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Global Archives - MULTI-ACT

Macro

The Consequences of Command and Control Economics

By | What We Are Reading | No Comments

In this article:

Everyone knows that the law of supply and demand is designed to bring equilibrium in the economy. If it is true for commodities, the same rule should apply to interest rates as well. But like Soviet Russia where the price of sugar has very little to do with supply and demand because it runs on a command-and-control economy, central bankers have been setting the price for the most important commodity in the world: money. How will all this end? Does anyone know?

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Value stocks and Patience – may be the only way to turn around Bleak Returns

By | What We Are Reading | No Comments

It is a terrible time for investors. With bleak returns seeming to be the norm across the globe in this tumultuous stretch, they are relying on varied valuation metrics in hope of enhancing dividends. This piece discusses the best valuation metrics to gauge whether a stock is “cheap” or “expensive” and also provides an insight into Andrew Lapthorne’s views on why modern-day investors have to be brave to hold on to value stocks and be prepared to lose money for some time.  Read More

Macro

What Bridgewater’s Ray Dalio Told The New York Fed

By | What We Are Reading | No Comments

Ray Dalio, founder, Bridgewater Associates, is a vocal opponent of quantitative easing by central banks. In his speech at the Federal Reserve Bank of New York on October 5 this year, he presented what may seem to be a rather gloomy picture akin to a depression warning.

Learn about long- and short-term debt cycle and read what one of world’s most influential investors has to say about the limits to central banks’ monetary policies.

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Airliners: Assumptions Flying High

By | Corporate Governance | No Comments

Anyone reading a company’s financial reports should be aware of the assumptions and estimates used by the preparer of the report because it can lead to a distorted picture of a company’s performance

In this article, Multi-Act experts analyze the financial reports of a major airline company and uncover key assumptions in calculating yearly pension cost. In this case, higher assumption of expected return can lead to lower pension expenses and higher earnings. Assumption relaxation in revenue recognition was observed by another major airliner thus boosting revenues and earnings in their reporting period.

Investors need to pay close attention to assumptions and estimates that may be used by the preparer of any report. The examples of these airline companies give a clear picture of how assumptions can be used to project companies in better light.

“Figures often beguile me…particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, damned lies, and statistics.” – Mark Twain

Had Mark Twain seen the financial statements of various companies, he would have exclaimed- “Lies, damned lies, statistics and accounting”.

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Macro

Time to stop dancing: Asset inflation cycle coming to an end?

By | What We Are Reading | No Comments

Why is it that after ninety-something months of zero or near-zero rates, growth is still sputtering? Why is the corporate sector in an earnings recession? Why is the productivity growth negative? And why do central bankers still insist that no recession is in the forecast?
Read this article to dismiss the myth if in reality the central bankers can control the cycles and public behavior and can act as last anchor of confidence to eternity. Read More

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U.S. Regulated Utilities: Non-Cyclical or Cyclical?

By | Company Insights, Global Equity Perspective | No Comments

In This Article:

As some of the best-performing stocks, many consider U.S. Utilities stocks a safe haven paying steady dividends with moderate risk. Assured return close to 11% shows why investors are attracted to this sector making them a bright choice in bear and bull markets. However, there is a caveat: Whenever rates rise, the value of these may drop. With the Central Bank’s repressive rate policy, we believe investors should show caution when making investments in U.S. Utilities equities.

This article discusses how U.S. interest rates seem to have given rise to a cyclical trend within the Utilities sector. Read what has been driving the sector’s current valuation growth.  
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Global Macro View

By | Global Macro | No Comments

In this Article:

Listen in on a conversation between Multi-Act experts and their advisory clients. Find answers to questions such as:

  • What can we expect with fluctuating interest rates, particularly U.S. interest rates, which have a large impact of flow of funds globally?
  • Where is the U.S. dollar going as it appreciates against other currencies? How is the Rupee placed?
  • What is China’s impact on the global economy and how is it likely to all pan out?

Get expert insights into these questions and more in this transcript of a conference-call hosted on 19th February, 2016 with our Advisory Clients.

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Economies of Scale: An Analytical Framework for Assessment of A Firm’s Competitive Advantage

By | Global Equity, Investment Insights | No Comments

This article originally appeared on Advisor Perspectives.

“The moat in a business like our auto insurance business at GEICO is low cost. I mean people have to buy auto insurance, so everybody’s going to have one auto insurance policy per car basically, or per driver. And…I can’t sell them twenty…but they have to buy one. Read More

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Showing The Door

By | India Macro | No Comments

A key factor when investing in quality stocks is the sustainability of a company’s competitive advantage. In their article, Entry and Exit Barriers, the authors Baijnath Ramraika and Prashant Trivedi suggest that while most investors look at entry barriers as a proxy for the ability of a business to persist with its supernormal returns, the presence or absence of exit barriers is a key factor as well and may at times serve to nullify the impact of entry barriers. Read More

Portfolio Management Services (SEBI Registration No. INP000002965) are offered through Multi-Act Equity Consultancy Private Limited (CIN: U67120PN1993PTC074692), which is a wholly-owned subsidiary of Multi-Act Trade and Investments Private Limited; Investment Advisory Services (SEBI Registration No. INA000008589) are offered through Multi-Act Trade and Investments Private Limited (CIN: U65920MH1997PTC109513).