What we’re reading (7/1)
“The Mixed Case for Private Equity in Retirement Plans” (Wall Street Journal). New labor department guidance allows 401(k) plans to offer private equity in diversified retirement plans, opening up a huge source of capital for PE funds and, potentially, other alternative asset managers. The downside: extra fees.
“These 5 Giant Stocks Are Driving the U.S. Market Now, But Watch Out Down the Road” (MarketWatch). Per a Dimensional Fund Advisors study, dominant stocks tend to lose steam eventually. From a “corporate lifecyle” standpoint, that completely makes sense.
“A Viral Market Update X: A Corporate Life Cycle Perspective” (Musings on Markets). Speaking of the corporate life cycle, this recent, thorough post by the “Dean of Wall Street” (NYU finance professor Aswath Damodaran) comprehensively lays out the connection between the life cycle theory and the market turbulence of late. What we’re seeing, according to Prof. Damodaran, is “a redistribution of value from older, low growth, more capital intensive companies to younger, high growth companies.”
“Hidden Wine Cave, $110 Million Parking Bill: Energy Collapse Wasn’t Only Thing That Sank Chesapeake” (CNBC). Chesapeak’s bankruptcy followed a “financial mess that included no budgets, a massive wine collection and a nine-figure bill for parking garages, sources told CNBC’s David Faber.” You’ll be pleased to know Stoney Point’s model has some bells and whistles to weed out companies like this.
“AQR Boasts Multiplicity Of Factors For Terrible Performance” (Dealbreaker). We like AQR. As pioneering factor-investing firm that does quantamental-type stuff it’s one of the hedge funds in the equities world we don’t endeavor to destroy. But apparently their value factor isn’t working out so well (lately). Could just be anomalous. Could be how they measure “value.”
