Category Archives: investment climate / big picture

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Why I stayed away from REITs until now + new research report

Real estate investment trusts have been a favored asset class of many due to enabling property ownership without enslaving oneself with mountains of debt and without betting just on one horse. Other factors like liquidity, the ability to sale fractions of your ownership and often great shareholder returns have been other arguments. I was avoiding them on purpose – but there’s a sub-sector that could be interesting just right now.

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Why I am skeptical about the “safe copper bet”

Who hasn’t heard of it, yet? The price of copper, together with the respective miners, can only see one way: up, up and upper! This thesis is based on the ongoing electrification of our society. Where there is electricity, copper is needed. More electricity demand = more copper demand, right? What sounds plausible, has some weak points to it. Actually, I am even skeptical that this will play out in the way that the majority thinks, at the very least in the short to medium term.

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Update to my first silver Weekly + new research report

Almost exactly a year ago I published a Weekly with the question whether it was the right time back then to buy silver. I rather referred to silver in physical form, respectively via ETFs which hold it in physical form, as I had difficulties in finding an investable stock of a producer that fit my strict quality filter. This industry is still a mess, as many miners are actively destroying shareholder value and / or are having difficulties with their costs, but also declining reserves.

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Invest in businesses with net cash or net debt?

During the last one and a half decades, it nearly didn’t matter to look at a company’s balance sheet. The reason was quasi non-existent interest rates – a historically unprecedented scenario, not only for the younger generation. Hence, it is no wonder that those who held too much cash in their books even got punished by not receiving any income on their deposits. On the other hand, debt-hungry entities got subsidized. However, the winds have changed. Interest rates are up dramatically. What are the consequences?

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A silver lining for Argentina? A look at YPF + new research report

Argentina is mainly known as a nation being in perpetual crisis mode. Besides beef, wine and tango, among the first thoughts that likely come to one’s mind are debt, economic hardship and hyperinflation. Needless to say that in such an environment you won’t find a booming economy. However, many Argentine stocks or those with a vast exposure to this market, have been rising over the last months. Is a (massive) turnaround in sight?

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Deep Dive into Offshore Energy Drilling – coming back from the near-dead + new research report

Not only being one of the most cyclical, but also most hated energy sub-sectors, offshore drilling has been a secure investment grave for the last nearly 15 years. There is barely any investment topic where you could have sunk money more reliably. However, there are really interesting developments that make it worthwhile to risk a look into it, again. Especially, as along as it is perceived a no-go area for ESG-promoters – although offshore drilling tends to be the best choice in this regard.

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Earnings quality the worst in three decades – look at free cash flow!

Operating or net income, adjusted operating or net income, earnings per share (EPS), adjusted EPS and the price to earnings (PE) ratio are commonly used to assess a company’s business results and to value it. They are also often used as headline numbers and proof of performance by the companies themselves. However, there is a rising trend of decreasing “earnings quality” – an indicator that neither the economy is doing pretty well, nor many companies.

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Is the stock of M&T Bank the best pick among regional US-banks?

After the first wave of banking collapses last March and some subsequent calming down, the last few weeks have again been dominated by fears about who’s next. The California based First Republic Bank was the next to fall. Its assets were sold to JPMorgan. Stocks of other regional banks got hammered by even 50% in single trading days, as if this were nothing unusual. The search for the next victim is running. M&T Bank so far held up rather well (and managed to stay under the radar). Is it worth a closer look?

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German Conglomerates: Creating Shareholder Value from spin-offs? + new research report

Decades ago, it was en vogue to create big conglomerates. Size was associated with being a sign of strength, bringing robustness in times of economic distress. However, as “holding discounts” nowadays are holding these companies back from achieving higher valuations, the opposite direction is pursued to lift these “hidden values”. Many German concerns are currently in this process. There is also one particular under the radar opportunity that is too cheap to be ignored.

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US shale production is peaking – what it means for oil and gas prices

You can read everywhere that due to the “coming recession” in Western countries, energy demand is going to take a hit and push prices down. Likewise, you also find headlines that Chinese recovery demand might come in below expectations. It is a foregone conclusion that prices of energy will go down – everything circles around demand. But is this the big picture? What would happen if a massive supply shock took market participants by surprise? You won’t be surprised, but prepared, with this latest Weekly.

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