GME - Valens Credit Report - 2020 11 13
Cash bond markets are grossly overstating credit risk with a cash bond YTW of 9.979% relative to an Intrinsic YTW of 2.389%. Furthermore, Moody's is materially overstating the firm's fundamental credit risk, with its B3 rating six notches lower than Valens' XO (Baa3) rating.Incentives Dictate Behavior™ analysis highlights management members are not well-compensated in a change-in-control scenario, limiting event risk for creditors
GameStop is a multichannel video game and licensed consumer products retailer. The company's products and services includes: New Video Game Hardware, which provides video game platforms from manufacturers; New Video Game Software, which provides new video game software for existing and certain prior generation consoles from manufacturers, including Sony, Nintendo and Microsoft; Video Game Accessories, which consist primarily of controllers, gaming headsets, virtual reality products, and memory cards; and Digital, which sells a variety of digital currency and has developed technology to sell downloadable content and full-game downloads in its stores and on its U.S. website.
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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