ENVISION HEALTHCARE : KKR Backed and Bankrupt!

Posted on May 31, 2023 by Dr. Marcinko

A”Surprise Billing” Maven

By Staff Reporters

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Envision, a $10 billion physician and ambulatory surgery firm owned by private equity giant Kohlberg Kravis Roberts, filed for Chapter 11 bankruptcy on May 15th 2023.  It was the largest healthcare bankruptcy in US history. 

CITE: https://www.r2library.com/Resource

Envision claimed to employ 25 thousand clinicians- emergency physicians, anesthesiologists, hospitalists, intensivists, and advanced practice nurses and contracted with 780 hospitals.  Envision’s ER physicians delivered 12 million visits in 2021, not quite 10% of the US total hospital ED visits.

READ: https://www.advisory.com/daily-briefing/2023/05/19/envision-bankruptcy#:~:text=On%20Monday%2C%20Envision%20Healthcare%20filed%20for%20Chapter%2011,%E2%80%94%20will%20be%20cancelled%2C%20totaling%20around%20%245.6%20billion.

MORE: https://www.brookings.edu/wp-content/uploads/2021/10/Private-Equity-Investment-As-A-Divining-Rod-For-Market-Failure-14.pdf

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CHARTER COMMUNICATIONS: Why We’re Confident in Our Investment

Posted on May 30, 2023 by Dr. Marcinko

By Vitaliy N. Katsenelson CFA

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You can also listen to a professional narration of this article on iTunes, Google & online.
CHARTER COMMUNICATIONS: Why we’re confident in our investment

December 12, 2022

When my wife Rachel and I were getting married, the preparations for the wedding were stressful. It was the usual stuff – finding caterers, picking a wedding dress and invitations, shrinking the enormous guest list, and making a lot of other (in hindsight), unimportant decisions. (My advice to my kids: Have a destination wedding in Hawaii on the beach; this will shrink your guest list by 90%, leaving only those who really care about you. This way, you’ll be planning a small party, not orchestrating a giant brawl.)

I remember the preparations for the wedding being unnecessarily frustrating. My bride and I thought once we got married and the wedding was behind us, life would get easier. My father made an important observation: “Do you think all your problems will go away once you get married? This is when a different, often more difficult, chapter of your life begins – you’ll be facing different, more important, problems.”

He was so right.

This applies to investing as well. Researching companies is preparation for the wedding. But after we buy a stock – “get married” – is when the real research begins, because life happens to companies. I have to admit, this wedding analogy is imperfect on many levels: Selling stocks is not as traumatic as getting divorced (our stocks don’t know we own them). We are not really married to our stocks; we would love to own them for a long time but will sell them with ease if new information starts hinting that our initial thesis was wrong.

I did not enjoy the preparations for my wedding, but I actually love doing research. Most of our research doesn’t turn into weddings – we buy only a few companies a year but research hundreds.

If this analogy is so bad, why keep it? It highlights what investing is and, as importantly, what it is not. Plus, I sank an hour into it, which I’ll never get back.

We had done a tremendous amount of research before we bought Charter Communications (CHTR). It seems like we have done twice as much research since we bought CHTR (“got married to it“) and have been kicked in the face by the declining stock price. However, we are convinced that our initial decision, although in hindsight it was imperfectly timed (an understatement), was the correct one.

The market’s concerns about the competitive threat to cable operators from fiber and fixed wireless drove all cable stocks down, creating an opportunity (more on that later). The more work we have done, the more we are convinced that this threat, though it may shave off a few percent from revenue growth in the short run, will have little impact on cable operators’ cash flows in the long term.

This is what I wrote about wireless competition:  Let’s start with 5G. It is exponentially better than 4G. It is faster, has less latency, and drains batteries less. But it is still constrained by the scarcity of wireless spectrum – the “air pipe.” This is why wireless providers usually limit how much you can download on your device. Typical wireless providers put a cap of 50GB a month of downloads per household. The average cable customer consumes 400GB of data if they have TV service and 700GB if they don’t. (Remember, if you don’t have TV, you stream it over the internet, and thus consume more data.) Our internet data consumption is only moving in one direction, at a very fast pace, indefinitely: up! This will put further stress on the finite 5G spectrum, whereas broadband’s upward bound is virtually unlimited.
 
5G wireless customers will pay as much as Charter cable customers but will get 10-15x less data and slower speeds. If each 5G customer used as much internet as broadband customers, wireless providers would either go broke (they’d have to be spending hundreds of billions of dollars on new spectrum) or download speeds would slow to a crawl.The observation above is partially correct. T-Mobile, after merging with Sprint, has more spectrum than AT&T and Verizon and has been offering unlimited broadband, at very fast download speeds, for only $30 a month.

Brendan Snow (IMA analyst) and I went to the T-Mobile store to check it out. T-Mobile offered broadband in Brendan’s neighborhood but not in mine. I live in a very average suburban neighborhood, but despite owning more spectrum than its rivals, T-Mobile doesn’t have enough spectrum capacity to offer its service to me. Remember, broadband users consume 50–70 times more broadband than traditional wireless consumers.

Also, this offer is only available to customers who have wireless service with T-Mobile. I have read reviews of T-Mobile’s broadband service, and they all mention one thing in common: Service is intermittent and speed fluctuates a lot depending on the time of day. Bottom line: This service will take some market share from cable providers in areas with low population density, where cable companies have limited presence anyway.

Fiber is another threat that drove cable stocks down. “Fiber to the home providers” offer 1 gigabit speed on both downloads and uploads. Both Charter and Comcast have announced they will be upgrading their networks to DOCSIS 4.0, a new technology which, at a relatively small cost (less than $200 per customer), will put cable data speeds at parity with fiber. Comcast announced that they will roll out the technology everywhere by 2025, while Charter said they will focus on markets where they face the most competition from fiber. DOCSIS 4.0 will turn cable networks from smart to “brilliant” (this is how one cable executive described this technology), promising to increase uptime and reduce maintenance capital expenditures.

Our thinking on the wireless offerings by Charter and Comcast has changed. Initially, we thought it was a defensive move to compete with wireless providers, with the ultimate goal of bundling it with internet service and reducing churn. We assumed it would produce a limited stream of cash flows.

We changed our thinking here.

Cable companies have a structural cost advantage in offering wireless service, as consumers have been trained to connect their phones to Wi-Fi. This means that when we are on our mobile phones, we offload 90–95% of our data to wired networks, where cable companies have virtually unlimited capacity.

Wireless companies have to spend a tremendous amount of money on building and maintaining wireless networks, and pay tens of billions of dollars for spectrum. Cable companies, however, are able to shortcut this expense by buying buckets of data from wireless companies (AT&T and Verizon). As a result, both Charter and Comcast are offering wireless service at a significant discount to their wireless competitors.

The wireless business is growing at a rate of 30–40% a year, requiring minimal investment from cable companies. In a few years, once it reaches scale, it will become a significant contributor to earnings.

December 18th, 2022

Just as we were ready to send out this letter, right after I wrote the above, Charter held an investor day on December 13th. Management said they would roll out DOCSIS 4.0 across their full footprint in three years. The cost per customer is going to be $100, not the $200 that we, and everyone else, had expected. This was great news! $100 is less than two months of internet subscription.

Charter has 55 million customers, so additional investment (capital expenditure) over the next three years will total $5.5 billion. Charter will pay for it from its abundant cash flows. This new technology will allow customers to download and upload at 1 gigabit per second (with potential to take it up to 10 gigabits per second), putting cable technology completely on par with fiber.

In addition to increasing the company’s competitive advantage and pricing power (its product is priced lower than the fiber competition), management said that this investment in DOCSIS 4.0 will reduce its maintenance capital expenditures by $600 million to $1 billion a year.

The stock declined by 20% in response to the news. We laughed!

The market did not appreciate this investment, as it meant that Charter would have to reduce the amount of money it spends on buying back its own stock by the increase in capital expenditures. This is one of the best examples of time arbitrage we have ever seen. The market is not looking past its nose. Charter’s management’s time horizon is years into the future, as it should be.

The value of any asset, be it a company, cow, or bond, is the present value of its future cash flows. We put the new assumptions into our Charter discounted cash flow model: We reduced its cash flows by $5.5 billion over the next three years, and then increased them by $800 million after that (a midpoint number in the company’s guidance). Cost savings alone, ignoring the improved ability to raise prices and grow market share, increase Charter’s value (the present value of cash flows) by about 10%.

Paraphrasing Ben Graham, in the short term the market is a speculative casino but in the long term it is an Excel spreadsheet running discounted cash flows.

All cable stocks have declined, so we did some minor reshuffling of the portfolio. In taxable accounts we sold all of Charter, took a short-term loss, and bought Comcast. In nontaxable accounts we reduced our position in Charter and bought Comcast. We also bought Liberty Broadband in almost all accounts. Liberty Broadband is a company controlled by John Malone that owns about 30% of Charter. The Liberty discount for Charter has widened to about 25%, giving us the opportunity to buy Charter at a significant discount. Though this number may vary by portfolio, our exposure to the cable industry is now about 5%.

Charter and Comcast are like two first cousins who share the same grandparent – John Malone. A large part of Comcast is TCI, a company started by Malone. Today, Malone personally owns roughly 2% of Charter through his Liberty Broadband holding.

Cable is a much better business than wireless, for one reason: It has much less competition. Charter and Comcast compete with wireless carriers and phone companies, but they don’t compete against each other. Their footprints don’t overlap and will never overlap. In fact, they have joint ventures together. Charter’s and Comcast’s cable businesses are of a similar size. Charter has a laser focus on the cable business, whereas Comcast also has a media business (it owns NBC, Sky, and other media properties). Charter is more leveraged than Comcast, but its stock is cheaper. We like the management of both companies.
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FIDUCIARY: Obtain an Unbiased 2nd Financial Advisory Opinion

Posted on May 30, 2023 by Dr. Marcinko

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Dr. David Edward Marcinko MBA CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY

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CONTACT: Ann Miller RN MHA

EMAIL: MarcinkoAdvisors@msn.com

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2nd Opinions

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HAPPY: 529 Day

Posted on May 29, 2023 by Dr. Marcinko

COLLEGE 529 SAVINGS PLAN DAY

By Staff Reporters

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May 29th is observed across the U.S. as 529 Day or 529 College Savings day. It was introduced to increase awareness of these plans and encourage families to start saving toward future education expenses.

A 529 plan is a type of education savings plan.

MORE: https://www.businessinsider.com/personal-finance/529-day-plans-by-state

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WALL $TREET: Memorial Day 2023

Posted on May 29, 2023 by Dr. Marcinko

WALL STREET

By Dr. David Edward Marcinko MBA

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Memorial Day 2023: U.S. exchanges are closed today, May 29th, for Memorial Day

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RE-PODCAST: Financial Implications of Ozempic, Wegovy and Mounjaro

Posted on May 28, 2023 by Dr. Marcinko

By Eric Bricker MD

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What is a Social Impact Bond?

Posted on May 25, 2023 by Dr. Marcinko

New Financial Product – or Societal Economic Hammer

By Dr. David Edward Marcinko MBA CMP™

At a time when government finances are stretched there is growing interest in finding new ways to fund public services [healthcare, for example] which improve social outcomes [public health]. And, one new funding model currently being tested, for the past decade in the United Kingdom, is Social Impact Bonds (SIBs).

Definition

A SIB is a form of payment by results (PBR) in which funding is obtained from private investors to pay for interventions to improve social outcomes. If these interventions succeed in improving outcomes, they should result in savings to the Government and provide wider benefits to society. Of course, as part of a SIB, the Government agrees to pay a proportion of these savings back to the investors. If outcomes do not improve, investors do not receive a return on their investment.

Link: http://en.wikipedia.org/wiki/Social_impact_bond

Wall Street’s Securitization

Wall Street can securitize almost any asset for a commission, or to hold it for profit or loss. Remember David Bowie bonds?

“Securitization” is the process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers of the repackaged instruments to investors. The process can encompass any type of financial asset and promotes liquidity in the marketplace.

Link: http://thehealthcareblog.com/blog/2012/03/05/could-social-impact-bonds-help-restore-public-budgets/

SIBs

SIBs may be an example of securitization. By combining small debt into one large pool, the issuer can divide the large pool into smaller pieces based on each individual bond’s inherent risk of default, and then sell those smaller pieces to investors. The process creates liquidity by enabling smaller investors to purchase shares in a larger asset pool. Individual retail buyers, like physician-investors and others, are able to purchase portions the bond. Without the securitization, retail investors might not be able to afford to buy into a large pool of bonds.

Read more: http://www.investopedia.com/terms/s/securitization.asp#ixzz1oGtOPTvZ

Assessment

This is the first time we’ve discussed SIBs on this ME-P. But, they should get much more attention from our CPA, investment advisor [IA] and financial advisory [FA] readers now that President Obama has announced his support for this British idea like getting private investors to pay for public services such as housing for the homeless, health care for vulnerable populations; or even education. It could work for anything that can save the Government money in the long run, but costs money up front, as long as we can measure it.

Link: http://www.fastcompany.com/1728321/the-most-exciting-00003-of-obama-s-budget-social-impact-bonds

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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DAILY UPDATE: MAXIM Data Breach, Gold and the Markets

Posted on May 25, 2023 by Dr. Marcinko

By Staff Reporters

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Thousands of clients of Maxim Healthcare Services are about to receive a payment of up to $5,000 in compensation for a data breach. According to information obtained by The Sun, the private medical personnel company based in Columbia, Maryland; agreed to pay 2020 data breach claims filed in a class action lawsuit by residents of the state of California.

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Gold futures tallied a third consecutive session decline settling at their lowest in nearly a week as further strength in the U.S. dollar pressured prices for the precious metal. Gold gave up early gains that had been driven by uncertainty surrounding a U.S. debt-ceiling deal in Congress.

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And, here is where the major benchmarks ended yesterday:

  • The S&P 500 Index was down 30.34 points (0.7%) at 4115.24; the Dow Jones industrial average was down 255.59 (0.8%) at 32,799.92; the NASDAQ Composite was down 76.08 (0.6%) at 12,484.16.
  • The 10-year Treasury yield was up about 4 basis points at 3.742%.
  • CBOEs Volatility Index was up 1.52 at 20.04.

Technology and regional bank stocks were among the weakest sectors, with the Philadelphia Semiconductor Index down more than 2%. Energy was one of the few gainers among S&P 500 sectors as crude oil futures climbed to a three-week high of near $74 a barrel. The U.S. dollar index rose a third straight day to a two-month high.

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BREAKING: News on Yelp!

Posted on May 24, 2023 by Dr. Marcinko

By Staff Reporters

Markets: Stocks sagged as investors wondered whether those “productive” debt-ceiling meetings would actually lead to the production of a deal to raise the borrowing cap. The “X-date” by which the US would default on its debts could arrive in eight days [June 6-8].

  • Stock spotlight: Yelp shares popped after an activist investment firm called on the review app to explore strategic alternatives, including a sale, the WSJ reported. The activist investor believes that Yelp could fetch a price that’s more than double its current value.

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U.S. DEBT CEILING DISCUSSIONS: No So Fast!

Posted on May 23, 2023 by Dr. Marcinko

By Staff Reporters

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Talks were “productive,” but no debt ceiling deal yet

As the US careens toward a June 1st deadline to avoid default, President Joe Biden and House Speaker Kevin McCarthy met last night and failed to reach an agreement to prevent economic chaos. Still, McCarthy called their discussion “productive” and “professional,” saying the tone was “better than any other time we’ve had discussions.”

MORE: https://abcnews.go.com/Politics/biden-negotiate-directly-mccarthy-debt-ceiling-republicans-move/story?id=99490207

Before the meeting, McCarthy acknowledged that a deal must be struck this week in order to get it through Congress prior to the deadline, but the two sides remain far apart on the Republican’s demands for spending cuts.

MORE: https://www.theguardian.com/us-news/2023/may/23/first-thing-biden-and-mccarthy-hold-productive-debt-talks-but-no-deal-reached

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META: Busted and Fined!

Posted on May 22, 2023 by Dr. Marcinko

By Staff Reporters

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LONDON (AP) — The European Union just slapped Meta with a record $1.3 billion privacy fine today and ordered it to stop transferring user data across the Atlantic by October, the latest salvo in a decadelong case sparked by U.S. cybersnooping fears.

The penalty fine of 1.2 billion euros from Ireland’s Data Protection Commission is the biggest since the EU’s strict data privacy regime took effect five years ago, surpassing Amazon’s 746 million euro penalty in 2021 for data protection violations.

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Modern Portfolio Theory and Asset Allocation [Not Correlation]

Posted on May 21, 2023 by Dr. Marcinko

THE CORRELATION HOT TOPIC

ACADEMIC C.V. | DAVID EDWARD MARCINKO

By Dr. David Edward Marcinko MBA CMP©

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Modern Portfolio Theory approaches investing by examining the complete market and the full economy. MPT places a great emphasis on the correlation between investments. 

DEFINITION:

Correlation is a measure of how frequently one event tends to happen when another event happens. High positive correlation means two events usually happen together – high SAT scores and getting through college for instance. High negative correlation means two events tend not to happen together – high SATs and a poor grade record.

No correlation means the two events are independent of one another. In statistical terms two events that are perfectly correlated have a “correlation coefficient” of 1; two events that are perfectly negatively correlated have a correlation coefficient of -1; and two events that have zero correlation have a coefficient of 0.

Correlation has been used over the past twenty years by institutions and financial advisors to assemble portfolios of moderate risk.  In calculating correlation, a statistician would examine the possibility of two events happening together, namely:

  • If the probability of A happening is 1/X;
  • And the probability of B happening is 1/Y; then
  • The probability of A and B happening together is (1/X) times (1/Y), or 1/(X times Y).

There are several laws of correlation including;

  1. Combining assets with a perfect positive correlation offers no reduction in portfolio risk.  These two assets will simply move in tandem with each other.
  2. Combining assets with zero correlation (statistically independent) reduces the risk of the portfolio.  If more assets with uncorrelated returns are added to the portfolio, significant risk reduction can be achieved.
  3. Combing assets with a perfect negative correlation could eliminate risk entirely.   This is the principle with “hedging strategies”.  These strategies are discussed later in the book.

Citation: https://www.r2library.com/Resource/Title/0826102549

BUT – CORRELATION IS NOT CAUSATION

https://medicalexecutivepost.com/2021/02/05/correlation-is-not-causation/

In the real world, negative correlations are very rare 

Most assets maintain a positive correlation with each other.  The goal of a prudent investor is to assemble a portfolio that contains uncorrelated assets.  When a portfolio contains assets that possess low correlations, the upward movement of one asset class will help offset the downward movement of another.  This is especially important when economic and market conditions change.

As a result, including assets in your portfolio that are not highly correlated will reduce the overall volatility (as measured by standard deviation) and may also increase long-term investment returns. This is the primary argument for including dissimilar asset classes in your portfolio. Keep in mind that this type of diversification does not guarantee you will avoid a loss.  It simply minimizes the chance of loss. 

In the table provided by Ibbotson, the average correlation between the five major asset classes is displayed. The lowest correlation is between the U.S. Treasury Bonds and the EAFE (international stocks).  The highest correlation is between the S&P 500 and the EAFE; 0.77 or 77 percent. This signifies a prominent level of correlation that has grown even larger during this decade.   Low correlations within the table appear most with U.S. Treasury Bills.

Historical Correlation of Asset Classes

Benchmark                             1          2          3         4         5         6            

1 U.S. Treasury Bill                  1.00    

2 U.S. Bonds                          0.73     1.00    

3 S&P 500                               0.03     0.34     1.00    

4 Commodities                         0.15     0.04     0.08      1.00      

5 International Stocks              -0.13    -0.31    0.77      0.14    1.00       

6 Real Estate                           0.11      0.43    0.81     -0.02    0.66     1.00

Table Source: Ibbotson 1980-2012

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What Is the OTC-QB Venture Market?

Posted on May 20, 2023 by Dr. Marcinko

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By Staff Reporters

The OTCQB, also called “The Venture Market,” is the middle tier of the over-the-counter (OTC) market for U.S. stocks. It was created in 2010 and consists mainly of early-stage and developing U.S. and international companies that are not yet able to qualify for the OTCQX but are not as speculative as the lowest-tier Pink Sheets.

The OTCQB replaced the Financial Industry Regulatory Authority (FINRA)-operated OTC Bulletin Board (OTCBB) as the main market for trading OTC securities that report to a U.S. regulator. As it has no minimum financial standards, the OTCQB often includes shell companies, penny stocks, and small foreign issuers.

LINK: https://www.otcmarkets.com/files/OTCQB%20Fact%20Sheet%20for%20U.S.%20Companies.pdf

Key Takeaways

  • The OTCQB is the mid-tier OTC equity market, which lists primarily early-stage and developing companies in the U.S. and international markets.
  • OTCQB companies must meet certain minimum reporting standards, pass a bid test, and undergo annual verification.
  • The other OTC tiers are the highest quality OTCQX, and the most speculative Pink Sheets.

CITE: https://www.r2library.com/Resource/Title/082610254

READ MORE: https://www.investopedia.com/terms/o/otcqb.asp

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Debt Limit and Foot Locker?

Posted on May 20, 2023 by Dr. Marcinko

By Staff Reporters

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Debt Limit: Stocks took a dive yesterday even though Jerome Powell said that interest rates may not have to rise as much as expected to quash inflation. What could loom even larger than Jerome Powell? A hiccup in negotiations over the debt ceiling raised fears about the possibility of the US defaulting. In fact, negotiations aimed at raising the nation’s debt limit resumed briefly last night after being halted for six hours during the day when Republicans broke off talks saying the White House was being unreasonable. A major sticking point was said to be the overall amount of government spending for next year as the deadline to get a deal in place to prevent an economically crippling default on June 1st draws near. Although no breakthrough came from the evening’s talks, further discussions are reportedly scheduled for later today.

Stock spotlight: Investors were about as interested in Foot Locker as an old stinky sneaker after a slowdown in sales prompted the retailer to slash its outlook for the year.

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DAILY UPDATE: Stocks Up, Again!

Posted on May 19, 2023 by Dr. Marcinko

By Staff Reporters

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  • Markets: Stocks climbed for the second straight day as a last-minute deal to raise the debt ceiling begins to take shape. GOP House Speaker Kevin McCarthy and Democratic Senate Majority Leader Chuck Schumer signaled their chambers could vote next week on an agreement that would avert the US’ first-ever default.
  • Stock spotlight: Netflix shares popped after the streamer said its cheaper ad-supported plan is off to a hot start. Earlier this week, Netflix said that 25% of its new subscribers opted for the ad tier in regions where it’s available.

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Here is where the major benchmarks ended yesterday:

  • The S&P 500 Index was up 39.28 points (0.9%) at 4198.05; the Dow Jones industrial average was up 115.14 (0.3%) at 33,535.91; the NASDAQ Composite was up 188.27 (1.5%) at 12,688.84.
  • The 10-year Treasury yield was up about 7 basis point at 3.65%.
  • CBOE’s Volatility Index was down 0.78 at 16.09.

The tech sector continued to be one of the market’s strongest performers, with the Philadelphia Semiconductor Index jumping nearly 3% and the Nasdaq-100 closing at a 13-month high. Real estate led decliners among S&P 500 sectors.

Also, the U.S. dollar index surged near a two-month high amid growing confidence the Fed won’t be lowering rates any time soon.

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What is a Financial CDO and CMO?

Posted on May 18, 2023 by Dr. Marcinko

Collateralized Debt Obligations

versus

COLLATERALIZED MORTGAGE OBLIGATIONS

https://healthcarefinancials.files.wordpress.com/2018/06/david-edward-marcinko.png

BY DR. DAVID E. MARCINKO MBA CMP®

CMP logo

SPONSOR: http://www.CertifiedMedicalPlanner.org

A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing mortgage-backed securities (MBS).

Like other private label securities backed by assets, a CDO can be thought of as a promise to pay investors in a prescribed sequence, based on the cash flow the CDO collects from the pool of bonds or other assets it owns. Distinctively, CDO credit risk is typically assessed based on a probability of default (PD) derived from ratings on those bonds or assets.

CITE: https://www.r2library.com/Resource/Title/0826102549

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Collateralized Debt Obligation (CDO) - Assignment Point

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Collateralized Mortgage Obligation

A CMO is a debt security backed by mortgages. These mortgage pools are usually separated into different maturity classes called tranches (from the French word for “slice”). The securities were issued by private issuers, as well as the Federal Home Loan Mortgage Corporation (Freddie Mac). As the mortgages were usually government-guaranteed, CMOs usually carried AAA ratings until their current financial meltdown. The early versions of CMOs were known as “plain vanilla,” but recent developments gave us PACs (planned amortization certificates) and TACs (targeted amortization certificates); among too many others. They were all variations on how principal repayments in advance of maturity date were treated.

CITE: https://www.r2library.com/Resource/Title/0826102549

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CMO vs CDO | What is the difference between them? - Fintelligents

RELATED: https://medicalexecutivepost.com/2011/07/06/merrill-lynch-investigated-for-cdo-deal-involving-magnetar/

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VICE MEDIA: Over and Out

Posted on May 16, 2023 by Dr. Marcinko

By Staff Reporters

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Vice Media filed for bankruptcy

The company, which was valued at $5.7 billion in 2017, filed for Chapter 11 bankruptcy protection yesterday and plans to sell itself to a group of creditors for $225 million. It’s the latest in a string of digital media companies to stumble recently after advertising revenue became harder to come by.

Vice’s filing also made it one of seven large companies to head to bankruptcy court in a 48-hour period—the largest number of filings during a two-day period since 2008, according to Bloomberg.

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CORPORATE EARNINGS: Review

Posted on May 16, 2023 by Dr. Marcinko

By Staff Reporters

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Earnings roundup

The following companies are in the earnings pipeline this week:

  • Home Depot is due to release its results for its last fiscal quarter before the market opens Tuesday. Analysts expect the home-improvement chain to report earnings of $3.81 per share, down from $4.09 during the same quarter a year earlier, according to Zacks Investment Research. Home improvement businesses benefited from increased spending on renovations during the pandemic but have struggled as inflation picked up. Home Depot’s shares were down about 0.9% Monday.
  • Target will follow Wednesday, with analysts predicting the big box retailer will report earnings of $1.75 per share, down from $2.19 the year before. Again, investors will be looking to see how Target has dealt with inflation and recession-wary shoppers. Its shares were up more than 1.3%.
  • Walmart wraps up big-retailer week Thursday. Analysts expect the retailer to report earnings of $1.31 per share, a slight improvement from $1.3 a year earlier. Its shares were down about 0.8%.
  • Cisco Systems (CSCO) will report results for the fiscal quarter ended in April on Wednesday. Analysts expect the software company to report earnings of $0.87 per share, up from $0.78 a year before.
  • Two major Chinese tech companies will also report results this week, with Baidu (BIDU) going first before market open Tuesday and Alibaba (BABA) following Thursday.

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CALM: US Equity NASDAQ Traders

Posted on May 15, 2023 by Dr. Marcinko

By Staff Reporters

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  • Markets: Despite the risk of the US defaulting on its debts next month, equity traders have kept calm and carried on, sending the NASDAQ to a weekly gain last week. But over in the bond market, investors are sweating. The cost of credit-default swaps, which act as insurance against a default, is higher in the US than in emerging markets like Mexico and Brazil.
  • Stock spotlight: This stat about the stock market’s concentration is wild…Apple’s market cap is now greater than the value of every company in the Russell 2000 small-cap index combined.

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DAILY UPDATE: Workplace Productivity Down

Posted on May 15, 2023 by Dr. Marcinko

By Staff Reporters

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The US is experiencing the biggest decline in worker productivity since 1948, according to research from EY-Parthenon, and many executives have been quick to single out remote work as the main culprit.

This is what they cite to prove their point.:

  • A study published in Nature Human Behaviour found that working remotely made Microsoft’s remote workers miss important learning opportunities by not rubbing elbows with coworkers who aren’t part of their immediate team.
  • More recent research showed that interacting through a screen can make workers less likely to generate ideas. That’s a problem for tech companies needing to out-innovate the competition.

For many industry leaders, accessing a wider talent pool outside of traditional tech hubs isn’t enough to make up for those drawbacks. And as widespread labor shortages subside and layoffs sweep through Silicon Valley, companies are no longer in a perk war to recruit and retain the brightest minds.

Finally, the Big Tech office pushed mirrors broader thru white-collar labor market dynamics; according to Morning Brew. In December, 13% of LinkedIn postings were for remote jobs, compared to 20% nine months prior.

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What is Corporate “ENTERPRISE” Financial Value?

Posted on May 12, 2023 by Dr. Marcinko

THE E.V. MATH FORMULA

CMP logo

By Dr. David E. Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

The enterprise value [EV] tends to be thought of as a theoretical takeover price if a company were to be bought. It is calculated as market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

CITE: https://www.r2library.com/Resource/Title/0826102549

Enterprise value = common equity at market value (this line item is also known as “market cap”) + debt at market value (here debt refers to interest-bearing liabilities, both long-term and short-term) + minority interest at market value, if any + preferred equity at market value + unfunded pension liabilities and other debt-deemed provisions – value of associate companies – cash and cash equivalents.

MORE: https://en.wikipedia.org/wiki/Enterprise_value

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The CPI Report and Inflation

Posted on May 11, 2023 by Dr. Marcinko

By Staff Reporters

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Stocks were a mixed bag yesterday after the consumer price index showed prices rose 4.9% last month, marking the 10th month in a row of cooling inflation and the first time inflation has dipped below 5% in two years. That’s still higher than the Fed’s 2% target, but it leaves space for Jerome Powell to chill out a bit. Tech stocks got a boost from that news, especially Google’s parent, Alphabet, which also benefited from rolling out its new AI.

CITE: https://www.r2library.com/Resource

What drove the markets?

Economists polled by the Wall Street Journal had forecast the CPI increasing 0.4% and advancing 5.0% over the past year. The core inflation rate rose 0.4% in April for the second straight month, in line with economists forecasts. For the year, the core inflation rate, excluding food and energy prices, increased 5.5% down from a 5.6% rise in March.

“The below 5% headline CPI number is a sigh of relief to a market on edge,” said Alexandra Wilson-Elizondo, co-head of portfolio management for multi asset solutions at Goldman Sachs Asset Management.

Traders hoped that the lower-than-expected inflation data may leave room for the U.S. central bank to refrain from raising interest rates further at its June meeting.

“The data today will be interpreted as not hot enough to force the Fed’s hand in June … We do not think this one data point will determine the outcome of the June FOMC meeting because we still have a string of economic data to process between now and then,” wrote Wilson-Elizondo.

“The details of the print suggest that we are still a meaningful distance from the Fed’s 2% target, giving little reason for the Fed to cut this year.”

Investors priced in the Federal Reserve beginning to trim borrowing costs in coming months, a hope that is seen underpinning stocks of late and helping the S&P 500 index move towards the top of the 3,800 to 4,200 range its has held all year.

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Why are CERTIFIED MEDICAL PLANNER® Textbooks So DARN Popular?

Posted on May 10, 2023 by Dr. Marcinko

 The Big Surprise

[By Dr. David Edward Marcinko MBA CMP®]

http://www.CertifiedMedicalPlanner.org

OK – I was a Certified Financial Planner® before my academic team launched the Certified Medical Planner™ online and on-ground chartered education and board certification designation program a few years ago. I am now CFP reformed and in remission.

MORE: Enter CPMs

Enter the Certified Medical Planner™ Chartered Designation

Today, we are of course, gratified that Certified Medical Planner™ mark notoriety is growing organically in the healthcare, as well as financial services, industry.

Even uber-blogger Mike Kitces MSFS, MTAX, CFP, CLU, ChFC, RHU, REBC, CASL has taken note of us in his musings on the Nerd’s Eye View website. And, the reality is that there are a growing number of CFP educational programs at the post-CFP niche market level.

But, none for healthcare industrial complex: for doctors … by doctors!

Popularity of our Text Books

However, it is our modern, innovative and proprietary Certified Medical Planner™ textbooks and dictionaries that have exploded in the academic marketplace.

In fact, they are now redacted in thousands of medical, graduate, law and B-schools and libraries, as well as colleges and universities throughout the nation. This includes the Library of Congress, National Institute of Health and  the Library of Congress.

What Gives?

We have been told that this textbook popularity and publishing success is because of their balanced and peer-reviewed nature; something not very widespread in the financial services industry that is prone to gross and overstated advertising, salesmanship and marketing hyperbole. And, for this we are very gratified.

But, is there another reason our books are so popular?

A bit of networking and research suggests that interested folks may be eschewing the actual course work in favor of just the high quality textbooks! UGH!

Another reason may be that our books and curricula are kept fresh and updated on our corporate website: http://www.MedicalBusinessAdvisors.com

Assessment

So, what do you think? Matriculation with the professional mark versus self study without the designation mark. Please opine.

Conclusion

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Subscribe: MEDICAL EXECUTIVE POST for curated news, essays, opinions and analysis from the public health, economics, finance, marketing, IT, business and policy management ecosystem.

DOCTORS:

“Insurance & Risk Management Strategies for Doctors” https://tinyurl.com/ydx9kd93

“Fiduciary Financial Planning for Physicians” https://tinyurl.com/y7f5pnox

“Business of Medical Practice 2.0” https://tinyurl.com/yb3x6wr8

Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™  Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Product DetailsProduct Details

HOSPITALS:

“Financial Management Strategies for Hospitals” https://tinyurl.com/yagu567d

“Operational Strategies for Clinics and Hospitals” https://tinyurl.com/y9avbrq5

Product DetailsProduct Details

Adult Learners and Students:

Product DetailsProduct DetailsProduct Details

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Stocks, Musk, Goldman Sachs and Intel

Posted on May 9, 2023 by Dr. Marcinko

By Staff Reporters

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  • Stocks mostly held steady yesterday as everyone waits for April’s inflation data to drop tomorrow. Regional banks saw some movement as PacWest cut its dividend, then teetered up and down throughout the day. But Six Flags theme park operator shot straight up after reporting record revenue for the last quarter thanks to higher ticket prices.
  • Elon Musk warned that Twitter follower counts may drop as the platform removes inactive accounts.
  • Goldman Sachs has agreed to pay $215 million to settle a long-running class-action lawsuit accusing the investment bank of underpaying women. Elon Musk warned that Twitter follower counts may drop as the platform removes inactive accounts.
  • Intel continues to rattle the tech industry by confirming that it plans to cut its workforce to reduce costs. The company declined to share how many workers would be affected but said the layoffs would take place across the company.

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Musings on a Famous Portfolio Asset Allocation Study

Posted on May 9, 2023 by Dr. Marcinko

Some Critics Claim Brinson, Hood, and Beebower Conclusions Wrong

[By Dr. David Edward Marcinko MBA CMP™]

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Frequently, we hear the axiom that asset allocation is the most important investment decision, explaining 93.6% of portfolio returns. The presumption has been that once the risk tolerance and time horizon have been established, investing is simply a matter of implementing a fixed mix of stocks, bonds, and cash using mutual funds selected for this purpose. This axiom is based on a famous study by Brinson, Hood, and Beebower (BHB) published in the Financial Analysts Journal in July/August 1986. It is the stuff of most modern business school and graduate students in economics and finance.

Enter the Critics

One critic claims that BHB’s conclusions and the interpretation of their conclusions are wrong, stating that because of several methodological problems, BHB needed to make certain assumptions for their analysis to go forward. They assumed that the average asset-class weights for the 10-year period studied are the same as the actual normal policy weights; that investments in foreign stocks, real estate, private placements, and venture capital can be proxied by a mix of stocks, bonds, and cash; and that the benchmarks for stocks, bonds, and cash against which fund performance was measured are appropriate. The author believes that each of these assumptions can lead to a faulty measurement of success or failure at market timing and stock selection.

The Jahnke Study

William Jahnke claims that BHB erred in their focus on explaining the variation of quarterly portfolio returns rather than portfolio returns over the 10-year period studied. According to the study, asset allocation policy explains only a small fraction of the range of 10-year portfolio returns earned by the pension funds reported in the study. The author concluded that this discrepancy is caused by the effect of compounding returns. He adds that BHB were wrong to use variance of quarterly returns rather than the standard deviation. Use of standard deviation would reduce the often cited 93.6% to about 79%. Moreover, BHB did not consider the cost of investing, such as operating expenses, management fees, brokerage commissions, and other trading costs, which are more significant for individual investors than for the pension plans studied. Jahnke claims that excessive costs can reduce wealth accumulation by 50%.

Note: (“The Asset Allocation Hoax,” William W. Jahnke, Journal of Financial Planning, February 1997, Institute of Certified Financial Planners [303] 759-4900).

Assessment

Finally, the author takes issue with establishing long-term fixed asset class weights. Asset allocation should be a dynamic process. Higher equity return expectations should in turn produce larger equity allocations, other things being equal.

Certified Medical Planner

Conclusion

Are doctors different than the average investor noted in this essay?

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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Product Details

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e-BOOKS: For Doctors, Financial Advisors, CPAs, Insurance Agents, Medical Consultants and Health Law Attorneys

Posted on May 9, 2023 by Dr. Marcinko

By Ann Miller RN MHA CMP™

INTRODUCING OUR NEXT GENERATION e-BOOK LIBRARY FROM iMBA, Inc.

An e-book is an electronic or digital book that can be read on a computer or a handheld device.

Our new e-books consists of text, images, and are fixed to a specific spot on the page.

And, our e-books are a data files similar in content and structure to a word-processing document that comes in a PDF format. To use our e-books, you need to purchase and download it to a device that has a .pdf file reader app, such as ADOBE® or similar on a smartphone, tablet or computer. A PDF, also known as a portable document format, is the format most people are familiar with and used in our e-books. PDFs are known for their ease of use and ability to hold custom layouts. They are the most commonly used e-Book formats, especially by professionals and adult-learners.

You can then access the e-book and read it, or highlight pages and even take side notes.

e-Books Save Money

With no manufacturing, printing, binding or shipping costs, e-Books are cheaper than traditional hard or paper back books.The price of each specialized and highly niche focused e-Book [50-100 pages] is only $25, whereas similar paperback printed books of this type generally cost $145, or more!

Payable thru PayPal [3% courtesy surcharge applies].

MORE HERE: https://medicalexecutivepost.com/me-pr-a-new-feature/

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PODCAST: What is the Corporate Bankruptcy ZETA Model?

Posted on May 7, 2023 by Dr. Marcinko

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By Dr. David Edward Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

CMP logo

What Is the Zeta Model Altman Score?

The Zeta Model is a mathematical model that estimates the chances of a public company going bankrupt within a two-year time period. The number produced by the model is referred to as the company’s Z-score (or zeta score) and is considered to be a reasonably accurate predictor of future bankruptcy.

REF: https://c996d1545ece1ca2b7ff440941e7b83b.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

CITE: https://www.r2library.com/Resource/Title/082610254

The model was published in 1968 by New York University professor of finance Edward I. Altman. The resulting Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company.

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Altman's Z-Score Model - Overview, Formula, Interpretation

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READ: https://pages.stern.nyu.edu/~ealtman/ZETA-Analysis.pdf

PODCAST: https://www.bing.com/videos/search?q=altman+z-score&&view=detail&mid=A638789D96F2C2946170A638789D96F2C2946170&&FORM=VRDGAR&ru=%2Fvideos%2Fsearch%3Fq%3Daltman%2Bz-score%26FORM%3DHDRSC3

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What is Financial and Accounting DELTA?

Posted on May 7, 2023 by Dr. Marcinko

By Staff Reporters

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What is Delta?

FINANCE: Delta is a risk sensitivity measure used in assessing derivatives. It is one of the many measures that are denoted by a Greek letter. The series of risk measures that use such letters are fittingly referred to as the Greeks. They are often also called risk measures, hedge parameters, or risk sensitivities.

ACCOUNTING: Delta is the ratio of the change in price of an option to the change in price of the underlying asset. Also called the hedge ratio; For a call option on a stock, a delta of 0.50 means that for every $1.00 that the stock goes up, the option price rises by $0.50.

STOCK MARKET: Where:

  • S – the stock price
  • K – the strike price
  • r – the risk-free rate
  • q – the annual dividend yield
  • τ – time until expiration
  • σ – the volatility

CITE: https://www.r2library.com/Resource/Title/082610254

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Understanding Risk Adjusted Portfolio Performance

Posted on May 7, 2023 by Dr. Marcinko

A Vital Feedback Loop for any Medical Professional’s Investment Program

By Dr. David Edward Marcinko MBA, CMP™

[Publisher-in-Chief]

While recently visiting the beautiful Johns Hopkins University and Medical School in Baltimore Maryland, I realized that investment portfolio performance measurement — much like an annual physical exam in the Spring — is an important feedback loop to monitor progress towards the goals of the medical professional’s investment program.

Performance comparisons to market indices and/or peer groups are a useful part of this feedback loop, as long as they are considered in the context of the market environment and with the limitations of market index and manager database construction.  Inherent to performance comparisons is the reality that portfolios taking greater risk will tend to out-perform less risky investments during bullish phases of a market cycle, but are also more likely to under-perform during the bearish phase.  The reason for focusing on performance comparisons over a full market cycle is that the phases biasing results in favor of higher risk approaches can be balanced with less favorable environments for aggressive approaches to lessen/eliminate those biases.

THINK: The “flash crash” of March 2009, and the DJIA now hovering near 33,675 of  late.

The Biases

Can we eliminate the biases of the market environment by adjusting performance for the risk assumed by the portfolio?  While several interesting calculations have been developed to measure risk-adjusted performance, the unfortunate answer is that the biases of the market environment still tend to have an impact even after adjusting returns for various measures of risk.

Assessment

However, medical professionals and their advisors will have many different risk-adjusted return statistics presented to them, so understanding the Sharpe ratio, Treynor ratio, Jensen’s measure or alpha, Morningstar star ratings, etc. and their limitations should help to improve the decisions made from the performance measurement feedback loop.

And, these are discussed elsewhere on this ME-P.

MORE:  https://medicalexecutivepost.com/2022/10/19/what-is-risk-adjusted-stock-market-performance/

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Product DetailsProduct DetailsProduct Details

Product Details  Product Details

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Whatever Happened to the Invisible Hand of Capitalism?

Posted on May 6, 2023 by Dr. Marcinko

The Invisible Hand of Capitalism?

vitaly

By Vitaliy Katsenelson CFA

Just as the well-meaning economist of the Soviet Union didn’t know the correct price of sugar, nor do the good-intentioned economists of our global central banks know where interest rates should be.

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246_1

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Assessment

Even more important, they can’t predict the consequences of their actions.

Here’s why?

http://contrarianedge.com/2016/03/16/whatever-happened-to-the-invisible-hand-of-capitalism/

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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WOODSTOCK for Capitalists

Posted on May 6, 2023 by Dr. Marcinko

ANNUAL MEETING TODAY

By Staff Reporters

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“Woodstock for Capitalists” is happening today

Warren Buffett will preside over Berkshire Hathaway’s 59th annual shareholders meeting today—an event expected to draw a large crowd to Omaha, Nebraska. Everyone will be watching to see what Buffett has to say about the economy, the state of the banking sector, his big bet on Apple, and his struggling “favorite child,”

Geico. Shareholders will also vote on six proposals on climate change, political advocacy, and the firm’s leadership, all of which Buffett opposes.

Agenda: https://www.good-investing.net/event/berkshire-hathaway-annual-shareholders-meeting-2023/#:~:text=The%20Berkshire%20Hathaway%20Annual%20Shareholders%20Meeting%202023%20takes,Shareholder%20Meeting%202023%2C%20including%20the%20Exhibition%20Hall%2C%20open.

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