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We Think Baidu (NASDAQ:BIDU) Can Stay On Top Of Its Debt
We Think Baidu (NASDAQ:BIDU) Can Stay On Top Of Its Debt

Yahoo

time21-05-2025

  • Business
  • Yahoo

We Think Baidu (NASDAQ:BIDU) Can Stay On Top Of Its Debt

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies Baidu, Inc. (NASDAQ:BIDU) makes use of debt. But the more important question is: how much risk is that debt creating? Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together. The image below, which you can click on for greater detail, shows that Baidu had debt of CN¥71.0b at the end of December 2024, a reduction from CN¥76.4b over a year. However, its balance sheet shows it holds CN¥127.7b in cash, so it actually has CN¥56.7b net cash. According to the last reported balance sheet, Baidu had liabilities of CN¥81.0b due within 12 months, and liabilities of CN¥63.2b due beyond 12 months. On the other hand, it had cash of CN¥127.7b and CN¥14.3b worth of receivables due within a year. So these liquid assets roughly match the total liabilities. This state of affairs indicates that Baidu's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the CN¥221.5b company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, Baidu boasts net cash, so it's fair to say it does not have a heavy debt load! Check out our latest analysis for Baidu But the other side of the story is that Baidu saw its EBIT decline by 3.4% over the last year. If earnings continue to decline at that rate the company may have increasing difficulty managing its debt load. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Baidu's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting. Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. Baidu may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. During the last three years, Baidu generated free cash flow amounting to a very robust 94% of its EBIT, more than we'd expect. That positions it well to pay down debt if desirable to do so. While it is always sensible to look at a company's total liabilities, it is very reassuring that Baidu has CN¥56.7b in net cash. The cherry on top was that in converted 94% of that EBIT to free cash flow, bringing in CN¥13b. So we don't think Baidu's use of debt is risky. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of Baidu's earnings per share history for free. At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Oaktree Capital investing $250M in parallel-economy credit card Coign
Oaktree Capital investing $250M in parallel-economy credit card Coign

New York Post

time20-05-2025

  • Business
  • New York Post

Oaktree Capital investing $250M in parallel-economy credit card Coign

Investment giant Oaktree Capital has struck a $250 million deal with Coign, a conservative-focused credit card company, marking one of the largest institutional investments in the so-called parallel economy, NYNext has learned. The parallel economy has gained traction in recent years as conservatives seek products aligned with their values. While companies like Coign have built a foothold, they've largely lacked recognition from major financial institutions. Oaktree Capital, founded by billionaire Howard Marks, signals that this movement is increasingly attracting even typically apolitical investors. In a statement to investors reviewed by NYNext, Coign announced, 'The $250 million partnership with Oaktree provides a debt facility to scale our super-prime credit card portfolio and launch non-prime cards.' Advertisement Howard Marks, pictured with wife Nancy, started Oaktree Capital — which manages more than $200 billion worth of assets. Clint Spaulding / PatrickMcMulla Chris Gray, Managing Director at Oaktree Capital, added that Coign is 'well positioned to be a significant growth story in fintech.' I called up Coign's founder and CEO Rob Collins to ask about the deal and he said Oaktree's involvement underscores just how significant the American market of 120 million conservatives is. Advertisement According to Coign's materials, conservatives are both the largest and wealthiest affinity groups in the US and thus far they've only been given the option of using credit cards that donate overwhelmingly to liberal causes (the top credit card companies have given more than $2 billion to Democratic causes, according to a report in the Washington Times). 'More and more people are recognizing how well conservative movies and media are doing … that extends to our industry,' Collins said. Conservative products particularly have a strong word-of-mouth element and engender serious loyalty from customers. That is all to Coign's benefit — the card already has tens of thousands of members in every state and a waitlist over 110,000 more as the company builds up capacity. Coign, which uses Visa's payment infrastructure, reportedly donates a small amount to conservative causes on every transaction. Advertisement And perhaps most interestingly, the churn for this credit card is just 2.5% — far lower than the usual 10% companies experience, according to a 2025 survey. Coign, which uses Visa's payment infrastructure, reportedly donates a small amount to conservative causes on every transaction. 'Every purchase benefits conservative causes chosen by cardholders,' according to a company statement. 'Spending Right with Coign funds organizations like Rescue 22, which rescues dogs and trains them as service animals for veterans. With Coign, conservatives are taking back our economy and our country — one dollar at a time.' This story is part of NYNext, an indispensable insider insight into the innovations, moonshots and political chess moves that matter most to NYC's power players (and those who aspire to be). Advertisement Collins also said this is recognition of a broader trend: The growing bifurcation of consumer markets. 'All Americans are looking for products that reflect their values,' he adds. Whether it is liberals ridding themselves of their Teslas or conservatives very loudly boycotting beer from Bud Light, the politicization of products is here to stay. Send NYNext a tip: nynextlydia@

Howard Marks Exits Infinera Corp, Impacting Portfolio by -3.41%
Howard Marks Exits Infinera Corp, Impacting Portfolio by -3.41%

Yahoo

time15-05-2025

  • Business
  • Yahoo

Howard Marks Exits Infinera Corp, Impacting Portfolio by -3.41%

Howard Marks (Trades, Portfolio) recently submitted the 13F filing for the first quarter of 2025, providing insights into his investment moves during this period. As the Chairman of Oaktree Capital Management LP, Marks has been instrumental in guiding the firm since its inception in 1995. Known for his adherence to a disciplined investment philosophy, Marks focuses on less efficient markets and alternative investments, with a strong emphasis on debt, preferred stocks, and convertible bonds. His strategic decisions are closely watched by value investors seeking to emulate his success. Howard Marks (Trades, Portfolio) added a total of 9 stocks to his portfolio, with notable additions including: The most significant addition was Nokia Oyj (NYSE:NOK), with 18,752,227 shares, accounting for 2.3% of the portfolio and a total value of $98.82 million. The second largest addition was TransAlta Corp (NYSE:TAC), consisting of 5,585,253 shares, representing approximately 1.21% of the portfolio, with a total value of $52.12 million. The third largest addition was Grab Holdings Ltd (NASDAQ:GRAB), with 10,275,995 shares, accounting for 1.08% of the portfolio and a total value of $46.55 million. Howard Marks (Trades, Portfolio) also increased stakes in a total of 5 stocks, among them: The most notable increase was Barrick Mining Corp (NYSE:B), with an additional 1,501,595 shares, bringing the total to 2,516,658 shares. This adjustment represents a significant 147.93% increase in share count, a 0.68% impact on the current portfolio, with a total value of $48.92 million. The second largest increase was Cemex SAB de CV (NYSE:CX), with an additional 4,794,697 shares, bringing the total to 19,383,729. This adjustment represents a significant 32.87% increase in share count, with a total value of $108.74 million. Howard Marks (Trades, Portfolio) completely exited 12 holdings in the first quarter of 2025, as detailed below: Infinera Corp (INFN): Howard Marks (Trades, Portfolio) sold all 25,175,384 shares, resulting in a -3.41% impact on the portfolio. Sunrise Communications AG (NASDAQ:SNRE): Howard Marks (Trades, Portfolio) liquidated all 1,440,836 shares, causing a -1.28% impact on the portfolio. Howard Marks (Trades, Portfolio) also reduced positions in 16 stocks. The most significant changes include: Reduced Expand Energy Corp (NASDAQ:EXE) by 1,375,000 shares, resulting in a -19.82% decrease in shares and a -2.82% impact on the portfolio. The stock traded at an average price of $104.03 during the quarter and has returned 9.07% over the past 3 months and 15.41% year-to-date. Reduced California Resources Corp (NYSE:CRC) by 670,000 shares, resulting in a -32.73% reduction in shares and a -0.72% impact on the portfolio. The stock traded at an average price of $47.45 during the quarter and has returned -10.62% over the past 3 months and -16.93% year-to-date. At the first quarter of 2025, Howard Marks (Trades, Portfolio)'s portfolio included 55 stocks. The top holdings included 15.45% in TORM PLC (NASDAQ:TRMD), 14.43% in Expand Energy Corp (NASDAQ:EXE), 8.6% in Garrett Motion Inc (NASDAQ:GTX), 5.99% in Sitio Royalties Corp (NYSE:STR), and 4.73% in Anglogold Ashanti PLC (NYSE:AU). The holdings are mainly concentrated in 11 industries: Energy, Basic Materials, Consumer Cyclical, Financial Services, Communication Services, Technology, Real Estate, Healthcare, Utilities, Consumer Defensive, and Industrials. This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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