Revisiting Valeant Pharmaceuticals
Industry Perspectives: A Monthly Research Analyst Series
By Brian Fontanella, CFA
We continually try to improve our decision making and learn from both our successes and mistakes.
Health Care Re-reform
Industry Perspectives: A Monthly Research Analyst Series
By Kyle Schneider, CFA
We have been deliberate in targeting companies whose competitive advantages should persist under any reasonable outcome.
Finding Value in Discontinued Insurance Business
Industry Perspectives: A Monthly Research Analyst Series
By Krishna Mohanraj, CFA
As long-term investors with low turnover in our portfolios, we welcome opportunities to stay invested with companies that can create value across business cycles.
The debate between active and passive management that has reverberated for years in equity markets is now shifting to fixed income. We believe it is critical for investors to understand the intricacies of passive management in high yield fixed income....
The Diamond Hill Mission Statement calls on us to serve our clients by providing investment strategies that deliver lasting value through a shared commitment to our intrinsic value-based investment philosophy, long-term perspective, disciplined approach, and alignment with our clients’ interests....
Mechanics and Benefits of Securitization
Fixed Income Perspectives: An Educational Series
  • Securitization is not a new concept. In its most basic form, securitization dates back to the late 18th century. The first modern residential mortgage-backed security was issued by the Government National Mortgage Association in 1970, fueling a dramatic expansion in the housing market.
  • A securitized deal begins with an agreement between a lender and a borrower as to the amount borrowed, interest rate paid, collateral to secure the loan, and loan maturity. The borrower’s obligation is then sold or pledged to a trust along with a variety of other similar loans, creating the securitized product.
  • Securitized issues are split into tranches, which are categorized into varying degrees of subordination. Each tranche is separate and distinct from the other tranches, and each has a different level of credit protection or risk exposure.
  • The primary benefit of securitization is to reduce funding costs. Through securitization, a company that is rated BB but maintains assets that are very high in quality (AAA or AA) can borrow at significantly lower rates, using the high quality assets as collateral, as opposed to issuing unsecured debt.
At Diamond Hill, our mission is to serve our clients by providing lasting value through a shared commitment to our intrinsic value-based investment philosophy, disciplined approach and alignment with our clients’ interests. To this end, we have carefully designed structural...
We described our approach to setting investment management fees and how we link those fees to our internal return goals in our 2011 white paper, “Active Management Fees and Alignment of Interests”, available on our website ( Specifically, we noted...
Executive Summary Using history as a guide, we considered the appropriate price-to-earnings (P/E) ratio that will provide investors a sufficient return on investment, relative to current interest rates, and reward them for equity market risks. We examined periods of extreme...
At Diamond Hill, all of our portfolio managers have a five-year absolute return objective for their strategies. Those absolute return goals are one of three quantitative inputs in our portfolio manager incentive compensation calculations, along with five-year return relative to...
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