A good portion of our equity portfolio has reported earnings thus far. Frankly, if I didn’t know there was so much negative sentiment out there, I’m not sure I would know there was a weakening economic environment based on our those that have reported so far.
I generally try to keep us, at least in the equity sleeve, invested in companies / funds that tend to be opportunistic, overcapitalized, and diversified (perhaps I should start using the acronym ODD?). Our alternative investment managers we are invested in are doing M&A to bolster their platforms (both Vinci and Patria), buying stressed assets (Apollo), and pushing forward monetizations (Brookfield Business Partners).
Our energy investments are hitting on all cylinders, with bond-like energy infrastructure companies showing high single digit growth versus last year with pricing increases pending regulatory approvals as the year goes on (highly influenced by backwards looking inflation). Dividends are increasing materially. Our coal investment is spewing cash, increasing its dividend 10-15% per quarter, and locking up forward sales ~3 years in the future at peak pricing, of which contracting that far in the future was unheard of in the recent past. Our infrastructure fund reported cash flow growth in the 20%+ range versus last year by acquiring energy infrastructure on the cheap and inflation indexed rates pushing profits higher while fixed rate debt keeps interest costs low.
Our convention center hotel / country music venue investment reported all time high profits with no equity issuance through Covid, an incredible feat. It is just beginning to push rates materially.
Despite the softness in retail, our mall stock reported occupancy climbing, an increase in the dividend, and a full capital return of all capital invested in distressed retailers during Covid.
Frankly, it’s not like there aren’t some bumps in the road of certain equity holdings (namely M&A sensitive and direct retail), but for the most part, things don’t seem as bad as headlines indicate these days.
Perhaps that changes in the future…