What New Constructs Does for me - David Hendler, Viola Risk Advisors - 14 July 2023

19 Jul 2023 · 2 min

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2:12

David Hendler explains how regional bank failures like SVB and First Republic happened: rising rates, weak management, and regulators treating perpetual preferred stock as equity. New Constructs gives analysts standardized quarterly data to compare companies fairly and work more efficiently.

Chapters

And the latest contagion with those regional banks, First Republic, Silicon Valley, and Signature, as the regulators got involved, they wiped out not only equity, but perpetual preferred stock got wiped out because under a regulatory Regime, that's considered equity. Although dealers on Wall Street have trading desks that specialize in that, they got wiped out. They went from par to zero in 2 years. You have to figure out what are the tendencies toward that. I'm not saying it's easy, but new construct spotted things that could have helped you. Now, Was it because of interest rates going up? Maybe. Is it also because, like you said, with Peloton, management was selfish and they were doing selfish short-term things that lined their pockets? Yes. Were the regulators asleep at the switch? Yes. Were the rating agencies also in a coma? Yes. Were the equity analysts on Wall Street Cheerleading it all on because of growth. Yes. So where is the sane person in this process? I would say New Constructs have the data. Who used the data is another thing to understand and execute the trade, but at least New Constructs provides the data. That's what New Constructs does for me. It leverages my expertise to areas that I don't have enough people to break down all the balance sheet stuff. Footnote stuff and standardize it and do it every quarter and compare it on an equal basis across the industry segment. So that's the beauty of new constructs. It amplifies your capabilities.