Category: Markets

Unicredit’s Bold Ambition: TAKING THE LEAD IN EUROPEAN BANKING On September 11th, UniCredit acquired a 4.5% stake in Commerzbank after the German government sold 531.1 million shares, roughly 4.49% of its shareholding in Commerzbank, for about $750 million. The lender doubled its holding in Commerzbank and reached 9% of the shares.On September 23rd, Unicredit asked for approval to increase its stake in Commerzbank to 29.9%, as for the ECB it constitutes as a qualifying holding. Meanwhile, it entered into financial derivative contracts, specifically zero collar derivatives, covering about 11.5% of Commerzbank’s shares. Settlement of these derivatives, which would transfer actual shares to Unicredit, is conditional to obtaning the necessary regulatory approvals.Therefore, Unicredit’s current direct ownership stands at 9%, with the potential of incresing the stake up to 20.5% upon settlement…

Secondary Buyouts It is worth analyzing one of the most common and controversial way in which a PE firm is able to exit from an investment that has been made during the life cycle of one of its Private Equity fund. Secondary buyout, also known as SBO, is a strategy that is increasingly used starting from 1996; in this particular exit strategy the PE firm sells a portfolio company to another PE firm.  According to On Secondary Buyout 1, SBO exit strategy sharply increased starting from roughly 9% in 1996 to more than 40% in 2012. To present and explain why this type of exit is frequently seen as a possible manifestation of agency conflicts and opportunistic behaviors between GPs (General Partners) and LPs (Limited Partners), we can start from…

Navigating Capital Markets: Key Investment Instruments Explained In capital markets, various types of instruments can be bought, providing different ways to invest our money. These instruments offer opportunities to grow our savings, protect them from inflation, or simply generate additional income.Investing in the right mix of these instruments can help build a robust financial portfolio tailored to individual risk tolerances and financial goals.There are four main categories of instruments in capital markets: bonds, derivatives, ETFs, and mutual funds.The simplest way to invest money is by purchasing bonds. Legally, bonds are essentially documents that grants the right to be repaid the money lent to the issuer. This document, called “security” represents the bond. Bonds can be categorized into corporate bonds and government bonds, depending on the issuer—either a corporation or a…

Evergrande is a Chinese real estate company. It has become well known around the world for the huge level of debt (more than 260 billion dollars). Such a high debt could lead to a global financial crisis. This enormous debt comes from a dangerous scheme that Evergrande used to take advantage of the exponentially growing real estate market in China.Basically, in that context Evergrande had to issue bonds in order to keep up with the real estate boom but, clearly, this caused a massive increase in the debt levels as it’s shown in the following graph. In 2020 the real estate bubble burst and by 2021 Evergrande was in default. Every attempt to save Evergrande was unsuccessful and on the 29th of January 2024, a Hong Kong Court ordered the…

In the life of a company, just as it occurs in a person’s life, there are significant instances that mark a deep shift from the previous life. One amongst them is the IPO, which is an acronym that stands for Initial Public Offerings. An IPO is a procedure through which a private company offers its shares among the public (the so-called creation of the free float) for the first time on a regulated market. Upon making this shift, a company transitions from being privately held by a select group of owners and investors to being publicly owned. A company is regarded as private when its shares are held by a relatively limited number of shareholders. These shareholders often include initial investors such as the company’s founders, their family and friends,…

James Harris Simons, the famed mathematician and hedge fund manager, has died at the age of 86, according to a statement from his family foundation. He was widely known among investors for leveraging quantitative analysis and mathematics to create complex algorithms, taking advantage of the market inefficiencies. Jim Simons was born in Massachusetts in 1938 and he has liked mathematics from a very young age. He graduated from the MIT with an undergraduate degree in mathematics and earned a doctorate in the same subject at the age of 23. He soon began working in the academic world where he contributed to the development of knowledge in string theory, quantum field theory and condensed matter physics in the 1970s. Thanks to his talent, in 1964, he started working for the National…

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…

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…

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.…

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…