30 May 2024 – Page 2 – The Fund Society

US expansion pushes up credit losses at Klarna

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Stocks making the biggest moves midday: Salesforce, Kohl’s, HP, Best Buy and more

Check out the companies making the biggest moves midday: Salesforce — The cloud software vendor tumbled 20.5% after reporting weaker-than-expected revenue and issuing guidance that fell short of Wall Street’s expectations. Its fiscal first-quarter revenue was $9.13 billion, versus the $9.17 billion expected from analysts polled by LSEG. It was the first time since 2006 that Salesforce missed on revenue. Kohl’s — The department store chain plunged 25% after it reported a first-quarter loss of 24 cents per share. Analysts polled by LSEG had expected a gain of 4 cents per share, according to LSEG. Revenue also came in below expectations. HP — Shares surged more than 17% a day after the company posted better-than-expected quarterly results. HP reported fiscal second-quarter earnings per share of 82 cents on $12.8 billion of revenue. Analysts polled by LSEG had forecast earnings per share of 81 cents on $12.60 billion of revenue. Foot Locker — Shares jumped 19.5% after the retailer reported an earnings beat for its first quarter. Foot Locker’s earnings per share came in at 22 cents, versus the LSEG consensus estimate of 12 cents per share. UiPath — The stock sank 35% after the software company said it anticipates revenue between $300 million and $305 million for the second quarter, lower than the $342.3 million expected from analysts polled by FactSet. Full-year revenue guidance also fell short of expectations. In addition, the company announced CEO Rob Enslin was resigning, effective June 1. Best Buy — The electronics retailer popped 11% after posting fiscal first-quarter earnings of $1.20 per share, topping the LSEG consensus estimate of $1.08 in earnings per share. Best Buy also stuck with its full-year forecast. CEO Corie Barry said on a call that the company expects 2024 “to be a year of increasing industry stabilization.” Agilent Technologies — The stock fell nearly 8% after the company reported a slight revenue miss but an earnings beat. Agilent also cut its full-year guidance. It anticipates full-year adjusted earnings per share to come in between $5.15 and $5.25, versus its prior guidance of between $5.44 and $5.55. Analysts polled by FactSet expected full-year adjusted earnings per share guidance of $5.50. The company also lowered its revenue guidance for the year, which fell short of expectations. C3.ai — Shares added 18% after the tech company reported an adjusted loss

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Your guide to Wall Street analyst research and how to use it like the investing pros

Wall Street sell-side research is a key part of the financial markets, written by analysts working for brokerage firms, investment banks and other institutions. These analysts evaluate companies and issue recommendations to help investors – mostly institutions – make informed decisions. Buy-side research (by money management firms) is another kettle of fish entirely, produced in-house by institutional investors themselves and not meant to be shared or distributed or otherwise sold, and intended solely for the use of that firm’s own money managers. Here is a breakdown of how the sell-side research process works and how to use it to your advantage: Sell-side analysts’ role Analysts are financial professionals, oftentimes holding qualifications such as a Chartered Financial Analyst designation, who perform in-depth research on publicly-traded companies. In health care research, it’s not unusual to find analysts with medical degrees. Sometimes analysts will come from private industry. The work involves analyzing financial statements, industry trends, management performance, company strategy and macroeconomic factors affecting supply and demand. The goal is to assess a company’s future performance and offer investment recommendations to the investment bank’s clients, be they institutional investors such as pensions or hedge funds, mutual funds, insurance companies or retail investors. Research reports An analyst’s published research report might include a company overview with basic information about a company’s business, products and position in the relevant market. This is especially true when an analyst is first initiating research coverage into a particular company or industry. Beyond the basics, the report will explore a company’s financial health and analyze income statement, balance sheets and cash flow. That will include the analyst’s own financial model and estimates of future years’ revenue; profit margins; net income; income adjusted for one-time items; earnings before interest, taxes, depreciation and amortization (EBITDA); cash flow; and a host of secondary yardsticks. That analysis will lead to a discussion of valuation, using methods such as future cash flows discounted back into today’s dollars; price-to-earnings ratios based on current results and expected numbers in the future; and other benchmarks to decide on intrinsic value. Against that backdrop, an investment thesis will offer arguments for why a stock is a good or bad investment , and highlight the possible risks to that thesis that could affect a business’s performance or the price of its stock on the open market. The

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There is currency stress on the horizon

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The Big Questions: Private credit in 2024 and beyond

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Saudi Arabia readies sale of at least $10bn Aramco shares

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EU Batteries Need Export Credit Backing

As Europe races to keep up with China and the US on clean technologies, state-backed export credit agencies’ role is expected to grow.

Export credit agencies (ECAs) must step up their support for Europe’s nascent battery-manufacturing industry if the sector is to attract private investment and compete with Asia and the US, according to Dutch bank ING. Lithium-ion batteries are a core component of electric vehicles (EVs), and their supply is therefore essential…

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Boosted HarbourVest PE distribution pool offers potential ‘material rerating’ of shares

According to the vehicle’s annual results to 31 January 2024, the distribution pool is set to fall between $150m-$250m for the calendar years of 2024 and 2025, including a $75m seed. Taking the estimated midpoint and deducting the seed amount, Jefferies analysts Matthew Hose and Fiona Huang calculated the $62.5m annual allocation would produce distributions equal to 10% of the portfolio each year. HarbourVest Global Private Equity establishes distribution pool to manage future buybacks “This looks realistic in the context that annual distribution rates of greater than 20% have been…

Jamie Dimon: ‘There could be hell to pay’ in private credit as retail investors join in

Speaking during an industry conference on Wednesday (29 May), Dimon said there were a lot of “brilliant” people in the industry, but cautioned that not all players in the sector are “good”, with problems frequently stemming from the “not good” ones that make mistakes. “There may be problems here. I do not think it is systemic, but I do expect there to be problems,” he added. Private capital fund managers have in recent years started to pivot their fundraising efforts toward the non-institutional space, with the likes of KKR, Apollo and Blackstone setting ambitious capital raising tar…

Inflexion adds senior advisor

European mid-market private equity firm Inflexion has appointed Kevin Adeson as a senior advisor. In his new role, Addison will support the firm with new investment opportunities and strategic initiatives.

Adeson most recently served as Vice Chairman, Global Banking & Markets at HSBC, where he worked closely with client relationships and helped developed growth initiatives across business lines.

Prior to joining HSBC, Addison created and led the European leveraged and acquisition finance business at Morgan Stanley, having joined in 1997 from Bankers Trust, where he worked in leveraged finance and equity arbitrage.

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