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 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.

This week's interesting finds

Cymbria's 18th annual investor day

This year's Cymbria Day will take place both in-person and virtually on Wednesday, May 13th. Registration is now available. Click here to learn more.

A few charts worth discussing

“Global GDP growth is exceptionally feeble, not only from year-to-year but also decade-to-decade. Investors should focus on identifying positive change at the company level, from the bottom up, while maintaining a margin of safety in their portfolio, given that the macro-outlook appears dismal.”

- Stas Lopata

“The growing capital intensity of the hyperscaler data centre buildout is showing up in higher levels of debt issuance.”

- Jason Liu

“Retail traders are becoming an increasingly important player in U.S. markets, making up over 20% of total U.S. trading volume from 10% in 2010. Long only and hedge funds' share have fallen from 23% to 15% over the same period.”

- Claire Thornhill

Other charts worth pointing out

AI disruption risk concerns by theme & industry

Equity market correlations - Cyclicals/Defensives

% of FMS investors who believe companies are spending too much on capex

Average cash levels still near historic lows

Small-cap vs. large-cap performance expectations

Software stock performance and valuation levels

Greater Toronto Area new condo sales

Blue Owl permanently halts redemptions at private credit fund aimed at retail investors

Private credit group Blue Owl will permanently restrict investors from withdrawing their cash from its inaugural private retail debt fund, backtracking from an earlier plan to reopen to redemptions this quarter.

The New York investment group on Wednesday said investors in Blue Owl Capital Corp II would no longer be able to redeem their investments in quarterly intervals but that the company would instead return investors’ capital in episodic payments as it sells down assets in coming quarters and years.

The decision underlines the risks facing retail investors, who have ploughed hundreds of billions of dollars into funds with limited liquidity rights.

Blue Owl’s announcement came as part of a $1.4bn sale of credit assets across three of its funds, including $600mn for its retail credit fund. The sale amounts to 30 per cent of its total assets, which will be distributed to investors.

Blue Owl Capital Corp II, also known as OBDC II, has been closed to redemptions since November after it abandoned efforts to merge it with a larger publicly traded credit fund managed by Blue Owl. 

That deal drew scrutiny after an FT report showed investors in OBDC II would face a 20 per cent hit based on the acquiring fund’s trading price at the time. Blue Owl called off the fund merger days later. 

Because OBDC II is not publicly traded it had instead offered investors the ability to redeem cash every quarter at the fund’s stated value, generally up to 5 per cent of net assets.

Blue Owl’s abandoned fund merger came as redemptions climbed in 2025 to a level where it would eventually have been forced to restrict investor withdrawals.

Investors in OBDC II pulled $150mn from the fund through the first nine months of 2025, a 20 per cent increase from the prior year, according to securities filings. Redemptions in the third quarter of 2025 nearly doubled to $60mn, or 6 per cent of its net asset value.

The company said it had also agreed to $800mn worth of loan sales from two other funds, including its non-traded technology-focused fund Blue Owl Technology Income Corp and its listed $16.5bn vehicle Blue Owl Capital Corporation, known by the ticker OBDC.

It said pension funds and insurance companies would buy the loans at an average of 99.8 per cent of their carrying value using new vehicles to be managed by Blue Owl.

Wednesday’s deal comes amid heightened scrutiny into the quality of private credit loans after a number of high-profile defaults and rising fears over the exposures portfolios have to software companies vulnerable to AI disruption.

Blue Owl characterised the asset sale as a validation of the quality of its portfolio and pointed to the prices it was able to secure in the sale. The company said its funds would maintain significant stakes in the loans after the $1.4bn worth of sales are completed.

This week’s fun finds

Journey Through Autumn and Winter in Robinsson Cravents’ Hand-Drawn ‘Yosemite’

Even though most of us are eager for spring here in the Northern Hemisphere, we’re happy to linger in winter a little while longer to take in Robinsson Cravents’ new project. The Colombia-based designer and illustrator recently released a pair of hand-drawn digital landscapes that take a bird’s-eye view of Yosemite National Park. Starting with a wide aerial shot of coniferous trees, the films then journey down a stream up to a waterfall, capturing the majestic scenery with grainy, tactile detail.

The project is a commission for Yosemite, a venture capital firm helmed by Reed Jobs that funds startups and researchers working on cancer treatments. For the creative direction, Cravents collaborated with LoveFrom, a collective helmed by Apple alum Jony Ive.