A Fund Manager Beating 90% of his Rivals Told Us Why He Actively Avoids Companies with Giant Profit Margins — and Shares 5 Stocks He Thinks will Keep Winning for Years (Business Insider)
One of the best ways to get a struggling stock to turn around is a big improvement in its profitability. After all, one reason investors love tech stocks is that they’re remarkably efficient at making tons of money. But is there such a thing as too much of a good thing? Fund manager David Dudding of Columbia Threadneedle Investments says that sometimes, fantastic profit margins are a warning sign. While he’s naturally looking for profitable companies and has substantial investments in tech, he says he wants to see companies that are planning ahead.
Elliott Seeks Perfect Home for Rent-to-Own Retailer (MSN Money)
PerfectHome, the online rent-to-own retailer which became Britain’s biggest following the collapse of BrightHouse earlier this year, is being put up for sale by its hedge fund owner. Sky News has learnt that an affiliate of Elliott Advisors, which has owned Perfect Home since 2018, has kicked off an auction of the chain. The auction comes seven months after BrightHouse became one of the first corporate casualties of the coronavirus pandemic. Its demise cost 2,400 employees their jobs and triggered the closure of 240 shops around the country.
Quiksilver Owner Sued Over Oaktree-Backed Rescue Deal (The Wall Street Journal)
Investors sued Boardriders Inc., the company behind the Quiksilver and Billabong brands, over a $431 million rescue financing package they said elevated the interests of a select group of lenders and private-equity backer Oaktree Capital Management LP. Intermediate Capital Group PLC, York Capital Management and other lenders filed a lawsuit in the Supreme Court of New York on Friday, challenging an August financing deal that supplied the surfwear-inspired apparel company with $110 million in fresh capital from a group of lenders.
Norron’s Multibagger (Hedge Nordic)
Stockholm (HedgeNordic) – Investing directly into unlisted privately-held businesses can sometimes be more lucrative than investing in publicly-traded businesses. Swedish asset manager Norron Asset Management, for instance, has seen its first unlisted holding – Norwegian clinical-stage biopharmaceutical company Vaccibody – surge in value by approximately 2,000 percent since investing in the company in December 2016. Norron Asset Management, which now owns about 1.4 percent of Vaccibody across its long/short equity funds – Norron Select and Norron Target – and its recently-launched long-only equity fund Norron Sustainable Equity, first invested in the Norwegian biotech company in December 2016. “This holding was the first one we invested in using our unlisted holding strategy,” writes the team at Norron. “The reason for our initial investment was the very promising fundamental research that the company was able to present at that stage in the pre-clinical phase concerning personalized cancer vaccines.”
Dalio Says ‘Time Is on China’s Side’ in Power Struggle With U.S. (Bloomberg)
Bridgewater Associates founder Ray Dalio said China has an advantage over the U.S. on a range of issues. “Time is on China’s side and it’s not on the United States’ side, for various developments,” Dalio said Monday in a conversation with New York Times columnist Thomas Friedman at the Milken Institute Global Conference. “What’s going to be a difficult situation in the new administration is destiny is on the side of China growing, and doing better probably.”