EV - Embedded Expectations Analysis - 2020 04 07
ï€ Eaton Vance Corp. (EV:USA) currently trades below recent averages related toUAFRS-based (Uniform) earnings, with a 9.7x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about their investment strategy, net fund inflows, and their positioning to compete
ï€ Specifically, management may lack confidence in their ability to sustain net inflows among their accounts and to combine their investment strategies to build upon their market-leading positions. Furthermore, they may have concerns about the potential of Calvert and demand for that solution and about growing competition in the customizable multi-asset market. Additionally, they may be downplaying concerns about declining average fee rates, and they may lack confidence in their ability to compete against the market leaders in the custom beta products business. Finally, they may have concerns about continued declines in contribution from consolidated CLO entities and about their ability to adapt as the industry changes
Eaton Vance is engaged in managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. Through its investment affiliates, the company manages active equity, income, alternative and blended strategies across a range of investment styles and asset classes, including United States, global and international equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds, and mortgage-backed securities, as well as a range of systematic investment strategies, including systematic equity, systematic alternatives and managed options strategies.
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.
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