Study 3: How Do Yields Vary by Industry?
Houlihan Lokey uses an industry classification system with nine major categories to align its teams across the firm with clients. We have analyzed the data that comprises the PPCI and calculated yield for each of those nine segments.
Our largest category of valuations is industrials. Energy and real estate are underrepresented as they are typically bespoke models that do not yet contribute to the PPCI dataset.
This graphic of current quarterly data shows the yield of each category and the central line, which shows the same PPCI value in each row. As the largest contributor to the PPCI, industrials is very close to the index. Consumer, food, and retail is well above the index yield, and energy is well below.
The change in a category relative to the change in the PPCI is presented above to provide a quarter-over-quarter view of the change in a category, excluding the change in the index itself (analogous to a stock beta vs. the S&P 500). For the categories on the right extreme, the yield increased by much more than the PPCI, where on the left axis these categories increased by much less than the index.
Houlihan Lokey uses an industry classification system with nine major categories. The purpose of this high-level classification system is to align our coverage efforts with our clients, so this organization informs our team structures. The Portfolio Valuation and Fund Advisory Services team collects SIC and NAICS data on borrowers to facilitate this categorization, and the full title of each category follows the final graphic.
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