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Actionable Investment Opportunities

We highlight actionable investment opportunities across various asset classes, including short-term US and Canadian government debt, high-yield bonds, private credit strategies, preferred and structured equity, venture debt, and new allocations to private equity. The secondary market for LP positions in private equity has seen significant activity, with potential deal volume during Q1 2023 3x-4x greater than last year and discounts widening significantly.

Short-term US and Canadian government debt

4%+ yields to maturity for US and Canadian Treasury bonds (for short maturities of up to one year) 

Public market high-yield bonds and leveraged loans. 

7-year annualized expected returns of 7.0% which are favorable relative to equities.  However, high-yield bond and leveraged loan spreads may widen further in a recession, which may make short-term performance more volatile.

Private credit strategies are also highly appealing (offering potential returns from low double-digits to mid-to-high teens).

Preferred and structured equity demand is increasingly sharply.   Sponsors are increasingly dependent on M&A acquisitions to drive portfolio company growth and cannot add senior debt to their capitalization stacks (either syndicated or through private direct lenders).   Preferred equity providers can add 1x-2x turns of leverage at mid-teens+ IRRs.       

Opportunistic credit funds should benefit from a wider range of higher-returning potential investments including a) dislocated publicly-traded bonds and loans and b) opportunities to provide bespoke bi-laterally negotiated credit solutions such as rescue financing or balance sheet restructuring to corporations.  

Venture debt is increasingly interesting especially post the SVB collapse.  The borrower universe has expanded (larger, more-established borrowers), expected yields have increased, and terms have become tighter and stricter.   The loans also have an attractive amortization component which leads to an attractive de-risking element.

New allocations to private equity are also becoming more interesting (especially across PE Secondaries)

Activity in the secondary market has picked up significantly during Q1 driven by institutions selling existing LP positions either to a) bring allocations to PE more inline with their targeted ranges or b) facing liquidity issues as distributions are delayed given current market conditions while capital calls are continuing.

Potential deal volume during Q1 2023 is 3x-4x greater this time last year. 

Discounts have widened significantly for LP transactions with average deals done in the low-to-mid 80% range of stated NAV vs. low-to-mid-90%s last year.   For the first time in several years, modest discounts are even available for best-in-class GP led continuation vehicle single asset deals.  

Continue Reading Topics from This Quarter's Review

Inflation and Labor Markets

Inflation data in the US has been mixed in 2023, with headline CPI declining on a YoY basis but core CPI remaining high. While leading indicators suggest decelerating inflation rates,

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Macroeconomic Conditions

US economic growth is expected to decelerate, with the risk of a mild recession in H2 2023 or early 2024. A severe credit crunch could occur if lending is significantly

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Shorter-term View

The trajectory of equity markets will be determined by interest rates, economic growth, outlook for corporate earnings, and potential for large sustained financial system disruptions. There are three potential scenarios

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Equity Markets

Equity markets have appreciated YTD across all major regions, with growth stocks outperforming value stocks. Valuations are generally fairly valued to modestly overvalued relative to historical averages, but confidence in

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Fixed Income Markets

We discuss the performance and valuation of safe fixed income investments. Yields have pulled back since March due to concerns about US regional banks, and while signs of stress are

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Alternatives & Private Investments

The HFRX Hedge Fund Index was flat in Q1 2023, with convertible arbitrage and credit strategies performing best while global macro/trend following strategies performed worst. Private real estate showed mixed

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BCA is not for everyone – and we are proud of that distinction. We look for a select group of individuals (and their entities) whose financial position and preferences enable them to thrive while working with us.

We welcome your interest. Please give us at call at +1-406-556-8202 or fill in the form below to set up a confidential exploratory consultation.