Brandon Snow's blog

Opportunities in Japan: lots of *potential* core companies

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In September, we began discussing some of the highlights from our business trip to Japan. As promised, we wanted to share a bit more with you about our meetings and some of the potential we see there for uncovering core companies.

When we look for new businesses, we target three characteristics:

Risk vs. reward: comments on corporate bonds

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I wanted to share a few charts that have me thinking more about the risk in corporate bonds. We have spoken about the lack of return potential, relative to risk, within high-yield bonds for a number of years. But a few charts shared by our team recently show these concerns extending into investment grade (IG).

 

Illuminations from Japan – back in the saddle after a great trip

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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.

Waking up on the other side (of the world)

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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.

Our trader's insight on volatility

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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.

A few interesting charts

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With asset valuations high these days, it makes it increasingly difficult to find returns without taking on more risk. I wanted to provide a few charts that have helped our framework for navigating this market. I hope they can help you in your process as well.

1)  How would the prices of different sovereign bonds respond to a 1% increase in yield? (Pennies--and in many cases a bill!--in front of a steamroller.):

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