Cattolica Investment Club – Page 5 – Cattolica Investment Club

20May 2024 by Cattolica Investment Club No Comments

Exploring the Implications of BBVA-Sabadell Merger

Markets

Banco Bilbao Vizcaya Argentaria (BBVA) recently made a strategic move in the banking sector, unveiling its proposal to acquire all outstanding shares of Banco Sabadell. This proposition, presented at a premium of 30% over the closing price recorded on April 29th, amounts to a substantial figure of approximately $12 billion. The motive behind BBVA's ambitious bid is clear: to solidify its position as a dominant force within the European banking landscape. By merging with Banco Sabadell, BBVA aims to create the second-largest bank group in Europe, boasting an anticipated market capitalization of €70 billion. This would place BBVA in close contention with industry heavyweight BNP Paribas, which currently leads with a market capitalization of €77 billion. However, despite the allure of BBVA's offer, Banco Sabadell has opted to reject the…

20May 2024 by Cattolica Investment Club No Comments

Power Shift: China’s Dominance in Automotive and Battery Markets Reshaping Global Dynamics

Markets

Considering that the next few years will be crucial for the spread and development of electric vehicles, we have witnessed a great shift as of 2023 alone. At the end of last year, we counted a total of 25,6 million vehicles, whereas 14 million of those sold within the year, registering a 35% year-on-year increase from 2022. Furthermore, forecasts from the 2023 edition of the Global EV Outlook (GEVO-2023) predict a total of 381 million EV vehicles by 2032. As far as sales are concerned, they tend to remain concentrated in specific areas: nearly 95% of the total were registered in China (57%), Europe (22%) and in the USA (13%). While the rest of the world is still catching up, in order to increase global sales, the most effective strategy…

20May 2024 by Cattolica Investment Club No Comments

OpenAI and Apple Partnership Signals AI Evolution Amid Market Uncertainties

Portfolio Management

May 16th, 2024 - ChatGPT maker OpenAI held its "Spring Update" event on Monday, where it announced a new desktop app, a web UI refresh, and the launch of its most advanced model, GPT-4o. The demo showcased how edge devices, starting with Macs and iPhones, can benefit from AI. By integrating voice, text, and images, the demo also highlighted AI's potential to significantly boost productivity. Much of the demo utilized a "hardwired" Apple’s (AAPL) iPhone to reduce latency in real-time interactions. In this context, analysts at Bank of America reiterated a Buy rating on AAPL, saying they expect the tech giant “to be a net beneficiary of AI at the edge” with “gross margin upside and momentum in services' '. Among Apple Inc. (AAPL)'s renowned products are smartphones, personal computers, tablets,…

20May 2024 by Cattolica Investment Club No Comments

BUY DOLLARS, WEAR DIAMONDS

Markets

Is the old saying "Buy dollars, wear diamonds" truer now than before? This saying suggests that by investing in dollars and bonds, one can accumulate enough wealth to afford luxury items like diamonds. However, in the current economic and political landscape, it is increasingly difficult to predict with reasonable certainty when the Federal Reserve will cut its key interest rates. In the United States, the inflation rate for March was 3.5%, exceeding the expected 3.4% and higher than the 3.2% recorded in February 2024. This persistent inflation suggests that the previously anticipated interest rate cuts in 2024 may be too ambitious and should be reconsidered. Conversely, inflation in the Eurozone in March was 2.4% compared to 2.6% in February 2024, leading to expectations of a potential rate cut in June.…

20May 2024 by Cattolica Investment Club No Comments

How Boeing has experienced major turbulence in recent years

Markets

INTRODUCTION Boeing is one of the major companies that operate in the aviation industry (commercial airplanes, defense, space, and security). The main competitor in the production of bigger widebody and narrowbody aircrafts is Airbus, while for defense, space, and security segments the major ones are Lockheed, Northrop and General Dynamics. WHAT HAPPENED? In the first quarter of 2024 Boeing lost $355 million on falling revenue. This is a clear sign of crisis for the company that must also deal with increasing scrutiny over safety concerns after several whistleblowers reported various manufacturing problems concerning Boeing 737 and 787. CEO David Calhoun assured the public that Boeing is focusing on fixing the manufacturing issues and that’s why they are not working on the financial results. The most recent incident happened in January…

20May 2024 by Cattolica Investment Club No Comments

The dynamics of Leveraged Buyouts

Corporate Finance

INTRODUCTION TO LBO Leveraged Buyouts represent one of the numerous investment techniques adopted within Private equity firms. Throughout this article we will analyze the fundamental pillars of this method. The acronym LBO stands for “Leveraged Buyout”. As the name suggests, this type of financial transactions are related to the leverage. Indeed, it consists in purchasing a target company by a small group of investors using a high level of debt and moderate equity investment. On average it is estimated that the equity contribution is around 40%, while the debt is 60%. Since an LBO is a sophisticated operation, it’s usually promoted by buyout firms. These transactions are generally financed by investors known as Limited Partners (LP) and managed by private equity firms known as General Partner (GP). Limited Partners tend…

12May 2024 by Cattolica Investment Club No Comments

AFTER DISAPPOINTING RESULTS, SHOPIFY AND UBER FACE HUGE DROPS IN THEIR STOCK PRICES

Portfolio Management

May 8th, 2024 - Today, Shopify (SHOP) (-19.3% at 10:35 AM EDT), a notorious Canadian e-commerce firm operating in multiple countries, disclosed its expectations about quarterly revenue growth and the forecasted values are the worst in the last two years. Among the several factors that led to this poor result are the decreasing consumers’ spending trend in recent times as well as the fact that the core of Shopify’s clientele represented by small and medium-sized companies has been heavily hit by the ongoing inflation. The company’s forecast for the second quarter of 2024 did not meet Shopify’s investors’ expectations at all, considering that the latter experienced an average revenue growth of 26% in the last quarters (with respect to this, LSEG data drove analysts to predict a growth rate of…

10May 2024 by Cattolica Investment Club No Comments

Junk bonds: are they really “trash”?

Markets

In the broad and intricate universe of bonds, junk bonds are one category among many. Junk bonds, also referred to as high-yield bonds or speculative bonds, represent one of the numerous categories of corporate debt securities: these are typically issued by companies or firms burdened with heavy debt or those carrying a speculative level rating (which are usually in a start-up phase). They offer higher interest rates compared to regular corporate bonds due to their increased risk and lower credit ratings. It is important to remember that, just because a security offers higher returns, it does not necessarily mean it is superior to others: there is a common misconception that higher risk always yields higher returns. The truth is, while there is indeed a positive correlation between risk and return,…

07May 2024 by Cattolica Investment Club No Comments

APPLE’S SALES DECREASE

Corporate Finance

“We never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.” Tim Cook, Apple’s CEO INTRODUCTION Apple Inc. is an American multinational corporation and technological company based in Cupertino, California. Given its extraordinary performances it’s considered as one of the Big Tech companies, as well as being in prestigious positions such as the world’s largest company by market capitalisation from 2011 to 2024 (now the position is held by Microsoft), and the largest technology company by revenues in 2022 with $394.3B. Apple is listed on the NASDAQ under the ticker AAPL, as of April 26th the stock price is $169.30 with a $-0.59 change…

06May 2024 by Cattolica Investment Club No Comments

United Airlines Analysis

Portfolio Management

May 5th, 2024 - Founded in 1926, United Airlines is an international airline company with more than 100,000 employees headquartered in Chicago, Illinois that provides air transportation services worldwide. Its business lines include people transportation, which is the primary source of revenue, and cargo transportation, which offers freight and mail services. These two segments contribute to form the company’s operating income, alongside with other revenue, that includes revenue generated from third-party businesses such as maintenance services and flight academy. The company’s motto is “Connecting People. Uniting the World” and it is what drives its decision making. Their approach, as reported in their website, is based on seven pillars: safety, environmental sustainability, people and human capital, community, supply chain integrity, cybersecurity, and governance. The company is also very active on ESG,…

Author: Cattolica Investment Club