Shelly Lombard

📈🏢 Aby Rosen's RFR Holding is facing a staggering $2.5B debt bill as defaults pile up! 💥 🔎 According to a recent Bisnow article, RFR Holding, a prominent NYC real estate firm, is grappling with mounting debt and defaults. The company, led by billionaire Aby Rosen, has a portfolio of high-profile properties, including the iconic Seagram Building and Lever House. 🏢🏦 📊 The firm's debt load has surged to a whopping $2.5B, with $1.1B in loans maturing this year alone. 💸 The pandemic has hit the commercial real estate market hard, causing defaults to skyrocket. RFR Holding is no exception, with defaults on several properties, including the $200M mortgage on the Seagram Building. 📉 🗣️ "The pandemic has created a perfect storm for commercial real estate," said one industry expert. "Companies like RFR Holding are facing unprecedented challenges as they navigate this difficult time." 🌪️ 🔜 So, what's next for RFR Holding? The company is reportedly exploring options to refinance its debt and avoid further defaults. 💡 With the commercial real estate market showing signs of recovery, there's hope that RFR Holding can weather this storm. 🌞 Stay tuned for more updates on this developing story! 📰🔔 #RFRHolding #CommercialRealEstate #Debt #Defaults #NYCRealEstate

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The Wall Street Journal Again Gets It Right: America Must Quickly Rebuild its Maritime and Shipbuilding Industry for Critical and Urgent National Security Reasons. WSJ Opinion page authors Republican Congressman Mike Waltz and Democratic Senator Mark Kelly make a powerful bipartisan argument that our will and ability to counter our adversaries and strategic competitors, led by China in the Pacific, on the oceans will define whether our generation follows centuries of historical precedent to underpin global free trade and democracy. Excerpts include: “In his 1890 book, “The Influence of Seapower Upon History,” Alfred Thayer Mahan identified a crucial factor in the British Empire’s rise to global dominance: a battle fleet. A strong force could protect a nation’s merchant marine and maritime commerce, which could finance national power. Mahan subsequently exhorted the U.S. to build such a fleet and reap the rewards. America today faces its most significant greatpower threat since the end of the Cold War, especially on the seas. China has learned Mahan’s lessons well. Its international shipbuilding industry and expansive merchant marine, combined with its growing navy, pose a comprehensive threat to American prosperity and security. The U.S. must change course urgently. In our Congressional Guidance for a National Maritime Strategy—and with the support of a bipartisan alliance of maritime officials, industry leaders and lawmakers—we encourage our nation and its leaders to address our pressing maritime challenges. Our framework proposes investment across the maritime sector to rebuild America’s ability to create and sustain a merchant fleet and industry. It offers proposals that will strengthen the U.S.-flagged international shipping fleet, domestic shipbuilding, and our maritime workforce. It also encourages private-sector investments and streamlines burdensome regulations. ……… China’s threat over the oceans and how we respond to it will shape our economic and national security for decades. As former service members, we know that the oceans ensure our path to prosperity and security, today no less than a century ago.” https://lnkd.in/dXZYUT67

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There is a lot of talk about the PE industry not delivering the exits they promised. PitchBook succinctly put it with the title “Behind the J-curve” in its recent in-depth analysis of distribution activity in private market funds. Another side of that story, particularly relevant for secondary buyers like us, is that many private market funds hold their assets at seemingly inflated valuations. TVPI numbers look great for most funds, but they can’t monetize their holdings anywhere near their current NAV, indicating their estimate of “fair market value” is way too optimistic. There is always a market, the price may just not be where you wish it. To a large degree, the reluctance to exit companies results from having them marked too high. Assets were aggressively written up to look good in the short-term, impressing LPs with “paper gains” to raise the next, much bigger fund. #secondaries #privatemarkets

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Read this new white paper by my friend and eminent practitioner-scholar Michael Mauboussin, coauthored with Dan Callahan, CFA. The paper explains how to apply valuation multiples like P/E and EV/EBITDA ratio for modern corporations. The message is consistent with my own research--be careful in mechanically using accounting numbers for modern tech companies--their accounting suffers from numerous deficiencies. This paper suggests precautions an analyst must exercise in using numbers and ratios, while offering concrete solutions.

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As the DOW Jones closed above 40,000 for the first time in its history, Olaolu Aganga recently joined the team on CNBC’s Closing Bell to discuss our playbook in alternatives and current strategic and tactical asset allocation views. Through what many have described as a “supercycle” election year, we see large asset owners seeking out stability in longer-term allocations to alternatives – including private credit and private equity. Typically marked to market at a slower rate, exposure to alternatives can provide important stability through more volatile periods. Balancing strategic and tactical decision making across portfolios is all about assessing risk and return relative to time horizon. Strategically, we’ve been neutral on Europe for some time, but tactically, we’ve been looking internationally to capture opportunities across emerging markets, most recently in China where we see valuation distortion. Join the Mercer Investments team and Olaolu Aganga LIVE in Nashville for the Global Investment Forum June 10-12: bit.ly/3Vm71yw

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100% agree with Jamie Finney's call to Just Start a Fund ...and I up the ante: Start a fund that includes, yes, all the local impact-oriented angels and anchor institutional investors but take it one important step further to include all aspiring citizen investors. I'm talking about the non-accredited (retail) folks, and there are plenty who have the means and desire to put their money where their homes and hearts are. Investment crowdfunding (Reg CF) opened the door for retail investors to engage with values-aligned companies. And -- for all the same reasons that Jamie points out in his post -- they will also become more effective and engaged if they can band together into a fund rather than taking on investments one-by-one. Granted, including retail investors adds complexity -- believe me, I know! A small but committed group of community capital champions has been tackling the barriers of investor exclusivity for years and I'm happy to say it is getting easier thanks to the work of Capital Innovation Lab, National Coalition for Community Capital (NC3), PathLight Law and Michael Shuman. And with community champions like Local Return in Rhode Island and WEPOWER in St. Louis leading the way to build true community wealth, we have more and more examples of how it can be done. #juststartafund https://lnkd.in/e_w7hFAf

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Saw this on Bloomberg: "Publicly traded companies’ profits fell along with interest rates over the last four decades, while profit rates for privately-held firms climbed “substantially,” according to researchers for the Federal Reserve Bank of San Francisco. Private returns began to rise relative to public corporations in the late 1970s and are now more than 50% higher, the authors found. “This shift is substantial, with private company returns surpassing public corporation returns by over 10 percentage points after 2000.” When I read this, I am reminded of a paper by Michael Jensen entitled "The Eclipse of the Public Corporation" published in 1989 (yeah, I've been around a while) which stated: "Despite the protests, this organizational innovation should be encouraged. By resolving the central weakness of the public corporation—the conflict between owners and managers over the control and use of corporate resources—these new organizations are making remarkable gains in operating efficiency, employee productivity, and shareholder value. Over the long term, they will enhance U.S. economic performance relative to our most formidable international competitor, Japan, whose companies are moving in the opposite direction." https://lnkd.in/exR7-afv Private companies are not focused on the quarter, they are focused on creating value, longer-term value. Public companies, if they miss expectations by a penny, get punished severely lately - the focus on the quarter. Admittedly, if they are owned by GPs/funds, they can be used inappropriately to create payouts to LPs (see yesterday's post), buy generally, it is a better form of company. Thoughts?

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A rule of thumb for investment research reports says that if the title is a question, the correct answer is almost invariably "𝗡𝗼". (*) But in this specific case, I’m inclined to say that “esoteric” asset classes can be interesting diversifiers for a multi factor portfolio of risk premia (to be included in the illiquid bucket). “𝗔𝗿𝗲 𝗘𝘀𝗼𝘁𝗲𝗿𝗶𝗰 𝗔𝘀𝘀𝗲𝘁 𝗖𝗹𝗮𝘀𝘀𝗲𝘀 𝘁𝗵𝗲 𝗡𝗲𝘄 𝗛𝗲𝗱𝗴𝗲𝘀? 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀 𝗮𝗿𝗲 𝗲𝘅𝗽𝗮𝗻𝗱𝗶𝗻𝗴 𝗶𝗻 𝗻𝗶𝗰𝗵𝗲 𝗮𝘀𝘀𝗲𝘁 𝗰𝗹𝗮𝘀𝘀𝗲𝘀, 𝗳𝗿𝗼𝗺 𝘄𝗵𝗶𝘀𝗸𝗲𝘆 𝘁𝗼 𝗮𝗿𝘁 𝘁𝗼 𝗶𝗻𝘁𝗲𝗹𝗹𝗲𝗰𝘁𝘂𝗮𝗹 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆.” https://lnkd.in/gvdk4G8q (*) Examples: "Will the Fed get inflation under control?" "Is investing in crypto exchanges a good idea?" “Is this the end of the world and how to trade it?”

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MSO earnings season starts this week, with eight of the top ten US operators reporting. Consensus analyst expectations are for the top ten MSOs to show a Q/Q 2.62% contraction in revenue and adjusted EBITDA to decline 6.18%. (1/3) The top ten MSOs' Y/Y revenue is expected to grow by 3.20%, and AEBITDA is expected to expand by 17.30%. Analysts predict the highest Y/Y revenue growth for Ascend Wellness Holdings (CSE: AAWH.U / OTCQX:AAWH) at +22.40%, and Cresco Labs is predicted to have the best Y/Y improvement in AEBITDA at +62.00%. Finally, here are some of the companies reporting this week: May 7: Ascend Wellness Holdings (CSE: AAWH.U / OTCQX:AAWH) May 8: Green Thumb Industries (GTI), Verano, MariMed, Inc. May 9: Curaleaf, Trulieve, TerrAscend, Cannabist, Jushi Holdings Inc. Source: FactSet

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See below for an outstanding and short read, reminding the Wall Street Journal Editorial Board that they are not carrying out their mission to have their editorials combine deft writing, intelligence, facts and opinion into cogent and timely commentary. I agree with Aaron Edelheit, these are hit pieces, knowingly massacring statistics (facts) and repeating Prohibitionist and anti-business rhetoric that has zero to do with allowing capitalism and Liberalism (the real meaning of the word, note the capital L) to flourish in this country. If the Wall Street Journal can not champion a domestic industry that is $30b+, provides over 400,000 jobs and is setting up US corporations to be leaders in a $100+ billion global industry, then why should The Wall Street Journal continue to think of itself as the vanguard of capitalism and free markets in this country? Just an idea, why not allow free markets, in combination with our regulatory bodies, decide if this sector, that has 70%+ approval in our country (90%+ for medical), should be “allowed” too flourish. The Wall Street Journal, stop your Prohibitionist and thoroughly misleading OpEds and get on the side of US commerce and push for our companies to export this product to all legal markets (like Germany). Let the cannabis sector in this country lead the way for the world, the companies we invest in and follow are ready, why hold them back? https://lnkd.in/eKQ2iitq

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Some interesting observations by Torsten Slok on the relative size of the public (= listed) and private segments of the US corporate sector. Key message: In most metrics, privately held companies far outweigh the publicly traded sector. However, when he says that "public markets account for only a small portion of the overall economy", he is distorting reality a bit, considering that S&P 500 companies account for half of total corporate profits. I suspect that in most other developed economies - given the size of the US listed sector relative to GDP - the relative size of the public and private sectors is even more skewed in favour of the latter. The normative aspect - whether a high or low proportion of public companies is something we should care about - deserves some consideration. 

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Your Next Trade Ep65 "Silver Mooning" In this episode of "Your Next Trade", I cover recent developments like: Silver to the Moon, NVDA earnings, compressed volatility, low quality squeeze, volatility drivers... https://lnkd.in/ef45RCFx

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Brevan Howard's $12 billion flagship fund is down 2.4% this year. 🏢 Despite gaining 0.77% in May, Brevan Howard's Master Fund is falling behind the industry average. 🏢 Hedge funds have averaged 5% gains year-to-date, according to data from research firm HFR. 🏢 Macro hedge funds have beaten equity and emerging market funds to post average gains of 6.5% this year. #hedgefunds https://lnkd.in/eBNMyhMX

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In the latest edition of Barron's, long-tenured Associate Editor Randy Forsyth writes: “Bond investors of a certain age will recall that the Treasury 30-year bond yield briefly touched 14% 40 years ago this past week. While the all-time record of about 15% was hit in September 1981, the 14% yield was more valuable, given that inflation by 1984 was in retreat from the double digits of the late 1970s and early ‘80s, to 4%. That meant a real return of 10% from a risk-free government security, more than stocks have returned historically. […] This was the turning point for the generational decline in yields, observed Jeffrey Gundlach.” And likewise supplied the fuel for a generational increase in equity prices, which had previously languished during the high inflation of the 1970’s until tamed by Fed Chairman Paul Volcker. We didn’t know it in real time, but on reflection the ensuing four decades were halcyon days, and the “easy money” was long duration and long beta. No more. Need new ideas. Fresh perspectives. Outcomes not benchmarks. .

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