Ryan Cohen builds Alibaba stake, wants more share buybacks (4 min read)
Activist investor Ryan Cohen has built a stake in China’s Alibaba Group, worth hundreds of millions of dollars since last August. Ryan believes the company can reach double digit sales growth and nearly 20% free cash flow growth over the next five years. He is pushing Alibaba to increase share buybacks to $60 billion from $40 billion, which was already raised by $15 billion in November. Buybacks can send signals to the markets that the company is confident about how high its shares might be able to climb.
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Goldman Sachs posts its worst earnings miss in a decade (3 min read)
Goldman Sachs’ Q4 profit and revenue were down 66% and 16% respectively, from a year ago, while expenses rose 11% during the same period. Their earnings were below estimates by a huge margin, the largest since 2011. The sharp decline was driven by two of their main divisions, Asset & Wealth management, and Global Banking & Markets. JPMorgan and Bank of America, on the other hand, reported quarterly profits higher than expectations last week. Shares of Goldman Sachs slid more than 6% after the news.
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Davos: PwC survey finds 'bleak CEO outlook' for 2023 (3 min read)
During the recent World Economic Forum (WEF), a survey from PWC showed that 73% of CEOs believed global economic growth would decline over the next twelve months. It was a huge contrast from the optimistic outlooks of 2021 and 2022, and the most pessimistic since this survey started 12 years ago. The top ranked threats to businesses from the survey were inflation, macroeconomic volatility, and geopolitical conflicts.
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Canada's inflation eases in December ahead of another likely rate hike (3 min read)
Canada’s annual inflation rate in December slowed to 6.3%, lower than the previous month, and the estimate from analysts. CPI measures also dropped slightly month-to-month. The decrease in prices was mostly driven by the decline in gas prices. Although inflation is starting to ease, it is still three times higher than the 2% target. Most analysts agreed Bank of Canada will hike the rate by 0.25% this month and is likely to keep it higher for longer given the stickiness of inflation.
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Lines Blurring Between Active, Passive ETFs (4 min read)
The evolution of ETFs has blurred the lines between active and passive investing for some time already. Many indexed-linked ETFs launched in the last 15 years are not truly passive because they focus on narrow investment factors rather than broad market exposure. These factor-oriented indexes, or some may call it “smart” or “strategic” beta ETFs, have been growing rapidly since the early 2000s and currently account for 16% of all equity ETF assets in the US.
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What Investors Can Learn from Thematic ETFs (2 min read)
The success of thematic ETFs has a lot to do with being in the right place and at the right time. Many thematic ETFs suffered little to no assets until some exogenous event caused investors to embrace them in a major way. In most cases, performance has very little impact on attracting or retaining assets. This article used some of the top thematic ETFs that rose to fame in the last several years as examples to illustrate this view point.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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