Think twice about banks
Since interest rates around the world began to rise in early 2022, the banking sector has seen something of a resurgence in investors’ minds. Underpinning this is the, perhaps simplistic, notion that rising rates are great news for banks whose return on assets (loans) rise as rates rise while their primary cost of funding (deposits) […]
ChatCB – Artificial Intelligence and Convertible Bonds
The concept of Artificial Intelligence (AI) has been around for a while, but is it finally ready to be the Next Big Thing? Over the last 12 months, the release of a large language model to the public (ChatGPT) and a material uplift in Q2 2023 guidance from chipmaker Nvidia based on demand from AI […]
Japan – Back in Vogue
For the first time in my 20-year career, I feel like the cool kid in town. Suddenly, almost everyone wants to know what I think about Japan; about the new Bank of Japan Governor, the Yen, the Tokyo Stock Exchange’s (TSE) focus on low valuation stocks, about what companies I think Warren Buffett will buy […]
A Capitalist Coronation
On May 6th, as the world switched on their live-streams and settled in for the show, I was one of the fortunate few who got up bright and early, and walked through the brisk May air to the centre of town to see the event in person. The crowd buzzed in anticipation of the arrival […]
Attractive Asymmetry in Asian Convertible Bonds
Asian stock markets have presented an opportunity along with a challenge for investors. The region offers some of the highest economic growth globally and includes large countries with populations that are moving steadily upwards into the middle-class. Also, in terms of relative stock market valuation, the combination of potential dollar weakness and low-price multiples makes […]
Redwheel Convertible Bonds Quarterly Issuance Radar
As anticipated, the first quarter of 2023 offered a marked increase in new issuance in the convertibles market, which presented itself across many sectors with a tilt towards Investment Grade issuers. The majority of the Convertible bonds (CBs) coming to market in 2023 have a feature that has been absent for many years: a meaningful […]
Changing of the Guard: Re-shoring to Drive a Manufacturing Resurgence
Over the past decade we have seen more investment in asset-light innovation and technology than in any previous business cycle. The world is now awash with food delivery apps and online gaming and video streaming services. This investment has generally been driven by low inflation and a low cost of capital. However, we believe that […]
Markets can no longer be Fed their quantitative easing addiction
Ernest Hemingway famously wrote in The Sun Also Rises – “How did you go bankrupt?” “Gradually, then suddenly”. Silicon Valley Bank (SVB) had been a poor stock performer for over a year until Thursday 9th March. Then within 24 hours it had gone bankrupt, the shares halted on Friday afternoon, 10th March and the bank […]
The twilight of China’s population
‘While the demographic shift is often presented as a crisis for China, we see immense opportunities in these challenges.’ China’s population declined last year, the first annual contraction since 1961, amid a Covid-induced sharp decrease in new births and long-term structural factors. China has followed a similar trajectory to many developing countries as having an […]
Bank on it: The case for investing in banks
In 2001, Polaroid filed for bankruptcy. Despite the many scientific breakthroughs of its visionary founder Edwin Land, and despite creating and dominating the instant photography market, Polaroid was blindsided by the inexorable rise of emerging technologies, most notably digital photography, with which it struggled to compete. This, truly, captures the risk of corporate obsolescence: the […]