Starwood REIT Misleads, Like BREIT only Worse!
(Apr 2024)
By Craig McCann and
Regina Meng
You can download a pdf of this article to print or email here.
In late 2022 we analyzed BREIT and concluded that BREIT had been systematically inflating its NAV, smoothing its returns and misleading investors. The intervening 18 months have confirmed our opinions.
We focused on BREIT because it was a juggernaut and a poster child for the nontraded REIT industry trying to rebuild after its prior "lifecycle" flimflam was no longer tenable in the face of...
Another Example of Apparent Marking-the-Close
(Mar 2024)
By Craig McCann and
Mike Yan
You can download a PDF of this article to print or email here
Introduction
We recently posted research into stock issuances solely underwritten by Aegis Capital. We concluded that investors, including many Aegis' retail customers, suffered $3.0 billion to $5 billion in losses in
recent years as a result of Aegis' conduct. You can view that post here.
We also concluded that in at least three instances either Aegis marked the close or looked the...
2024 Brokerage Firm Risk Rankings
(Feb 2024)
By Craig McCann, Chuan Qin and Mike Yan
We previously published two papers ranking brokerage firms based on the complaint history associated with their current brokers and the complaints associated with brokers who they employed
at the time of the conduct being complained about, wherever those brokers are currently employed.
We recently updated our analysis of complaints against brokerage firms and found that our earlier results were extremely useful for identifying brokerage firms likely...
Blackstone Fiddles as BREIT Burns
(Apr 2023)
By Craig McCann and Regina Meng.
You can download a pdf of this article to print or email here.
Introduction
In December, we argued that Blackstone Real Estate Income Trust ("BREIT") smoothed and inflated its reported returns for years, leading to large investor inflows. [1] We predicted that a run on the bank had started because of Blackstone's prior conduct, leaving it with two very bad options. BREIT could honor redemption requests at posted NAVs and see its NAV cut in half as the NAV...
SLCG Research: Structured Product Indexes
(Nov 2013)
Most research on structured products focuses on what is known as initial date mispricing -- the difference between what a product costs and how much it is worth, as of the issue date. If you look at any of our structured product reports (let's take this reverse convertible, for example), you can see that the product was issued at a price of $1,000, but that the present value of its resulting cashflows only comes out to $960.40. The difference, $39.60 or 3.96%, represents an expected loss to...
SLCG Research: Structured Product Based Variable Annuities
(Sep 2013)
In 2010, AXA Equitable began issuing a new kind of variable annuity that, in addition to traditional mutual fund-like subaccounts, also included an option for a structured product-like crediting formula linked to an underlying index such as the S&P 500. Our firm had done a lot of work on both structured products and variable annuities, so in late 2011 we started analyzing the structured product embedded in AXA's product, eventually writing a short research paper on the subject which we...
SLCG Research: Structured Certificates of Deposit
(Jul 2013)
Lately, we've been fascinated by structured certificates of deposit (CDs), also known as 'market-linked CDs', 'equity-linked CDs', 'market contingent CDs', etc. Structured CDs are bank deposits that have interest payments linked to market indexes, individual stocks, commodities, or any other underlying asset. Unlike structured products, which have public SEC disclosure documents, structured CDs are not well studied and even the size of the market is not perfectly clear. We covered the basics...
SLCG Research: Dual Directional Structured Products
(May 2012)
Earlier this month, SLCG released a new research paper that values Dual Directional Structured Products (DDSPs). DDSPs are debt securities that feature payoffs very much like a long straddle position on the underlying asset for small price movements -- the investor realizes gains if the underlying asset increases or decreases in price (the origin of the term 'dual directional') within a certain range during the term of the note.
DDSPs differ from a conventional straddle position in a number...
SLCG Research: Average Credit Quality
(Aug 2011)
SLCG released today 'What Does a Mutual Fund's Average Credit Quality Tell Investors?'
Bond mutual funds often report an "average credit quality" in their marketing materials. A fund's average credit quality is represented by a rating (e.g. A, A-) that is based on the credit ratings of the fund's individual securities, and these credit ratings come directly from rating agencies such as Standard and Poor's and Moody's.
In this paper, we explain a methodological flaw in the way average...
SLCG Study on Competitiveness of Canadian Market for Securities
(Jun 2011)
Investment Industry Association of Canada Releases SLCG Study on Competitiveness of Canadian Market for Securities Data
SLCG was recently hired by the Investment Industry Association of Canada (IIAC) to investigate and write a report about the competitiveness in the market for securities data in Canada.
Canadian securities data costs have more than doubled since the mid-1990s. The IIAC alleged that these costs increases were not due to any improvement in technology or quality. SLCG...
