conglomerate boom 2.0: a stable platform?€¦ · 20-10-2015 · conglomerate boom 2.0: a stable...

The opinions set forth in this Presentation are solely observations of JHL Capital Group LLC, and do not constitute investment advice or recommendations. Strictly confidential. Not for public distribution. © 2015 JHL Capital Group LLC. All rights reserved.

Conglomerate Boom 2.0: A Stable Platform? October 20, 2015

Strictly confidential. Not for public distribution. 2

Disclaimer

This Presentation includes certain economic observations of JHL Capital Group LLC (“JHL”), and does not purport to give any form of investment advice.

There can be no assurance that the observations of JHL included in this Presentation are accurate, much less in any respect predictive of the value or future stock prices of any of the issuers with respect to which such observations are made.

JHL, in compiling this Presentation, has relied on information (including anecdotal information) obtained from third parties which JHL believes to be accurate but has no ability independently to verify.

JHL may hold certain positions which create a conflict of interest on the part of JHL in making the observations in this Presentation.

No one should rely on any of the observations made in this Presentation in making any investment decision; these observations are presented solely for the information of the recipient.

This is not an offering or the solicitation of an offer to purchase an interest. Any such offer or solicitation will be made to qualified investors only by means of a final offering memorandum and only in those jurisdictions where permitted by law.

JHL Capital Group LLC®, JHL Capital Group®, JHL®, and JHL’s logo are registered trademarks of JHL Capital Group LLC.

© 2015 JHL Capital Group LLC. All rights reserved.


Boom Cycles and Easy Money

Source: Bloomberg, Evercore ISI, JHL research.

Easy access to capital fueled housing investment in the 2000s and energy investment in the post-financial crisis era.


Global E&P Spending and US Private Fixed Residential Investment

1985 – 2017E vs. 1977 – 2013

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Global E&P Spending (1985=100)2013 Forecasts2015 Forecasts

US Private Fixed Residential Investment (1977=100)

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The 1960s Conglomerate Boom

With a low cost of equity capital, high perceived corporate synergies and limited growth opportunities, investors paid ever-increasing multiples for acquisition-led growth.

A major boom in conglomerate formation occurred in the 1960s driven by low interest rates, muted economic growth and investors’ focus on earnings growth.


Low interest rates depressed the cost of capital and encouraged investors to move into riskier

assets

LOW AND STABLE INFLATION AND

INTEREST RATES

A slowdown in growth in 1967 fueled M&A activity and inflated

the conglomerate bubble

MUTED ECONOMIC GROWTH

“Go-Go” fund managers or “gunslingers” focused on

earnings growth independent of how it was generated, and developed an affinity for

conglomerate stocks

INVESTORS’ APPETITE FOR

EARNINGS GROWTH


The 1960s Conglomerate Boom Index Companies

Company Industries Leader

Gulf & Western Industries Inc. Auto-parts, movie production, machinery, cigars, sugar production Charles Bluhdorn

International Telephone & Telegraph Corp. (ITT) Telecommunications, hotels, education, baked goods, rental cars Harold Geneen

Leasco Data Processing Equipment Corp. Computer leasing, insurance Saul Steinberg

Ling-Temco-Vought Inc. (LTV) Electronics, missiles, golf equipment, meat packing, pharmaceuticals Jimmy Ling

Litton Industries Inc. Military electronics, submarines, typewriters, frozen foods, publishing Tex Thornton

Monogram Industries Inc. Manufacturing, airplane toilets, electrical insulation Martin Stone

Ogden Corp. Scrap metal, shipbuilding, cargo handling, food service Charlie Allen

Teledyne Inc. Electronics, aerospace, microwaves, hydraulics, optics, steel Henry Singleton

Textron Inc. Textiles, gas meters, golf carts, helicopters, radar antennas, watchbands Roy Little

United States Industries, Inc. Automation machinery, robotics, steel, concrete pipe, textiles John Snyder

Source: “The Rise and Fall of the Conglomerate Kings” by Robert Sobel, New York Times, company websites, academic journals.



The 1960s Conglomerate Boom

Source: Chicago Booth Center for Research in Security Prices, JHL research.

An index of 10 conglomerates appreciated 608% from August 1962 to July 1968, outperforming the S&P 500 Index by 531%.


Conglomerate Index vs. S&P 500 Index

AUGUST 9, 1962 – JULY 8, 1968

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800Conglomerate Index S&P 500 Index

1963 1964 1965 1966 1967 1968


The 1960s Conglomerate Bust

Earnings growth failed to keep up with inflated expectations. Rising interest rates and a stalling economy resulted in lower stock prices. The conglomerates then crashed swiftly.


• Acquisitions grew in size to maintain the momentum

• The top of the market was a failed attempt by Saul Steinberg to acquire Chemical Bank in 1969

• 10 year interest rates rose from 4% in 1963 to 8% in 1969

• Earnings disappointments drove stock prices lower

• Lower stock prices and higher interest rates forced management teams to shed assets in the 1970s and 1980s

Reality Failed to Meet Inflated Expectations

Interest Rates Rose and Stock Prices Declined

Conglomerates Restructured


The 1960s Conglomerate Boom – Bust Cycle

Source: Chicago Booth Center for Research in Security Prices, JHL research.

From its peak in July 1968, the Conglomerate Index declined by 79% over the next two years.


Conglomerate Index vs. S&P 500 Index

AUGUST 9, 1962 – DECEMBER 31, 1970

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1963 1964 1965 1966 1967 1968 1969 1970


The 1960s Conglomerate Boom – Bust Case Study: Leasco

(1) Leasco filed for IPO in June 1965, but traded OTC until September 27, 1966. Source: Bloomberg, Chicago Booth Center for Research in Security Prices, “The Power of Collective Purse Strings” by Davita Glasberg, “The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s” by John Brooks, JHL research.

Leasco, with $236 million in equity capital, attempted to take over Chemical Bank, the sixth largest US bank, with $9 billion in assets. The financial establishment united against Saul Steinberg.


Leasco Data Processing Equipment Corporation Stock Price

SEPTEMBER 27, 1966 – AUGUST 14, 1970

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$300

(25%) over two weeks: Abrupt selling of large trading blocks... bear raid led by Chemical Bank?

Feb 20, 1969: Steinberg ends Chemical Bank takeover attempt

+5,495% in 4 years

(87%) in 17

months

IPO(1)

Nov 1968: Leasco begins secretly buying Chemical Bank stock

Jan 31, 1969: Leasco’s takeover plans for Chemical Bank are disclosed

Aug 1, 1968: Reliance accepts Leasco’s tender offer

Mar 1968: Leasco begins secretly buying Reliance Insurance stock

1966 1967 1968 1969 1970 1971


The Paired-Share REIT Boom – Bust Cycle

Source: Bloomberg, New York Times, US Government Publishing Office, JHL research.

An index of the four REITs with special tax privileges appreciated 290% over three years. The index plummeted 70% over the next year as President Clinton proposed regulations curbing their loopholes.

Paired-Share REITs: Starwood Hotels, Patriot American Hospitality, Meditrust, First Union

JANUARY 3, 1995 – DECEMBER 31, 1998

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1995 1996 1997 1998 1999

Paired-Share REIT Index S&P 500 Index

Jul 22, 1998: Congress signs IRS law reforming REITs

Jan 30, 1998: NYT article “Stocks of Four REIT’s Sag on Report of Threat to Status”

Even in a bull market, Paired-Share REITs had a devastating boom-bust cycle once the arbitrage peaked and became “front page news.”



The Paired-Share REIT Boom – Bust Case Study: Starwood

Source: Bloomberg, company press releases, Fortune Magazine, Associated Press, PR Newswire, US Government Publishing Office, JHL research.

Starwood was much smaller by market cap, but its high-priced stock provided Barry Sternlicht the currency to go after ITT Sheraton Corp – itself a remnant of Harold Geneen’s 1960s conglomerate.


Starwood Hotels & Resorts Stock Price

JANUARY 2, 1992 – JANUARY 2, 2000

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1992 1993 1994 1995 1996 1997 1998 1999 2000

Jan 7, 1999: Starwood restructures into a corporation

Sep 9, 1997: Starwood buys Westin Hotels for $1.5bn

(66%) in 1 year

Jan 1995: Sternlicht buys a paired-share REIT, Hotel Investors Trust

Aug 26, 1998: Starwood plans to become a tax paying corporation

Oct 20, 1997: Stock peaks at $31.69 the week Starwood announces ITT acquisition for $14.3bn

+2,900% in 5 years

Jul 22, 1998: Congress signs IRS law reforming REITs


The Conglomerate Boom 2.0: The Platform Boom

With a low cost of debt capital, high perceived corporate and/or tax synergies and limited growth opportunities, investors paid ever-increasing multiples for acquisition-led growth.


Low interest rates and financial repression depressed the cost of capital and encouraged investors

to move into riskier assets

LOW AND STABLE INFLATION AND

INTEREST RATES

Post 2008 crisis growth rates have repeatedly disappointed

MUTED ECONOMIC GROWTH

Hedge funds focused on earnings growth independent of

how it was generated, and developed an affinity for platform

stocks

INVESTORS’ APPETITE FOR

EARNINGS GROWTH

A new conglomerate boom developed in the aftermath of the 2008 economic crisis, driven by many of the same variables as in the 1960s. This new boom has been enhanced with tax arbitrage similar to the Paired-Share REIT boom.


The Platform Boom Index Companies

(1) As of October 15, 2015. Source: Bloomberg and Thomson consensus estimates, company filings and guidance, JHL research. Multiples based on forward earnings estimates.


Company Ticker Industry Stock Price(1) MCap (bn) TEV (bn) TBV (bn) TBV/Share EV/EBITDA P/E Ratio

Allergan plc AGN Health Care $274.08 $114.3 $156.7 $(52.4) $(125.55) 18.4x 38.8x

Altice ATC NA Consumer Discretionary 22.68 24.8 61.5 (23.6) (21.58) 9.5 10.8

AMAG Pharmaceuticals Inc. AMAG Health Care 38.85 1.6 2.0 (0.4) (8.42) 8.7 11.1

Anheuser-Busch InBev BUD Consumer Staples 115.13 188.4 237.1 (50.5) (30.86) 13.6 21.7

Avago Technologies AVGO Information Technology 121.87 36.3 38.9 (0.9) (3.08) 10.6 25.2

Concordia Healthcare Corp. CXR CN Health Care 31.64 1.4 2.0 (1.1) (26.10) 8.3 2.3

Danaher Corp. DHR Industrials 89.06 59.9 73.7 (12.8) (19.01) 15.4 23.0

Endo International plc ENDP Health Care 66.60 15.3 25.6 (1.8) (7.87) 17.9 35.8

Hain Celestial Group HAIN Consumer Staples 51.94 5.5 6.2 (0.0) (0.12) 14.5 23.7

Horizon Pharma Inc. HZNP Health Care 18.55 3.1 3.7 (0.7) (4.18) 13.9 265.0

Jarden Corp. JAH Consumer Discretionary 49.85 11.9 16.5 (2.9) (12.03) 13.4 18.0

Jazz Pharmaceuticals JAZZ Health Care 136.65 8.9 9.4 (0.5) (7.71) 11.7 25.1

The Kraft Heinz Company KHC Consumer Staples 75.22 91.9 120.3 (9.7) (7.91) 17.4 28.4

Liberty Global plc LBTYA Consumer Discretionary 45.80 40.9 81.3 (23.7) (25.71) 9.7 (60.1)

Mallinckrodt Pharmaceuticals MNK Health Care 66.90 8.1 14.6 (6.6) (54.67) 10.5 24.6

Medtronic MDT Health Care 73.43 106.2 123.5 (15.5) (10.75) 12.3 22.4

Mylan N.V. MYL Health Care 42.73 22.1 28.0 (2.5) (4.77) 9.4 20.0

Perrigo Company plc PRGO Health Care 162.62 23.9 28.4 (4.7) (31.79) 18.3 78.9

Platform Specialty Products PAH Materials 12.59 2.7 6.2 (3.2) (14.83) 11.0 139.9

Post Holdings Inc. POST Consumer Staples 60.49 4.1 8.6 (3.5) (50.98) 13.4 (103.0)

Spectrum Brands Holdings SPB Consumer Staples 92.71 5.6 9.9 (3.4) (56.33) 12.3 26.8

Thermo Fisher Scientific TMO Health Care 125.47 50.8 64.4 (11.5) (28.43) 15.4 25.4

TransDigm Group Inc. TDG Industrials 215.06 12.3 20.1 (6.4) (112.81) 16.4 28.6

Valeant Pharmaceuticals VRX Health Care 168.87 59.3 91.5 (33.9) (96.67) 16.3 61.5


The Platform Boom Cycle

Source: Bloomberg, JHL research.


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From March 2009, to its peak on July 20, 2015, the Platform Boom Index surged almost 1,000% during a period when the S&P 500 Index rose 215%.

Platform Boom Index vs. S&P 500 Index

MARCH 9, 2009 – JULY 20, 2015

2010 2011 2012 2013 2014 2015

Strictly confidential. Not for public distribution. 15 © 2015 JHL Capital Group LLC. All rights reserved.

The Platform Company Model

Bill Anders (General Dynamics) Warren Buffett (Berkshire Hathaway) Katharine Graham (The Washington Post) John Malone (TCI)

Tom Murphy (Capital Cities) Henry Singleton (Teledyne) Dick Smith (General Cinema) Bill Stiritz (Ralston Purina)

The new buzzword is Zero-Based Budgeting.

“They disdained dividends, made disciplined (occasionally large) acquisitions, used leverage selectively, bought back a lot of stock, minimized taxes, ran

decentralized organizations, and focused on cash flow over reported net income.”

- William N. Thorndike

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success


Platform Tactics: Creative Accounting by Healthcare Companies(1)

(1) Healthcare companies in Platform Boom Index. Source: Bloomberg consensus, midpoint of company guidance when available, company filings, JHL research.


Branded pharmaceuticals typically have a maximum patent life of 20 years. Historically, generic drugs have had annual price declines.

GAAP earnings are lower for a reason. The amortization is real.

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Non-GAAP EPS GAAP EPS

($200)

($100)

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Equity Value TBV

GAAP vs. Non-GAAP Earnings Per Share ($)

2015E

Equity Value vs. Tangible Book Value ($ in billions)

OCTOBER 15, 2015


Platform Tactics: Aggressive Pricing

Source: IMS, Wall Street Journal, Pixabay, Citibank, PriceRX, Wolters Kluwer, US House Committee on Oversight and Government Reform, IRI, The Nielsen Company, JHL research.


$48 Q1 2013 Hospira

$215 Q4 2013

Marathon

$880 Q3 2015 Valeant

Nitropress (VRX)

+310%

+348%

Per vial

$40 Q1 2013 Hospira

$1,473 Q1 2015 Valeant

$180 Q4 2013

Marathon

Isuprel (VRX)

+720%

+350%

Per vial

Xyrem (JAZZ)

$315 Q1 2008

Jazz

$3,391 Q1 2015

+977%

Per vial

$800 Q2 2010

$1,945 Q3 2012

$1,849 Q1 2014

Actavis

$20 Q4 2013

Warner Chilcott

Doryx (AGN)

+9,145%

Per 500 tablets

Q1 2015 Mayne Pharma

Aggressive price inflation may not be sustainable in healthcare or other sectors as cyclical and regulatory pressures surface.

+11% yoy

+25-78% yoy

+22% yoy

+21% yoy

Single Serve Desserts (KHC) Powdered Tea (KHC) Frozen Dinners (KHC) Ketchup (KHC)


Platform Tactics: Creative Tax Structures


Tax Rate Before and After Inversion Deals

YEAR WHEN TAX INVERSION DEAL CLOSED

0%

15%

30%

45%

VRX(2010)

JAZZ(2012)

AGN(2013)

PRGO(2013)

ENDP(2014)

HZNP(2014)

MYL(2015)

Tax Rate Prior to Inversion 2015E Non-GAAP Tax Rate

Source: Company filings, JHL research.

Tax arbitrage has been a critical value driver for many platform companies.


Platform Tactics: Acquisitions Financed with Low Cost Leverage

Leverage for the Platform Boom Index companies has increased dramatically over time.


(1) Includes deals announced but not closed. Debt issuance expected as stated by company press releases. Source: Company filings, Capital IQ, Bloomberg, JHL research.

Platform companies have accessed low cost debt financing for an accelerating volume of acquisitions. Will deals still prove accretive in a more normalized interest rate environment?

Total Acquisitions ($ in billions)(1)

2009 – 2015 YTD

Total Debt Issuance ($ in billions)(1)

2009 – 2015 YTD

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2009 2010 2011 2012 2013 2014 2015YTD


Regulatory Response to Platform Tactics – Federal


The Federal political pressure has begun. It’s “front page news.”

“In recent months, there have been reports of a number of corporate inversion transactions designed to change the tax domicile of a U.S.-based multinational firm with minimal change in its business operations… we should prevent companies from effectively renouncing their citizenship to get out of paying taxes.”

– Jacob Lew, U.S. Secretary of the Treasury, July 15, 2014

“Price gouging like this in the specialty drug market is outrageous. Tomorrow I’ll lay out a plan to take it on.” – Hillary Clinton, Sep 21, 2015

“Exclusive: U.S. probes allegations AB InBev seeking to curb craft beer distribution” – Reuters, Oct 12, 2015

“Valeant subpoenaed by U.S. prosecutors over U.S. drug pricing” – Reuters, Oct 15, 2015


Regulatory Response to Platform Tactics – State


The State political pressure has begun. It’s “front page news.”

“Turing Drug Distribution Probed by N.Y. After Price Hike” – Bloomberg, Oct 13, 2015

“AB InBev Holds Talks With Regulators About California Deals” – Bloomberg, Oct 13, 2015

“Massachusetts bill seeks to rein in prices of some drugs… Similar ‘transparency’ legislation has been filed in New York, California, Pennsylvania, Texas, North Carolina, and Oregon, though the specifics of each deal vary” – Boston Globe, Aug 10, 2015


The Platform Bust

The prevailing wisdom of “lower for longer” will not last forever. A rising interest rate environment, global macroeconomic weakness and/or stock market volatility may further pressure today’s conglomerates.


• Acquisitions have grown in size making integration difficult

• Regulators questioning aggressive pricing, tax practices and anti-competitive behavior

• Fed ended asset purchases in October 2014

• Equity market volatility has increased in the second half of 2015

• Rising debt costs and deflated share prices will slow down pace of acquisitions

• Cost discipline cannot indefinitely offset volume and/or intangible asset value declines

• Break in psychology

• When will investors become more focused on earnings quality?

Reality Fails to Meet Inflated Expectations

Interest Rates and Stock Market Volatility Rising

Conglomerates will Experience

Pressure




Platform Boom Index vs. S&P 500 Index

MARCH 9, 2009 – OCTOBER 15, 2015

Since March 2009, the Platform Boom Index surged almost 1,000% during a period when the S&P 500 Index rose 215%. Since July 20, 2015, the Platform Boom Index has plummeted 24%.

The Platform Boom – Bust Cycle

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[24%]

?

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The Platform Boom – Bust Case Study: Valeant

Source: Bloomberg, Wall Street Journal, Valeant and Actavis press releases, Twitter, JHL research.


Valeant Pharmaceuticals International Stock Price

JANUARY 2, 2008 – OCTOBER 15, 2015

Feb 4, 2008: Michael Pearson becomes Valeant CEO

May 28, 2013: Valeant acquires Bausch & Lomb

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2008 2009 2010 2011 2012 2013 2014 2015 2016

Jun 21, 2010: Valeant merges with Biovail and relocates to Canada

Apr 22, 2014: Valeant announces proposal to acquire Allergan

Nov 17, 2014: Actavis acquires Allergan

Feb 22, 2015: Valeant acquires Salix Pharma

Sep 21, 2015: Hillary Clinton tweets about pharma price gouging

Sep 28, 2015: US House Democrats launch investigation into drug pricing and request to subpoena Valeant

+3,452% in 7 years

Michael Pearson led Valeant through a series of acquisitions, including a tax inversion, that fueled strong stock performance. The shares have started to rerate on regulatory scrutiny over aggressive pricing policy.

[40%]

?

Oct 15, 2015: Valeant under investigation by Federal prosecutors


Valeant Valuation


Regardless of one’s view of this “Platform Value,” it now makes little sense for a creditor to want to be long this risk. Valeant’s five-year spreads have widened 160 bps in the last month.

Equity Value $59.3bn

Pearson and M&A $43.1bn

VRX at Cost (2008-Today) VRX at Market (Today)

Net Debt and Minority Interest

$32.2bn

Total Enterprise Value

$91.5bn

“Platform Value” $48.4bn

The market has granted Valeant $48.4 billion of “Platform Value” to its Outsider CEO improvements, cost of capital advantage and tax arbitrage. Arguably, this platform premium is even greater because most of Valeant’s assets have a finite shelf life.

*Market data as of October 15, 2015. Pro forma for announced deals. Source: Company filings, JHL research.


If Valeant = Leasco…

(1) Leasco filed for IPO in June 1965, but traded OTC until September 27, 1966. Source: Bloomberg, Chicago Booth Center for Research in Security Prices, JHL research.

Leasco reached too far and was killed politically. This process has begun for Valeant.


Valeant Pharmaceuticals International Stock Price


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2008 2009 2010 2011 2012 2013 2014 2015 2016

+3,452% in 7 years

Leasco Data Processing Equipment Corporation Stock Price

SEPTEMBER 27, 1966 – AUGUST 14, 1970

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$150

$200

$250

$300

IPO(1)

(87%) in 17

months

+5,495% in 4 years

1966 1967 1968 1969 1970

[40%]

?


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1100Platform Boom Index Current S&P 500 Index 1960s Conglomerate Index 1960s S&P 500 Index

Conglomerate Boom – Bust Comparisons

Source: Bloomberg, Chicago Booth Center for Research in Security Prices, JHL research.

The platform boom was larger and more prolonged than the 1960s bubble, exacerbated by financial repression, low cost debt and tax arbitrage.


Conglomerate Indices vs. S&P 500 Indices

MARCH 9, 2009 – OCTOBER 15, 2015 vs. AUGUST 9, 1962 – DECEMBER 31, 1970

1 4 6 5 0 7 3 2 8

[24%]

?


Outsiders and Cycles


When an Outsider meets a cycle, it is likely the cycle whose reputation will remain intact.

“We did set an aspirational target to be a top five pharma company by the end of 2016. A couple years ago, about the same time we set the aspiration of being a top 15 pharma company by the end of 2013, which a lot of people were highly skeptical of, but fortunately we were able to do that and so we figured that would be about $150 billion market cap roughly…” – Michael Pearson, CEO of Valeant Pharmaceuticals

“We’d love to take a look at Coca-Cola… We could run it with 200 people.” - Jorge Lemann, Co-founder of 3G Capital

“We’ll buy a second, a third and one day we’ll be able to say: ‘Hello Mr. Comcast!’ or ‘Hello, Mr. Charter!” - Patrick Drahi, Founder of Altice


Bust Comparison

v1.0 v2.0

1960s PLATFORMS

Company Leasco Teledyne Valeant Kraft Heinz AB InBev

CEO / Leader Saul Steinberg Henry Singleton Michael Pearson 3G Capital Jorge Lemann

Perception Bad Good Bad? Good?

Peak-to-Trough Decline (87%) (89%) [40%]? KHC [14%]? ABI BB [23%]?

All platform companies will be affected now that the feedback loop has gone into reverse.




€ 0

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2008 2009 2010 2011 2012 2013 2014 2015 2016

Feb 5, 2014: AB InBev acquires Blue Point Brewing

Mar 28, 2011: AB InBev acquires Goose Island Brewery

The Platform Boom – Bust Case Study: AB InBev

Source: Bloomberg, Wall Street Journal, AB InBev press releases, JHL research.


Anheuser-Busch InBev Stock Price


Nov 18, 2008: Merger of Anheuser-Busch and InBev is completed

Oct 13, 2015: AB InBev announces SABMiller acquisition for $106bn

+1,052% in 7 years

Serial acquirer Anheuser-Busch InBev’s stock price is faltering as the company announces the largest consumer acquisition ever.

Jan 23, 2015: AB InBev acquires Elysian Brewing

Nov 5, 2014: AB InBev acquires 10 Barrel Brewing

[23%]

?


Looming Debt Maturities are Larger than in 2009

Source: Credit Suisse, JHL research.


US High-Yield and Leveraged Loan Maturities ($ in billions)

2009 – 2017 vs. 2015 - 2023

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2009 2015 2010 2016 2011 2017 2012 2018 2013 2019 2014 2020 2015 2021 2016 2022 2017 2023

HY & LL 12/31/2008 HY & LL 9/30/2015

Companies will very likely have to refinance their debts at higher interest rates.


This Bull Market


S&P 500 Index return is greater than GDP growth

GDP growth is greater than S&P 500 Index return

1987-2001

8%

1949-1957

7%

1974-1982

(2%)

2009-2015

14%

2002-2008

3%

1982-1987

14%

1957-1962

5%

1962-1966

2%

1966-1970

(2%)

Diff

eren

ce b

etw

een

Annu

aliz

ed S

&P 5

00 In

dex

Ret

urn

and

Nom

inal

GD

P G

row

th

Increasing Duration of Bull Market


This cycle has been the largest bull market in history, relative to nominal GDP growth.

1970-1973

0%


DEATH, TAXES & CYCLES


The opinions set forth in this Presentation are solely observations of JHL Capital Group LLC, and do not constitute investment advice or recommendations. Strictly confidential. Not for public distribution. © 2015 JHL Capital Group LLC. All rights reserved.

Conglomerate Boom 2.0: A Stable Platform? October 20, 2015

conglomerate boom 2.0: a stable platform?€¦ · 20-10-2015 · conglomerate boom 2.0: a stable...

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