Over the next few weeks we want to offer an assessment of the country, companies and market through a Cambridge lens. Over the course of these blogs I hope you gain a better understanding of how we navigate the globe while staying true to our process and philosophy.
While we digest the information we obtained from our recent business trip to Japan, I wanted to share a few thoughts on global interest rates. Amidst the recent Fed “noise” around rates in the U.S., I thought I would highlight what I believe was a shocking milestone reached over in Europe a few weeks ago. Both Henkel (€50B euro market capitalization – seller of household products) and Sanofi (€90B euro market capitalization – pharma company) managed to convince a group of fixed-income investors to pay them for the right to borrow money.
This week, Steve, Greg and I are in Japan researching and meeting with management teams of various companies. The first thing I thought about when I woke up this morning was that my kids would be off to school. I wondered whether they would be eating oatmeal, cereal or pancakes for breakfast. Then I realized that with the time difference, my kids would be sound asleep right now.
Given the abnormally low amounts of volatility of late, we thought it would be appropriate to have our trader, Tyler Hildebrand, provide some insight:
Many people fear volatility, but at Cambridge we believe it presents openings, or as we call them dislocations. A dislocation happens when a market, political or other event causes a separation between the underlying value of a company and the price the market is willing to pay for a stock.
We often get asked what it means to do fundamental or bottom-up analysis. In a nutshell, it is a lot of hard work, time and travel in the pursuit of finding attractive risk/reward opportunities around the world for the benefit of our fundholders. It’s because of this level of effort and diligence that our investors entrust active management and specifically Cambridge with their hard earned savings.