Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

Valens Research
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UBER - Valens Credit Report - 2023 11 27

Cash bond markets are materially overstating credit risk with a YTW of 6.646% relative to an Intrinsic YTW of 4.918%, while CDS markets are overstating risk with a CDS of 133bps relative to an Intrinsic CDS of 48bps. In addition, Moody's is overstating UBER's fundamental credit risk with its Ba3 credit rating four notches below Valens' IG4 (Baa2) credit rating. Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As positives, most members of management are materia...

Valens Research
  • Valens Research

CIEN - Valens Credit Report - 2023 11 23

Credit markets are overstating CIEN's credit risk with a YTW of 6.624% relative to an Intrinsic YTW of 5.604% and an Intrinsic CDS of 116bps. Furthermore, Moody's is overstating the company's fundamental credit risk, with its speculative Ba1 credit rating three notches lower than Valens' IG4+ (Baa1) credit rating. Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As positives, most members of management are material owners of CIEN equity relative to their annual...

Valens Research
  • Valens Research

AMKR - Valens Credit Report - 2023 11 22

Cash bond markets overstating credit risk with a YTW of 6.926% relative to an Intrinsic YTW of 5.896%, while CDS markets are accurately stating credit risk with a CDS of 162bps relative to an Intrinsic CDS of 124bps. Meanwhile, Moody's is overstating AMKR's fundamental credit risk, with its Ba3 credit rating four notches lower than Valens' IG4+ (Baa2) rating. Incentives Dictate BehaviorTM analysis highlights mostly negative signals for credit holders. As a positive, management members have low ...

Valens Research
  • Valens Research

CIEN - Valens Credit Report - 2023 11 22

Credit markets are overstating CIEN's credit risk with a YTW of 6.624% relative to an Intrinsic YTW of 5.604% and an Intrinsic CDS of 116bps. Furthermore, Moody's is overstating the company's fundamental credit risk, with its speculative Ba1 credit rating three notches lower than Valens' IG4+ (Baa1) credit rating. Incentives Dictate BehaviorTM analysis highlights mixed signals for credit holders. As positives, most members of management are material owners of CIEN equity relative to their annua...

Valens Research
  • Valens Research

Valens Credit Weekly Insights - 2023 11 22

Valens Credit Research team highlights DINO, which has a compelling bond offering that we believe the market is currently mispricing, with strong fundamentals, favorable management alignment, and an actionable trade.

Valens Research
  • Valens Research

VRX - Valens Credit Report - 2018 05 17

Credit markets are overstating VRX's credit risk with a CDS of 485bps and YTW of 7.111% relative to an Intrinsic CDS of 340bps and an Intrinsic YTW of 6.241%. Furthermore, Moody's is materially overstating VRX's fundamental credit risk, with their high-yield B3 credit rating seven notches lower than Valens' IG4 (Baa2) credit rating Incentives Dictate Behavior™ analysis highlights mostly positive signals for creditors. Management's compensation metrics should drive them to focus on all three valu...

Valens Research
  • Valens Research

JCP - Valens Credit Report - 2018 05 16

Credit markets are grossly overstating credit risk, with a CDS of 967bps relative to an Intrinsic CDS of 401bps, and a cash bond YTW of 13.127% relative to an Intrinsic YTW of 6.957%. Furthermore, Moody's is materially overstating JCP's fundamental credit risk, viewing the firm as a highly speculative, high-yield credit, with its B3 rating six notches lower than Valens' XO (Baa3) rating Incentives Dictate Behavior™ analysis highlights that JCP's management compensation framework should incentivi...

Joel Litman ... (+2)
  • Joel Litman
  • Rob Spivey

Valens Market Phase Cycle Monitor & Corporate Credit Macro View - Apri...

In general, management teams tend to be value buyers, buying when their stocks dip and withdrawing when their equity rallies. If they don't, it can be a sign of their concern about fundamentals. Watching this statistic can be helpful in confirming other signals about the fundamental outlook. Over the past month, with earnings related black-out periods removed, company management teams have taken the opportunity to buy their stock at higher than average levels. Management teams are showing confid...

Joel Litman ... (+2)
  • Joel Litman
  • Rob Spivey

Valens Research US Market Phase Cycle Monitor & Corporate Credit Macro...

As the world rings in to the new year in a few days, many will sing Auld Lang Syne. The lyrics ask if we should put the past behind us, or take the opportunity to remember the friendships that got us where we are today. It is a perfect time to reflect on one old friend…the current bull market. It is approaching 7 years old (or even longer, depending on how you define the beginning of the bull)… The phase “bull markets don't die of old age” has been written a lot of use in the past year, because ...

Joel Litman ... (+2)
  • Joel Litman
  • Rob Spivey

Valens Research US Market Phase Cycle Monitor & Corporate Credit Macro...

In the last month's Market Phase Cycle, we highlighted inflation as a key risk that investors would be focused on as we moved through 2018. Shortly thereafter, the market had a correction due largely to this issue and its implications for interest rates and equity investors. Inflation also is a negative for equity multiples longer-term because of its implication for real returns for investors. In essence, inflation leads to lower valuations in the long-term. However, in the nearer-term, inflatio...

Joel Litman ... (+2)
  • Joel Litman
  • Rob Spivey

Valens Research US Market Phase Cycle Monitor & Corporate Credit Macro...

In late 2016 into early 2017, we repeatedly highlighted that fundamentals appeared to be accelerating favorably, and this would be a tailwind for markets in the coming year. As we enter 2018, we see many factors pointing similarly for the markets. Management teams continue to be ramping up investment, and corporate earnings are benefiting from the corporate tax cut. Valuations remain reasonable. Also, credit risk remains muted with strong balance sheets and income statements, and limited debt ma...

Joel Litman ... (+2)
  • Joel Litman
  • Rob Spivey

Valens Research US Market Phase Cycle Monitor & Corporate Credit Macro...

Equity market expectations are currently not aggressive – pricing in continued modest growth with steady ROA' improvement. If corporations continue to deliver the strong adjusted earnings growth they've delivered this year, there is substantial fundamental upside going forward. Investor sentiment has fallen from overly bullish levels to very conservative levels in the past 3 months. Investors are positioned for a pullback, making it less likely to happen. As highlighted in prior letters, the mar...

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