Bundle of investment news: Musk's new victories and the reassessment of insurance businesses

Пачка инвестновостей: новые победы Маска и переоценка страховых бизнесов

S&P GlobalSPGI$348.78 Buy

Пачка инвестновостей: новые победы Маска и переоценка страховых бизнесов

Tesla MotorsTSLA$892.65 Buy

Пачка инвестновостей: новые победы Маска и переоценка страховых бизнесов

TwitterTWTR$48.60BuyService in partnership with Tinkoff Investments. Quotes are updated every 15 minutes

S&P Global puts spokes in the wheels of insurance companies. Elon Musk wins.

Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

"Apologize, apologize immediately!»: as S&P ruins the life of the insurance business

Since the end of April, the rating agency S&P Global (NYSE: SPGI) uses a new methodology for assessing the creditworthiness of insurance companies - and the latter is not profitable. Here's why.

The main innovation of SPGI: when evaluating the investment portfolio of insurance companies, it will now downgrade the rating for those securities, which she did not rate herself. It's very bad for insurers., because their financial strength ratings are strongly influenced by the status of securities in their portfolio. And ratings are the key point in assessing them as lenders, as well as clients and investors. Respectively, the lower the rating of securities in the SPGI view, the lower the overall rating of the insurance companies themselves.

Of course, all this is done by SPGI in order to, to force market participants to pay her for giving a credit rating: if another company gives them a rating, then this part of the SPGI business will suffer and market participants will have less motivation to go to SPGI.

Very likely, that SPGI won't badly nightmare the investment ratings of its biggest competitors, Fitch and Moody's, simply because, that specialists work there plus or minus the same level.

Probably, SPGI's main downtrend awaits stocks, rated by its smaller competitors DBRS Morningstar, Egan-Jones Ratings и Kroll Bond. In recent years, these smaller rating agencies have been active in issuing relatively high ratings to those corporate issuers, that did not meet the level, required to obtain a relatively high rating from large agencies. I.e, figuratively speaking, Kroll Bond could issue an investment rating to such an issuer, to which the same SPGI would have awarded a garbage rating.


Of course, insurers are protesting against these changes and are trying to lobby for a ban on such actions by regulators from SPGI. But, in my opinion, this whole situation matters more, than they realize it in SPGI.

The history of downgrading SPGI "not their" ratings shows, that the entire credit-rating business is based on highly dubious assumptions: rating companies are clearly not interested in establishing the truth and they only care about payment. This, basically, logical: eventually, this is a private business. But because of this approach, the market is overflowing with securities of companies, whose real creditworthiness is lower, than stated. This creates significant risks for the financial system as a whole..

If the incident with insurance companies leads to a revision of the existing system for assessing investment ratings, then the SPGI business, certainly, will suffer greatly.

Damn Elon Musk, you are not worth my caresses": recent successes of an eccentric entrepreneur

Elon Musk can be considered a real favorite of Fortune, because the past week has brought him several victories.

Firstly, in the SolarCity dispute, the court took his side. Let me remind you the background: major shareholders of Tesla (NASDAQ: TSLA) sued Mask for it, what, in their opinion, SolarCity was bought and integrated into Tesla to the benefit of Musk and hurt the rest of the shareholders.

According to the court, let the whole SolarCity takeover scheme be imperfect, the board of directors approved the deal, so everything is legal. Now the former SolarCity gives about 3% revenue of all Tesla.

Secondly, another venture of his received generous investment: tunneling company Boring Company (play on words: English boring - "drilling", "boring") received venture investments in the amount of 675 million dollars, thus reaching an estimated value of 5.675 billion.

The company will have to build tunnels as part of Musk's plan to create a Hyperloop vacuum transportation network.. So what can we say, that Musk is a recidivist entrepreneur, which is not limited to managing only one business.

But seriously, then getting Boring funding against the background of other adventures The mask says, that his name has serious weight and is able to attract investors.

  held a seminar

Meanwhile, the story of Musk's purchase of the social platform Twitter (NYSE: TWTR) nearing completion: the company accepted the offer to buy. Everything is already serious enough: according to the terms of the agreement, that party, that will disrupt the closing of the deal, will have to pay the other party a penalty of one billion dollars.

If the deal falls through due to Musk's actions, then he will have to pay Twitter this amount. What if the deal falls through on Twitter?, for example, at a meeting of shareholders they will vote against the sale of the company, then it will be the turn of the company to fork out.

Everything about this deal is amazing.. And that, as a week before the first news about her, Musk said, that he will not buy the company and that it is a headache to manage it at all. And that, how he suddenly changed his mind after, how class and intellectually close entrepreneurs talked to him. And that, that Musk quickly found funding for this deal.

Пачка инвестновостей: новые победы Маска и переоценка страховых бизнесов

Пачка инвестновостей: новые победы Маска и переоценка страховых бизнесов

Пачка инвестновостей: новые победы Маска и переоценка страховых бизнесов

Пачка инвестновостей: новые победы Маска и переоценка страховых бизнесов

Anyway, deal to be done soon. It makes no commercial sense to buy Twitter, but Musk's proper use of the platform could have a lot of value for Tesla's quotes..

Musk is constantly threatened with a lawsuit from regulators over “Twitter abuse”. This story has been dragging on since 2018 and can still come back to haunt like Musk himself, so and so, who was lucky enough to become shareholders of his enterprises: obviously, that the lion's share of the charm of quotes in the eyes of investors is generated directly by Musk. So,, his removal could lead to a drop in the same Tesla shares.

However, one can humbly hope, that Musk will last a couple more years: according to some reports, he plans to take Twitter public again in a few years.

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