Foto cedidaFoto: David Page, economista sénior de AXA Investment Managers. Foto: David Page, economista sénior de AXA Investment Managers
After a couple of weeks’ of battling, Congress fagreed on a stimulus package thought to total $2trn (9.2% of GDP). This is an unprecedented stimulus, which according to David Page, Head of Macro Research at AXA Investment Managers, represents 9.2% of GDP.
The package began as a Senate Republican proposal estimated at around $850 bn, but over the ensuing time has morphed into a package that is estimated to more than double the combined GFC packages – the Economic Stimulus Act 2008 and the American Recovery and Reinvestment Act (2009). Senate Democrats had resisted earlier passage of the bill because it was not sufficiently focused on households, state or local governments. Democrats also wanted sufficient oversight of how a large portion of the package, to support larger businesses, was distributed. On Wednesday night 25, the Senate approved the measure with a unanimous vote of 96-0 and the House of Representatives voted out loud on Friday 27, with which the stimulus plan was approved.
The stimulus package contains
$500bn in bank loans and direct assistance to US companies, states and local governments affected by the virus (including $75bn to large corporates including airlines).
$377bn to small businesses (sub-500) to help fund payrolls in coming months. These payments will be structured as up to $10m interest free loans to businesses, but will be ‘forgiven’ proportionate to the number of workers kept on payrolls.
$250bn in direct checks to US individuals ($1200 per person, $500 per child).
$260bn in expanded unemployment insurance, raising payments by $600 per week and extending coverage duration by four months.
$150bn funding for states
$340bn additional Federal government spending
US Treasury Secretary Mnuchin stated that these payments would come quickly. He stated that loans to small businesses would be made next week and that individual payments would be paid within three weeks. Democrats secured more precise oversight for the distribution of stimulus funds to large corporates after accusations surrounding the distribution of TARP over a decade ago. An independent Inspector General will be appointed who will work with a panel of five members picked by Congress. A weekly report on the disbursement of funds will be produced.
While eye-watering in scale and a complement to the range of measures enacted by the Federal Reserve, questions remain about whether even this will prove sufficient. Governors from Maryland and New York have suggested that there is insufficient aid to states most affected by the virus. In combination, the Fed and Congress are trying to help US households and businesses plug the significant hole that the coronavirus will leave in the economy over the coming months. The problem is no one can be sure how big that hole will be. The median estimate for jobless claims (released today) is to rise to 1.64m, although some estimate more than double that. St Louis Fed President Bullard recently said unemployment could rise to 30% in Q2. Such a sharp rise would suggest a double-digit fall in real disposable incomes in Q2, which would in turn exacerbate a sharp fall in domestic spending not just in Q2, but over the coming quarters. The stimulus package is designed to prevent such a deterioration, particularly by providing direct support to firms and incentivising them keep workers on payrolls, and to individuals through direct payments. This complements the Fed’s actions to facilitate lending to businesses to keep afloat while the virus-related drop in demand passes. But only the coming weeks will show how successful these measures will prove.
The stimulus package approved by Congress is also in part designed to bolster confidence, particularly for financial markets. To that extent, it has proved successful with the S&P 500 index rising by 10.5% as certainty over the passage of the stimulus rose. This easing in financial conditions in part offsets the material tightening over recent weeks which has provided an additional headwind to activity. Broader market moves saw the impact of the stimulus mix with ongoing efforts to curb liquidity issues in USD markets. 2-year yields have fallen by 10 bps to 0.30% over recent sessions, while 10 year yields have fallen by around 7 bps over a similar timeframe to 0.79%. The dollar has fallen by 2.4% against a basket of currencies this week as dollar liquidity scarcity has started to ease.
Changes in Santander‘s international business: According to what Funds Society has learned, Alfonso Castillo has been appointed head of Santander BPI (his international private bank) and CEO of BSI (the bank’s international business in the US).
In his new role, he will continue to develop the business and consolidate Santander Private Banking as a global platform for the entity’s clients worldwide. Castillo will report to Víctor Matarranz (in his role as head of BPI) and Tim Wennes –CEO of Santander US- and Matarranz as CEO from BSI.
Castillo will replace Jorge Rosell, who is to leave the bank in search of new projects.
Alfonso Castillo joined the ranks of the global Wealth Management division created by Santander in late 2018, a few months after the bank created that division, which integrates private banking and asset management, and is headed by Víctor Matarranz.
Castillo came from Bankinter, where he was Managing Director, responsible for their Private Banking division. In his almost 20 years of experience, he has also worked at firms such as Barclays Wealth, Credit Suisse or EY.
Foto cedidaFoto de la Federación de Bancos de Alimentos de España.. BlackRock destina 50 millones de dólares para apoyar a ONG y paliar el impacto del COVID-19 entre los más desfavorecidos
BlackRock, the world’s largest asset manager, on Monday committed $50 million to relief efforts as the coronavirus pandemic leads to job losses and unexpected medical costs.
“We are committing $50 million to relief efforts, helping meet immediate needs of those most affected right now and by addressing the financial hardship and social dislocation that this pandemic will bring,” the company said in a statement.
Blackrock said a first tranche of $18 million in funding has been deployed to food banks and community organizations across America and Europe working directly with vulnerable populations.
BlackRock’s commitment includes plans to support various global charitable initiatives aimed at helping those impacted by the ongoing coronavirus pandemic, including $5 million to Feeding America, $2 million to the UK’s National Emergencies Trust, and $500,000 to the Global FoodBanking Network, “which will serve as our partner in meeting ongoing needs in Asia and the emerging crisis in Latin America.”
Furthermore, BlackRock is supporting its employees’ efforts and has said it will match employee contributions to local organisations addressing the crisis in their communities.
“COVID-19 is a stark test to companies everywhere. BlackRock Is working hard to support all of our people through this crisis,” the firm said. “There’s no doubt that there is much uncertainty ahead as we continue to address this fast-moving global challenge, an effort that we believe will require unparalleled global cooperation… We’ll keep all our stakeholders informed of what we learn as we tackle this crisis together.”
Photo; NeedPix CC0
. silver lining of the COVID-19 crisis for the U.S. economy and markets
The U.S. stock market shrugged off several weeks of developing adverse China related coronavirus (COVID-19) news and rallied to a record closing high on February 19th…
Then news of an increase in cases outside of China ignited a volatile market sell-off that resulted in the worst week for world stocks since the Global Financial Crisis of 2008. COVID-19 is creating major concerns over global supply and consumer spending, and this increased uncertainty and impact on earnings is unfolding at a time the overall market has a limited margin of safety. The fear of the virus alone could lower consumer confidence in the U.S. and this could have a dampening effect on the economy. Some additional factors that have negatively impacted stocks include: no uptick rule (reinstatement would have powerful positive effect), Algos, Momos, Quants, hedging, and leveraged ETFs. We are finding more stocks selling below net, nets (cash ,working capital /- all debt.. the classic Graham Dodd definition), and intrinsic value.
So far oil and other energy prices have declined sharply, a potential boost to U.S. consumer spending (about seventy percent of U.S. GDP). Low gasoline prices at the pump helps workers and low interest rates help refinancing and home builders. The silver lining of the COVID-19 crisis for the U.S. economy and markets is that it will likely bring overseas manufacturing and supply chain jobs back home.
On the merger arbitrage front, markets sold off broadly in February and into early March over concerns related to COVID-19 and a significant decline in oil prices and its impact on credit markets. Market volatility spilled into merger arbitrage investments, causing mark-to-market declines in our portfolio. It is important to note that no deals were terminated due to the market decline. Furthermore, we are well positioned to take advantage of dislocations in the market, with a focus on short-dated deals. We are able to opportunistically deploy capital in significantly de-risked deals at lower prices that will generate greater returns when the deals close.
Column by Gabelli Funds, written by Michael Gabelli
__________________________________
To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:
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.
Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476
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.
Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155
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.
Pixabay CC0 Public Domain. Aviva Investors llega a un acuerdo de distribución con Capital Strategies Partners para España, Portugal, Brasil y Uruguay
Aviva Investors, the asset manager of insurer Aviva, has struck a distribution deal with Madrid based Capital Strategies Partners, that will allow them to sell investment capabilities into Spain, Portugal, Brazil and Urugruay.
CSP will focus on distributing Aviva Investors’ credit, equity, liquidity, multi-asset and real assets capabilities through its wholesale and intstitutional channels.
According to a press release, the deal completes the manager’s geographical coverage of Iberia and Latin America, and complements an existing partnership with Exel Capital, which represents Aviva for the institutional markets in Chile, Peru and Columbia.
Charlie Jewkes, Head of Global Financial Institutions at Aviva Investors, will work with CSP in Brazil and Uruguay, while Paolo Sarno, head of Southern Europe at Aviva Investors, will work with CSP on distribution in Spain and Portugal. Cristina Rubio, Pedro Costa Felix, Jorge Benguria and Agustin Mariatti will lead the sales efforts in these markets for CSP.
Jewkes said: “We are delighted to enter into a partnership with CSP, which has a 20-year track record of raising assets in these markets for international asset managers. I believe this arrangement will be transformational in providing Aviva Investors with a footprint to promote our investment capabilities in some of the most exciting markets in the world.”
“As global macro, socioeconomic and regulatory changes continue to accelerate opportunities for international asset managers in the Latin American and Iberian regions, we look forward to bringing our full suite of capabilities to clients in those markets. The combination of growing personal wealth and some of the most forward-looking long-term savings reforms make the region extremely attractive. Our broader credentials as a leader in responsible investment provide us with an excellent platform to partner with early adopters of this philosophy, which we are already beginning to see.”
Daniel Rubio, CEO, Capital Strategies Partners, said: “We are delighted to kick off this project and work with Aviva Investors in some of our markets, which we are confident will be a success. Aviva Investors’ strong investment offering, asset management and insurance heritage and leadership in responsible investing will be very attractive to clients in these markets.”
Jenny Johnson, President and CEO at Franklin Templeton, courtesy photo. Jenny Johnson, President and CEO at Franklin Templeton
Franklin Resources, a global investment management organization operating as Franklin Templeton, announced on February 18th that it has entered into a definitive agreement to acquire Legg Mason, for $50.00 per share of common stock in an all-cash transaction. The Company will also assume approximately $2 billion of Legg Mason’s outstanding debt. The acquisition of Legg Mason and its multiple investment affiliates, which collectively manage over $806 billion in assets as of January 31, 2020, will establish Franklin Templeton as one of the world’s largest independent, specialized global investment managers with a combined $1.5 trillion in assets under management (AUM) across one of the broadest ranges of high-quality investment teams in the industry. The combined footprint of the organization will significantly deepen Franklin Templeton’s presence in key geographies and create an expansive investment platform that is well balanced between institutional and retail client AUM. In addition, the combined platform creates a strong separately managed account business.
“This is a landmark acquisition for our organization that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies,” said Greg Johnson, executive chairman of the Board of Franklin Resources, Inc. “Our complementary strengths will enhance our strategic positioning and long-term growth potential, while also delivering on our goal of creating a more balanced and diversified organization that is competitively positioned to serve more clients in more places.”
Jenny Johnson, president and CEO of Franklin Templeton, said, “This acquisition will add differentiated capabilities to our existing investment strategies with modest overlap across multiple world-class affiliates, investment teams and distribution channels, bringing notable added leadership and strength in core fixed income, active equities and alternatives. We will also expand our multi-asset solutions, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions.”
Joseph A. Sullivan, chairman and CEO of Legg Mason, said, “The incredibly strong fit between our two organizations gives me the utmost confidence that this transaction will create meaningful long-term benefits for our clients and provide our shareholders with a compelling valuation for their investment. By preserving the autonomy of each investment organization, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimizing the risk of disruption. Our clients will benefit from a shared vision, strong client-focused cultures, distinct investment capabilities and a broad distribution footprint in this powerful combination.”
Carol Anthony “John” Davidson, lead independent director of Legg Mason, said, “Today’s announcement marks the beginning of an exciting next chapter for Legg Mason, our investment affiliates and valued clients, who will benefit from a leading global asset manager with the scale to compete and win in today’s markets. I am honored to have had the opportunity to serve as the lead independent director of this dynamic board, and I am truly appreciative of the hard work and dedication of the entire Legg Mason team.”
Nelson Peltz, CEO and Founding Partner of Trian Fund Management, and a Legg Mason director said, “Given the dynamics of today’s rapidly evolving and increasingly competitive asset management sector, I believe this transaction is compelling. In our view, it offers an attractive valuation for Legg Mason’s shareholders. I believe it will also enable Legg Mason’s investment affiliates to remain at the forefront of an industry where scale is increasingly vital to success and to join Franklin Templeton, an organization that I have deep respect for and confidence in.”
Trian Fund Management, L.P. and funds managed by it, which collectively own approximately 4 million shares or 4.5% of the outstanding stock of Legg Mason, have entered into a voting agreement in support of the transaction.
Jenny Johnson added, “This transaction gives us significant scale, addresses strategic gaps and brings greater balance to our business, while positioning us for accelerated growth in the future. We have incredible respect and admiration for the success Legg Mason and its investment affiliates have achieved and we have structured the transaction to ensure that its affiliates have the right mix of independence and support to continue building on their strong track records. Legg Mason’s investment affiliates will be able to leverage Franklin Templeton’s global infrastructure and ongoing investment in technology and innovation, while clients can take comfort in the combined firm’s financial strength and aligned interests.”
Continued Autonomy for Investment Affiliates
Franklin Templeton has spent significant time with the affiliates and there is strong alignment among all parties in this transaction and shared excitement about the future of the company.
James W. Hirschmann, CEO of Western Asset, a Legg Mason affiliate, said, “Western Asset is excited to be joining the Franklin Templeton family, a firm with a long and storied history of proven financial performance and a leadership team and board with decades of asset management experience who value our investment independence and organizational autonomy. Like us, Franklin Templeton understands the importance of culture, teams and core values to achieving outstanding investment results for clients.”
Terrence J. Murphy, CEO of ClearBridge Investments, a Legg Mason affiliate, said, “As part of Franklin Templeton, we are confident that we will retain the strong culture that has defined our success as a recognized market leader in active equities. Their commitment to investment autonomy, augmented by the scale and reach that the combined organization will provide, will allow us to deliver for our existing clients and expand our ability to deliver our investment capabilities in new channels and regions. We are very pleased to join the team at Franklin Templeton and excited about what we can do together.”
Organizational Structure and Parent Company Integration
With this acquisition, Franklin Templeton will preserve the autonomy of Legg Mason’s affiliates, ensuring that their investment philosophies, processes and brands remain unchanged. As with any acquisition, the pending integration of Legg Mason’s parent company into Franklin Templeton’s, including the global distribution operations at the parent company level, will take time and only commence after careful and deliberate consideration.
Following the closing of the transaction, Jenny Johnson will continue to serve as president and CEO, and Greg Johnson will continue to serve as executive chairman of the Board of Franklin Resources, Inc. There will be no changes to the senior management teams of Legg Mason’s investment affiliates. Global headquarters will remain in San Mateo, CA and the combined firm will operate as Franklin Templeton.
After careful consideration, EnTrust Global, a Legg Mason affiliate that provides alternative investment solutions, and Franklin Templeton, jointly agreed that it was in their best interest that EnTrust repurchase its business, which will be acquired by its management at closing. EnTrust will maintain an ongoing relationship with Franklin Templeton. Jenny Johnson added, “EnTrust is an excellent business and we recognize and appreciate their desire to once again become a private company. We have appreciated their collaboration in our discussions and look forward to our ongoing relationship.”
Transaction Details
The all-cash consideration of $4.5 billion will be funded from the Company’s existing balance sheet cash. Franklin Templeton will also assume approximately $2 billion in Legg Mason’s outstanding debt. Upon closing of the transaction, Franklin Templeton expects to maintain a robust balance sheet and considerable financial flexibility with pro forma gross debt of approximately $2.7 billion with remaining cash and investments of approximately $5.3 billion. This transaction is designed to preserve the Company’s financial strength and stability with modest leverage, significant liquidity and strong cash flow to provide ongoing flexibility to invest in further growth and innovation.
This transaction is expected to generate upper twenties percentage GAAP EPS accretion in Fiscal 2021 (based on street consensus earnings estimates for each company), excluding one-time charges, non-recurring and acquisition related expenses.
While cost synergies have not been a strategic driver of the transaction, there are opportunities to realize efficiencies through parent company rationalization and global distribution optimization. These are expected to result in approximately $200 million in annual cost savings, net of significant growth investments Franklin Templeton expects to make in the combined business and in addition to Legg
Mason’s previously announced cost savings. The majority of these savings are expected to be realized within a year, following the close of the transaction, with the remaining synergies being realized over the next one to two years.
The transaction has been unanimously approved by the boards of Franklin Resources, Inc. and Legg Mason, Inc. This transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals and approval by Legg Mason’s shareholders, and is expected to close no later than the third calendar quarter of 2020.
Broadhaven Capital Partners, LLC and Morgan Stanley & Co LLC served as financial advisors to Franklin Resources, Inc. Ardea Partners LP also provided advice. Willkie Farr & Gallagher LLP acted as external legal counsel. PJT Partners served as the lead financial advisor to Legg Mason. J.P. Morgan Securities LLC also served as financial advisor to Legg Mason. Weil, Gotshal & Manges LLP served as lead counsel to Legg Mason and Skadden, Arps, Slate, Meagher & Flom LLP served as special counsel to Legg Mason. Dechert LLP served as legal counsel to EnTrust Global.
Pixabay CC0 Public Domain. Jupiter Fund Manager compra Merian Global Investors por 469 millones de euros
Jupiter Fund Management is to acquire Merian Global Investors for £370 million ($476.5 million), in a deal that will boost its fixed-income and emerging markets capabilities.
A jointnews release said the deal, which is expected to complete July 1, will add £22.4 billion to Jupiter’s AUM, for a combined assets under management of £65.2 billion.
The 100% acquisition will be financed through the issue of new Jupiter shares to Merian shareholders. Following completion of the deal Merian’s largest shareholder, TA Associates Management, will own about 16% of the enlarged firm and key Merian management will own about 1%.
The deal is subject to Jupiter shareholder and regulatory approval. Once completed, the firm will operate as Jupiter.
Merian’s investment team will join Jupiter, according to the release.
“The addition of Merian is compelling for all stakeholders. With this acquisition, our business will benefit from an increased capacity to attract, develop and retain high quality talent, backed by further investment in our platform and technology. In turn, we will be able to offer a wider choice of strongly performing active investment strategies to our clients, while shareholders will benefit from a highly earnings accretive deal delivered through substantial cost synergies,” Andrew Formica, CEO of Jupiter, said in the news release.
Mark Gregory, CEO of Merian, added: “Jupiter is a great strategic and cultural fit with our business. It has a market leading brand with a clear focus on high conviction, active asset management which is entirely consistent with our own. I believe the enlarged business will be more strongly positioned to offer greater choice and investment performance to clients and continue to meet clients’ ever-evolving needs.”
The U.S. stock market rallied into the third week of January then dropped sharply at month end as fears that the spreading coronavirus (nCoV) would reduce growth in China and eventually other countries. U.S. stocks closed flat for the month while Chinese markets were closed for the final week of the Lunar New Year. Earnings releases are in full swing and the U.K. has left the EU. The world waits.
Our firm’s research theme for the next decade is saving Planet Earth, helping people and creating potential…saving the planet by reducing/eliminating plastic and focusing on the impact of climate change and on companies that are finding new solutions. Renewables, including wind, solar, battery storage and building infrastructure for transmission are the areas we want represented by some portfolio companies.
One of the Gabelli stock ‘picks’ in BARRON’s 2020 Roundtable Part 3 published in the January 27 issue that is directly impacting climate change is Orange, Connecticut based sustainable energy company Avangrid Inc. (AGR). AGR has a regulated utility business with a growing $10 billion rate base that provides a tailwind to earnings and a rising dividend.
The second part of AGR is the Avangrid Renewables business, a major factor in solar and wind that owns and operates a portfolio of renewable energy generation facilities across America. In December, Connecticut awarded an Avangard partnership a 20-year contract to provide 14% of the state’s electricity with renewable energy. Spanish utility Iberdrola (IBE), owns over 250 million of the 310 million AGR shares outstanding and is a potential catalyst for an M&A deal.
Another Gabelli BARRON’S ‘pick’ is clean energy project operator NextEra Energy Partners (NEP), which is also an attractive opportunity in renewables.
We feel there should be a greater need for companies to allocate capital in the new year, as opportunities present themselves, there will be a headwind for more deal activity.
Column by Gabelli Funds, written by Michael Gabelli
__________________________________
To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:
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.
Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476
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.
Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155
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.
Oliver Röder, courtesy photo. Erste AM nombra a Oliver Röder nuevo director de Ventas Institucionales
Erste Asset Management has appointed Oliver Röder as head of institutional sales, since the beginning of February 2020.
He is now responsible for all institutional sales activities across Erste Asset Management.
This appointment brings the Institutional Sales team of Austria, Germany, and International under his direction. He is also in charge of managing and coordinating the according activities in the Central and East European countries. In this position, he reports to Wolfgang Traindl, member of the Board of Directors of Erste Asset Management.
Heinz Bednar, CEO: “Oliver Röder has convinced us with his strategic ideas about ways of expanding the institutional business of Erste AM further. His international track record and his years of experience are crucial elements of success for this business segment, which is very important to us.”
Oliver Röder (47) has been Director of Erste AM in Germany since 2016 – a position which he will maintain. Previously, he worked for other international houses in International Sales. He holds a degree in Bank Management and earned an MBA from Ashridge Management College. He is member of Deutsche Vereinigung für Finanzanalyse und Asset Management e.V. (DVFA; German Association for Financial Analysis and Asset Management) and Certified Investment Analyst (CIIA).
Pixabay CC0 Public Domain. Amizut termina el año con el mejor resultado de su historia y eleva su objetivo para 2020
Based on the first preliminary results on the Group’s activities and the first forecasts on 2019, Azimut expects to close 2019 with the best consolidated net profit in the history of the Group, ranging between 360 and 370 million euros.
The cumulative dividends distributed to shareholders over the 5 years of the plan, including what will be proposed to the BoD convened for March 5, 2020, will be at least 7,8 euros per share. As a consequence, the average payout throughout the plan will be greater than 90%, well above the envisaged target, resulting in a cumulative average yield of 44%. With this latest result, all targets indicated in the 5 year business plan have been achieved for the third consecutive time since 2004.
In 2019 the Group recorded 4.600 million euros of Net Inflows, bringing total assets to exceed 59.000 million euros (vs. the 50.000 million euros plan and + 16% compared to the end of 2018). Furthermore, the target set for International AuM at the end of the plan has also been fully achieved and exceeded.
In fact, at the end of 2019, the AuM from non-domestic businesses reached 29% of Total, against the 15% budgeted in the plan. EBITDA from the international operations in 2019 is estimated to be between 50 and 55 million euros (ca. + 53% compared to 2018).
Thanks also to the above results, the Group estimates under normal market conditions, to achieve a net profit of at least 300 million euros in 2020, raising its initial range of 250-300 million euros indicated during the Investor Day of June 4, 2019. This positive delta is expected to be reached thanks to growth across all business lines: distribution in Italy, alternatives and International activities.
The alternatives project continues to progress well. After the success of the largest Italian event dedicated to private markets (Azimut Libera Impresa EXPO), net inflows on products launched in the last quarter of 2019 stands at c. 450 million euros, bringing the total AuM in the private markets space to exceed 1.000 million euros.
Pietro Giuliani, Chairman of the Group, comments: “In 2019 we generated a net weighted average performance to clients of c.+ 8.5%, above the Italian industry. There is no better way to celebrate Azimut’s 30 year anniversary: all targets of our latest five-year business plan have been successfully completed for the third consecutive time.
We expect 2019 to close with a net profit between 360 and 370 million euros, marking a new historical record for the Group. Also our share price closed 2019 with a record: + 128% performance during the year, making Azimut the best performing stock amongst FTSE MIB members. The trust we receive every day from customers and shareholders makes us confident to continue with the same pace also in 2020, and achieve a net profit of at least 300 million euros.
Our international business has seen another sharp increase in 2019, with AuM accounting for almost 30% of total assets and an expected EBITDA of 50 to 55 million euros. Lastly, we are satisfied with the launch of the first products in the private markets area, democratizing this asset class and allowing us in just a few months to exceed € 1 billion of AUM in this segment.”
