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The Opportunities And Challenges Of Private Market Investing

The Opportunities And Challenges Of Private Market Investing

By Anna Davies

If you have a portfolio of stocks, bonds and other public assets, you may be intrigued by private market investing. Private market investing—a phrase often used interchangeably with private equity, venture investing and direct lending—offers robust opportunity, said Jay Karpen, investment manager at Whittier Trust.

“Companies are staying private longer and are going public at larger sizes than they were a decade ago,” he said. “Because of that, we’re seeing more investors who want to participate in the private markets.”

But while it may be easier than ever to participate in private markets, these investments require a different mindset and strategy than investing in public assets. “There’s more risk due to less disclosure combined with asymmetric information, illiquidity, execution challenges and manager risk,” said Karpen, adding that connections to opportunities, extensive due diligence and access to industry experts is essential.

Here are five tips to consider when you’re adding private market investments to your portfolio. 

An Extension Of Traditional Asset Classes 

Instead of thinking of private market investments as a brand new type of investment, consider it an extension of traditional asset classes, said Karpen. 

“Venture and growth equity have similar characteristics to small and mid-cap equities, private equity buyout is similar to large cap and direct lending is similar to fixed income markets,” said Karpen. 

That said, private market investing does bring additional considerations for investors. For one, the investment is illiquid, they are loosely regulated and there are often fees associated with private market investments. 

“You should expect to be compensated for these risks, otherwise it may not be worth it,” said Karpen.

The Right Partner Is Essential 

Since these investments are illiquid, and private equity vehicles generally require a large financial commitment, it’s important to take the time to understand the investment partnership,

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Amazon’s first-ever fall Prime Day brings new challenges in the midst of a tumultuous year

Amazon’s first-ever fall Prime Day brings new challenges in the midst of a tumultuous year

Amazon and its army of logistics workers are bracing for the first-ever fall Prime Day starting Tuesday, as the extraordinary circumstances of 2020 bring new challenges for a shopping event that has become key for Amazon’s e-commerce business.



a truck on a city street: An Amazon Prime truck in downtown Seattle near Amazon HQ. (GeekWire Photo / Kurt Schlosser)


© Provided by Geekwire
An Amazon Prime truck in downtown Seattle near Amazon HQ. (GeekWire Photo / Kurt Schlosser)

The pandemic created unprecedented change and disruption for Amazon. The company has seen its sales surge, and it has rapidly added staff and infrastructure to keep up. Typically, Amazon holds the contrived shopping holiday in July to boost sales during the slow season, but this year, the company pushed Prime Day to the fall when it was struggling to keep up with a deluge of orders from customers sheltering at home.

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Prime Day offers sales on hundreds of items for members of Amazon’s Prime subscription service. It began in 2015 and has become a reliable revenue boost for the company.

But the shift to October presents new challenges, coming just weeks before the holiday shopping season, amid the ongoing coronavirus crisis and a period of acute environmental concerns. Meanwhile, the company’s treatment of its third-party sellers is under a microscope following the release of a House subcommittee’s antitrust report last week.

Amazon’s plan to forge ahead with Prime Day despite those complications reveals how essential the six-year-old shopping holiday has become to the company.

An extra long holiday

The decision to hold Prime Day Oct. 13-14 effectively adds an extra month to Amazon’s peak season, the holiday rush that starts with Black Friday in ordinary years. It’s a major effort for Amazon’s logistics and delivery team. Amazon staffs up warehouses with seasonal workers and requires employees to work overtime to keep up with demand.

This spring, Amazon was caught unprepared by

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Intercept Pharmaceuticals: Regulatory Challenges Offset The Bargain (NASDAQ:ICPT)

Intercept Pharmaceuticals: Regulatory Challenges Offset The Bargain (NASDAQ:ICPT)

Investment Thesis

Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) is in the news once again. This time, an article alleges OCA, the company’s only commercialized drug, has become the subject of an FDA investigation related to its safety. The stock, once battered by the company’s failed attempt to make OCA the first FDA-approved therapy for NASH, has slumped to trade near a 52-week low last week. The article has made no revelation, and the newly-identified safety signal, under evaluation as part of the FDA’s routine post-marketing surveillance, is classified as only a “potential risk” whose link to the drug is yet to be established.

As Intercept refocuses on OCA in PBC, the reputational damage can further decelerate the sale growth, already under pressure from the pandemic-related slowdown in new patient starts. Though the company leads in NASH therapeutic development, the highly complex path for a regulatory signoff rules out any premium for the current forward price-to-sales multiple, which, even with my optimistic revenue forecasts for 2020, identifies a modest premium for the stock. With the margin of safety being hardly adequate to offset the sales as well as R&D uncertainty, my neutral view on the stock remains.

Intercept Pharmaceuticals_Ocaliva

Source: Emedz.net

Intercept Suffers a Double Whammy

Not even a week had passed since its previous regulatory hurdle when I last penned my article on Intercept in early July. The stock had crashed ~39.7%, posting the sharpest one-day drop following the announcement of the CRL (Complete Response Letter), which relates to the NDA (New Drug Application) the company filed for OCA (obeticholic acid/Ocaliva) for liver fibrosis due to NASH (nonalcoholic steatohepatitis). Despite the neutral rating on the stock, based largely on the uncertainty linked to the clinical development of liver therapies, I remained optimistic about the company’s prospects. After all, the FDA’s decision was based on

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Fintech’s role in financial inclusion rises but infrastructure, literacy challenges loom – Business

Fintech’s role in financial inclusion rises but infrastructure, literacy challenges loom – Business

Indonesian fintech companies are still facing basic infrastructure and literacy issues in their attempt to increase financial inclusion in the country.

Some two-thirds of surveyed fintech companies were already serving both the unbanked and underbanked population, including in rural areas, according to a recent survey by the Indonesia Fintech Association (Aftech), which has 362 members offering various financial services.

However, 75 percent of the fintech companies reported they were still facing low financial literacy among the target market, 57 percent reported facing basic infrastructure problems and 44 percent reported facing limited capital or resources challenges.

“So if we can work on this part, all of these three things, we can actually reach our target even faster,” Aftech board member Chrisma Albandjar said on Thursday during the Jakpost Fintech Fest webinar series organized by The Jakarta Post.

“If we are very focused on that part we will actually achieve the 90 percent financial inclusion,” she added, referring to the national target in 2024.

According to a 2019 survey by the Financial Services Authority (OJK), Indonesia’s financial inclusion rate stood at 76.1 percent, marking an increase of some 40 million unbanked adults from 2017, when the rate was nearly 50 percent.

To overcome the challenges, 45 percent of fintech companies told the Aftech survey they collaborated with traditional financial institutions such as banks and 23 percent took part in the government’s strategic partnership.

Chrisma was expecting the COVID-19 pandemic to accelerate the progress because it was leading to faster adoption of digital financial services as people had to stay at home or at least comply with social distancing rules.

The government also has interest in more and more people having a formal financial account so it can transfer its Rp 695 trillion (US$46.4 billion) coronavirus relief package efficiently, said Chaikal Nuryakin,

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COVID-19 Adds to Challenges for Bahrain’s Fragmented Insurance Market

COVID-19 Adds to Challenges for Bahrain’s Fragmented Insurance Market

COVID-19-driven financial market volatility is expected to negatively impact solvency levels of Bahraini insurers this year, according to a new AM Best special report, adding to the challenges faced by the kingdom’s (re)insurance sector — the smallest among the Gulf Cooperation Council (GCC) countries.

The Best’s Special Report, “COVID-19 Adds to Challenges for Bahrain’s Fragmented Insurance Market,” notes the Bahraini (re)insurance market is very competitive, with a large number of companies vying for a limited amount of premium.

The report explains Bahraini insurers typically take more asset risk than their peers in mature markets. In particular, exposures to equities and real estate are generally higher among Bahraini insurers than among insurers in developed economies. As a result, their performance is heavily influenced by investment results and prone to volatility driven by financial market movements.

While the good solvency buffers of the large Bahraini insurance companies will allow them to absorb these types of financial market shocks, there is concern as to how insurers with lower solvency levels will cope with additional stresses in the short term, particularly in the event of a second wave of COVID-19 infections later in the year.

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=301861.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Contacts

Luca Patron
Financial Analyst
+44 20 7397 0304
[email protected]

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268
[email protected]

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