Category: Risk

Remember Depeche Mode? You know the 80’s New Wave band? They blasted through the US charts. One of their iconic album’s was called “Black Celebration”.  This album was a sensation. One particular song of interest from the album was “A Question of Time”.

Lyrics:

It’s just a question of time
And it’s running out for you
It won’t be long until you’ll do
Exactly what they want you to


This can be referenced in the US bond markets with interest rates.

In the 90’s there were the “Bond Vigilantes” that put the bond markets back into equilibrium. If rates were out of the norm, they would take a counter position in hopes of the spread narrowing.


The US Treasuries rates are at an all time low. From a historical standard, there’s only 2 directions the rates will go.  The rates will go sideways or go up. 


Because rates are so low, savers have been punished with low interest rates.  These investors have been looking for higher yield.  But, as the yield increases, so do the risks.  Some of these riskier markets are corporates, high yield corporates, mortgage back securities, shadow crypto banking markets, and more.

These alternative fixed income markets create risk arbitrage interest rate opportunities for investors.  Capital will flow out of low interest rates into these higher yielding opportunities.  Examples can be seen with low bank rates and savers moving out seeking higher yield in corporate bonds.

Does it matter if the Fed lowers rates anymore? Which way will they go?

Is it a Question of time before the Fed raises rates?  As the song continues:

It’s just a question of time
And it’s running out for you
It won’t be long until you’ll do
Exactly what they want you to
It won’t be long until you’ll do
Exactly what they want you to



As the title of this article, “It’s a Question of Time.”
Be prepared. Review and analyze your portfolio today.  Contact us NOW!

Lyrics:
Depeche Mode, Martin Gore

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Because of COVID-19, we have seen an increase in cyber crimes.  The holidays are here which is a perfect time for cyber criminals.  It’s a perfect time because more people are working from home using their personal electronic devices and shopping online.  Every day precautions should be made to help minimize cyber crimes.

A recent example I’ve seen myself is with an email from a well known bank I received.  The email wanted me to log in, view documents, or visit their site.  I was suspicious.  A simple procedure I used is to check the email header and look for the Sender Policy Framework (SPF) or Domain Keys Identified Mail (DKIM) email verification.  This validates the domain name identity that is associated with the message through cryptographic authentication.  This is how a DKIM looks. 

Typically you’re going to want to make sure the DKIM “d=XXX” matches whoever sent it to you especially if it’s coming from somebody important like a financial institution, medical health, or insurance.  Things like food or events may have mismatched DKIM headers.  Here’s a sample from Lucilles BBQ from the Gmail app.  Gmail has a nice and simple “View Security Detail” feature for each email so that you can visually see the security details easily.  FBMTA.com is Fishbowl which is a restaurant marketing software platform. 

I also put a sample of TreveriCapital email header below.

If everything looks fine but you’re still suspicious, you can always call whoever sent it to you and ask if they have any records of sending you anything.  Most companies will have a contact relationship manager (CRM) with client correspondence details of you. 

These simple steps can help minimize future cyber criminal problems.

spotify unicorn slayer executive liquidity IPO

This is no Aprils Fools…

This is another case of unicorn slaying.  Lets see how this slay unfolds. Recently Spotify issued a $1B convertible debt from TPG, Dragoneer, and Goldman Sachs clients. We will call them the VC mob (VCM).

Terms:

  1. VCM can convert the debt to equity at a 20% discount of the IPO price.  (print money baby!!)
  2. If no IPO within 1 year, the carnage, oops, I mean the discount increases 2.5% and the interest on the debt (5%) will increases 1% maxed out to 10% every six months there after.
  3. VCM can sell their shares 90 days after IPO.  Spotify employees are locked up for 180 days zombiefied.

What this means is Spotify will IPO ASAP.  The race to zero first reported by The Wall Street Journal.  Treveri Capital specializes in risk management for executive liquidity of pre-IPO companies.

Information contained herein is for informational purposes only and should not be construed as an offer, solicitation, or recommendation to buy or sell securities, or personalized investment, tax or legal advice. The information has been obtained from sources believed to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice. TreveriCapital LLC is a California registered investment advisor.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If the public markets are any sign of the future, unicorn valuations will be difficult to understand.  Public companies are an indicator of comparable private companies.  Public companies are also the most comparable to any private business when seeking valuations because they are constantly being priced during the day with various buyers and sellers.  Although private companies are protected from the volatility of the daily public  markets, private companies have very uncertain valuation numbers especially when they are juiced up.

Even though public companies are public, their valuations are uncertain.  An example is seen here with Linkedin ($LNKD) and Tableau Software ($DATA).  Over night their valuations were annihilated.  LinkedIn has $9.6 billion (-43.63%) and Tableau Software has $2.1 billion (-49.44%) valuation disappear in 24 hours.

LNKD Unicorn

DATA unicorn valuation

As we can see, Wall Street does not hold back.  Eventually these private companies need liquidity for insiders, investors, or expansion.  They either raise another round of fantasy juice, get bought out, or do an initial public offering (IPO).  During this process, valuation is re-analyzed.  If the public markets are any indicator of the future, be mindful of any private company hiccups.

Is this the start of “The Disappearing Unicorn Act?

 

 

Information contained herein is for informational purposes only and should not be construed as an offer, solicitation, or recommendation to buy or sell securities, or personalized investment, tax or legal advice. The information has been obtained from sources believed to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice. TreveriCapital LLC is a California registered investment advisor.





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