Ativo Capital

Rigorous Thinking


Financial and economic commentary reflecting Ativo’s world view:

“Sometimes Markets Are Stupid”

Thursday, December 18, 2014

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Writing at Bloomberg View, Noah Smith puts his description of yet another market inefficiency in the proper perspective: “Of course, experienced traders are laughing as they read this, because it’s obvious to anyone who has ever traded.” Even so, we appreciate his contribution. We at Ativo also believe in long-run market efficiency, but efficiency doesn’t happen automatically. Efficient markets require active managers to systematically search out and correct the countless inefficiencies that continually crop up. So when an active investor beats the benchmark (on a risk-adjusted basis, of course), just think of it as compensation for keeping markets efficient.

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Financial crises are caused by cross-border investment flows, not misbehavior, says economist Robert Aliber

Friday, October 31, 2014

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Financial crises are widely believed to be caused by greed, corruption, or lack of regulation. But what if the cause is simply the variability of cross-border investment inflows? That’s the model developed by Robert Aliber, professor emeritus of international economics and finance at the University of Chicago Booth School of Business. Aliber, editor and co-author with Charles P. Kindleberger of the 1978 classic Manias, Panics, and Crashes: A History of Financial Crises, predicted the Icelandic banking crisis 18 months before it happened. In an interview with CFA Institute Magazine, Aliber offers a different view on the cause of financial…

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Thomas Piketty and the Long-Term Investment Outlook

Wednesday, August 6, 2014

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Thomas Piketty’s Capital has been one of the best selling books by an economist, the timing of the publication was propitious, since there is a lot of angst that the distribution of income and wealth has become more unequal. His central argument is that the share of income and wealth accruing to the top one percent, the top 0.1 percent, and the top 0.01 percent has been increasing because the rate of return on capital is higher than the rate of growth of GDP. He implicitly assumed that the rich reinvest most of their income from capital. That’s a…

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Alan Greenspan on Stock Price and Capital Spending

Monday, April 21, 2014

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Taking a few vacation days this past week has given me time to read Alan Greenspan’s latest book, The Map and The Territory.  His comments on page 84 were particularly interesting: The ratio of stock price to cost of construction of capital assets correlated quite well with machinery orders (capital investment) going back into the 1920s.  I recently updated the 1959 analysis and was amazed at how well this simple relationship still works, even tracing the recent years’ sharp fluctuations in real private capital investment.  Since 1993, for example, a 10 percent change in stock prices relative to the…

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Ukraine and Russia – Assessment and Portfolio Adjustments

Tuesday, March 11, 2014

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Ativo has taken steps to reassess the exposure of our portfolios to Russia and Eastern Europe in light of the developments over the last few months in Ukraine. We had an overweight in Russian equities when the crisis in Ukraine escalated on February 22nd, as Ukrainian President Viktor Yanukovych fled the country to Russia after a political coup and Russia subsequently occupied the Crimean region in southern Ukraine. Since then we’ve cut down our exposure to a slight underweight in Russia with the sale of Sberbank and Sistema JSFC from our portfolios. We’ve maintained our exposure to other Russian…

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More U.S. Firms Use Nonstandard Accounting Measures to Figure Executive Payouts

Monday, March 3, 2014

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Last Wednesday’s Wall Street Journal reported that an increasing number of firms are using non-GAAP measures as the basis for executive compensation awards. Despite the overall negative tone of the article, our perspective is that moving away from GAAP measures isn’t necessarily a bad idea.

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Release: Ativo Emerging Markets Strategy Funded

Thursday, January 16, 2014

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FOR IMMEDIATE RELEASE: Contact:Michael S. BrooksDirector of Client Relations312-263-7600 x208mbrooks@ativocapital.com Ativo Emerging Markets Strategy Funded The Emerging Markets Strategy for Ativo Capital Management LLC (“Ativo Capital”) received initial funding in Q4 2013 through FIS Group, Inc.  and Attucks Asset Management LLC. The funding is a reflection of Ativo’s expertise and long record of accomplishment as an Emerging Markets investor through its broader global ACWI-X portfolio. Ricardo Bekin, Ativo Capital Chief Executive Officer and Chief Investment Officer, stated, “We appreciate the confidence that these two clients have shown in Ativo.  Seeding this strategy provides the basis for expanding an important product offering.  Our approach is attractive as global investors seek opportunities to enhance Emerging Markets exposure…

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2013 Q4 Commentary

Wednesday, January 15, 2014

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Ativo Capital is a registered investment advisor focused on delivering top quartile performance and exceptional service to institutional clients. We follow a rules-based process that combines quantitative methodologies with a fundamental overlay to build long-only, high active share portfolios. We invest globally, with an emphasis on international markets. Central to our approach is a proprietary model that scores stocks based on our assessment of their intrinsic value, price momentum and other important factors.   Market Overview International stock markets finished 2013 on a positive note, with the MSCI ACWI ex US rising 4.77% in the fourth quarter. The MSCI EAFE + Canada Index gained 5.56%, outperforming the 1.83% increase in the MSCI Emerging Markets Index….

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