and its extensive experience in digital services, Orange aims to bring mobile banking into a new dimension.”
Thierry Martel, CEO of Groupama, said: “This partnership represents an important step for Groupama. It will enable us to leverage Orange’s technical know-how and its expertise in digital services to accelerate our existing online banking activity. Through this partnership, we are effectively combining two powerful and complimentary brands in order to offer our customers a disruptive banking service. We are aiming to put the highstreet bank into our customers’ pockets, turning tomorrow’s bank into today’s reality.”
CC-BY-SA-2.0, FlickrBlackRock: 2016 Latin America & Iberia Investment Forum - foto cedida. BlackRock celebra el 2016 Latin America & Iberia Investment Forum
Connectivity brings with it a positive force for change, and in turn, innovation. By almost all measures, the world is more connected than ever, hastening the access and speed of information and data. The impact of connectivity and innovation on the financial community is no exception.
On March 14-16, 2016 BlackRock hosted its fourth annual Investment Forum with the objective of Connecting for a Better Tomorrow.
The message throughout the conference was focused on how best to transform challenges into opportunities by working hand and hand with key partners that will help foster innovative solutions. Through this message of connectivity, BlackRock empowered its clients to make connections to the trends, insights and solutions that will matter not only today, but also in the future investment landscape.
Over two days, The BlackRock Investment Forum connected 180 wealth and institutional clients across 10 countries in Latin America & Iberia. Clients attended a total of 15 sessions led by BlackRock leaders across the firm, such as the President of the firm, six members of the Global Executive Committee and several investment leaders.
Notable sessions included:
Keynote: Talent and Innovation
The keynote address from Rob Kapito, President and Director of BlackRock, stressed the importance of rethinking how our industry can help clients move cash off of the sidelines in order to invest for the future. To set this catalyst for change, “modern technology can be applied to the challenges clients are facing in order to help make better investments decisions to achieve the outcomes needed.”
Big Data achieve returns
In a recent study, IBM estimated that approximately 90% of the data in the world today was created in the last two years. In addition to there being more data, we have the capability to understand this data more comprehensively and quickly than ever before.
In this forward looking session, Rob Goldstein, Chief Operating Officer of BlackRock, interviewed Raffaele Savi, Co-CIO for Blackrock’s Scientific Active Equity and Co-Lead of Active Equities on how the intersection of technology and investors will revolutionize the way we invest in the future. They focused their discussion on understanding how BlackRock’s Scientific Active Equity (SAE) Team harnesses the power of Big Data, providing new signals and indicators through advanced methods of data extraction to seek sustained alpha across market environments.
The Power of Factor Investing: Smart Beta
Other ways investors are building better portfolios is through Factor Investing. Sara Shores, Managing Director and Head of Smart Beta Strategies at BlackRock, touched on the importance of factor investing and how it is empowering investors by identifying and precisely targeting broad, persistent and long-recognized drivers of return.
Smart Beta strategies have democratized access to Factor Investing. Individuals, investment professionals and institutions alike are using these strategies to screen thousands of securities to capture single or multiple factors transparently and efficiently. As of April 2016, Smart Beta ETP flows hit a new monthly high with $7.8bn*”
Other sessions presented at the 2016 Investment Forum included:
The State of the Markets
Geo-Political Perspectives
Connecting Investors to Retirement Capabilities
Financial Distribution Trends
Casting a Wider Net with Multi Asset Investing
Equity Markets: New Drivers, Rethinking Fixed Income in 2016 and Beyond
ETF Growth
Connecting to New Sources of Diversification: The Alternatives Approach
Investing with IMPACT
Portfolio Construction
At the end of the Forum clients walked away with a better understanding of the importance of becoming more outcome-oriented than ever before. Investment decisions are no longer just about products or asset classes but rather finding the diversified solutions that will help investors achieve their investment goals. As highlighted by the Forum, connecting with the right partner is critical in order to foster innovative solutions that can transform today’s challenges into tomorrow’s opportunities.
*Data is as of March 31, 2016 for all regions. Global ETP flows and assets are sourced from Markit as well as BlackRock internal sources. Flows for the years between 2010 and 2015 are sourced from Bloomberg as well as BlackRock internal sources. Flows for years prior to 2010 are sourced from Strategic Insights Simfund. Asset classifications are assigned by BlackRock based on product definitions from provider websites and product prospectuses. Other static product information is obtained from provider websites, product prospectuses, provider press releases, and provider surveys.
CC-BY-SA-2.0, FlickrPhoto: Lucas Hayas. How Important is the Valuation of High-quality Companies?
Does the valuation of a high ROIC company matter? If Q1 companies have typically outperformed, is there any benefit to also selecting cheaper companies, or should we simply remain agnostic to stock valuation?
According to Investec experts, they prefer to use free cash flow (FCF) yield as their valuation metric as it captures the cash-generating power of the business, rather than the income statement profits, which are based on accrual accounting and are more vulnerable to manipulation by management. Moreover, the FCF yield better reflects the available cash that can be reinvested into a business for future growth, or returned to investors.
The next graph prepared by Investec shows that valuation does matter, and is more important for companies with low ROIC (those in Q4). The highest return at the individual stock level appears to be achieved by investing in companies with a high ROIC and FCF yield. Historically, investing in these companies has provided outperformance of 3.8% per annum. Meanwhile, investing in the most expensive companies with a Q1 ROIC has typically resulted in modest underperformance of 1.2%. Importantly, this analysis takes no account of the final ROIC of the company like the prior charts, and does not, therefore, assess the sustainability of high returns.
“We believe in exercising caution when operating in these areas of the market. A combination of high ROIC and seemingly cheap valuation can imply the market is anticipating a structural problem with the company’s business model, often meaning that returns have a high probability of fading fast. In this scenario you need a fundamental understanding of the inner workings of the company’s business model to properly assess the sustainability of returns. In our experience, we rarely find such an opportunity that is attractive on a risk-adjusted basis over a long-term investment horizon,” says Investec.
Alternatively, they suggest, to purchase a stock with a Q4 FCF yield, “we require the business model to be impeccable with structural trends that mean we are compensated with above average growth and limited uncertainty. Again, these types of opportunities tend to be few and far between. Lofty valuations are often caused by market over-exuberance around future growth, resulting in long-term underperformance. Consequently, we select moderately valued companies with a high ROIC that we believe can be maintained over the long term.”
Implications for portfolio construction To generate outperformance they aim to construct a portfolio for their Investec Global Franchise Strategy that, in aggregate, maintains a Q1 ROIC. Figure 7 tracks the Investec Global Franchise Strategy’s ROICs against the median quartiles for the market and shows that this aim has been met for almost the entire lifespan of the strategy. “We believe this is a positive indicator for its future performance, as we have confidence that the companies that make up this portfolio have competitive advantages to maintain their current high returns. Crucially, this confidence is based on our detailed bottom-up analysis of these companies and an assessment that their ROICs are sustainable over the long term.”
“Valuation plays an important role in our investment process. Although we believe that quality companies deserve a premium valuation, we are not willing to include overpriced stocks in our portfolios. For us, investing in high-quality companies only makes economic sense if FCF yields are superior to long-term bond yields. This comparison comes from the stable and consistent cashflow generation of these companies, many of which have bond-like characteristics,” they conclude.
