Foto cedidaLázaro de Lázaro. Lázaro de Lázaro to Lead Santander AM's European Hub, While Luis García Izquierdo Will be in Charge of LatAm
Santander Asset Management is changing its organizational structure. As confirmed by Funds Society, the firm has created two hubs, with the aim of strengthening coordination efforts as well as relationships with banks and local customers.
In charge of the European hub will be Lázaro de Lázaro, and Luis García Izquierdo is to lead the Latin American one.
Lázaro de Lázaro was until now responsible for the Santander AM in Spain position that will go to Miguel Ángel Sánchez Lozano, until now responsible for Structured Products of Santander Spain.
Looking for a new CIO
Gonzalo Milans del Bosch, until now the global CIO, is leaving the firm for personal reasons and his position will be temporarily co-filled by Jacobo Ortega Vich, until now CIO of Santander Spain, and Eduardo Castro, CIO in Brazil, until a full time replacement is appointed.
Foto cedidaOlivia Watson and Jess Williams. Courtesy photo. Olivia Watson and Jess Willliams Bolster Columbia Threadneedle's RI team
Columbia Threadneedle Investments appoints Olivia Watson and Jess Williams for its Responsible Investment team. With the appointments, they have 12 investment professionals in the unit. They will report to Chris Anker, lead analyst for the EMEA region.
Iain Richards, global head of Responsible Investment said: “Investors are increasingly seeking to capture the value of effective ESG integration and understand the wider consequences of their investment choices. Olivia and Jess both join with strong experience of sustainable finance and knowledge of social and ethical issues, and will help us to continue to meet our clients’ needs through providing valuable support to our portfolio managers.”
Olivia Watson, who has been hired as senior analyst, will be in charge of responsible investment research and engagement on environmental, social and governance issues, as part of the company’s stewardship activities in EMEA.
Jess Williams, hired as portfolio analyst, will be responsible for research and analysis on client portfolios from a responsible investment point of view. She previously worked at S&P Global Ratings, where she developed sustainable finance products. She also worked on the Global Innovation Lab for Climate Finance at the Climate Policy Initiative in Venice.
Watson joins Columbia Threadneedle from the Principles for Responsible Investment, where she was responsible for overseeing the development of collaborative investor initiatives and investor engagement on environmental and social issues. Prior to that, she worked in corporate sustainability consultancy and in corporate governance research.
Columbia Threadneedle’s responsible investment team supports portfolio manager through oversight of stewardship relating to environmental, social and governance (ESG) issues in their portfolios, as well as portfolio construction through the identification of investment opportunities aligned to eight thematic outcome areas.
Photo: William Wan
. Merger Arbitrage Update for November 2018
Merger arbitrage performance in November was bolstered by deals that received key regulatory approvals, including “green lights” from the Chinese regulatory authority. Specifically:
Rockwell Collins (COL-NYSE) and United Technologies received antitrust approval from China’s State Administration for Market Regulation (SAMR) for UTX’s acquisition of Collins. This was the last remaining hurdle for the deal after clearing U.S. antitrust in October. The deal was subsequently completed on November 27 and Collins shareholders received $93.33 cash and 0.37525 shares of United Technologies common stock for each share, or about $30 billion.
Aetna, Inc.’s (AET-NYSE) agreement to be acquired by CVS Health received a number of state regulatory approvals in November, culminating with New York Department of Financial Services on November 26. The U.S. DOJ approved the merger in October after the companies agreed to sell Aetna’s Medicare Part D business, the only area in which the two companies competed. The deal closed on November 28, and shareholders of Aetna received $145 cash and 0.8378 shares of CVS common stock for each share, or about $71 billion.
Twenty-First Century Fox (FOX-NASDAQ) shares traded higher after Disney received Chinese SAMR approval for its acquisition of Fox. The deal remains subject to Brazilian regulatory approvals which is expected early in the first quarter of 2019. Under terms of the agreement Fox shareholders will receive $38 in cash and Disney shares, as well as one share of New Fox, which will own Fox’s broadcast and cable assets.
Some new deals announced in November included:
ARRIS International (ARRS-NASDAQ), a manufacturer of communications equipment and related products, agreed to be acquired by CommScope Holding for $31.75 cash per share, or about $7 billion.
Athenahealth, Inc. (ATHN-NASDAQ), a provider of cloud-based software used to manage electronic health records and medical practices, agreed to be acquired by a consortium led by Veritas Capital for $135 cash per share, or about $6 billion.
BTG plc (BTG LN-London), a medical technology and pharmaceutical licensing company, agreed to be acquired by Boston Scientific for £8.40 cash per share, or about £3.3 billion.
We continue to find attractive opportunities investing in announced mergers and expect future deal activity will provide further prospects to generate returns uncorrelated to the market.
Column written by Michael Gabelli from Gabelli Funds
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.
CC-BY-SA-2.0, Flickr. The US Dollar Should Weaken As Global Growth Converges Again In 2019
The US dollar was a clear winner in 2018 as it was one of the very few assets to register gains. Exceptionally strong US economic growth, political upheavals in Europe and the emerging markets and escalating trade tensions have buoyed the greenback this year.
Softer data in Europe brought on fears of a slowdown in the region and distanced the possibility of seeing a rate hike by the European Central Bank. In Italy, the coalition government of the League and the 5-Star Movement brought forth a budget plan that defied the European Commission and riled investors who feared that an increase in Italian debt would send ripple effects across markets. The pound sterling also weakened against the dollar in the face of the never-ending negotiations to reach a Brexit agreement. Finally, higher interest rates and the trade war between US and China especially affected emerging market currencies, as a more severe slowdown in China would have a direct impact on their economies.
We thought the dollar would weaken in 2018 but we had not foreseen the protracted trade war negotiations nor the outcome of the Italian election. 2018 has been a year of diverging economies, with a striving US on one side and the rest of the world on the other. We think this should change in 2019 as the fiscal stimulus fades in the US and the rest of the world recovers.
The slowdown in Europe was partly due to the normalisation of unsustainable high growth rates in 2017 and temporary factors such as the decline in the auto sector. The implementation of the Worldwide Harmonised Light Vehicles Test Procedure in September may well help to cut carbon emissions, but it also created problems in the production, distribution and storage of vehicles. Nevertheless, Europe is still growing above trend and these temporary factors should dissipate going forward. Furthermore, base effects will become easier and the improvement in the labour market should continue to support domestic demand.
With respect to political risks, Italy cannot go too far in its fiscal deviation as the markets will push yields higher, going against Italy’s own interests. It is precisely for this reason that they have already brought the deficit target down to 2.04%, almost in line with the requirements of the EC. As for the UK, there seems to be a multitude of possible outcomes, including an early general election or even another referendum. But whatever the outcome, eventually the UK will have to reach an agreement as a no-deal Brexit would be too disastrous for its economy.
Regarding emerging markets, we think China will resort to fiscal stimulus policies should the growth rate drop below 6% and, even though the ride could still be rocky, a trade agreement between the US and China should be reached in the best interest of all parties.
Market sentiment towards all these risks is already very negative and a gloomy scenario seems to be priced in. A positive outcome for any one of these issues, therefore, would probably see a downward movement in the dollar. Ultimately, the most important factor for currency movements is the shift in interest rate differentials. The market is only pricing in 40 bp of hikes by the ECB over the next two years, whereas the Fed is nearing the end of its hiking cycle. Consequently, there is ample room for a hawkish surprise on behalf of the ECB.
The main risk to this view is that the dollar may only start to depreciate during the second half of 2019, as political tensions may take time to resolve themselves and the European parliamentary elections in May could prove to be yet another hurdle.
Column by Jadwiga Kitovitz, CFA, Head of Multi-Asset Management and Institutional Clients of Crèdit Andorrà Group. . Crèdit Andorrà Financial Group Research.
CC-BY-SA-2.0, FlickrPhoto: Lowes Atlanta Hotel. Analyzing Women's Role in the Asset Management Industry
Financial Advisor magazine invites all advisors interested in women and wealth to attend its 5th annual Invest In Women conference, a national event that explores some of the most thought-provoking issues that face advisors and their female clients.
The 2019 conference will be held April 29-May 1 at the Loews Atlanta Hotel in Atlanta, Ga., and will feature a wide range of speakers on topics that include next-gen advisors, diversity, impact investing, executive women, estate planning, behavioral finance, divorce, client relations, marketing and much more.
“FA’s goal with Invest In Women is to provide a compelling, national forum for advisors to engage on topics that are particularly relevant to women,” said FA’s Executive Editor Dorothy Hinchcliff and Director of Conferences. “IIW has continued to grow each year, and we expect record attendance at our upcoming conference.”
David Smith, FA’s Group Publisher and Cofounder, said he is extremely pleased with the support sponsors have given to Invest In Women. “Leading firms such OppenheimerFunds, Dimensional Fund Advisors and TDAmeritrade, to name only a few, see the value in conveying the message that women advisors and clients are a force that shouldn’t be ignored. The fact that so many of our sponsors are capable of sharing their research and expertise to our content is confirmation of their commitment to the cause.”
Keynote speakers include:
Dr. Bernice King, the daughter of Martin Luther King Jr. and Corretta Scott King. As CEO of the King Center in Atlanta, she has continued to advance her parents’ legacy.
Lara Logan, a 60 Minutes journalist and war correspondent who faced harrowing experiences covering some of the world’s most dangerous places and who is known for her personal integrity.
Lauren Simmons, who has been dubbed the real-life “Fearless Girl,” who became the youngest and only full-time female trader at the New York Stock Exchange. She’s also the second African American woman in history to work as a trader on the floor.
Dr. Laura L. Carstensen, cofounder and director of the Stanford Center on Longevity at Stanford University. She has amazing insight on how we can make later life a time of great happiness.
Christina Boris, vice president and client research director at OppenheimerFunds, who is the architect of The Generations Project for the firm. Her current studies include advisor sentiment about wealth transfer, next-generation financial advisory practices, the shifting generational needs of high-net-worth families.
Marlena Lee, co-head of research for Dimensional Fund Advisors. Lee works closely with Dimensional’s clients on a variety of investment-related initiatives and questions. Previously, she worked as a teaching assistant for Professor Eugene Fama while she earned her Ph.D. in finance at the University of Chicago Booth School of Business.
FA’s Inside Retirement conference will immediately follow the Invest In Women conference. In its 10th year, Inside Retirement focuses on the changes clients face as a result of increases in longevity and how that impacts advisory practices. It also provides insight on issues for advisors who provide advice to small businesses on retirement plans, such as 401(k)s.
The events will also offer pre- and post-conference workshops. On April 29, immediately before the Invest in Women conference, FA has assembled a pre-eminent team to answer your key questions on planning for a sale of your practice. Following Invest in Women on May 1 and leading in to Inside Retirement, the ever-popular Susan Bradley, founder of the Sudden Money Institute, will present the workshop “In The Client’s Shoes.”
Courtesy photo. Mexico's Largest Pension Fund Changes CEO
The Board of Directors of Afore XXI Banorte has appointed Felipe Duarte Olvera as their new CEO, position he started on Monday, December 10. He replaces Juan Manuel Valle Pereña, who for almost two years led Mexico’s largest pension fund.
According to a statement from the firm, “the appointment is made as an agreement between the partners to promote and strengthen the professional management of Afore XXI Banorte, for the benefit of savers and customers, as well as investors and employees… The mandate for the new CEO is to protect and increase worker’s savings, while generating value for investors.”
Duarte Olvera had been working since January 2016 as Deputy CEO of Infrastructure and Energy at Grupo Financiero Banorte. Between 2013 and 2015, also within the Banorte Financial Group, he was Deputy CEO of Customer Experience. Previously, he was the Undersecretary of Transportation of the Ministry of Communications and Transportation (SCT), Undersecretary of Competitiveness and Regulations of the Ministry of Economy, and Technical Secretary of the Mexican President’s Economic Cabinet.
He holds a Master’s Degree in Business Administration from Harvard Business School; He holds a degree in Administration and a Public Accountant from the Instituto Tecnológico Autónomo de México.
CC-BY-SA-2.0, FlickrCourtesy photo. Investec Miami Conservation Awareness: Investec AM's Commitment with Art And Protecting Wild Life
On December 3rd, Investec Asset Management, preparing for the Art Basel season in Miami, gathered 80 distinguished members of the asset management industry coming from private banks, family offices, and distributors in Miami for their Investec Miami Conservation Awarness. An event featuring David Yarrow, at the InterContinental Hotel.
David Yarrow is a British fine-art photographer, conservationist and author. He took up photography at an early age and as a 20 year old and some of his pieces have received the highest bid for piece by a living photographer. Philanthropy and conservation are central to David Yarrow’s passion to document the animal and human world in a fresh and creative way.
The event actutioned a piece of art for the benefit of the Tusk Trust, an NGO with a mission to amplify the impact of progressive conservation initiatives across Africa. “For almost thirty years, Tusk has supported forward-thinking and successful conservation intervention in Africa. From the plains of the Serengeti to the rainforests of the Congo Basin, we’re working towards a future in which people and wildlife can both thrive across the African continent.” Says Investec.
Pixabay CC0 Public DomainPhoto: Dave McBee CC0. SEC is Still Undecided About Bitcoin ETFs While Bipartisan Bills Look to Strenghten US' Position
Two US congressmen have introduced pieces of legislation designed to prevent the manipulation of cryptocurrency prices as well as ensuring the US becomes a leader in the crypto sphere.
Democratic Representative Darren Soto of Florida and Republican Representative Ted Budd of North Carolina have introduced The Virtual Currency Consumer Protection Act of 2018 and the U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018. The bills are designed to protect retail investors from price manipulation while also positioning the US at the forefront of the developing industry.
In a joint statement eleased on December 6, the two congressmen emphasized the “profound potential” of cryptocurrencies and blockchain in their ability to drive economic growth.
“Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth. That’s why we must ensure that the United States is at the forefront of protecting consumers and the financial well-being of virtual currency investors, , while also promoting an environment of innovation to maximize the potential of these technological advances” the congressmen stated.
One bill directs the Commodity Futures Trading Commission to describe how price manipulation could happen in virtual markets, then recommend regulatory changes. Another seeks to keep the U.S. competitive in the global industry. They ask the Commodity Futures Trading Commission to come up with recommendations.
On the same day, the U.S. Securities and Exchange Commission (SEC) posted an update regarding the approval process for a rule change proposal for the allowance of a bitcoin exchange traded fund (ETF).
The ETF in question is the VanEck SolidX Bitcoin Trust, created in a team up between money management firm VanEck and blockchain company SolidX. The attempt is VanEck’s third at creating a bitcoin ETF. In the update, the SEC said it was delaying its decision until Feb. 29, 2018.
“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change,” Eduardo A. Aleman, assistant secretary in the SEC, said in the release.
The last time the SEC postponed the decision on the VanEck SolidX bitcoin ETF, over $9 billion was wiped off the value of bitcoin.Back in the summer, Jan van Eck, chief executive officer of VanEck said: “I believe that bitcoin has emerged as a legitimate investment option, as a type of ‘digital gold’ that may make sense for investors’ portfolios,” since then bitcoin has lost nearly half of its value.
CC-BY-SA-2.0, FlickrPhoto: Tina Nord / Pexels CC0. Why The Energy Stock Selloff May Be Overdone
Unless oil prices collapse, energy stocks now appear to be cheap, Russ Koesterich, CFA, Portfolio Manager for the BGF Global Allocation Fund explains.
While much ink has been spilled this year on the rout in emerging markets, and, more recently, the fall from grace of technology stocks, natural resource shares are actually the worst performers year-to-date. The S&P Energy Sector Index is down more than 5%, underperforming the S&P 500 by approximately 900 basis points (bps, or nine percentage points).
More interestingly, although oil prices have dropped sharply in recent weeks, they have not collapsed, unlike in early 2016. West Texas Intermediate Crude (WTI) is flat year-to-date, but the global benchmark Brent is still up 6%. This suggests that either the recent collapse in energy shares looks overdone or oil prices have further to fall. Consider the following:
1. Based on price-to-book (P/B) the energy sector is now trading at the largest discount to the S&P 500 since at least 1995 (see Chart 1). Energy stocks are currently trading at roughly a 50% discount to the broader market.
2. The sector also appears unusually cheap on an absolute basis. At less than 1.7x earnings, the current valuation is the cheapest since early 2016 and is in the bottom 5% of all observations going back to 1995.
3. As you would expect, the valuation of the energy sector tends to move (roughly) in tandem with oil prices. When oil prices are lower, the sector’s relative value versus the market also tends to be lower. Since 1995, this relationship has explained approximately 20% of the relative multiple of the sector. Based on oil prices at $60/barrel, history would suggest that the sector should be trading at a 15% discount to the market, not a 50% one.
Valuations hard to justify
As I’ve discussed in many previous blogs, value is a poor market timing tool. Neither cheap relative or even absolute valuations guarantee a bottom. The comparisons against both the broader market and oil prices could simply mean that the S&P 500 and/or oil prices might be too expensive, rather than energy shares too cheap. That said, both the market and oil would have to fall a significant amount to justify today’s sector valuation. As a simple example, if the historical relationship between oil prices and relative valuation were too hold, oil prices could fall to $40/barrel, roughly where they bottomed in 2016, and the energy sector would still appear underpriced.
Finally, there may be another reason to consider raising the allocation to energy shares. Historically, energy stocks have been more resilient than the broader market during periods of rising interest rates and/or inflation. If part of what has dislocated the market this year is the prospect for higher rates and an overheating U.S. economy, energy stocks seem a logical hedge. All of which suggests that for investors sifting through the rubble searching for bargains: Consider U.S. energy companies.
Build on Insight is written by Russ Koesterich, CFA, is a Portfolio Manager for the BGF Global Allocation Fund at BlackRock
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57% of Americans say they prefer a partner who provides financial security more than “head over heels” love. The survey conducted with over a thousand mass-affluent respondents shows that this preference is true for men and women, whereas today’s youngest generation, Gen Z, is the only generation to prioritize love over money.
The report also finds that Americans are contributing more annually to their savings and investments, than they spend in a year on their mortgage, children’s education and travel.
However, as Aron Levine, Head of Consumer Banking & Merrill Edge while explains, “While an endless pursuit for financial security may be prompting Americans to save at record rates, it’s clear that saving does not mean planning.” The majority of respondents say they have no monetary goal in mind when it comes to many major life milestones, including having a baby (67 percent), getting married (64 percent), sending children to college (54 percent), and putting a down payment on a house (50 percent).
Could emerging technologies be the solution to these planning shortfalls?
Respondents are increasingly embracing artificial intelligence (AI) in their financial lives, with the majority already comfortable with AI providing financial guidance, managing day-to-day finances and making investments. And, nearly half of Americans admit social media impacts their finances on a daily basis, including their spending habits, budget, and savings.
Merrill concluded that many Americans are clearly in need of well-defined plans to help pursue their goals with more autonomy and confidence.
