MXN

REITs Will Likely Continue To Underperform

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By Brian Nelson, CFA Stock prices and returns are in part a function of the cash-based sources of intrinsic value: net cash on the balance sheet and future expectations of free cash flow. Though there are many ways to slice and dice a company with respect to equity analysis, to arrive at an intrinsic value estimate of a firm, it generally comes down to these two important cash-based dynamics. Due to the nature of their business models, most REITs have lofty net debt positions, and many are investing in real estate at a pace that is faster than that which they are generating operating cash flow. One good example of the trouble brewing on many a REIT’s cash flow statement … Read more

Opinion: China-US Trade Augmented, Not Paralyzed Under Trump

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Image Source: Fuzzy Gerdes By Brian Nelson, CFA “(Trump’s) tough rhetoric may just be setting the negotiations table with China (and Mexico, too), and Negotiations 101 says you start far away from the middle, and then you compromise to get what you truly want.” Nobody wins from a trade war, and business tycoon and President-elect Donald Trump knows this. It’s Business 101. Many believe, including us, that imposing steep tariffs on imports from China (MCHI, EWH, FXI) had been merely campaign rhetoric to win over votes, but many market participants are still positioning themselves for some degree of fallout nonetheless. China itself is not taking chances either. The country’s state-backed newspaper Global Times fired a shot across the bow November … Read more

Assessing Reactions to Trump’s Victory

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Image Source: Gage Skidmore Donald Trump will be the 45th President of the United States of America. Let’s dig into some of the reactions across the market. We’re keeping our cool. By Kris Rosemann and Brian Nelson, CFA The global markets often don’t know what to make of surprises, a characteristic that was on full display as news came rolling in that Donald Trump would soon become the 45th President of the United States, “trumping” Secretary Hillary Clinton in a decisive electoral college victory, despite the popular vote eventually going to the Democratic candidate. In the wee hours of the morning Wednesday, November 9, major markets across the globe were in shock, showing red almost across the board. At one … Read more