Market Recap 11/10/2020

Download PDF United States This week the S&P 500 index experienced its biggest weekly gain in three months, going up by 3.84% and closing at 3,477.13, slightly more than the +3.27% characterizing the Dow Jones that finished its rally at 28,586.90. Generally speaking, volatility appears to have decreased across the market with the VIX going down by roughly 10%, reflecting a positive sentiment of investors who looked rather optimistically at new potential treatments for the Read more…

Value in the land of the rising Sun: Warren Buffett’s contrarian bet on Japanese trading houses

Download PDF Introduction In the past year Berkshire Hathaway slowly built a 5% stake in each of the 5 most important trading houses in Japan. The overall size of the transaction is ¥670bn ($6.3bn) and it was backed by a surprising ¥625.5 billion issuance of yen-denominated bonds made in September 2019. What is even more interesting is the timing of the acquisition, as usual, contrarian to the trend of fleeing the Japanese stock market after Read more…

Gaming 101: A Tutorial of the Gaming Industry

Download PDF Introduction In this article we are going to provide an overview of the gaming industry and its trends starting from the more traditional console and pc which are moving toward the cloud, to the newest trends in the mobile gaming, such as hyper-casual games, to then finish with the new possibilities enabled by eSports and streaming.   The More Traditional Gaming: Console/PC and the Push Toward Cloud Gaming Ever since the early 1950s, Read more…

Devon and WPX merger: kickstarting a new M&A wave in the Permian Basin

Download PDF Devon Energy Corporation (DVN:NYSE) – market cap as of 9/10/2020: €3.9bn WPX Energy Inc. (WPX:NYSE) – market cap as of 9/10/2020: €3.0bn   Introduction Following months of global lockdown and a fierce oil price war hitting highly indebted American oil producers, a new wave of consolidation in the oil sector has begun. After Chevron’s takeover of Noble in July, another stock-for-stock deal was announced this week. On the 28th of September, US oil Read more…

A short dive into SSAs – a European perspective

Download PDF Introduction The supranational, sub-sovereign and agency (SSA) market sits on a highly niche portion of the general bond market, having composed of sovereign government issuers and private credit borrowers. The issuer landscape is made up of international institutions that have differing funding requirements, such as development banks, infrastructure developers, export creditors, shipping entities, etc. These institutions generally have in common of being mandated with social or economic public policy initiatives. The issuer structure could Read more…

Quantitatively evaluating ESG: a new paradigm?

Download PDF Introduction In the business world, there are many words, some have strong meanings, others are buzzwords. Does the word “ESG” have a material impact in the asset management world, or is it just used as a marketing ploy? In this article, we seek to evaluate this question globally (with a focus on Europe), as well as explain how policies related to ESG can be implemented within the industry. In addition to organizing previously Read more…

Has Illumina found the Holy Grail?

Download PDF Illumina, Inc. (ILMN: NASDAQ) – market cap 01/10/2020: $45.5bn Grail – privately held   Introduction On September 21st, 2020, the biotech pioneer Illumina agreed to buy the cancer screening start-up Grail in a $8bn deal. Illumina will pay $3.5bn in cash and $4.5bn in common stock to finance the acquisition. It will use cash directly from its balance sheet along with nearly $1bn in debt or equity financing. As part of the deal, Read more…

Market Recap 04/10/2020

Download PDF United States Last week the S&P 500 went up by 0.44% and closed at 3,348.44, whilst Dow Jones registered a weekly gain of 1.17%, finishing at 27,682.81. Hopes for another coronavirus-relief bill contributed to the recovery of the market after having four consecutive weeks of bearish trend. The NASDAQ composite closed at 11,075.02, down by 0.08% week on week. Apple and Tesla shares experienced losses by more than 3% and 7%, respectively. Volatility Read more…

Cross-currency basis – an omen of a funding crisis. The case of COVID-19

Download PDF   Two years ago, in our article Dollar repatriation? Different story told by cross-currency swap, we have looked into the 2018 environment of the cross-currency basis market. This year has brought about a major funding crisis and that caused this topic to be worth revisiting since COVID-19 brought about significant changes in the dynamics of the trading of this instrument.   Introduction Some of the most well-known simplifying assumptions of the economic states Read more…

Introduction to Leveraged ETFs

Download PDF   INTRODUCTION Nearly 2 years ago, we wrote our article titled “Investing in the ETF Era”, describing Exchange Traded Funds and their ever-expanding popularity and role in the world of finance (formulating a useful introductory reading to the world of ETFs). This trend hasn’t changed ever since then, and it can even be said that it’s accelerating with the large inflow of retail investors to the US stock market this year. This comes Read more…

Is the IPO dead?

Download PDF   Introduction Bullish tech valuations have companies flocking towards stock exchanges to make their debut on public markets. The IPO market is hot according to data from Zephyr, which says 53 companies worldwide went public in September1, a 331% increase compared to the same time last year. 22% of those were tech companies forming an ever-expanding list of big names such as Snowflake, Unity and Palantir. Amidst this flurry of new listings, tech Read more…

A tale of national consolidation: CaixaBank’s merger with Bankia

Download PDF CaixaBank (MCE: CABK.MC) – market cap as of 2/10/2020: €10.3bn Bankia (MCE: BKIA.MC) – market cap as of 2/10/2020: €3.55bn   Introduction On the 18th of September, CaixaBank, a Spanish financial company, agreed to acquire in an all-share deal Bankia, a Spanish bank, valuing it at €4.3bn, a 36% premium with respect to the bank’s closing price on the 3rd of September. The joint group, with more than 20m customers and €664bn in Read more…

Tail wind for tail-risk hedge funds

Download PDF Introduction Tail-risk hedging strategies were once again on investors mouths, following the March 2020 drawdowns. April 2020 headlines were dominated by tail-risk hedge funds performance numbers and tenfold returns were not uncommon. By mainly incorporating complex option-based and CDS strategies, the funds look to minimize portfolio drawdowns in most volatile market scenarios and provide protection against “fat tails”. Its proponents claim it’s a necessity, while the other group treats it as an unnecessary Read more…

SPACs: The IPO Killer?

Download PDF Introduction On July 17th 2020, in the midst of severe market volatility, Bill Ackman, the famed activist investor, raised the largest SPAC in history. With an IPO of $4bn, Pershing Square Tontine Holdings is just one of the many large SPAC fundraisings that have been conducted this year. With many investors clamoring for the use of SPACs over the traditional IPO process, we at BSIC think it is imperative to understand what SPACs Read more…

Market Recap 27/09/2020

Download PDF   United States Last week the S&P 500 went down by 0.63% and closed at 3,298.46, whilst Dow Jones registered a weekly loss of 1.75%, finishing at 27,173.96. These figures represent the fourth straight weekly fall for both indexes, the longest losing streak in over a year. Gloomy prospects for the growing cases of coronavirus, new lockdown measures, and disappointment with the lack of economic stimulus – all contributed to the bearish tendency Read more…