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Actionable Investment Opportunities

Leverage a barbell strategy for short-term US and Canadian government debt, focusing on shorter maturities and 10-year US Treasuries. Private Credit offers strong returns with senior direct lending and increased demand for flexible junior capital. Asset-backed credit solutions see a rise as high-quality collateral is pledged. In Private Equity, secondary volume grows, especially in GP-led deals with quality assets. Growth equity stands out with balanced valuations and a focus on profitable revenue growth.

Short-term US and Canadian government debt

We favor a barbell approach of shorter-duration maturities of less than two years (yielding 5.0%-5.5%) and mid-duration maturities (10-year US Treasuries) that yield 4.6%.   Adding duration increases the chances of meaningful bond price appreciation should 10-year Treasury yields decline by 100bps+ either due to subsiding inflation or if recessionary conditions emerge.   

Private Credit (offering potential returns from low double-digits to mid-to-high teens).

Senior direct lending strategies are offering asset-level gross yields of 12%-13% with lower leverage levels and better covenants.  

The opportunity set is especially interesting for middle-market borrowers as regional banks are likely to pull back on lending and private credit can increasingly capture share.

The demand for flexible junior capital – provision of flexible payment structures (mix of cash and PIK interest) – is also increasing and offers asset-level mid-teens IRRs.  Additionally, these capital solutions can demand stronger protections in terms of financial and maintenance covenants.  

Asset-backed credit solutions are seeing increased demand as companies seeking liquidity are pledging high-quality sources of collateral such as receivables, inventory, and certain fixed assets.   

Private Equity

Secondary volume has been picking up throughout the year both for LP-led transactions and for GP-led deals.

While discounts have narrowed recently, they remain higher than normal, and buyers increasingly have options to cherry pick certain desired funds from multi-fund portfolios available for sale.  

Given low exit activity and nearing maturity walls for several PE fund vintages from 2007-2011, we expect GP-led continuation vehicles to increase with transactions involving several high-quality assets.

Growth equity is becoming increasingly attractive as a subset of private equity.

Valuations are more reasonable relative to frothy conditions in 2021 / H1 2022.  

Additionally, companies are achieving better mix of revenue growth and profitability in terms of key metrics.   In prior years, companies were far too focused on revenue growth at any cost.     

Continue Reading Topics from This Quarter's Review

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Shorter-term View

US equities soared in 2023, but what’s next? From potential Fed rate cuts to inflation worries, three key scenarios could shape the market’s fate. Will we see the S&P 500

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Equity Markets

In Q3, global equities fell 3.4% but surged 11.2% YTD. Value stocks outpaced growth this quarter, but tech-heavy growth dominates YTD. The S&P 500 dropped 3.4% in Q3 but climbed

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Fixed Income Markets

Q3 saw fixed income dynamics shift as interest rates rose, impacting US Treasuries. High yield bonds and leveraged loans shine this year, with particularly risky HY bonds standing out. Current

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Alternatives & Private Investments

HFRX Hedge Fund Index rose 0.5% in Q3, totaling 1.3% YTD. Convertible arbitrage strategies led, while office real estate faced challenges with increased defaults. Private equity shows positive YTD performance,

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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.