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NEWSLETTER of September 21, 2018

 

The following content has been added at finexpert:


Tutorials
QoD10

Question of doubt in corporate valuation QoD#10: Which models are able to include fading growth into terminal value calculation? (Part II)  (Bernhard Schwetzler)

This second video on the topic analyzes the case of fading excess returns combined with fading assets (invested capital) and shows how to implement this case into some standard valuation equations for terminal value calculation.
(September 21, 2018). >more


Studies > Performance

The Boston Consulting Group

A NEW BOLDNESS PAYS OFF: THE 2018 INSURANCE VALUE CREATORS REPORT

A new boldness appears to be afoot in the insurance industry — and investors are paying attention. This year’s value creators data, which covers the five years from 2013 through 2017, shows that markets rewarded many companies across the industry for a variety of value-creating moves. Insurance as a whole ranked 12 out of the 33 sectors tracked in the BCG value creators database, with a median annual total shareholder return of 18%. It performed more consistently than other sectors, showing a standard deviation of only 7%, the lowest among all industries. But the spread between top- and bottom-quartile insurers was still wide. >more

Studies > Performance

Bain & Company

SLOW SLIDE? EUROPE’S LARGEST BANKS FACE ERODING FINANCIAL POSITIONS

Bain's latest annual analysis shows that, on average, measures of profitability, efficiency, capital adequacy and asset quality improved for European banks, and investors raised their valuations accordingly. The market continues to be polarized, as there is no one homogeneous European banking system. The largest banks, though, have lost ground relative to the sector for several years. Investors have been especially lenient toward banks with weaker balance sheets. Winning banks also have higher loyalty scores, which reflect their better customer experience and lead to stronger economics. >more

Studies > Alternative Investments

AlixPartners

SURVEY: MISALIGNMENT BETWEEN PRIVATE EQUITY INVESTORS, PORTFOLIO COMPANY CEOS TRIGGERING COSTLY TURNOVER

Our latest Private Equity/CEO study performed jointly with Vardis shows misalignment between the two groups on a surprisingly wide range of critical matters. At a glance: CEO turnover is unplanned for 34% of investments, leading to significantly worse returns and longer hold times for private equity firms. The first 100 days are ripe for misalignment, with varying expectations of support, assessments of the management team, performance metrics, and frequency of contact. Private equity investors tend to replace CEOs at the most disruptive times. >more

Studies > Jobs | Opportunities

CMS Hasche Sigle

UPDATE ARBEITSRECHT SEPTEMBER 2018

CMS Hasche Sigle regularly publishes updates and news concerning the German labor law. Amongst others, this edition features updates on remuneration trends and legal principles. >more


Research Papers > Alternative Investments

SENSATION SEEKING AND HEDGE FUNDS

Stephen Brown, Yan Lu, Sugata Ray, and Melvyn Teo
2018
We show that motivated by sensation seeking, hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns, resulting in lower Sharpe ratios, information ratios, and alphas. Moreover, sensation-seeking managers trade more frequently, actively and unconventionally, and prefer lottery-like stocks. We show further that some investors are themselves susceptible to sensation seeking and that sensation-seeking investors fuel the demand for sensation-seeking managers. While investors perceive sensation seekers to be less competent, they do not fully appreciate the superior investment skills of sensation-avoiding fund managers. >more

Research Papers >     M & A

THE VALUE OF ACCESS TO FINANCE: EVIDENCE FROM M&A

Jess Cornaggia, and Jay Y. Li
2018
We examine synergies in mergers and acquisitions generated by firms’ comparative advantages in access to bank finance. We find robust evidence that greater access to bank finance increases firms’ attractiveness as acquisition targets. Targets’ comparative advantage in bank finance improves bank credit supply and reduces financing costs for the merged firms. These effects are more pronounced for acquirers with greater frictions in accessing bank loans and acquirers with greater growth opportunities. Overall, this paper reveals that targets, not just acquirers, contribute to financial synergies in M&A. >more