Latest news with #HowardMarks'
Business Insider
11 hours ago
- Business
- Business Insider
Howard Marks says he used AI tool Perplexity to help write his latest memo
Howard Marks' memos are considered must-reads by many in the financial world, including Warren Buffett. Perplexity, an AI-powered search engine, helped write a chunk of his latest missive. Marks, the billionaire co-founder and co-chairman of Oaktree Capital Management, has been writing memos for 35 years and turns 80 next year. That makes it perhaps a little surprising that he's drafted in a machine as a contributor. "In a sign of the times, I'll let my new (and AI-powered) editorial assistant, Perplexity, fill you in on the background," Marks said in a Wednesday memo titled "More on Repealing the Laws of Economics." The veteran fund manager said he hadn't "changed a word" of Perplexity's output, which was "pretty close to what I would have produced in an hour or two." In support of his argument for free-market economics and less government intervention, Marks roped in the AI tool to lay out how regulations have distorted the fire insurance sector in California, resulting in widespread underinsurance. "As Perplexity notes, insurers were told they couldn't price fire policies to reflect increases in the frequency and severity of forest fires," Marks said. "Likewise, they couldn't raise prices to pass through the higher premiums their reinsurers were charging based on the increased frequency and severity." The distressed-debt investor asked whether a hypothetical insurer would cover a $5 million house with a 1% chance of burning down if the regulator only allowed it to charge $25,000 a year for a policy. "I didn't need Perplexity to tell me the insurance company faces an expected payout of $50,000 on that policy," Marks said. "The answer's simple: you don't write that policy." AI tools are divisive. Proponents hail them as productivity boosters that will free workers from mundane tasks and supercharge economic growth. Critics fear they'll stymie learning and development, erode skills, and destroy so many jobs that they cause mass unemployment. Marks may have embraced AI but he still finds value in human wisdom. In his new memo, he quoted Buffett saying the US fiscal deficit was "unsustainable" and could become "uncontrollable" during Berkshire Hathaway's annual meeting in May. The Wall Street legend also included his own colourful, incisive comments: "The behavior in Washington with regard to both the fiscal deficit and the precariousness of Social Security remind me of the tale of the guy who jumped off the 20-story building. As he passed the 10th floor, he said, 'so far, so good.'" Marks may be in his golden years and as skeptical of high-flying assets as ever, yet seems open-minded about innovations. For example, he went from dismissing bitcoin as "not real" in 2017, to trumpeting its privacy and convenience in 2021 after learning about cryptocurrencies from his son. He's clearly finding uses for AI too.
Yahoo
28-01-2025
- Business
- Yahoo
Is HSBC Holdings plc (HSBC) the Best European Bank Stock to Buy According to Analysts?
We recently compiled a list of the . In this article, we are going to take a look at where HSBC Holdings plc (NYSE:HSBC) stands against the other European bank stocks. Strong earnings, record shareholder returns and resilience amid falling interest rates were the catalysts behind European bank stocks delivering their best year in over a decade. On average, the stocks were up by more than 32% as they benefited from a high interest rate environment as the European central bank sought to keep inflation in check in 2024. Due to their emphasis on fee-based income and wealth management services, major European banks have managed to stay profitable. Additionally, Eurozone banks came into 2024 with stronger balance sheets, lower non-performing loan ratios, and larger capital buffers thanks to strict regulatory reforms put in place following the 2008 financial crisis. Interest rate cuts as the year came to a close did little to dent investor sentiments on the European bank's outlook, as depicted by the Euro Stoxx Bank index rising to its highest level since 2010. While loan growth slowed due to the high interest rate environment, effective risk management did more than enough to offset the losses. READ ALSO: Billionaire Howard Marks' Top 10 Stock Picks and 10 Cheap Value Stocks to Invest In, According To Seth Klarman. The Stoxx 600 Europe Banks Index is predicted to see average price returns of over 8% in 2025, continuing the upward trend. Analysts claim that more value may be unlocked and that European banking stocks are still inexpensive when compared to their US counterparts. A favourable outlook for banking stocks is making now a good time for European governments and buyout companies to sell their holdings. 'We expect the unwind of public stakes at some European listed banks to continue at an uneven pace this year,' said Roberto Scholes, head of strategy at wealth manager Singular Bank. The moves would " positively impact share prices as potential public interference dissipates.' Likewise, President Donald Trump's winning the hotly contested election is emerging as another factor that could continue pushing European bank stocks higher in 2025. That's in part because the new administration has affirmed its commitment to deregulation tax cuts and fiscal stimulus expected to fuel deals and activities in the sector. Deregulation is expected to spur banking deals in 2025 after topping highs of $41.5 billion in 2024. 'We would expect 2025 to be another strong year for M&A as management teams have surplus cash burning a hole in their pockets and buybacks are becoming less accretive,' said Nick Brand, a fund manager at Polar Capital Global Financial Trust. Similarly, investors have been drawn to Europe's beat-down valuations across industries, with stock prices in the region trading at a record 40% discount to their US counterparts based on forward earnings multiples. There are indications that European M&A may continue to pick up in 2025 as buyout companies seek to deploy record quantities of unspent capital. While there have been fears that banks would come under pressure as central banks in the region cut the benchmark interest rates, the sector appears to be more than prepared. A lower interest rate environment is expected to fuel deal-making expected to maintain the positive earnings momentum. Similarly, European bank balance sheets are more than equipped for the test. According to Bloomberg Intelligence, the sector median CET1 ratio, which measures capital levels, is at the highest level it has ever been since 2011, at 14.9%. 'Now that balance sheets are stronger and the product factories have been strengthened, European banks are now reconsidering larger deals,' JPMorgan Chase & Co. analyst Kian Abouhossein wrote in a note. 'This renewed focus is positive for banks with discounted valuations that could become targets.' Stronger balance sheets and improved capital buffers are some of the factors that should allow the best European bank stocks to continue outperforming amid falling interest rates in compile our list of the 10 best European bank stocks to buy according to analysts, we first made a list of all European banks and asset managers that trade on the NASDAQ and NYSE stock exchanges using stock screeners. We examined the banks, focusing on why they stand out as long-term investment plays. Finally, they were ranked based on Wall Street analysts' upside potential. At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). A financial specialist advising a corporate client at the trading desk of a high-stakes bank. HSBC Holdings plc (NYSE:HSBC) provides banking and financial services through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. It stands out as one of the best European banks to buy owing to its track record in returning value through buybacks and dividends. The bank has returned over $34 billion to shareholders over the past two years. After announcing a 9.9% surge in third-quarter profit to $8.48 billion, HSBC Holdings plc (NYSE:HSBC) confirmed a $3 billion share repurchase program. The buyback program aligns with the bank's long-term plan to deliver enhanced shareholder value while maintaining a solid capital structure. The $3 billion buyback program comes from the bank, delivering solid financial results characterized by revenue growth and solid performance in the wealth and wholesale transaction units. In 2025, HSBC Holdings plc (NYSE:HSBC) also intends to simplify its geographic governance and restructure its organization into four business lines. Additionally, the business has reaffirmed its goal of a return on tangible equity in the mid-teens. These latest events demonstrate HSBC's dedication to expansion and reorganization. As of January 24th, HSBC had an upside potential of 1.15%. Despite the modest average upside, the highest target suggests significant growth. The stock is rated as a Strong Buy by several analysts. Over the past year, 5 Wall Street analysts have rated HSBC, resulting in a consensus "Buy" rating: 1 hold, 3 buys, and 1 strong buy. Overall HSBC ranks 10th among the best European bank stocks to buy according to analysts. While we acknowledge the potential of HSBC as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than HSBC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: and. Disclosure: None. This article is originally published at Insider Monkey.
