Tuesday, August 13, 2013

Growth Equity performance to be benchmarked by Cambridge Associates

Cambridge Associates last week announced that it will begin posting quarterly performance benchmarks for “growth equity” as it has matured into its own distinct asset class. Russ Garland mentioned it WSJ’s Venture Capital Dispatch on August 7, 2013 and wrote:

"… The data make clear why growth equity is popular—it outperformed venture capital over the crucial 10-year window by nearly six percentage points. The annual return to limited partners by growth-equity funds for the 10 years ended Dec. 31 was 12.7% versus 6.9% for venture funds.

On top of that, growth equity was much less risky, generating a capital loss ratio of 13.4% compared with 35.4% for venture capital between 1992 and 2008. Significantly, its loss ratio was lower than buyouts’ 15.1%.

Cambridge Associates,
in a market commentary, defines growth equity as a strategy that sits between late-stage venture and leveraged buyouts. It flows to companies that need money for growth, most of them founder-owned with no prior institutional investment and a proven business model. Investors typically take minority stakes and use little if any leverage.

What is Growth Equity?  

Growth equity is one of three asset classes in PE: buyouts,(VC) and growth equity.

Here is what it does/what it’s used for:
  • Capital extension (cushion to reach next milestones/additional milestones).
  • Company, asset, or intellectual property acquisition financing.
  • Convertible, subordinated and mezzanine loans.
  • Management buy-outs and corporate spinout financing.
  • Revenue acceleration (sales and marketing development/entering new markets, manufacturing/corporate expansion, etc.)
  • Vendor financing.

In general, the characteristics of growth companies are:

Sunday, July 28, 2013

Wall Street firms buying distressed homes

Private equity and hedge fund firms have been sinking billions into single family rentals, buying distressed homes off of banks’ balance sheets up to 30% of inventory in some markets.

Source: The March MarketPulse report from CoreLogic

July MarketPulse report

July 2013 Issue of the Real Deal

Monday, March 18, 2013

Personal Use of Business Aircraft

On March 11, 2013, IRS released changes to the entertainment use of business aircraft, available at NBAA

Under the Act, the difference between the actual cost of personal entertainment flights provided for “specified individuals” and the amount included as income for the individual (based on SIFL or Fair Market Valuation), is disallowed as a deduction to the corporation.

"IRS did make changes dealing with the treatment of depreciation and interest expenses. The final rules provide that, in the case of a taxpayer making the election to use the straight line depreciation method for purposes of the disallowance calculation, the disallowed depreciation in any year will not exceed the allowable depreciation for such year. Also, interest is now included in the costs subject to disallowance if the underlying debt is secured by or allocable to an aircraft used to provide entertainment flights."

NBAA Personal Use of Business Aircraft Handbook

Stock Momentum Analysis Education

Several stock momentum tools are easily available to stock watchers:

1. Stockrover -shows "relative strength" -latest momentum leaders from among 8,000 most liquid securities on NA exchanges.

2. IBD's CAN SLIM (7 Criterias) and IBD's "Tool Chest" based on IBD's SmartSelect® Ratings which are:

•Composite Rating rolls all of the other IBD SmartSelect® Ratings mentioned below into one useful measure, making it your single most useful fundamental and technical gauge. This rating also factors in where a stock's share price stands in relation to its 52-week high. And it gives more weight to the stock's EPS and Relative Price Strength ratings. Ratings range from 1 to 99, with 99 being the best.
Stocks rated 80 or higher are in the top 20% of the overall market.

•Earnings Per Share Rating (EPS) compares a company's recent quarterly and annual earnings to those of other publicly traded firms. Specifically, it looks at the past two quarters and the past three to five years of profit growth. That makes it easier to assess a firm's short- and long-term earnings growth. EPS Ratings range from 1 to 99, with 99 being the best.

•Relative Price Strength Rating (RS) compares a stock's price change during the past 12 months to the price moves of other stocks. It gives extra weighting to a stock's price performance during the past three months. RS Ratings range from 1 to 99, with 99 being the best.

•Sales + Profit Margin + ROE Rating (SMR®) combines a company's recent sales growth, profit margins and return on equity, then compares them to other publicly traded companies. It's also known as the SMR® Rating. SMR® Ratings range from A to E, with A being the best.

•Accumulation/Distribution Rating (ACC/DIS RTG®) tracks the level of buying (accumulation) and selling (distribution), based on daily price and volume changes. It's one of the best ways to spot stocks of interest to big, institutional investors. Accumulation/Distribution Ratings range from A+ to E, with A+ being the best. An A Rating indicates heavy buying; an E indicates heavy selling.

•Industry Group Relative Price Strength Rating compares the six-month price performance for a stock's industry group with that of IBD's 197 other industry groups. Runs from A to E, with A being the best.

Wednesday, February 13, 2013

StarMine 2012 Industry Analyst Awards

Here are the top equity analysts : first, second and third places


StarMine objectively measures the performance of analysts based on the returns of their buy/sell recommendations and the accuracy of their earnings estimates. The 2012 stock picking awards for the United States are based on the 2011 calendar-year performance of recommendations. The 2012 awards for estimating accuracy are based on quarterly periods that reported between 01 April 2011 and 31 March 2012. (For most companies, this is FQ-Mar-2011, FQ-Jun-2011, FQ-Sep-2011 and FQ-Dec-2011.) Only analyst performance on companies that are based in the United States is included in the awards calculations.

DATA SOURCE StarMine's awards for the United States are based on the estimates and recommendations as recorded in the Thomson Financial I/B/E/S database. StarMine uses the GICS (Global Industry Classification System) for its industry definitions.

Analysts are ranked according to their Industry Excess Return, computed from a portfolio simulation that measures each analyst relative to an industry-based benchmark. The top three qualifying analysts in each industry receive an award.

Friday, January 18, 2013

2012 DowJones Private Equity Performance Ranking -with new v2017 stock pitch contest video

Prof. Oliver Gottschalg of HEC Paris and Dow Jones released their latest edition of the PE Performance "Fitness" Rankings Report, which analyzes 112 firms. Prof. Gottschalg explained his rankings:
"The aggregate performance score is neither an IRR-type annual return measure nor a money multiple. It can only be interpreted relative to the average aggregate performance score of all firms we analyzed: An aggregate performance score of 1 means that a given PE Firm has an aggregate performance that is one "standard deviation" above the average performance, which would position it typically at the 85th percentile, i.e. 85% of all firms would have a lower aggregate performance. Also, an aggregate performance score of 2 means that performance is twice as high as for an aggregate performance score of 1. A PE Firm with the average performance has (by design) an aggregate performance score of 0."

1. TPG Capital Score: 1.54
Total funds raised over past 10 years: $56.2bn Texas-based TPG Capital has $51.5bn of capital under management in a wide range of industries, according to its website. The firm’s performance in this ranking was boosted by returns from its Asian investment arm, TPG Newbridge, which would have ranked highly if included as a separate entity.

2. Hellman & Friedman Score: 0.97
Total funds raised over past 10 years: $20.7bn Based in San Francisco, Hellman & Friedman’s current investments include insurance software firm SSP and Wood Mackenzie, a UK oil and gas researcher.

3. Oaktree Capital Score: 0.90
Total funds raised over past 10 years: $53.6bn Based in Los Angeles, Oaktree has been involved in some of 2012’s most high-profile debt-for-equity deals. The firm, which operates as a distressed debt and turnaround specialist, has seized control of some of Europe’s most debt-laden private equity assets, including Fitness First, which was owned by BC Partners.

Saturday, January 12, 2013

Gulfstream 280 strong newcomer in super mid-size class.

 The new G280 has a new wing, engines and empennage. It's now a genuine Gulfstream performance machine with the best thrust-to-weight ratio and runway performance in the super-midsize class. And it has more tanks-full payload, 350-nm more range and better fuel efficiency than its Canadian competitor, Bombardier Challenger 300.

The G280 has more cabin volume than either the Challenger 300 or the G200, along with a lower cabin altitude and reduced cabin sound levels. Its 120-cu.-ft. aft baggage compartment is the largest in class and it's now accessible in flight because the G200's aft fuselage fuel tank has been eliminated. The G280 carries all its fuel in wing, center and belly tanks.

The new Gulfstream super midsize has a 935-cu.-ft. cabin volume, 3,600-nm range and Mach 0.80 normal cruise speed. It has more range than either the Dassault Falcon 2000S or Embraer Legacy 600. It also can fly 100+ nm farther at Mach 0.80 than the Challenger 605 ! Bombardier Challenger 300 -still at the top of the game, at $14.5 million.
Aircraft guide: Bombardier Challenger 300 from CorporateJetInvestor on Vimeo.
In the U.S., large corporations such as Exxon Mobil, FedEx, Union Pacific and The Limited, along with Eaton Corp., PNC Financial Group and XTO Energy, operate fleets of the aircraft, according to FAA registration records (Source: Fred George, BCA, Jan. 1, 2013 issue)