Justas Šaltinis

Is AI Coming for Your Job?

Justas — Fri, 06 Mar 2026 08:00:00 +0000

Friday is a great day to check if AI is coming for your job.

If you’re in construction, agriculture, or grounds maintenance – AI can barely figure out what you do, or how to replace you…

Source: Anthropic

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Three AI Scenarios, One Trend Line, and Zero Consensus

Justas — Fri, 27 Feb 2026 08:00:00 +0000

This one chart perfectly summarizes every AI discussion from the past few weeks.

Three scenarios, one trend line, and zero consensus.

Source: FT

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Beware of Analysts’ Ratings

Justas — Thu, 06 Nov 2025 06:35:01 +0000

Looking back at 5 years of analyst sentiment on Fiserv stock – BUY ratings dominated the timeline.

If the investor decided to buy the stock during the most optimistic period, after the 2025 Q2 earnings reports, the loss would be staggering, ~55%. The long horizon would not have helped as well, even a December 2020 starting date would have resulted in a loss of 36%.

Fiserv, a global fintech and payment company, gave harsh news to investors – they won’t hit the financial targets set by its former CEO. The news resulted in ~44% stock price free fall, wiping out USD 30 in market value.

From December 2020 to mid-2021, BUY ratings consistently hovered above 80%, just before the c. 25% decline in stock price. Ratings slowly changed to HOLD, but never to SELL. After the stock fully recovered and gained c. 75%, more analysts changed their ratings from HOLD to BUY.

Last week, the sentiment changed completely. After the news, more than half of the analysts changed their ratings from BUY to HOLD.

This example serves as a good reminder to be aware of analysts’ ratings and do your own research. In a typical earnings season, about 70% of companies produce positive “surprise” compared to analyst estimates. The reports themselves are valuable and contain rather accurate financial modelling.

The last thing investors should do is follow the BUY / HOLD / SELL ratings printed on the front page of these reports. They’re lagging indicators at best.

Source: FactSet, WSJ

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Earnings are driving US equity returns this year

Justas — Tue, 28 Oct 2025 08:00:00 +0000

Earnings are driving US equity returns this year

Insightful chart from BlackRock that splits the total equity return into three components: earnings growth, multiples expansion/contraction, and dividends.

Looking at the U.S. AI-linked indices, the majority of equity returns came from earnings growth, with Magnificent 7 even experiencing a multiples contraction. However, indices that excluded Mag7/Tech provided returns from a mix of multiple expansion and earnings growth.

International equity markets were valuation-driven, doing the long-awaited fundamental catch-up phase. China leads the total return, mainly via multiple expansion.

Not all gains are created equal.

Source: BlackRock // #Investing #StockMarket #PortfolioManagement #Markets

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Most Shorted Stocks Are Outperforming US Equities

Justas — Fri, 24 Oct 2025 08:00:00 +0000

𝐌𝐨𝐬𝐭 𝐒𝐡𝐨𝐫𝐭𝐞𝐝 𝐒𝐭𝐨𝐜𝐤𝐬 𝐀𝐫𝐞 𝐎𝐞𝐭𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐢𝐧𝐠 𝐜𝐒 𝐄𝐮𝐞𝐬𝐭𝐢𝐞𝐬

Interesting chart for Friday: being long US equity has delivered steady gains over the last 6 years; however, being long the most heavily shorted basket of 250 stocks (not an ETF, yet) would have outperformed the market by 3x.

The most likely reason is short squeezes that are amplified by a social media driven retail buying frenzy. It could also be mean reversal, contrarian investing, or risk-on behavior, but with lower likelihood.

It would be interesting to know how hedge funds are adapting their trading strategies to retail investors’ behavior during these squeezes.

And as always with the great short opportunities – the markets can remain irrational longer than you can remain solvent.

Source: FT, S3 Partners // #Investing #HedgeFunds #StockMarket #Markets

S3 basket: “Most shorted” basket is top 250 US equities by short % float with notional short interest above USD 10 million and market cap above USD 300 million.

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Most Shorted Stocks Are Outperforming US Equities

Justas — Fri, 24 Oct 2025 08:00:00 +0000

Most Shorted Stocks Are Outperforming US Equities

Interesting chart for Friday: being long US equity has delivered steady gains over the last 6 years; however, being long the most heavily shorted basket of 250 stocks (not an ETF, yet) would have outperformed the market by 3x.

The most likely reason is short squeezes that are amplified by a social media driven retail buying frenzy. It could also be mean reversal, contrarian investing, or risk-on behavior, but with lower likelihood.

It would be interesting to know how hedge funds are adapting their trading strategies to retail investors’ behavior during these squeezes.

And as always with the great short opportunities – the markets can remain irrational longer than you can remain solvent.

Source: FT, S3 Partners

#Investing #HedgeFunds #StockMarket #Markets

S3 basket: “Most shorted” basket is top 250 US equities by short % float with notional short interest above USD 10 million and market cap above USD 300 million.

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Private Debt Returns: Are Alphas Real?

Justas — Wed, 18 Dec 2024 08:00:00 +0000

𝐏𝐫𝐢𝐨𝐚𝐭𝐞 𝐃𝐞𝐝𝐭 𝐑𝐞𝐭𝐞𝐫𝐧𝐬: 𝐀𝐫𝐞 𝐀𝐥𝐩𝐡𝐚𝐬 𝐑𝐞𝐚𝐥?

The private debt asset class has been one of the fastest growing in recent years as investors were eager to capitalize on higher total returns. Various asset managers and finance companies rushed to offer closed-end funds and evergreen structures to capitalize on increased demand.

These funds usually provide mostly direct loans to firms that typically cannot get bank loans based on their creditworthiness. That is either due to already existing leverage, lack of assets, “creative” structure, or overall lower quality of the borrower. Thus, their cost of borrowing is higher.

The paper evaluates risk-adjusted returns of private debt funds from Burgiss-MSCI from 1992 to 2015. The dataset differentiates between generalists, mezzanine, distressed strategies, and small or large funds based on funds’ size.

Authors find that “private debt funds are also ‘equity-like’ both because their loans are substantially riskier than most other debt, and also because roughly 20 percent of their portfolios include equity features”. Therefore, the authors evaluate returns using both equity and debt benchmarks.

𝐎𝐭𝐡𝐞𝐫 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭𝐢𝐧𝐠 𝐩𝐢𝐞𝐜𝐞𝐬:
– Promised returns must be large enough to offset potential defaults and funds’ fees.
– Competition limits the extent to which funds can charge their rates.
– Fund investors earn only a rate of return appropriate for the risks they face, but no more.

𝐀𝐞𝐭𝐡𝐨𝐫𝐬’ 𝐟𝐢𝐧𝐝𝐢𝐧𝐠𝐬 𝐢𝐧 𝐧𝐞𝐦𝐝𝐞𝐫𝐬:
– On gross return bases, authors observe gross alphas of around 4%, almost equal to funds’ fees, i.e. management fee of 1.5% and 15-20% carried interest.
– If only the debt risk factor is used, risk-adjusted profit is positive and statistically significant (0.11$ on 1$ invested) and translates to 1.8% net alpha.
– Consistent with the above, positive and significant alphas on mezzanine and small funds, but no evidence of abnormal returns if equity factor is considered.

Authors conclude that private debt returns look more attractive than they actually are, because of the active equity risk factor. As always, selection is the key, and as evident from publicly traded debt instruments, there is significant variation in underwriting quality.

#PrivateDebt #alternativeInvestments #privateCredit #AssetAllocation

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2024 Private Market Fund Investors’ Days: Key Takeaways

Justas — Thu, 12 Dec 2024 08:00:00 +0000

I recently attended the 2024 private market fund’s investors’ days in London. The two-day event was filled with private equity and private debt market professionals, who covered diverse topics, including deals’ deep dive, market development, and GPs’ expectations for 2025.

Panel discussions supplemented with direct LP discussions provided insights into managers’ viewpoints and investors’ concerns. Some titbits from the event:

Misalignment of sellers and buyers to remain as public markets are now more expensive than private
Uncertainty kills every deal – unknown EBITDA is the worst as multiple does matter
Specialization is the key to vetting proprietary sourcing
Investors want GPs to be more strict on their exit decisions (every day you are holding an asset is an active decision)
GPs expect holding periods to increase, especially for quality assets.

What to expect for 2025?

Higher rates for longer
Slower IPO market than expected by market participants
Strong [buyout] pipeline for 2025
Cash is back, focus on DPI
More Continuation Vehicles (CVs) and evergreen funds are expected

#alternativeInvestments #PrivateDebt #AssetAllocation #PrivateEquity

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Navigating Bull and Bear Markets: Insights from 50 Years Track Record

Justas — Wed, 20 Nov 2024 08:00:00 +0000

Navigating Bull and Bear Markets: Insights from 50 Years Track Record

Most current investors have lived through a maximum of one major bear market, whereas the more seasoned investors have experienced at least two. The latest quarterly report from J.P. Morgan Asset Management split MSCI World index performance into bull and bear periods (covering 1970-2024).

Besides the informative visual, here are some important points to consider:

Longest Bull Market: A massive 314% gain over 61 months during the mid-80s.
Most Severe Bear Market: The 2008 financial crisis marked a -59% drop over 16 months.
Recent Trends: The post-pandemic recovery gave a 103% rise over 22 months, while the post-2021 highs have resulted in a -27% decline over the past 9 months.
Duration: while market drawdowns can be sharp, typically they do not last as long as bull markets on average.

For long-term investors, this serves as a reminder to focus on time in the market rather than timing the market. Remember that while past performance does not guarantee future results, historical trends can provide valuable insights for navigating future market uncertainties.

Source: J.P. Morgan

#investing #stockmarket #stocks #finance

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Venture Capital: Only Upper Quartile Funds Have Returned >2x For Investors

Justas — Tue, 12 Nov 2024 08:00:00 +0000

𝐕𝐞𝐧𝐭𝐞𝐫𝐞 𝐂𝐚𝐩𝐢𝐭𝐚𝐥: 𝐎𝐧𝐥𝐲 𝐜𝐩𝐩𝐞𝐫 𝐐𝐞𝐚𝐫𝐭𝐢𝐥𝐞 𝐃𝐞𝐧𝐝𝐬 𝐇𝐚𝐨𝐞 𝐑𝐞𝐭𝐞𝐫𝐧𝐞𝐝 >2𝐗 𝐃𝐨𝐫 𝐈𝐧𝐨𝐨𝐬𝐭𝐨𝐫𝐬

The most recent UK Venture Capital Financial Returns report provides a comprehensive performance analysis of VC funds. The report mainly focuses on the UK’s VC ecosystem, while also covering Europe and the US. Authors have amassed a large amount of data from commercial data providers (Pitchbook, Preqin), fund managers, and their alternative investments.

One key metric is distributions to investors relative to their invested capital, or DPI. It shows the multiple of invested capital already distributed to funds’ investors. The data covers vintages (2002-2015) that had sufficient time to reach maturity and realize investments (VC funds usually have a lifetime of 10-12 years).

Insights from the DPI distribution graph:

Power law distribution of DPI multiples
Distribution of DPIs is similar for all analyzed regions: US, UK, and Europe (lags below top decile).
Median return is clustered around 1x.
Upper quartile (top 25% of all VC funds) has returned less than 2x of invested capital (or around 9.5% p.a.)
Upper decile (top 10%) has less than 3x DPI ratio (or around 15.5% p.a.)

Of course, DPI does not show everything and there might be some remaining portfolio companies to be realized that could bring the total return higher.

Even so, playing against the house or power law is complicated. Investors must either get access to top managers, try selecting the next best emerging managers, or go for an asset class with a more promising return distribution.

Source: British Business Bank // #AssetAllocation #VentureCapital

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