David J La Placa, Founder | CEO's Picture

David J La Placa, Founder | CEO

Founder & CEO of Intellectus Partners, The Entrepreneurs Advisory I fervently believe that Integrity & Innovation are the two keys to success in business

San Francisco

23 posts

Inverted Yield Curves and stock returns

The US Treasury Yield curve inverted today for the first time in more than a decade. The yield on the 10 year bond has fallen below the yield on the 2 year bond. This is generally considered an important consequence of economic policy and slowing growth. The consensus is that it generally precedes recessions. Our question was, how do stock returns perform once this signal has been triggered? The Graph below is the 2/10 Yield curve since 1975. Please Note : (White Line is the 2/10 Curve) (The horizontal green line is the Zero line for the curve) 1.The Fed Funds rate(yellow) was STILL RISING post ALL of these points of inversion(vertical lines). 2.Also note that the 1 year return for

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In search of value....

As you will see in the following pages, we have been hard art work looking for what are the best values in the marketplace. The October selloff as expected has begun to open up opportunities for us. While we have been saying for quite awhile that a correction was due, and that we would continue to see “growth scares”, we have been very patient at adding equity exposure. Rightly so. Now that the market has hit a generic 10% correction, we deem this level as proper to get a bit more proactive on names. We are not yet calling a market bottom. Frankly, we think there is going to be continued volatility. But, we are now at the point where we begin to prepare for that

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Another growth scare...

With the recent volatility we wanted to share some of our thoughts on what is happening , and how we think about these types of interruptions of the Bull Market. Markets are hard to predict, so we do not really spend too much time on predicting them. What we do is look for powerful trends, innovation, great management teams and undervalued companies. Each and every analyst, portfolio manager or trader that interacts with our capital has the same high bar to achieve. Make sure that the capital invested is allocated in the most optimal long term risk adjusted method as possible. The investments that we own carry a strong combination of accelerating revenue and profit growth along with generally undemanding valuations. The large majority of single names

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Japan is still a good opportunity for patient investors

Profit margins in Japan are quietly surging. This is a phenomenon that we certainly have been seeing in the US for years, and incrementally in Europe. But, the rate of change in Japan is in fact, far better than the other two. Better yet, as the Wall Street Journal points out, with Net Margins at just about 6%, they have room for further improvement as they still lag these other developed markets. Since Abenomics has begun, the productivity of working age population 25-54 year old has risen sharply, from 80% to more than 85%. But the biggest evidence is in the change in real GDP per working age adult. After years of lagging the US, it is now accelerating faster than the US in recent years.

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An important test for all markets

As we have been calling for since the end of last year, there is indeed regime change in the markets. Our point was that the framework of the interest rate deck has changed. The next several years will be different because of this. What it means obviously is yet to be determined. But what really strikes me when I look at this chart below is this: The beginning of this enviornment was when we were reeling from the crisis. Frankly, at the time most of the market participants thought we were still deeply IN it. That is when Mohammed El Erian coined the term "New Normal". It was my opinion that term was really a pejorative for "cant really grow anymore". Well, what this seems to

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A pro-cyclical correction and regime change

What is happening in the markets now. Change is sometimes uncomfortable. It’s been too long since we have had a correction, so one was due. We are off more than 5% from the recent high. A 5% correction is a must and needed event to take the speculators out. We typically get two corrections of this size per year. Interestingly, it has been over 400 days since we have had one. Good opportunities begin to present themselves upon these downlegs, but a 10% or more correction could clearly be in the cards given the extent of this previous move. That said, there is already quite a bit of consternation about this sell off and it did seem as though this was already feared. That usually

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Watch this new emerging trend.....

Crypto Currencies, Blockchain and the ICO Crypto currencies are a digital currency that uses encryption techniques to regulate the creation of currency and verify the transfer of funds, operating independently of any central bank. They are built on top of a Blockchain, which is a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. While not exactly new, the Blockchain and Crypto currencies may be hitting critical mass and are now simultaneously upending multiple industries. They will eventually disrupt almost all industries. The ICO may be it's first "Killer App". The world of finance in particular is directly in it’s line of sight. Because token holders need only hold private keys to guarantee custody, it means that as

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Intellectus Continues to add specialty Advisory talent

We are proud to announce another significant addition to the Intellectus Team. Alice Wu, the former President of Robertson Stephens, Head of Asia Region has joined Intellectus. Alice will be based in our San Francisco office and will frequently be spending time in Asia. Please welcome Alice to the team! Our press release is below: Silicon Valley-based Independent Wealth Management Firm, Intellectus Partners, Hires Alice Wu as Head of Asia Pacific Region, Wealth Creation & Preservation NEW YORK, NY, June 20, 2017–Intellectus Partners today announced that the firm has expanded its leadership team with the addition of Alice Wu as Head of Asia Pacific Region, Wealth Creation & Preservation. Ms. Wu joins Intellectus Partners from Robertson Stephens where she was a Managing Director and President

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Buffet strikes again....AGAIN- an update

"If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright." So said Warren Buffet in 2003. My how things change...Great investors are never dogmatic. As you may recall from our post three months ago(Nov 11, 2016), we have been unabashed bulls on the airline sector for a very long time. In a nutshell, we think capacity discipline and the rationalization of the US airline industry are driving significant efficiencies (not to mention the indirect benefit that they receive from all of the oil and gas that the US is pumping). This is likely to lead to real value creation In fact, we think it already is. Just last week, Delta announced that they were

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The coming rebound in IPO's in 2017

We expect that 2017 is setting up to be a year of heightened activity in Advanced technology, leading to a robust IPO market in 2017. A decade of repressive regulations, costs and other aftershocks of the dual crises(2000-02 & 08/09) have created a pressure valve set to burst. The mountain of regulations have kept fast growing private companies private longer and the money followed. Venture Capital, and in particular, late stage capital(growth funds) have allowed the companies plentiful access to massive funding without the public markets. Advances in innovation have been accelerating at an exponential rate, costs to develop have dropped by orders of magnitude and available pool of talent has dramatically increased. After a long run of activity, the confluence of mobility,

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Alternative Datasets

We are big fans of using all tools available to derive insights for our investment views. In particular, alternative datasets are increasingly valuable, available and differentiated. The advent of Artificial Intelligence on the Investment court has changed how things are done quite a bit. The various A.I. techniques are finding their way into the top trading and research desks of investment managers and advisors. From Natural Language Processing(NLP), to Machine Vision, Deep Learning and others, we are processing mass quantities of complex data via algorithms to better understand (and hopefully predict) our world. In light of our view of the immense value of these alternative data sets and the high growth companies that are creating this market, We thought that we would share an

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Let's chat: Dialogue increases Value in Advisory.

The Entrepreneurial Lifecycle: As the New Year turns. I wanted to touch base on the lifecycle that we all go through and how to optimize the benefits of working with an Advisory firm like Intellectus Partners. There is a difference between investment management and Wealth Management. There is an even bigger difference in advising Entrepreneurs and execs in high growth companies and non-entrepreneurs regarding their finances. Most often clients come to Intellectus Partners at or near an exit and expect the firm to just step in and work it’s “magic”. We can certainly help and add value at that point but wealth management for those in an entrepreneurial world ideally should line up temporally with their business lifecycle. When someone comes to us near their

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Buffet strikes again

As has been his unique habit, Warren Buffet's Berkshire Hathaway has taken an aggressive stake in an industry. Berkshire has filed their Q3 2016 13F filing today and among them was a particularly outstanding item. He has acquired large stakes in an airline, no make that "ALL" four major airline companies, or, the entire industry. Warren Buffet has acquired stakes ranging from $300mm to $1bb in value in each of the legacy carriers, American Air, Delta and United Continental. He also took a stake in Southwest. As we have been stating for quite awhile, the relatively rapid consolidation in the Airline industry, (Continental, Virgin are the latest two) has created a dynamic similar to what the railroad industry went through a decade ago. The consolidation of

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What now? Take a deep breath.....we have been here before

Now that the American electorate has spoken,it is time to sharpen our focus on how tho think through this political earthquake: A "Republican" mandate? Not like you think...It's more like an Independant and a Republican Congress. Who is DJT? Is he really a Republican in a traditional sense? It depends upon how you define "traditional" I thought I would touch on some helpful historical analogies: 1.Today vs 1968-1980 2. DJT ~ Eisenhower and Teddy Roosevelt Now vs 1968: An argument could be made that we have been in one of the most tumultuous periods in American History over the past decade or so. It is evidenced in the stock market behavior of the last 15 years. We have had two of the largest bear

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So, let's not lose focus on the ecomomy...it's not too bad

Let's start by just looking at market action. After nearly a decade of underperformance US financials are showing relative strength. They are indeed cheap on a book basis. But can there be any visibility into earnings growth? Could the end of the Obama years lead to better banking futures? The bank index is now testing multi year highs and happened to be up big in yesterdays massive rally. Here you have the Dow Jones Transportation index.As you can imagine, this is a very cyclical index and is a forward leaning indicator. As goods and people are transported, ecomomic growth moves along with it. Here is a reinforcing datapoint. This shows US Air traffic. Clearly lots of strength here. As both a consumer discretionary item and

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