Global Macro #3

Jason Xu – Portfolio Manager Global Macro

 

  1. Berkshire Hathaway: Seeking for a new way out

Warren Buffett’s Berkshire Hathaway repurchased $928m of its stock in the third quarter, a telling shift by the company that underscores the difficulty its chief executive has had finding attractive deals that fit his investment philosophy.  In his most recent annual letter to shareholders, Mr. Buffett said that sensible purchase prices remained the key barrier to nearly every deal the company had reviewed in 2017 and likened Berkshire’s dealmaking restraint to a drought.  During that drought, the company’s cash levels have climbed to roughly $104bn. Another measure of the group’s dealmaking firepower, so-called float — insurance premiums the company has collected before it has settled claims — rose $2bn from midyear to stand at $118bn at the end of September

 

  1. Alibaba- Uncertainty Ahead

Alibaba cut its full-year sales forecast on Friday, as the ecommerce group blamed uncertainty in the wider economy for its decision not to cash in on higher user numbers and engagement on its China retail marketplaces. The company slashed its sales forecast for the fiscal year ending in March, with full-year revenues now expected to come in between Rmb375bn and Rmb383bn — at most a 53 per cent increase from last year. It had previously anticipated revenue growth would top 60 per cent. Shares in the company fell as much as 2.7 per cent after trading opened in New York on Friday, before recovering to trade 0.7 per cent lower 90 minutes after the market open. The ecommerce giant remains China’s most valuable company but, like its mainland tech peers, its shares have been scythed by a combination of the US-China trade wars, concerns over China’s economy and Beijing’s tighter grip on internet regulation.

 

  1. Apple: 1 Trillion Fear

Apple fell on Friday but the group maintained its $1tn market value in regular trade after the iPhone maker delivered a disappointing outlook for the holiday season. Shares fell as much as 6.2 per cent to $208.40 on Friday before trimming their losses to trade 5.4 per cent lower at $210.30. The shares remained above the $207.04 level, which it needs in order to maintain its trillion dollar market capitalisation, based on share figures from its most recent ‘10Q’ regulatory filing. Late on Thursday, shares fell as much as 7.7 per cent to $205.16 in extended trade and prompted the company to briefly abdicate its position as the only publicly listed US company to boast a $1tn market cap — a feat it first achieved this summer.

 

 

Monday Special

1MDB Scandal and Jho Low-The person who fooled Wall Street, Hollywood and Supermodels

Malaysian businessman Who Low is considered the mastermind of a multi-billion dollar financial scandal that involves a complex web of offshore shell companies, A-list celebrities, the Middle East and Wall Street.

 

According to Wall Street Journal, Goldman Sachs helped Malaysia’s 1MDB sell about $6.5bn of bonds between 2012 and 2013, two years before Malaysian police raided 1MDB’s offices to investigate allegations of massive fraud. In a 2016 indictment, the US Department of Justice alleged that much of the money raised with Goldman’s help was siphoned off by Malaysian financier Jho Low, who funnelled it into everything from Beverly Hills properties to Van Gogh paintings.

 

For three years, investigators have examined how funds were stolen from Malaysia’s quasi-sovereign wealth fund 1Malaysia Development Berhad(1MDB) and used to purchase international real-estate, super-yachts and even finance Hollywood films.

 

Low and film producer Riza Aziz, allegedly used plundered state money to help finance the 2013 Hollywood filmThe Wolf of Wall Street. For Victoria Secret Super Model Miranda Kerr, being on the receiving end of Low’s gifts of nearly $8 million in diamond pendants, earrings and bracelets came with additional complications. According to the Business Insider excerpt of “Billion Dollar Whale,” her association with Low had become romantic.

Macro #2

Upcoming week

Developing Markets

Interest Rates

Macro Analysis October 14, 2018

Trade War – Tariffs

Conflict

Natural Resources

Stock Market Decline

American Politics

Second round of presentations!

Thanks again to the work of the three analyst teams and the active participation of the investment club members we have successfully presented three more proposals.

Attached below are the three powerpoints:

TSE:L Proposal
NYSE:NOC Proposal
TSE:RY Proposal

First round of buy proposals complete!

Thanks to the dedication of the three analyst teams led by Jai Chagani, James Foo, and Felix Hoehne respectively, we have finished our first round of proposals. These presentations have been incredibly thorough, additionally, it is great to see the entire analyst teams involved.

Attached below are the three powerpoints:

NYSE:MMM Proposal
NYSE:V Proposal
NYSE:WMT Proposal

Nov. 21st Minutes

Here are the minutes for Nov. 21st- Nov.21st-minutes.docx. Thanks!

Welcome Back to Investment Club!

Gildan Activewear Proposal (Consumer Retail Team)

Proposal #4- presented by Mike Zhang and the Consumer Retail Team to buy Gildan Activewear. Thanks for doing a fabulous job! Presentation: Gildan-Activewear.pptx

RBC Proposal (Financial Institutions Team)

Thanks to Wesley Graham and the Financials team for presenting a proposal to buy shares of RBC. Presentation: RBC_Proposal.pptx

Artis Real Estate Investment Trust Proposal (Health and Real Estate Team)

Congratulations to Felix Hohne the Health and Real Estate Team for initiating the first transaction of the year. Presentation: Artis_Real_Estate_Investment_Trust.pptx