This week's interesting finds

A few charts worth discussing

“In leveraged loans, EBITDA add-backs now reduce reported leverage at issuance by roughly 1.2 turns of leverage. In direct lending, the impact is even larger - about 1.9 turns. In both cases the gap is roughly double what it was in 2015. As a result, the reported new issue debt-to-EBITDA of 4.6x for leveraged loans and 5.0x for direct lending often masks underlying leverage that’s actually 5.9x and 6.9x, respectively.”

- Jason Liu

“Even after layering in all the make-believe add-backs, leverage in private credit would land the average issuer firmly in the B-/CCC rating bucket. To be clear, this is a $2 trillion asset class with credit metrics on par with B-/CCC high yield bonds, which usually make up less than 20% of the high yield market and have a long-term average annual default rate of 20%-to-25%.”

- Derek Skomorowski

“The largest wealth builders in history...with the shortest time frame clocking in at 74 years for Northrop.”

- Frank Mullen

Other charts worth pointing out

Business development companies – AUM

MRIs by country

Number of MRI scanners – Canada vs Pennsylvania

Concentration peaks

Tech sector fund flows

Historical annual global equity returns vs. bond returns

Relative weight vs. S&P 500 Index by factor group

BofA Fund Manager Survey – Cash levels have largest monthly increase since COVID

Emerging markets equity allocation 

Private Credit’s Investor Exodus Spreads to Consumer Loans

Stone Ridge Asset Management told clients in the fund last week that recent redemption requests were so high that it would honor only 11% of the amount investors wanted back, according to an investor update viewed by The Wall Street Journal.

That suggests that investors’ concerns about private credit are broadening. Unlike other private-credit funds that experienced a flight of investors in recent weeks, Stone Ridge’s fund didn’t hold loans to software makers or other corporate sectors that investors fear will be displaced by advances in artificial intelligence.

The details

The Stone Ridge Alternative Lending Risk Premium Fund buys whole loans and securities backed by loans made by fintech lenders. That includes buy-now-pay-later loans from Affirm, personal loans from LendingClub and Upstart and loans that payments companies like Block and Stripe offer to merchants using their platforms.

LENDX, as the fund is also known, owned $2.4 billion of total assets at the end of November, and $1.6 billion of net assets.

LENDX is structured as an interval fund, meaning it must offer to repurchase at least 5% of shares outstanding each quarter. The shares don’t trade publicly, so investors who want to exit have to submit redemption requests to Stone Ridge during predetermined windows, the most recent of which ended on March 6.

Stone Ridge’s update didn’t include what percentage of overall LENDX shares investors wanted to redeem. Already, the firm offered in February to repurchase as much as 7% of its shares outstanding, with an option to buy back an additional 2% of shares if its offer was oversubscribed.

The context

With scores of investors wanting to cash out of private credit in recent weeks, fund managers have had to grapple with whether to relax their existing redemption limits.

Cliffwater, for instance, is paying out about 50% of redemptions requests it received at the Cliffwater Corporate Lending Fund.

With $31 billion of assets under management at the end of 2025, Stone Ridge is a smaller player in private credit. The firm also manages investments in fine art, energy, reinsurance risk and, through its NYDIG affiliate, bitcoin.

Ross Stevens is the founder of Stone Ridge and chief executive of its parent company. Stevens made headlines in January when he gave a record $100 million gift to the U.S. Olympic & Paralympic Committee that included $200,000 for each athlete competing in the Milan Cortina Games.

This week’s fun finds

On a recent trip to Nelson, BC, Kevin got his hands on some local hot sauces with West African influences. While they weren't the hottest we've ever tried, everyone loved the flavours!

Turing Award Goes to Inventors of Quantum Cryptography

In the mid-1980s, Charles Bennett and Gilles Brassard invented an encryption technology that could theoretically never be broken.

Called quantum cryptography, their technology relied on quantum mechanics, the strange and powerful behavior exhibited by electrons, photons and other very small things.

 At the time, their technique was a fascinating but impractical creation. Forty years later, it is poised to become an essential way of protecting the world’s most sensitive information.

This week's interesting finds

EdgePoint reading and listening list

Spring’s almost here and so is our annual March Break reading (and listening) list. The Investment Team shared some of their top recent reads and podcasts, including deep dives into some of the largest companies in the world today.

A few charts worth discussing

“The slope of the middle-income group is the concerning one.”

- Geoff MacDonald

“Debt balances in margin accounts are at the highest level in almost 30 years, coinciding with one of the strongest 3.5-year stretches for the 500 largest U.S. companies over the past century.”

- Tye Bousada

“It can't bode well for government finances, and by extension younger taxpayers, when populations are aging and simultaneously not saving enough for retirement.”

- TJerk de Gruijter

Other charts worth pointing out

Debt maturity by credit rating – software & services

Geopolitical events and historical returns by asset class

Energy dependence vs. energy sector as % of equity market cap by country

Natural gas net trade balance in Asia/Oceania

Crude oil reserves by country

Liquid natural gas exports traveling through the Strait of Hormuz

Power generation sources by Asian country

Median excess return by sector vs. the S&P 500 Index

AI hyperscaler depreciation & amortization

AI hyperscaler free cash flow vs. earnings

Federal Reserve to loosen capital requirements for big US banks

A top Federal Reserve official has said the central bank will soon cut capital requirements for big banks as it eases protections that were designed to avoid a repeat of the 2008 financial crisis.

The moves, announced on Thursday in a speech by Fed vice-chair for supervision Michelle Bowman, intensify the push by US regulators to loosen restrictions on Wall Street banks to encourage them to boost lending and regain market share lost to private credit groups.

She outlined plans to change the way an extra capital buffer is calculated for the biggest banks, which would lead to a “modest decrease in the surcharges” and more than offset the impact of the Basel reforms.

The Fed’s plans, which were welcomed by US lenders, are likely to intensify calls from banks in Europe and other countries to ease their rules in response. The Bank of England and EU have delayed part of their Basel reforms to see how Washington would apply them.

Three of the main US banking trade bodies said Bowman’s plans were “a thoughtful, bottom-up approach” that represented “a welcome focus on risk-sensitivity and a comprehensive view, taking into account the cumulative effects of all capital requirements”.

The Fed’s proposals represent a victory for Wall Street lobbying. In 2023, the Fed announced plans to implement the so-called Basel Endgame reforms in a way that would have resulted in a 19 per cent rise in minimum capital requirements of big US banks.

But the central bank agreed to dilute the proposals in 2024 following an aggressive campaign by bank lobbyists, including TV advertisements during half-time of the Super Bowl warning earlier that year that the rules would hurt American consumers by cutting lending and raising credit costs.

Bowman said reforms introduced after the 2008 meltdown had “substantially increased bank capital and strengthened financial system resilience”. But she added there was a risk of “unintended consequences” from excessively calibrating low-risk activities.

As part of the changes outlined on Thursday, Bowman said the extra capital buffer required for the eight most systemically important US banks would be reduced by lowering the component that accounts for risk from short-term funding. The buffer will also be adjusted for inflation and growth to prevent it rising as bank balance sheets grow.

This week’s fun finds

IT intern Sidharth (a.k.a., Sid) ordered an Afghani feast for the office on a snowy day. It was the perfect amount of spice to keep us warm. Thanks for delicious meal!

Man accidentally gains control of 7,000 robot vacuums

A software engineer’s earnest effort to steer his new DJI robot vacuum with a video game controller inadvertently granted him a sneak peek into thousands of people’s homes.

While building his own remote-control app, Sammy Azdoufal reportedly used an AI coding assistant to help reverse-engineer how the robot communicated with DJI’s remote cloud servers. But he soon discovered that the same credentials that allowed him to see and control his own device also provided access to live camera feeds, microphone audio, maps, and status data from nearly 7,000 other vacuums across 24 countries. The backend security bug effectively exposed an army of internet-connected robots that, in the wrong hands, could have turned into surveillance tools, all without their owners ever knowing.

This week's interesting finds

 A few charts worth discussing

“The past 3.5 years have been an outlier for the S&P 500 Index.  Maybe that is why we are finding a lot of ideas outside of the largest 500 U.S. businesses today.”

- Tye Bousada

“OpenAI and Anthropic are currently experiencing the steepest revenue growth curves in enterprise technology history, with both companies rapidly scaling from near-zero to billions in revenue in under three years. Anthropic, in particular, has shown a 10x annual revenue growth rate since surpassing US$1B in annualized revenue. As of February 2026, it’s reached an estimated US$14B to US$19B annual run rate.”

- Sydney Van Vierzen

“Despite growing quickly, OpenAI expects to become the largest cash burning project in corporate history by 10x. Time will tell if investors ultimately see a return on their investment.”

- Steven Lo  

Other charts worth pointing out

Sector P/E discounts –  Europe vs. U.S. 

10-year annualized total returns for U.S. government bonds at historic lows

S&P 500 Index performance after major events

Over the past 30 days, the S&P 500 is down ~1.4% while the average stock moved ~10% in absolute terms

S&P 500 Index performance dispersion

World oil chokepoints – daily transit volumes for Petroleum/other liquids

Average tenure of S&P 500 Index companies has declined

GDP and equity market cap comparison

Condé Nast CEO says AI is a ‘death blow’ to Google search

Condé Nast, the publisher of Vogue and The New Yorker, is preparing for a future in which Google search is “no longer a meaningful driver” of its business, in a striking acknowledgment of how AI is upending the news industry.

Google accounted for a majority of visits to Condé Nast’s websites just a few years ago but only about a quarter last year, according to chief executive Roger Lynch. He described Google’s introduction of AI summaries as “another sort of death blow” in search traffic. 

The shift underscores how quickly the economics of digital publishing are changing as generative AI tools alter how people find information online. 

Condé Nast has struck licensing agreements with AI groups including OpenAI and Amazon, but has yet to reach a deal with Google. Lynch criticised what he described as a “pernicious” arrangement under which publishers must opt out of Google search in order to prevent their content from being scraped for AI-generated summaries.

Long synonymous with glossy magazines, Condé Nast has spent much of the past several years overhauling its structure under Lynch, who was hired by the billionaire Newhouse family in 2019 to revive the publisher after years of losses.

Lynch said Condé Nast increased revenue in 2025, despite search traffic declining more than expected, thanks to strong growth in subscriptions and other areas.

Revenue in 2025 was similar to 2021 levels, but the company is “far more profitable now”, he said. The Wall Street Journal reported that 2021 revenue was nearly $2bn. Gross margins have climbed about three percentage points in the past two to three years, according to Lynch.

An internal memo viewed by the FT said both revenue and profit increased last year. Condé Nast is privately held and does not report financial results publicly. 

Despite its long history with print, the publisher now derived the majority of its revenue from digital operations, Lynch said, describing the past five years as a “culture shift” after a period of restructuring.

While Condé Nast has undergone several rounds of lay-offs in recent years, Lynch says last year’s profit growth was not driven by cost-cutting. “Operating expenses were relatively flat,” he said. 

After dominating the pre-internet era with culture-defining magazines that made celebrities out of editors such as Anna Wintour, Condé Nast has faced a tougher landscape as entertainment has moved online. 

Lynch has spent the past several years merging Condé Nast’s US and international operations. He has replaced some traditional editor-in-chief roles — including at US Vogue and Vanity Fair — with a “head of editorial content”. 

Seven of Condé Nast’s largest brands — Vogue, GQ, The New Yorker, Wired, Vanity Fair, Architectural Digest and Condé Nast Traveler — now account for 85 per cent of the company’s revenue. The New Yorker reached record revenue, profits and subscribers last year, according to Lynch. 

As part of that strategy, the group is selling LGBT+ title Them to Equalpride, the owner of Out, and exploring partnership or licensing models for Glamour and Self.

Lynch also argued that Condé Nast’s private ownership and lack of exposure to federal broadcast regulations insulated it from political pressures facing other US media groups, as US President Donald Trump has waged billion-dollar lawsuits against several major news organisations in his second term.

“When you look at what’s happening specifically here in the US, there are fewer and fewer journalistic organisations that are not being subject to political interference,” Lynch said, adding that he views it as a “competitive advantage” for Condé Nast.

The company’s restructuring, however, has brought job cuts and unrest. The company cut about 5 per cent of staff in 2023 and has faced union protests over lay-offs, while senior editors have left posts at Vogue China and Vogue UK.

This week’s fun finds

Grant Garmezy Molds a Full-Size Dakotaraptor from Molten Glass

Dakotaraptor, a fossilized skeleton of which was discovered a little more than 20 years ago by paleontologists in South Dakota, was an extremely lethal prehistoric predator. Its feathered body, powerful legs, and huge jaw gave it an advantage as it roamed its territory some 66 million years ago. But it was really its so-called “sickle claw,” a huge, taloned toe that measures 9.5 inches on the outer curve.

For artist Grant Garmezy, the ancient creature presented a unique opportunity to render a life-size sculptural version. Specializing in meticulously detailed, accurate representations of nature in glass, he took on the challenge of recreating the Dakotaraptor’s 14-foot length from snout to tail.

This week's interesting finds

A few charts worth discussing

“CCC-rated loan spreads are now at their widest level outside of the financial crisis, oil going to $8 in 2016, and the COVID-19 pandemic...while high yield spreads trade at all-time tights. There i’s a credit crisis brewing and nobody knows.”

- Derek Skomorowski

“EU bank deposits as a percentage of household assets are well above the global average at over 30%.”

- Claire Thornhill

Other charts worth pointing out

S&P 500 Index market cap weight, by sector

Affiliated investments by private capital-backed insurers

Software vs. S&P 500 index – performance comparison

Canada & the U.S. – home prices vs. incomes

Job postings – software engineers vs. total

U.S. new business applications

S&P 500 Index performance – 10 largest stocks vs. the next 40

Tech groups turn to more chip-backed loans to fund AI arms race

Tech companies are increasingly turning to loans backed by the chips on which their large language models are trained as they hunt for ways to fund their massive AI investments.

Such loans, which are secured against graphics processing units and backed by leases to the tech groups, are popular with a sector burning hundreds of billions of dollars a year in an AI arms race on chips that can quickly become obsolete.

Investors have been attracted by yields in the high single digits to mid-teens, which are typically higher than those on debt issued by the tech companies themselves.

Pioneered by cloud computing provider CoreWeave in late 2023, GPU-backed debt has grown in popularity as demand for advanced chips skyrockets and prices soar. Citigroup estimates that GPUs and associated servers can account for 30 to 40 per cent of total project costs for data centres.

The loans are typically taken out by special-purpose vehicles formed by tech companies and investment firms for the purpose of acquiring a cache of high-performing chips, which would then be leased to the tech businesses to train their AI models.

This arrangement allows Big Tech groups, whose use of debt markets is growing rapidly, to shift the loans off their corporate balance sheets.

Last month, Apollo announced a $3.5bn financing package for a digital infrastructure fund managed by Valor Equity Partners, which would buy Nvidia’s GB200 hardware, known as AI superchips, and lease them to Elon Musk’s xAI.

IREN Limited, an AI cloud service provider, also secured $3.6bn in loan commitments from Goldman Sachs and JPMorgan earlier this month to buy chips for its AI contracts with Microsoft.

Lenders often have to act fast and write big cheques in these transactions, according to a lawyer familiar with GPU financing.

The rising popularity of such loans highlights investors’ clamour for asset-backed finance, where banks and private credit funds seek esoteric debt secured by stable cash flows.

Deals usually come with “hell or high water” clauses that prevent tech companies from terminating the leases early, helping mitigate the risk that these GPUs become obsolete as AI technology quickly evolves.

Moody’s, which has begun to rate GPU-backed debt, said it withdrew credit ratings once underlying leases came to an end.

Nevertheless, some investors remain concerned that the economic life of GPUs could end up being shorter than expected, while the market value of older AI chips is often questionable due to a lack of price history in the nascent industry. Current valuations could also be inflated by short-term chip supply shortages, investors said.

This week’s fun finds

This week, Vishnu from the Technology Team, hosted the most anticipated moai at EdgePoint. It delivered both comfort and flavour that  exceeded the hype.

A total lunar eclipse will shine over Canada! Here’s how to watch from anywhere

Check your weather forecast for clear skies in the hours between midnight and sunrise next Tuesday, for a chance to see the last total lunar eclipse until the end of 2028!

On Tuesday, March 3, the Full Moon will pass directly through Earth's umbral shadow, resulting in a total lunar eclipse.