This is a topic that many people are looking for. thevoltreport.com is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, thevoltreport.com would like to introduce to you Hedge Fund CQS Sees Distressed Opportunities in Brexit, Energy. Following along are instructions in the video below:
even Leena this year weve seen a tremendous rally in bond and stock markets but it hasnt really lifted out all boats the distress market has severely lagged in your opinion whats what are investors waiting for before jumping in I think that investors have already jumped in to a large extent what I think is important to highlight when you think about distressed opportunities and when you think about divergence is how distressed investors ultimately on the right risk and how they think about risk when we think about risk we think about risk on an illiquid basis on a three-year basis and what that means right now in the psycho is were going to be owning a lot of these companies potentially through a recession so what we really are waiting for is an opportunity to buy it cheap to that three or four words right so that is your litmus test in terms of where is the distressed money going to come in and ultimately I think that that speaks to where is the market ultimately going to price some of these names because you hear about you know distress money coming into the market or wall of distress being raised for this opportunity but until we actually are cheap enough to again like that three or long-term Ford I dont think youre going to see that much participation so basically the market is waiting for some sort of dislocation that properly prices those assets yeah I mean I think that the go-go markets are stupid you know if multi-year highs so again like until we actually see performance and you know these assets actually pricing to that long-term you know Fords or cheap to that long-term forward forward youre just not going to see that much participation so if theyre a you obviously have to figure out where to put your money in a time like this and look for opportunities even if youre if were the parts in the market are properly priced for you and interactive to you yep so so where are you finding opportunities in this wait-and-see mode so I mean I think that there are three parts of the three things that you need to be looking for you know late cycle markets such as this first thing is you need to be looking for your syncretic opportunities so even though a sector has come under a lot of pressure or specific company is actually presenting a unique opportunity that is going to allow you to extract value no matter to whats happening to the market so idiosyncratic opportunities first and foremost event opportunities second of all is somewhere where you can either create an event or it can be put into an event that is going to effectively allow it to crystallize value and third of all again like cyclical opportunities where you in fact are creating something cheap to the long-term forward and youre creating a cheap to trough in a recession so these are the three things that I think late cycle ultimately make money is there an example something in particular yeah I mean like I would say that again like litigation liquidation risk is definitely interested interesting in this type of market because its not that cyclic oh its not that correlated just in terms of you know opportunities which I think cyclically are cheap I know thats a controversial thing to say but you know what actually do you think oil and gas is actually pretty interesting in this type of market there are a lot of projects a lot of companies who to which you are creating cheap to you know PV 15 PV 20 so even if you adjust that for you know sgna which has been obviously the topic du jour over the past 12 months youre just creating some of these projects to like you know NPV in the low teens which is very very attractive and that would be both in the US and outside of the US that youd be looking into the energy sector yes I mean I think that the opportunity is more pronounced in the US because some of the post reorg equity is in the energy sector I mean youve gotten completely destroyed this year right were talking about divergence in performance in credit market but if you actually look at some of these both posteriori equities theyre down 75 80 percent you know a principal company like cedral were not invested in Syria but company like see drew is you know down 80 percent here today and guess what like were talking about offshore here youre talking about buying drill ships very frequently you know seven generation shallow water drill ships inside of 901 and inside of 90 100 these are drill ships which were actually built at 250 260 million so there is definitely value there you just need to have patient capital and you need to I think realize that you might be in that trade in that investment for long period of time because one of the things thats keeping investors away from jumping into energy at this point was that they got burned pretty bad a couple years ago so how do you ensure that youre buying actually good assets like what specifically do you look for so when you think about I totally agree with you in terms of sentiment I think its sentiment is at definitely at multi-year lows and I think that the reason is when you actually were looking back in 2016 a toe in gas asset or was significantly lower but I think there wasnt that much fatigue in terms of some of these investments fast forward several years there is so much fatigue and even though oil has been pretty range-bound some of these investments have ultimately lagged so what we were looking for in assets is were looking at operating assets so again like were talking about offshore like when you talk about offshore youre looking at you know ships which are under contract which are
not stacked so theyre operating through a cycle and ultimately generating cash until you actually have an opportunity to monetize the asset so were looking at cash flow generation which can effectively breed you from the current value to hopefully where youre going to be selling it in three four years time and you and I were speaking earlier youve done a lot of work looking at PG&E could you just tell us a little bit about your thoughts in terms of the fight between creditors and shareholders right now and whos probably more threatened out of the two sides from the current wildfires in California yeah absolutely so just for disclosure purposes were not involved in PG&E we have spent a lot of time looking at PG&E and I have to tell you understand both camps and I understand why they are excited about being involved in this asset because I have to tell you as a distressed investor it is actually pretty rare that you managed to buy a utility company in an oligopolistic market inside of eight times easy to have it that right and this is whats happening here so obviously both groups are interested in owning this asset what I would say is that in my opinion there is plenty of value here to go around and an amicable solution which benefits all parties and allows all party to recover significantly higher than where you should be possible and I think thats what should be pursued over the next couple of months and we have also theres a lot of drama going around right now with with brexit obviously yeah you seek us is london-based and of course that means youre following that drama pretty closely are there any opportunities there to make money for for a distressed investor yeah no absolutely its funny because when people talk about briggsie they always talk about you know heartbreaks it and how our company is going to react to heartbreak said well let me tell you it is already happening right like weve lived with that uncertainty for three years what does that mean for companies what does that mean for corporates hiring and firing decisions expansion decisions capex decisions all of that has been on hold and tobeys we are seen like a significant slowdown across a number of industries I mean consumer discretionary just on the back of lower consumer spending commercial real estate on the back of weakness in retail that ultimately feeds into banks youre talking about casual dining is coming under pressure food producers and processors are coming under pressure supermarkets are coming under pressure so yes there is a lot of I think stress in the system and in turn I think there are a lot of interesting opportunities in terms of good companies wrong balance sheets cyclical pressure if you can get involved and you can bridge this company through a cycle youre going to be creating them in some very very interesting levels we are definitely involved in some of these companies examples are again names where we are involved on the long side were involved in a retailer called new-look which we recently restructured we are involved in food processor called Perrin and and again like both of these instances I think are example of a good company that is coming under a lot of liquidity pressure and he has most probably the wrong type of balance sheet but ultimately offers value and basically the outcome of brexit wont determine the fate of those companies one way or another I dont think so I mean I think of these companies have a reason to exist I think that ultimately heartbreaks it would obviously hurt them because what you have to remember about a lot of these businesses is sales are in sterling in many instances but theyre in would cost can be in dollars or Euros so obviously sterling goes to one these companies are going to come under pressure but theres obviously a way to hedge that FX is obviously pretty liquid so in terms of the companies that we own we are very hands on in terms of planning for that type of you know contingency so we can protect our downside and just is there we talked a little bit about some of the expected shake-up that the credit cycle is going to be experiencing is there a particularly part or area of credit thats most primed for a crisis in your opinion public markets public high yield markets the public high old markets in Europe and the US have grown to the tune of two two and a half x over the past eight nine ten years and I think what has happened alongside this growth is we have seen the rise of ETFs which I think has introduced a lot of liquidity mismatch in the system ie funds which are buying some of these high-yield bond deals which are shaky right and theyre buying them in big clips so when actually you know the cycle turns and theyre forced out of these positions what youre going to see a lot is a lot of pressure obviously in terms of prices and then the second important element I think is regulation banks balance sheets dealers simply cannot own that much inventory so the natural mechanism ie the guy that was supposed to provide a bed is no longer there so what youre going to see is a lot of situations where some of these assets air pocket so they go from trading at eighty five to trading at thirty five with nobody stepping in because back to the stress guys we again the litmus test is we usually are thirty points back and the reason we were thirty points back is because were going to own it over the next three four years and again like our investment philosophy is very very different its a long-term philosophy and again very frequently that requires us to buy it lower Eva Lena thank you so much for joining us
Thank you for watching all the articles on the topic Hedge Fund CQS Sees Distressed Opportunities in Brexit, Energy. All shares of thevoltreport.com are very good. We hope you are satisfied with the article. For any questions, please leave a comment below. Hopefully you guys support our website even more.