Latest news with #cashholdings
Yahoo
2 days ago
- Business
- Yahoo
Corporate Cash Levels Are Starting to Fall
(Bloomberg) -- The latest earnings period brought what might be an early warning sign about credit quality for high-grade US companies. Next Stop: Rancho Cucamonga! Where Public Transit Systems Are Bouncing Back Around the World ICE Moves to DNA-Test Families Targeted for Deportation with New Contract US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn Trump Said He Fired the National Portrait Gallery Director. She's Still There. Cash levels at blue-chip companies are shrinking, when excluding results from the most-cash-rich corporations. Among members of the S&P 500 that have posted results, cash levels for the latest quarter fell nearly 1% compared with the last three months of 2024. That's according to a Bloomberg News analysis that focuses on non-financial companies with less than $30 billion of cash. The group's cash holdings, now at $1.14 trillion, have broadly been declining since the third quarter of 2023, when they peaked at $1.21 trillion. While companies are still generally performing well, shrinking cash levels can be a sign of business slowing and profits falling. That's a particular concern now as escalating trade wars potentially boost the cost of foreign inputs, weigh on profits, and increase inflation. Bond prices for many US companies leave little room for error. Spreads, or risk premiums, on US high-grade corporate debt averaged just 0.85 percentage point on Friday, the tightest level since March. The average level for the last two decades is closer to 1.5 percentage point. 'It's actually a dangerous position to be in,' said Michael Contopoulos, deputy chief investment officer at Richard Bernstein Advisors. 'If you bring down cash balances and you find yourself having to deal with higher inflation and higher volatility, your debt is going to get punished.' For the biggest cash generators, the story is different. Giants from Meta Platforms Inc. to Microsoft Corp. and Nvidia Corp. generally posted strong earnings this quarter. The top 12 biggest holders of cash saw their holdings rise about 1.4%, to around $756.7 billion. The dozen companies, which also include companies outside of the technology industry like Johnson & Johnson, each have more than $30 billion of cash and marketable securities on their books, and hold in total about 40% of the S&P 500's cash. The biggest companies can distort averages, and by some measures many high-grade companies aren't looking great. Leverage levels, for example, have been better about 80% of the time over the last two decades, a UBS Group AG analysis found. But by other measures companies are still performing well. Investment-grade firms are holding more cash as a share of their assets than they have on average over the past decade, according to data from S&P that analyzed North American companies. It's likely the behavior that has contributed to the declines in cash — such as boosting share buybacks — has reversed this quarter as companies prepare for a slowdown, Bank of America credit strategist Yuri Seliger said. That's why some money managers are stopping short of saying that it's time to prepare for the worst. 'You still want to be positioned in companies that have the ability to weather a range of scenarios, but at the same time, I don't think you want to price your entire portfolio to the worst possible outcome,' said Maulik Bhansali, senior portfolio manager at Allspring Global Investments. If any credit weakness were to hit, it would likely start with smaller companies, and in leveraged finance or even private credit, said Matthew Mish, UBS' head of credit strategy. A close look does show some signs of weakness, at least in the smaller firms. Corporate profits for domestic, non-financial companies declined by about 3% in the first quarter compared to the previous period, Bureau of Economic Analysis data shows. 'The large liquid megacaps have certainly outperformed,' Mish said. 'Under the hood, there certainly is a little bit more weakness.' Week In Review Elon Musk is selling $5 billion of debt to help fund his artificial intelligence startup xAI Corp., the latest in a series of fundraising efforts across his business empire as the billionaire pivots away from politics and returns to running his companies. As part of that bond and loan sale, xAI opened its books to investors, showing the company generated about $52 million of gross revenue in the first quarter, and lost $341 million before interest, tax, depreciation and amortization. The sale may be complicated by a very public feud between Trump and Musk. Hong Kong developer New World Development Co. is sliding deeper into distress after its recent decision to delay interest payments on some bonds, marking the latest flashpoint in a years-long crisis in China's property market. Hedge fund founder George Weiss filed personal bankruptcy months after a federal judge ruled he's liable for more than $100 million in debt his eponymous firm owes Jefferies Financial Group Inc. JPMorgan Chase & Co. is sounding out investors for an almost $2 billion loan for Trucordia, the latest instance of a Wall Street bank refinancing debt that insurers initially secured from private credit firms. A group of Wall Street banks, led by Jefferies Financial Group Inc. and UBS Group AG, have started pre-marketing more than $1 billion of debt to fund Bain Capital's acquisition of restaurant chain operator Sizzling Platter. Owens & Minor, a distributor of medical supplies, canceled its planned purchase of Rotech Healthcare Holdings, sending its bonds on a wild ride. Notes it sold in April, with a 10% coupon and due 2030, dropped, because they can be redeemed at par and had been trading above face value. Many other securities the company had sold rallied. Banks and private credit funds are competing with each other to provide as much as €2.5 billion ($2.9 billion) of debt to insurance broker Diot-Siaci Group. Clearlake Capital-backed Wellness Pet Company snagged fresh financing and completed the first step of a debt deal that involves creditors taking a reduction in the value of the original amount they lent. German autoparts maker ZF Friedrichshafen AG pulled in more than €4.5 billion ($4.6 billion) in orders for a new bond sale, signaling strong investor support for shoring up its finances during a rocky stretch for the sector. Delta Air Lines Inc. sold $2 billion of investment-grade bonds Thursday to help repay a government loan it took out during the pandemic to pay employees. A $2.15 billion leveraged loan has been launched to help fund the planned acquisition of Colonial Enterprises Inc. Bankrupt genetic analysis company 23andMe will hold a second auction for its cache of DNA data with an opening bid of $305 million from a group led by the company's former chief executive officer, Anne Wojcicki. A subsidiary of Sunnova Energy International Inc. filed for bankruptcy in Texas as its parent struggled to convince creditors to give it funding to turn around its business in an out-of-court process. EchoStar Corp., the wireless and pay-TV operator controlled by billionaire Charlie Ergen, has decided to skip interest payments on three bonds after skipping another late last week. On the Move MUFG Securities Americas Inc. has hired two longtime leveraged loan bankers — Adam Hoffman and Roger Gilbert — as it continues to grow that business. Hoffman joins as head of loan trading while Gilbert will serve as head of loan sales. Both previously worked at Macquarie Group Ltd., which shuttered its US debt capital markets arm earlier this year to focus on private credit. Lane42 Investment Partners founder Scott Graves is building out his senior leadership team, hiring former CVC Capital Partners and Oaktree Capital Management employees to add to the asset manager he founded earlier this year. London-based hedge fund Redhedge Asset Management LLP has hired two portfolio managers amid growing US investor interest for European credit. Won Choi joined from Maven Investment Partners to oversee credit opportunities and special situations. Nick Campregher, formerly at ExodusPoint Capital Management, started last month and is focusing on financials. Before moving to the asset management industry, he had spent about a decade at UBS Group AG as a trader and risk manager. --With assistance from Tom Contiliano. Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling Is Elon Musk's Political Capital Spent? What Does Musk-Trump Split Mean for a 'Big, Beautiful Bill'? Cuts to US Aid Imperil the World's Largest HIV Treatment Program ©2025 Bloomberg L.P. 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
Bloomberg
7 days ago
- Business
- Bloomberg
UniSuper Turns to Cash to Navigate Market Ructions
Hello, Rich Henderson in Bloomberg's Melbourne bureau with the latest headlines... Today's must-reads: • UniSuper ramps up cash holdings • Demand for Aussie bonds falls • Australia cracks down on crypto ATMs UniSuper is ramping up its holdings of cash to navigate market uncertainty. John Pearce, chief investment officer of the A$149 billion fund, said its cash holdings were approaching Covid 19-era levels as Donald Trump's trade war roils global markets.
Bloomberg
03-06-2025
- Business
- Bloomberg
Cash Is Key Trump Trade for $96 Billion Australian Pension Fund
One of Australia's largest pension funds, UniSuper, is ramping up its cash holdings to near Covid 19-era levels as President Donald Trump's trade war roils global markets. John Pearce, chief investment officer of the A$149 billion ($96 billion) fund, called cash the 'only risk-free investment' and said his firm was wary of the risk that a rise in US inflation could hit both stocks and bonds simultaneously.
Yahoo
17-05-2025
- Business
- Yahoo
Warren Buffett's Berkshire Hathaway stood pat last quarter as volatility rocked the market. Here are the 3 biggest takeaways.
Berkshire Hathaway added no new positions to its portfolio last quarter, filings show. Warren Buffett has signaled more caution on the market in the last year. The firm pared its exposure to big banks, completely exiting a stake in Citi. Warren Buffett played it safe again last quarter, with his firm selling more stock while beefing up its cash pile. Berkshire Hathaway revealed in a 13F filing on Thursday that it trimmed several positions last quarter while the stock market was hit with the first wave of volatility related to tariffs, which drove the S&P 500 to a loss of nearly 5%. Buffett's firm now has $258 billion in assets under management, down from $267 billion at the end of 2024. Its cash holdings, meanwhile, swelled to $350 billion at the end of March, up from $334 billion at the end of last year. Here were the biggest takeaways from Berkshire's latest 13F: Berkshire Hathaway didn't add any new positions to its portfolio in the first three months of 2025. At Berkshire's recent annual shareholder meeting, Buffett said the firm got "pretty close" to spending $10 billion on a new deal, but ended up backing out. He also added that he would be happy to spend as much as $100 billion on a good opportunity, but only if it was offered at a good value and if Berkshire felt comfortable holding it long-term. Berkshire began to dramatically increase its holdings of cash starting in 2024. This embedded content is not available in your region. Buffett's firm lowered its exposure to various bank stocks. The firm shed over $2 billion worth of Bank of America shares, marking its largest sale in the quarter. Berkshire also trimmed its stake by 4% in Capital One Financial Corp, and sold $1 billion in Citigroup stock, completely exiting its position in the US banking giant. Berkshire snapped up more than 700,000 shares in Occidental Petroleum, bringing the value of its holdings of the energy company to $13 billion. The company also boosted its holdings of VeriSign, an internet infrastructure company, by 3% to $3.7 billion, and its holdings of Sirius XM Holdings, a broadcasting corporation, by 35% to $2.7 billion. Other stocks Berkshire added to the last quarter include Seagate Technology Holdings, Domino's Pizza, and alcohol distributor Constellation Brands. Read the original article on Business Insider 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
