This guy Eric Takaha at Franklin-Templeton is a master of using what I call “softening words,” which can come in very handy when you are describing overall trends in a public forum. I’ve bolded the “softening words” in the transcript below…
How has high yield performed recently?
Year-to-date, the high yield market has been a little bit up and down. Overall, we’re up a couple percent through the first quarter of 2015. January was a little bit of a weaker month. February moved up and then March has been a little bit up and down.
Overall, it’s been tracking energy pretty closely given the large percentage of the market that’s in the energy sector.
Outside of energy in general, we’ve seen [Matt’s note: “seen” makes it passive] money coming in to high yield mutual funds. That’s helped to support some of the prices. You’ve had a lot of supply coming on the market, so that’s dampened prices a bit [Matt’s note: “dampened” is more vague and passive than “lowered”].
Overall, default rates remain relatively low which has been [Matt’s note: note the passive construction] supportive for the overall asset class. In general, it’s been a positive year-to-date 2015 but a little bit of volatility in between.
[Matt’s note: note the heavy use of “overall” and “in general”]
Can you speak specifically to the energy sector?
The energy sector has remained very volatile over the past several months. Oil prices in particular have been going up and down and primarily down. We saw [Matt’s note: note again his use of “to see” — passive] some more recent lows over the last several weeks.
As a result, the energy space within high yield has been very volatile during that period of time.
We still believe longer term, there’s very good value in the energy space [Matt’s note: “space” is a vaguer term for “market”]. You have a lot of names trading at very distressed levels pricing in a high probability of default over the coming couple of years.
You will see [Matt’s note: again, note the use of “to see” (grammatically the sentence is active, but the meaning is still passive)] some very weak earnings from the energy companies over the coming quarters given the lower oil prices. Even natural gas remains near their recent lows. You will see some tough earnings and cash flow but we think many companies have liquidity to weather through [Matt’s note: this is a good phrase for “survive,” but “weather through” is softer, vaguer] the next several quarters.
We think longer term supply and demand should help [Matt’s note: “should” can be used two ways: to express an imperative need or command (You should do this = you need to do this), but it can also be used to express probability (X should cause Y = X will probably result in Y, but maybe not always, we’ll see)] to balance out the oil market in particular and give you some more upside to the oil price longer term. Under that scenario, we think there’s some pretty good [Matt’s note: “pretty good” is a vague, modest phrase for “excellent” or “great”] valuations to be had within the high yield energy space [Matt’s note: once again, he uses the word “space” instead of “market”].
About Matt Krause
Matt began his professional life managing inventory levels for wholesale import companies and forecasting labor costs for national retail chains. Since 2006, he has been teaching professionals how to present themselves and their companies better. His clients work for companies like Citibank, Microsoft, 3M, P&G, and HP.