Evercore's Core Value

In This Issue: Evercore's Core Value The Great Global Stock Market Rethink Five Rock-Solid Income Opportunities I've developed a proprietary formula designed to pinpoint companies impervious to the volatility rocking the broader markets right now. If you're looking for high-yield safe harbors, your search ends today. Click here for profitable details. Evercore's Core Value 11/11/2014 By Thomas Scarlett Investment banking can be a volatile segment of the economy, especially when the stock market is in a state of turbulence itself. But companies that have proven an ability to navigate these treacherous waters can be big winners for your portfolio. Evercore Partners (NYSE: EVR) is such a company. Evercore's Investment Banking business advises its clients on mergers, acquisitions, divestitures, restructurings, financings, public offerings, private placements and other strategic transactions and also provides institutional investors with high quality equity research, sales and trading execution that is free of the conflicts created by proprietary activities. Meanwhile, Evercore's Investment Management business comprises wealth management, institutional asset management and private equity investing. The firm serves a diverse set of clients around the world from 28 offices in North America, Europe, South America and Asia. Evercore was founded in 1996 by Roger Altman (a senior Treasury Department official in the Clinton administration),David Offensend, and Austin Beutner. In 2010 the firm advised on the two largest initial public offerings of the year---including the General Motors IPO.In the same year, the firm added a Private Funds placement group, and launched a research-driven equity sales and trading business. It ranked 11th in 2010 in the volume of announced transactions as compared to all firms, including bulge bracket and universal banks. The firm grew its Latin American presence through its 2010 acquisition of a 50% interest in Brazil-based G5 Advisors. Evercore's biggest news of late is that it has completed the acquisition of the ISI International Strategy & Investment and the remainder of its legacy Institutional Equities business. The acquisition positions Evercore as an elite and scaled provider of non-proprietary capital markets advice and execution, broadening Evercore's Investment Banking business and expanding its growth opportunities. The business, Evercore ISI, will initially provide macro research, as well as fundamental research coverage of more than 600 companies across 12 industries, or approximately 60% of the combined market cap of the S&P 500. Evercore ISI will serve more than 1,500 institutional investors globally, including the largest asset managers and fund complexes in the world. "We are excited to announce the closing of the ISI transaction, moving us one step closer to our goal of creating the most elite independent investment banking advisory firm in the world," said Ralph Schlosstein, President and Chief Executive Officer. "While it is still early days, client feedback to date affirms our expectation that Evercore ISI will have a positive effect on the growth rate of our overall Investment Banking business and that the Equities business will be an attractive business in its own right. Since the announcement of the acquisition in August, ISI has achieved a #5 ranking for its research product from Institutional Investor, and the firm has had record revenues in September and October, reflecting the support for this transaction from institutional investors globally. We are excited to welcome the entire ISI team to Evercore." "This step creates a broader and more effective banking firm because it provides Evercore with premier skills in all aspects of equities," said Roger Altman, Executive Chairman. "I look forward eagerly to working with our new ISI colleagues." "Our clients' support for this transaction has been extremely positive," said Ed Hyman, EvercoreISI's Chairman. "The combination of talent from the ISI and Evercore Equities businesses has created a powerhouse in research and distribution and we look forward to continuing to serve our expanded client network with the highest quality independent research, analysis and advice." In August 2011, the firm completed its acquisition of Lexicon Partners, an independent UK-based investment banking advisory firm. In October 2011, Evercore and Kotak Mahindra Capital Company Limited announced that the two firms had entered into an exclusive strategic alliance for cross-border M&A advisory services between India and the United States, the United Kingdom, and Mexico. In November 2011, the firm announced that it had agreed to purchase a 45% non-controlling interest in ABS Investment Management, an institutionally focused equity long/short hedge fund of funds manager. With all this expansion, the stock seems well-poised for further growth. Yet the stock price is actually noticeably lower than it was on June 1. The stock suffered a steep decline in June after a relatively disappointing earnings report and has not fully recovered, despite the recent good news about the ISI acquisition. Evercore seems to be seriously undervalued at this point. Its price-earnings ratio is about 27 and its market cap is $1.85 billion. We think it's a buy up to 58. Tom Scarlett is an investment analyst for Personal Finance. What Makes Warren Buffett Envy You? The greatest investor of all time gets sentimental about a specific investing strategy. How come? Because it helped him make his first million back in the day. In fact, the Oracle of Omaha wishes he could still use the system. But Buffett's immense wealth makes the strategy off-limits to him. Luckily, there's nothing stopping you. Buy these fast-growing stocks and watch your portfolio beat the market year after year – just like the Oracle himself. Get started today – go here. The Great Global Stock Market Rethink 11/07/2014 By Richard Stavros If you've been an investor long enough you know the market can behave in maddeningly bizarre ways. Now is one of those times. For example, it's strange oil prices would be so low while most economists forecast global growth. Also bizarre: European stock markets rally on news of the GOP winning control of Congress. And why would U.S. stock markets rally on news of European and Japanese stimulus, particularly given how small these programs are as compared to the U.S. stimulus? What I think is contorting global markets is that in the absence of unprecedented U.S. stimulus that supported them, investors are re-pricing, rethinking and reevaluating just about everything. It's what I call the Great Global Stock Market Rethink. This will mean choppy markets (and require tough stomachs), but also potential new opportunities. Here I review major market trends and how Global Income Edge is thinking about them as opportunities. Trend #1: Unbelievably Low Oil Prices Everyone I know in the energy industry is trying to make sense of the recent fall in oil prices. Is it an oversupply, a fall in demand, or Saudi Arabia trying to knock out higher-cost competitors by flooding the market? I learned years ago that only fools bet on oil prices in the short term, and that oil and gas investments are for long-term investors who can stomach volatility. Oil and gas investments are lumpy. The industry chases demand for years and inevitably oversupplies the market. Then prices drop and the industry cuts back. Then prices rise. How long this present retrenchment will take is anyone's guess, though I believe that when global growth reasserts itself we will see a major shift to higher oil prices. How to Rethink Oil The fall in oil prices will provide the equivalent of a tax cut for consumers and increase purchasing power. Low oil prices will improve margins in Global Income Edge's portfolio companies as they already have pricing power and are globally diversified. But low oil prices open up the opportunity for consumer stocks. And low oil prices could improve the fortunes of shipping companies that have been struggling as one of the industry's major costs, oil, is being cut. The question is will an increased demand for shipping follow increased consumer spending around the world on products and services. We'll be watching this trend closely. Trend #2: The Republican Control of Congress Why would European stock markets rally on news of the GOP winning control of Congress? Maybe Europeans feel a kinship with Republican House Speaker John Boehner's because like many Europeans he appreciates smoking, and drinking good red wine. More likely they think GOP influence might translate into improved trade agreements as Republicans have signaled they will move to fast track various trade deals next year that have been stalled. While many of these agreements are focused on opening markets for U.S. firms in various Asian countries, they will also benefit trade between all of America and major trade partners. How to Rethink Congress The GOP control of Congress is going to benefit multinationals, including many of the firms that are in the Global Income Edge portfolio. The lowering of trade barriers means more access to growth markets and greater earnings. The other opportunity is infrastructure. The GOP has signaled that it's going to support greater infrastructure spending in the U.S. As we have noted in previous reports, crumbling infrastructure in developed countries and a surge of infrastructure building in developing economies will mean 4% annual growth on infrastructure investment "well into the second half of this decade, pushing total investment to $4 trillion," according to a Bain & Company report. We are looking for suitable investments in this area, and will be watching for which sectors could benefit most by stronger trade. Trend #3: European and Japanese Stimulus Last week we wrote that the European market is oversold and that we are optimistic about a recovery given the European Central Bank has unveiled plans to bolster companies' and households' access to financing. Also, we're encouraged by a U.S. Federal Reserve style stimulus program that will pump as much as $1.26 trillion into Europe. Then last week, the Bank of Japan raised its annual target for monetary expansion to $724 billion from as much as $610 billion. Both of these have sent stocks around the world, including in the U.S., soaring. We believe the stimulus could be a boon and will likely drive European and Japanese corporate earnings and stock prices higher. How to Rethink Stimulus The U.S. economy has had a number of positive developments recently, such as the recent third-quarter growth in GDP of 3.5% and an improving labor market. But there is a realization that the recovery is at risk if the rest of the world does not also grow, particularly because 40% of S&P 500 companies have more than 40% of their earning overseas. That's why efforts to revive and sustain America's major trade partners will ultimately be good for America. These developments are clearly an opportunity to focus on U.S. firms doing business in Europe and Japan, as well as European and Japanese firms doing business in the U.S. In the coming issues of Global Income Edge, and our e-letter, Income Without Borders, we'll be outlining investments that stand to benefit from these new trends.   This article originally appeared in the Income Without Borders column. Never miss an issue. Sign up to receive Income Without Borders by email. The Oil of the 21st Century There's a stunning shortage of a resource that every fracker needs. Some say it's so valuable that it's the "oil of the 21st century." It's hard to argue when you know drillers are already paying over 29 times market prices to lock it up. I've found two companies that have a stranglehold on its supply. Both are selling it to the oil industry at ridiculous premiums. This situation gives you a way of turning every $1,000 invested into $11,109… starting tomorrow. 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