Knowledge Center

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Feature Article

Gyro Gearloose redux .

The arc of monetary evolution is the subject at hand. A question for the dollar-holding subscribers of Grant’s: What’s really in your wallet?

Topics

Please click on a topic below to read individual stories

Articles of Interest:

Gold

"The road to confetti "

April 15 comes and goes but the federal debt stays and grows. The secrets of its life force are the topics at hand...

APR 22, 2016

Gold

"Monetary action agenda"

With respect to the radicalization of monetary policy, investors en masse resemble the sleepy frog in the warming saucepan. They don’t jump out while the jumping’s good.

NOV 14, 2014

Gold

"Let's bury the gold"

A friend proposes to strike it rich in gold by giving the public what it wants. What the public wants is mining stock. We know that by the stupendous valuations accorded mining companies at a time of stable gold prices. People want mines -- so let's give them mines, our friend proposes. Let's buy some gold, bury it, dig it up and sell it.

SEP 21, 1987

Financial History / Cycles

"Gyro Gearloose redux ."

The arc of monetary evolution is the subject at hand. A question for the dollar-holding subscribers of Grant’s: What’s really in your wallet?

FEB 26, 2016

Financial History / Cycles

"Inside ACE Securities’ HEL Trust, Series 2005-HE5"

The nation is running out of magazine covers on which to announce the coming collapse of house prices. From which fact it could be inferred that . . .

SEP 8, 2006

Financial History / Cycles

"The slowest asset"

In Houston, office rents are falling again, fully a decade after the Texas energy business stopped inflating and began deflating. Rents continue to fall in New York, too...

APR 24, 1992

Global Macro Stories

"The balance sheet that ate Switzerland"

Like a celebrity in flight from the paparazzi, the Swiss Confederation demands protection from its pesky admirers.

SEP 19, 2014

Global Macro Stories

"Beijing to Sydney"

Herewith an update on China (sinking), Australia (sympathetically sinking), and a handful of Grant's short-sale names (also sinking, except for the one that soared).

JUN 14, 2013

Global Macro Stories

"Nikkei put warrants"

The wonderful Herbert Stein remark about patience--"If something can't go on forever, it won't"--has been as good a motto as any to lose money by in this epic bull market.

JUL 7, 1989

Equity Longs

"The thrifts are coming! The thrifts are coming!"

A discussion of newly converted thrifts coming to the market.

OCT 29, 2010

Equity Longs

"Certifiably formerly toxic "

A discussion of the transformation of Innospec.

SEP 17, 2010

Equity Longs

"Pariahs’ club "

The stock market is, by our lights, absurd, but it is becoming slightly more symmetrically absurd. There is a growing list of cheap valuations to complement a considerably larger number of extravagant ones.

FEB 4, 2000

Equity Shorts

"Anticipating Mr. Friedman "

history, a man so driven as the chief curator of Restoration Hardware might have led a revolution. As it is, he seeks to revolutionize the high end of furniture and décor trades.

DEC 11, 2015

Equity Shorts

"Generation ZIRP"

Lenders and borrowers may be reasonable people, but they periodically miscalculate. There is feast, then there is famine, world without end. It’s the credit-related business models that come and go.

JAN 23, 2015

Equity Shorts

"Drug dealer"

A financialized age has at last produced a financialized pharmaceutical company. Herewith, a long look at an enterprise that does its compound-hunting not in the laboratory but in the stock market.

MAR 7, 2014

Fixed Income Longs

"For the un-meek"

If something can’t go on forever, it won’t. Now under way is a bullish speculation on a bearish set of circumstances. Anticipating the joyous relief imparted by the lifting of bankruptcy fears.

MAR 11, 2016

Fixed Income Longs

"Introducing the Grant’s Supermodel Credit Portfolio"

Credit is what we are bullish on--cast-off residential mortgage-backed securities, senior bank loans, convertible bonds and corporate...

DEC 12, 2008

Fixed Income Longs

"Klarman baits a hook"

Seth A. Klarman, an investor of private capital in Cambridge, Mass., is now, and has been for some weeks, buying junk bonds--a few issues--with conviction.

FEB 16, 1990

Fixed Income Shorts

"Yield to worst"

"The food is terrible," to quote the famously ambivalent restaurant review--"and the portions are so small." Much the same can be said of today's junk-bond market.

APR 4, 2014

Fixed Income Shorts

"Napoleon advances on Moscow"

Although opulent, the 1987 Campeau Corp. annual report is dated. On April 1, two months after the close of the Campeau fiscal year, Federated Department Stores entered the corporate fold...

JUN 24, 1988

Fixed Income Shorts

"Junk debunked"

In the bond market, this is a day of high hopes and low interest-coverage ratios. It is a day of the near extinction of the triple-A corporate credit and the rise to investment respectability of the sub-Baa credit...

SEP 24, 1984

Alternative Assets

"Soil erosion"

Farmland values climbed with rising corn prices and tumbling interest rates. Now the cycle turns. We write for urbanites, suburbanites, exurbanites and agriculturalists alike.

AUG 8, 2014

Alternative Assets

"Zero-coupon trees"

While Wall Street has disavowed extreme leverage since the crisis of 2008, foresters practice it as a matter of course. Dig a hole, plant a seedling and wait 25 or 30 years.

JUL 13, 2012

Alternative Assets

"Trump for the bid"

A coincidence in the latest Playboy: Donald J. Trump, the subject of the Playboy interview, and Miss March, Deborah Driggs, share the same basic philosophy of life.

FEB 2, 1990

Grant's Archive

Subscribers may download whatever they wish. Non-subscribers may search the archives and download past issues at the cost of $115 per issue.

To license individual articles for reprint, please email us at reprints@grantspub.com

July 13, 2018, Vol. 36, No. 14

Humphrey-Hawkins originalist

Where’s the good faith in premeditated inflation?

Back together again

Looking for a few good yields, this publication has settled on one. The close of a kind of journalistic trial separation.

Tomorrow’s debt hearings

The federal inquest into the credit smashup of, let us say, 2019 will not overlook leveraged loans. Testimony will uncover the facts that were as plain as day in 2018.

No more pretending

Some $2 trillion of assets and liabilities will appear as if from nowhere on the balance sheets of American companies come the first quarter of 2019. For asset-light businesses, “Shangri-La doesn’t go on forever.”

James Carville redux

“The trouble with elections, of course, is that somebody wins them.”

June 29, 2018, Vol. 36, No. 13

Credit where credit is due

Time Warner, Inc. was put on this earth not to produce Game of Thrones but to punctuate the cycles of investment enthusiasm. Having rang down the curtain on the dot-com bubble, the former Ma Bell marks the characteristic excess of the post-crisis era.

Crypto’s doppelganger

In the California gold rush, the pick-and-shovel vendors famously out-earned the starry-eyed Forty-Niners. So it may prove in the crypto field today. A good, hard look at the leading pick-and-shovel merchant of the bitcoin-mining mania.

Good dog

Inanimate objects, never having lived, can hardly die, though gold investments are making a stab at that morbid impossibility.

Arrow points down

Promising their investors more, the debt hounders pay more. And they keep paying more—and borrowing more—to present a respectable financial face to the world. Not a formula for success.

Big Bertha goes boom

Rescuing the debt-bloated Chinese economy may prove more difficult this time around.

June 15, 2018, Vol. 36, No. 12

The man in the argyle socks

Over the sweep of decades, the 10-year Treasury has delivered a 2.3% real yield. Apply that average to the 2.8% CPI for May. Anyone for a 5% government bond handle?

Fountain of youth

Optically, a certain corporate centenarian is a technology business. Substantively, it is more and more becoming a financial business. Welcome to the ultra-low interest rate business longevity center.

Still radioactive

A survey of alternative opportunities in the market that is (if possible) even more marginalized than gold.

Thunder Down Under

Liars’ loans, robo-signing, interest-only mortgages—10 years later, the Lucky Country relives the American experience. This time a different ending?

Postcard from Toronto

Another outpost of the British Commonwealth is showing what a bear market in residential real estate might look like.

Made in America

Not in 44 years have respondents to the earnings component of the National Federation of Independent Business survey been more bullish. A certain coterie of Silicon Valley insiders begs to differ.

June 1, 2018, Vol. 36, No. 11

Down and out and radioactive

A reaffirmation of the bullish case for a heavy element with an even heavier price. “Sometimes you have a bad decade.”

Rocket ship yields

Query: Has Mr. Market lost his mind, or has he found it?

All in the family

Soaring revenues paired with plunging cash flows is a hallmark of the San Francisco high-tech elite – and, curiously enough, of a certain East Coast construction business.

Corrected valuation

At the current share price, Alliance Resource Partners, L.P., after it merges with its general partner Alliance Holdings G.P., L.P., is valued at around 4 times – not 6.6 times – trailing EBITDA.

Cheaper, not cheap

We write to update the thesis, not (principally) to remind our noble subscribers why they pay good money to read Grant’s.

Where yen go to die

Japanese savers will soon have a “high-yield” domestic option.

May 18, 2018, Vol. 36, No. 10

A prospectus for the United States of America

In its power to tax, borrow, spend, expropriate and wage war, the government of the United States must be the world’s greatest temporal power. Still, you wonder what this almighty institution would have to say for itself if it were brought into the sunshine of the Securities Act of 1933. The Grant’s model Treasury bond prospectus—the sixth in a series that dates from 1985—realizes this enticing impossibility.

Not the color green

The reasons to avoid coal are too obvious to belabor. The reasons to invest in it (for any with a tolerance for pariahs) are equally obvious but maybe less familiar.

Bancos do basis points

Short-dated, speculative-grade and U.S. dollar-denominated. A trio of income opportunities in the Great Green Country.

May 4, 2018, Vol. 36, No. 09

I Can’t Believe They’re Covenants

The central banks are against you. The managements are against you. And the lawyers are against you. Good luck to you, corporate-creditor victims!

Mexican yield exports

“Income on which to build a safe and carefree retirement”—not, admittedly, the first thing you associate with the country due south of the rising Trump wall.

Concerning the 3-1/4s of ‘26

A threefold status update: on the bonds, on their issuer and on the risks attached to the burgeoning triple-B portion of the investment-grade corporate bond market. Opportunity beckons after the fall.

After-tax edge

Equities are volatile, junk bonds are rich and cash is, still – even with the up-creep in the London interbank offered rate – blah. Where to turn for income?

Don’t blame Keynes

The federal finances are none too solid in prosperity. What cascade of red ink might the next recession deliver?

April 20, 2018, Vol. 36, No. 08

This magic moment

Whether the transformation in monetary worldview from Martin’s generation to our own is a good thing or a bad thing is for the bondholders to judge.

For the newbies

“The bull market in everything” – stocks, bonds, Picassos, bitcoin, real estate – is over. Actually, not every bull market is kaput, contended David Rosenberg, leadoff speaker at the April 10 Grant’s Conference.

‘A special thing’

“A discount that you can actually do something about, that is objective and that, while you sit there is not dead money.”

Here’s the beef

“Big” and “asset-light” are the reigning ideas in the restaurant franchise business. “I’m here to tell you this Shangri-La doesn’t go on forever.”

No munis, please

Howard Marks reflected on the asset class which he wouldn’t go near—hasn’t touched, in fact, in 40 years.

Overreaction syndrome

When a company’s stock falls out of bed while the same company’s debt remains securely under the covers, someone is going to make money.

Hedging Mr. President

“Two assets: Both go up, and yet they are strongly negatively correlated day-to-day. Nirvana.”

So out, it’s in

This biggest risk in holding gold bullion? “Career risk,” came the answer. They’ll fire you for taking leave of your senses.

‘Somalia on purpose’

The blockchain is, “a crappy technology and a useless technology,” our speaker matter-of-factly informed the Grant’s audience.

Only the best

“The biggest mistake is actually the trades you didn’t do and the reasons for why you didn’t do those trades,” said the hedge-fund titan John Burbank.

Tax Bungle

In which Grant’s erred: U.S. investors may not, in fact, receive capital-gains tax treatment on bonds purchased at a discount to face value and held to maturity.

Who Say’s Law?

The Fed’s program of balance-sheet reduction brings to mind the punchline of the old trader’s joke: “Sell to whom?”

April 6, 2018, Vol. 36, No. 07

Make way for Darwin

The index is not a company you want to buy.

Box Checker, Inc.

A grand tour of the housing market and mortgage finance now that the bubble-era round trip in home prices is over and done. Also, the thriving mortgage vendor that’s poised to thrive less.

Odd fact out

South of the border, yields don’t comport with the news.

Doormats of Wall Street

The loneliest corporate stakeholders need a raise.

Pattern recognition

Managerial insult compounds interest-rate injury.

Let the ECB pay you

Profiting from the negative.

March 23, 2018, Vol. 36, No. 06

The nine lives of the modern leveraged company

The zombies didn’t just climb up out of the graves by themselves.

Slightly below par

No tax experts are we, but 20% is better than 37%.

Down Mexico way

Spread compression has lately been the story in fixed-income investing, in EM debt and junk bonds alike. Now comes decompression.

Gnomes roll the dice

The Swiss prepare to vote up or down on a proposition to abolish double-entry bookkeeping in the accounts of the central bank. Turning chocolate into kale?

Hedge your bets

The strategy of the “three arrows” is at risk. What next for one of the strongest monetary brands not on the blockchain?

March 9, 2018, Vol. 36, No. 05

Xi Jinping’s poisoned chalice

We hoist an amber light not only for the countries and markets in obvious and financially close proximity to the “biggest and strangest thing in the world,” but also to just about anyone, anywhere who has money at risk.

Silicon Valley’s zombies

Not all zombie firms are created equal.

Fair-haired orphans

The United States is poised to overtake Saudi Arabia in energy production this year, though you wouldn’t know it by the slump in the prices of a trio of known Grant’s picks to click.

Where you sit

The one-eyed bond is king in Mario Draghi’s land of the blind.

While you wait

Something beyond the grudging yield on Warren Buffet’s Treasury bills to compensate the patient investor?

Down in Toronto

Sooner or later, the inevitable comes to pass.

February 23, 2018, Vol. 36, No. 04

This is the way the world ended

Radical monetary innovations got a fair trial in France exactly 300 years ago. In the resulting spectacular boom and bust, a cautionary story for our time.

Clunkers, Inc.

You might not suppose there’s much to quarrel with in the results of this titan of second-hand transportation and known Grant’s pick not to click. Still and all, maturities are lengthening, rates are rising and prices are softening.

Pass the ketchup

Left with little more to cut, what next for the brilliant Brazilians?

Bears watching

Ordinarily, the Ten Commandments do not impinge on the legal interpretation of bond indentures, especially in very large transactions.

Let’s assume

The bull stock market is a fact, the coming bear bond market a hypothesis. Imagination is no substitute for a margin of safety.

Gross and grosser

Imagine if IBM accounted for its pension liabilities the same way as the Treasury does. No, don’t imagine. It’s too frightening.

February 9, 2018, Vol. 36, No. 03

The bond crop never fails

The government will borrow more in relation to GDP next fiscal year than it has borrowed in any fiscal year since 1945. A reason or two why Dick Cheney may yet stand corrected.

Cognitive dissonance alert

With valuations at record highs and high-yield credit spreads at decade lows, it’s the heyday of private equity. One question: Where are the limited partners’ yachts?

Bond light

Mispriced, profuse and – from the point of view of refinancing risk – vulnerable is the debt of a certain Goliath. Wherein brew masters meet leverage artists.

Bay Street blues

Visiting Yanks have shaken their heads before, but don’t Canadian house prices look a little high? Yours to ponder, Bank of Canada.

What happened

The whys and wherefores of the stock-market volatility storm in fewer than 700 words.

January 26, 2018, Vol. 36, No. 02

A cloud no bigger than a man's hand

At risk is the government's credit and the prices of the government's securities. What's the opposite of Fort Knox?

Inflate your income

The cyclical stars are seemingly aligned, except for the dim star of inflation. Now comes a survey of the opportunities in – bonds.

'More study needed'

Not even the irreplaceable heretic of the Bank for International Settlements can help but dither. It's the time for action.

Washing(ton) machines

Grant's lifts its fatwa on a known pick-not-to-click for reasons related not to where the company makes its headquarters but to the capital of rent-seeking.

Like no business

No mystery about the common equity of this particular enterprise. It goes up. The mystery concerns the bonds. Why does anyone buy them?

Breaking the mold

Whatever could go wrong as we approach the ninth anniversary of the stock-market bottom?

Still more overvalued

The Big Mac (adjusted index)

January 12, 2018, Vol. 36, No. 01

Crypto-monetary easing drive

Could the boom in alt-currencies disrupt the policy-making monopoly of the fiat central banks? What the consensual suspension of the law against private-sector counterfeiting has wrought.

His highest praise

Contagious, our bullishness is so far not. We write to freshen an equity story and to highlight a pair of fetching bonds.

Motoring City

In which we close out a deep value investment. Here’s to you, “the most exciting city in America.”

Checking out

Old-time travel agents are gone. Middlemen are going. Now taste and technology are closing in a supposed untouchable franchise.

Out of gas

Never mind sex, data breaches or intellectual-property jiggery-pokery. The trouble with Uber is that it has lost money, it is losing money and it will lose money.

Divine currency call

Yes, a certain large, picturesque troubled country deserves a break, but not with your money. Sell the stocks, sell the bonds, sell the currency.

Amber lights among the green

Not all signs are on-message, and more than a few are concerning.

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