Robert Half (NYSE:RHI) Q4 2025 Earnings call January 29, 2026 05:00 PM ET Company ParticipantsHarold Antor - Senior Equity Research AssociateKarthik Mehta - Executive Managing Director and Director of ResearchKeith Waddell - CEOMichael Buckley - CFOTobey Sommer - Managing DirectorConference Call ParticipantsAndrew Steinerman - Managing Director and Senior Equity Research AnalystJeff Silber - Managing Director and Senior Equity Research AnalystKevin McVeigh - Managing Director and Senior Equity Research Anal ...

Core Viewpoint - Investors are withdrawing significant amounts from private credit vehicles due to lower returns and concerns over credit quality in the $1.7 trillion asset class [1][3]. Withdrawal Trends - In the fourth quarter, investors in BDCs holding over $1 billion requested to withdraw more than $2.9 billion, a 200% increase from the previous period [2]. - Despite the withdrawal requests, many funds are still attracting more cash than they are losing, with fund managers honoring all redemption requests [2]. Investor Sentiment - The increase in withdrawals indicates a decline in sentiment towards private credit, driven by fears of lower returns and rising stress signs [3]. - The current environment is seen as a significant test for the non-institutional client base of many funds since the onset of COVID-19 [3]. Specific Fund Performance - Blackstone's BCRED saw withdrawal requests of about $2.1 billion, approximately 4.5% of its net assets [4]. - Blue Owl Technology Income Corp. allowed withdrawals of up to 17% of its net assets, totaling about $685 million [5]. - Ares' non-traded BDC experienced redemption requests exceeding 5% of its net assets in the fourth quarter [6]. Historical Context - Historically, redemption rates have been around 2% of a fund's net assets, indicating the current surge is notable [6]. - Blue Owl, Ares, and Blackstone reported record fundraising for private wealth products last year, with minimal losses reported across non-traded vehicles [9]. Market Dynamics - Concerns are rising regarding underwriting quality and covenant standards, prompting investors to seek liquidity and reallocate their investments [11]. - If redemption requests persist at around 5%, non-traded BDCs could face approximately $45 billion in net outflows annually, although managers are expected to manage these redemptions effectively [12]. Investor Behavior - Investors are increasingly cautious about "shadow defaults" in private credit, leading to a reevaluation of capital allocation strategies [14]. - There is a trend of reallocating capital from corporate direct lending to larger direct lending funds [14]. Future Outlook - Expectations indicate that flows into non-traded BDCs may slow as investors seek discounts on publicly traded vehicles [15]. - Firms are under pressure to find deals to deploy raised capital, which has been challenging due to a lack of mergers and acquisitions [16]. - Some funds have raised so much capital that they struggle to find enough loans to deploy, resulting in a significant portion of their portfolios being allocated to bank-syndicated loans [17].

Core Insights - The current rate-cutting cycle is attracting more investors to international bonds, particularly in emerging markets (EM) debt, for diversification and attractive yields [1] - Vanguard offers two international bond ETFs, including the Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the Vanguard Emerging Markets Government Bond ETF (VWOB), which provide exposure to international bonds [2][7] Group 1: Vanguard's Bond ETFs - The Vanguard Total International Bond Index Fund ETF Shares (BNDX) is highlighted as a suitable addition to portfolios heavily invested in U.S. Treasuries, appealing to risk-averse investors due to its focus on investment-grade debt [2] - BNDX tracks the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index, with over 7% exposure to EM bonds as of October 31, and features a low expense ratio of 0.07% [3] - The Vanguard Emerging Markets Government Bond ETF (VWOB) tracks the Bloomberg USD Emerging Markets Government RIC Capped Index, focusing on U.S.-dollar-denominated bonds from EM governments [7] Group 2: Performance of EM Bonds - The J.P. Morgan Emerging Markets Bond Index (EMBI) gained over 2% in October, with a year-to-date return exceeding 13%, indicating strong performance in the EM bond market [5] - EM bonds are currently characterized by appealing yields and resilient macro-economic fundamentals, supported by abundant global financial liquidity [6] - VWOB's 30-day SEC yield stands at 5.68% with an expense ratio of 0.15% [8]

Core Viewpoint - The Federal Reserve's recent decision to cut the federal funds rate by 25 basis points reflects its uncharacteristically clear communication regarding interest rate policy, which aligns with market expectations [1] Group 1 - The Federal Reserve has been more transparent in its interest rate policy decisions recently [1] - The market anticipated the 25 basis point cut in the federal funds rate [1]

Core Viewpoint - Value investing is being overshadowed by hype around AI stocks, leading to opportunities in fundamentally strong businesses that are currently overlooked [1] Group 1: Investment Opportunities - Investors should seek companies that are creating value independently, particularly in the consumer discretionary sector as the Federal Reserve begins its rate-cutting cycle [2][3] - CAVA Group Inc. is positioned as a growth story similar to Chipotle, with a market cap of $7.2 billion, allowing for faster growth compared to Chipotle's $53.2 billion market cap [4][5] - CAVA's earnings forecasts indicate an expected EPS of $0.24 by Q2 2026, up from $0.16, with a consensus price target of $96.40, suggesting over 50% upside potential [6] - Lululemon Athletica has faced temporary setbacks but retains long-term strength, with a consensus price target of $239.30, indicating a 42% upside [7][9] - UPS, while not a direct retail player, benefits from e-commerce growth, currently trading at 58% of its 52-week high, with a price target of $111.44, reflecting a potential 33.3% upside [10][12] Group 2: Market Dynamics - The consumer discretionary sector is expected to see increased activity as interest rate cuts boost consumer confidence, creating favorable conditions for companies like CAVA, Lululemon, and UPS [3][9] - Lululemon's recent inventory investments, although impacting cash flows, are strategic moves to mitigate future tariff costs, indicating management's long-term vision [8] - Institutional confidence in UPS is highlighted by AQR Capital Management's increased stake, suggesting that current prices may undervalue its future potential [12]

Core Insights - U.S. stock indices are reaching record highs, but international markets are outperforming them in 2025, marking a shift from the previous decade of U.S. dominance [1] - Many regions in Europe, Asia, and Latin America are cutting interest rates, creating a more predictable investment environment compared to the U.S., which is facing trade and inflation uncertainties [1] - The decline of the U.S. dollar in 2025 has positively impacted international stocks, particularly for U.S. dollar-based investors [1] - Valuations in U.S. equities have become high, prompting investors to seek opportunities in markets with lower price-to-earnings ratios [1] - Increased military-industrial spending in Europe due to geopolitical tensions is attracting investment interest [1] Market Dynamics - The easing cycle in various global markets contrasts with the Federal Reserve's cautious approach, leading to a shift in investment focus [1] - The current market environment is characterized by a lack of innovation in some international markets, but this is offset by regulatory predictability [1] - The trend of international diversification is gaining traction as investors look for opportunities outside the U.S. [1]