David Bahnsen on Government Shutdowns, Dividend Investing, and Moelis Stock Pick

Government Shutdowns and Market Impact

• 🚫 David Bahnsen states that government shutdowns are not a market factor and have not been for the last dozen times they have occurred.
• 💡 He believes markets have learned to shrug off these events, as everyone knows how they will end, making them a political story rather than a market story.
• ⚠️ While acknowledging potential short-term volatility or headlines, Bahnsen asserts that shutdowns do not fundamentally alter the economy and the government will eventually reopen.

Dividend Growth Investing Strategy

• 📈 Bahnsen advocates for dividend paying stocks as a core investment strategy, emphasizing profiting from company profits.
• 💰 This approach is seen as a way to constantly derisk by getting paid for the risk taken, and it indicates companies with consistency and stability in free cash flow.
• ✅ Dividend growth is highlighted as a wonderful risk-adjusted way to invest.

Investment Pick: Moelis & Company

• 🏦 Moelis is presented as a fascinating financial company with no debt on its balance sheet and a practice of returning all profits to shareholders.
• 🚀 The firm has experienced significant growth, doubling in value in just a few years, and is actively hiring bankers in preparation for future M&A activity.
• 🎯 Bahnsen differentiates Moelis from commercial banks like JP Morgan and Morgan Stanley, which have massive balance sheets and lower multiples due to their net interest margin businesses.
• ✨ Moelis, as a pure advisory business (sell-side, buy-side, M&A), deserves a higher multiple due to its 45% return on equity, significantly higher than its commercial banking peers.
• ⚠️ The company is characterized by very little balance sheet risk, making it an attractive investment.