Chatham, the Routehappy of Derivatives Spring is here and it’s time for a vacation. Now that you’ve committed to take some time off and indulge in the fruits of your labor, it’s also time to secure among the most important of vacation details, your travel. And if you’re travelling by air, the search for airfare isn’t necessarily easy. Navigating the throngs of websites, special offers, flash sales and frequent flyer pricing can initially be invigorating, almost euphoric as you get that much closer to a beach chair. But once payment is confirmed and the fine print is read, the vision of palm trees and blue skies is quickly clouded, leaving you to ask, “Did I really get a good deal? Was now the best time to buy?” Airlines are constantly engaging in all kinds of sales practices based on dynamic…

Read More...

Bloomberg recently profiled a photo series from London-based photographer Travis Hodges entitled “The Quantified Self.” In each set of photos, Hodges captures people and the data they track, including sleep and spending habits, physical and social activity, health and happiness metrics. Almost every subject shares how quantifying and tracking have brought tangible positive changes to well-being. Since Suran’s uncle died of a heart attack, he gets a 3D body scan each month to measure and record seventeen circumference measures. Because significant belly fat predicts heart disease better than most metrics, the 3D scan demonstrates to Suran that he’s keeping up with his dietary and swimming goals. Rosa worried she was spending too much each month, and even feared that someone might have found a way to steal from her bank account. After tracking all of her debits, she soon realized…

Read More...

The air travel transportation network is amazing. In the US alone, some 2 million passengers board more than 30,000 flights every day. Any given flight can seat us with hundreds of travelers coming from different locations and heading to various destinations. When we do finally arrive, we stand at the baggage carousel expecting our luggage to trundle by without typically giving much thought to just how remarkable it is that our bags managed to pass every screening point and make every connection in time to meet us at baggage claim. The fact that only 0.5% of all bags end up unclaimed, and that airlines are able to eventually return the majority of these bags is pretty amazing. Kudos to you, airlines. But despite this impressive track record, there is still a fair amount of luggage that is never reunited with…

Read More...

Ever notice how many more things come in clear packages at the grocery store? Gone are the days when juices, granola, and frozen pizzas languished in those opaque cardboard containers; now we can see right through most packages to the delicious goodness inside. Why reveal so much all of a sudden? As Sarah Nassauer recently wrote in the Wall Street Journal, it turns out that brand managers discovered in testing that transparent packaging promoted the perception of better taste and fresher ingredients among consumers. Tropicana used to dominate orange juice sales, but it lost share to Simply Orange once the challenger was first to market with a clear bottle – Tropicana has not recovered its fallen sales, but perhaps to prevent further attrition it has adopted the clear jug approach. How significant is see-through packaging to sales? Kind Healthy Snacks…

Read More...

Private Equity Case Study: Currency Challenges Our Client: A large private equity firm executing an acquisition in a developed economy. Situation: A private equity consortium had agreed to acquire a North American company. Due to the state of debt capital markets, a substantial portion of the debt capital structure was denominated in USD with floating rates. Summary: The consortium and company needed to determine the best way to address the currency mismatch between cash flow and interest expense, as well as the optimal way to create a higher percentage of fixed rate debt. Chatham Financial educated the team on the use of cross-currency swaps, created transparency in the execution process of the hedging transactions, and assisted in the negotiation of the key documentation for the derivatives to ensure no hedge counterparty stood ahead of other secured lenders to the business.…

Read More...

Valuation Failure to properly measure the fair value of a derivative can result in significant losses over the life of the instrument. Using outdated valuation modeling techniques or simply not understanding how derivative fair values are measured often lead to additional scrutiny from management, auditors and regulators, further increasing costs to the company. Knowledge and experience: Chatham has vast experience in derivative pricing. For more than 20 years, we have assisted our clients by injecting transparency into the pricing process. Using proprietary valuation models, honed and refined by our in-house quantitative experts, we execute more than $2 billion of derivative notional globally on a daily basis. By routinely engaging in market hedging transactions, Chatham gains tremendous insight into where transactions are currently being priced. We are able to share that information with clients to help them obtain the best pricing…

Read More...