The revolutionary business of auto leasing
14 December 2021
Risk appetite declines in January
Leverage, the use of debt to increase investment capacity, is down nearly 10% in January according to FINRA statistics. This indicator reflects risk appetite. The more leverage an investor uses, the higher the potential gain, and the greater the risk of loss.
At the end of 2018, a similar decline was observed (-14% over 3 months). Then complete calm: the indicator remained stable for over a year :
- Investors had favored caution after
- Having suffered losses after the correction in January 2022
- We can expect a similar effect in the months to come
Does active management still have a future?
In a global financial world dominated by ETFs and algo-traders, one may wonder how the active manager still brings added value to his client.
A typical example: Gaz Transport et Technigaz (GTT)*
What does it do? Liquefied natural gas (LNG) storage engineering. In simple terms, GTT designs the tanks of LNG carriers intended for maritime transport of LNG. Patented technology, a monopoly position, 40% net margin and a substantial dividend paid to shareholders.
In mid-February 2021, the share price fell by 15%. This was due to forecasts that predicted a worse year than the record set in 2020.
In mid-February 2021, the share price fell by 15%. This was due to forecasts that predicted a worse year than the record set in 2020. However, in the details of the published results, some information highlights a significant concentration of orders taken for 2023 and 2024.
Last Thursday, the company published its 2021 results as well as the details of its order book, as it does every year. This time, Philippe Berterottière, the CEO, was very clear: "These elements allow us to anticipate, as of 2023, a turnover and results at a significantly higher level than in 2022." The market appreciated, with the stock now worth €81.
Most of this information was available 1 year in advance. The active manager who was working on his file is now up 30%.
Deconstructing the annual reports, getting out the calculator, and buying the undervalued stock is a strategy that still pays off.
Have a great week,
Pierre
Disclaimer
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