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First Eagle Global Value 2020 Annual Letter

First Eagle Global Value annual letter to investors for the year ended December 31, 2020. Q4 2020 hedge fund letters, conferences and more Those who think it’s possible to predict the future of economies and markets with any sort of accuracy would have…

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First Eagle Global Value

First Eagle Global Value annual letter to investors for the year ended December 31, 2020.

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Q4 2020 hedge fund letters, conferences and more

Those who think it’s possible to predict the future of economies and markets with any sort of accuracy would have a hard time explaining 2020—a year dominated by a black swan event that descended upon the world with little warning and even less indication of the breadth and depth of its impact. In December 2019, no serious economist or public health official was predicting the emergence of a novel coronavirus that would cause nearly two million deaths worldwide and provoke a deep and widespread recession. Similarly, we know of no prognosticators who forecasted, at the depths of the Covid-19 selloff, that nearly all major equity markets not only would recover their losses by the end of the year but many would also close 2020 at or near all-time highs.

At First Eagle, we have long accepted that the future is unknowable. As such, we orient our true north around the creation of resilient wealth in the face of complexity and uncertainty, striving to create all-weather portfolios that mitigate the permanent capital impairment no matter what surprises tomorrow may bring. We cast a wide net to identify businesses with scarce, durable assets that we believe have the potential to generate persistent earnings power over time, and we seek to acquire these businesses only when available at prices that represent a discount to our estimate of their intrinsic value.

First Eagle Global Value: A Banner Year for US Growth Stocks in the Teeth of a Pandemic…

Investors initially downplayed news of the identification of a novel coronavirus in China, and equity indexes continued to press higher for the first weeks of 2020 as they did for much of 2019, led by growth-oriented stocks in general and the popular new economy names in particular. Sentiment shifted violently midway through the first quarter, however, as it became evident the virus initially written off as a regional concern in fact represented an emerging global health crisis—one that ultimately would bring an end to the longest bull market in US history and trigger the deepest global recession since World War II and the most widespread on record.

A massive selloff in risk assets came to a halt in late March, even as the pandemic was building momentum in Western Europe and North America, with global central banks and federal governments acting quickly and forcefully to provide immense liquidity and other forms of support for financial markets, economies, businesses and individuals. In the US, the Federal Reserve rolled out all the facilities it implemented in response to the global financial crisis, including near-zero interest rates and largescale purchases of government securities, as well as additional programs to support the corporate bond market, the municipal market and small and medium-sized enterprises. Though the utilization of these new facilities was fairly low, their introduction had a significant impact, particularly in the bond markets, where the very existence of a Fed backstop attracted investors and contributed to pronounced spread tightening.

While growth stocks generally have outperformed value names in the nearly 12 years since the global financial crisis market bottom, 2020 was a generationally bad year for the value style relative to growth, driven in part by the dynamics that emerged in the wake of the pandemic-related disruptions of first quarter 2020.

Over the past decade, the MSCI World Index has compounded at an annualized rate of 9.9%, with the MSCI World Growth Index climbing 12.8% compared to the 6.8% increase in the MSCI World Value Index. While the difference between growth and value performance during this period is meaningful, it falls within the historical norms of cyclical variation. Relative performance in 2020 was far less typical. While the MSCI World Index was up 15.9%, the growth component returned 33.8% compared to a 1.2% decline in value; this 35% spread almost defies belief given that the growth and value indexes have a long-term historical correlation in excess of 0.9. Spreads between growth and value were similar in the US, as the Russell 1000 Growth Index posted a 38.5% return during 2020 compared to the 2.8% return of the Russell 1000 Value Index.1

Given the nature of the economic turmoil that emerged as Covid-19 widened its spread, a certain amount of value/growth bifurcation makes sense. The pandemic provoked a near shutdown of the more mature, physical components of the economy-such as commodities, manufacturing and real estate—whose participants tend to populate value indexes. In contrast, the pandemic-driven shift online for both business and personal commerce accelerated preexisting trends and provided a significant boost to the revenue and cash flows of new economy growth stocks with strong online presence. Not only did markets overwhelmingly favor growth stocks, they overwhelmingly favored a narrow cohort of mega-cap tech-related companies. As a result, the five largest stocks in the S&P 500 and MSCI World indexes—Apple, Microsoft, Amazon, Google (Alphabet Class A and Class C combined) and Facebook—represented 22% and 13% of these indexes in terms of market capitalization, respectively, as of yearend 2020 compared to 11% and 5% at end-2009.2 High concentration within indexes makes true diversification more difficult for benchmarked portfolios to achieve and in our view leaves such portfolios more susceptible to idiosyncratic risks.

While many of these companies posted impressive operating results in 2020, the incontrovertible problem for the high-flying growth stocks is that their market valuations in most cases have increased at a far greater rate than their fundamentals, suggesting investors have extrapolated 2020’s Covid-assisted metrics into the future. And with interest rates near zero, these high expectations for the future could be discounted back to the present at very low discount rates, resulting in significant multiple expansion. For example, the enterprise value/EBIT ratio of the MSCI World Growth Index relative to the MSCI World Value Index is at the highest level since 2000—a data point that might give investors pause.3

At the other end of the growth-stock spectrum, low discount rates also have heightened the appeal of more speculative names, as investors see less opportunity risk in taking a flyer on investments that may pay big rewards down the line—or nothing at all. We see this in “concept stocks” that trade at three- and four-digit and even infinitesimal earnings multiples. We also see this in the initial public offering (IPO) market, including offerings of special-purpose acquisition companies (SPACS or “blank check companies”), shell companies that raise investor assets in the public markets based on a commitment to acquire unspecified private businesses within a certain period of time. The 248 SPACs brought to market in 2020 have raised in excess of $83 billion, compared to less than $50 billion in aggregate proceeds over the previous 10 years.4

…But Is a New Day Rising for Value and International Equities?

As we’ve often cautioned, extrapolating trends is a risky way to commit capital, particularly when these trends reflect an extraordinary operating environment like 2020. Some of the factors that led to the extreme gap in valuation between growth and value last year have a natural elasticity to them and are likely to revert. The arrival of vaccines suggests there is a plausible path for economies to reopen within the next 12 months, to the potential benefit of the companies most directly impacted by 2020’s lockdowns—mature businesses operating in the physical economy. Further, morenormal conditions may make it difficult for certain growth stocks to maintain lofty valuation multiples as year-over-year sales and earnings growth comparisons become more challenging in 2021. In contrast, there are a number of solid, long-established companies in the mature economy—particularly in the materials, industrials and financial services sectors—that are trading at single-digit earnings multiples. Such companies generally do not need to post extraordinary growth rates to produce attractive returns; they simply need to bring their earnings power back to pre-pandemic levels, and many have track records of doing so after previous economic dislocations.

In fact, there were signs in the fourth quarter that investors had begun to take notice of these shifting dynamics. In what was a strong period for equities across the board, value outperformed growth both globally (15.7% for the MSCI World Value versus 12.5% for MSCI World Growth) and within the US (16.3% for Russell 1000 Value versus 11.4% for Russell 1000 Growth).5 Historically, such rotations from growth to more cyclical value stocks are typical of the early stages of a new business cycle, as investment flows to companies likely to benefit from a renewal in economic activity.

Also notable in the fourth quarter was a turnaround in the relative performance of non-US stocks, as the MSCI EAFE Index outpaced the S&P 500 Index 16.0% to 12.1%. Part of this sizable outperformance can be attributed to currency effects; in local-currency terms, the EAFE gained only 11.9%.6 A weakening dollar historically has boosted the performance of non-US companies and the performance of non-US stocks owned by dollar-based investors. Though the dollar was strong early in 2020 as investors sought perceived currency “safe havens,” it has weakened steadily since risk assets began to rebound in late March. This was due at least in part to the Fed’s slashing of its policy rate to near zero, which narrowed interest rate differentials between the US and other nations and diminished the appeal of the dollar carry trade.

While we don’t maintain a specific forecast for the dollar or any other currencies, we are mindful that the money supply in the US has been growing at a much faster rate compared to other developed markets. For example, M2 money supply in the US grew 25.1% in the 12 months through end-November 2020 while the broad monetary aggregates for Japan and the euro area grew 9.1% and 9.7%, respectively.7 The US also maintains the world’s largest current account deficit, while Japan and the euro area have surpluses.8 These factors suggest that further dollar weakening is a possibility, which could offer additional support for non-US equities. We have long observed that while the US is home to many excellent businesses, it does not have a monopoly on quality companies. Given relative performance trends in recent years, market valuations outside the US may offer opportunities to purchase quality international companies with a greater “margin of safety”9 in price than available domestically. We think now is a time when investors should closely consider the potential benefits of globally diversified portfolios.

These dynamics also impacted movements in the price of gold, which established a new record high in nominal US dollars during August. Real interest rates—that is, the difference between nominal interest rates and inflation—represent the opportunity cost of owning gold and are the most important driver of the gold price in the medium to long term. Since it pays neither dividends nor interest, gold is relatively expensive to hold when real interest rates are high and relatively inexpensive when real rates are low. As such, real interest rates and the price of gold historically have been negatively correlated. While 2020 was a tumultuous year for both real and nominal interest rates, gold exhibited its traditional behavior, rallying to its August high as real rates fell deeper into negative territory before leveling off.

Optimism Persisted Despite Abundant Risks

With the Fed and other central banks having committed to low interest rates for the next several years, it could be that the recovery from the Covid recession takes on a different shape than other recent experiences. Notably, policymakers this time around seem less likely to proactively respond to mounting inflation pressures as business activity picks up. In fact, the Fed’s August shift to a flexible inflation averaging mandate suggests it will gladly allow inflation to run at a rate above its 2% target to make up for the sub-target inflation that has prevailed since the global financial crisis. Higher inflation would help reduce bloated levels of sovereign debt relative to GDP, but it also may prompt investors to demand higher interest rates on Treasuries and put additional downward pressure on the dollar.

Historically, stocks have reacted positively to low, stable inflation and negatively to both deflation and high inflation. Markets priced for perfection suggest investors may be underestimating the risk of any outcome other than a perfect disinflationary recovery—the financial system equivalent of Captain Sully setting down safely in the Hudson River after a bird strike disabled the engines of his Airbus A320.

Inflation isn’t the only risk that could blow markets off course. Despite relief over the rollout of vaccines, the end point of the Covid era and its many economic dislocations remains uncertain. In the meantime, many businesses remain shuttered, and unemployment remains both high and bifurcated, highlighting the K-shaped recovery that appears to have taken hold. While the jobless rate nationwide stood at 6.7% at the end of December, this figure can be decomposed into a 7.8% rate for those with only a high-school diploma and 3.8% for college graduates.10 Following much partisan rancor, a second stimulus bill signed into law in late December will provide many struggling Americans with another $600 check.

After winning both seats in the January 5 Senate runoff in Georgia, the Democrats will control all three branches of the US government come Inauguration Day. While this improves the likelihood of ongoing fiscal stimulus in 2021, the Democrats’ slim advantage in the Senate—a 50-50 split with Republicans, with Vice President-elect Harris serving as a tiebreaking vote if necessary—may serve as a check on the type of massive spending that was earlier speculated to be a strong possibility in the event of a November “blue wave” and curtail very progressive, antibusiness policy tendencies.

Though the Biden administration is expected to take a more cooperative, predictable approach to foreign policy, geopolitical conditions remain tense. China, for example, finds itself in the midst of a multifaceted economic transition—from a command economy to a market economy, from a closed economy to an open economy, from an investment-based and export-led economy to a consumption-based and service-sector economy—as it continues to flex its vitality on an increasingly fractured global playing field. Significant obstacles stand in its way, including waning potential GDP and productivity growth, a rapidly aging population, massive indebtedness, the challenges of opening its capital account and deteriorating Sino-American relations. And though China’s economic activity has rebounded significantly from the early 2020 dislocations of Covid-19, the pandemic has increased the degree of difficulty for policymakers and highlighted the shortcomings inherent in China’s political and socioeconomic framework. If China mishandles its transition to a slower rate of growth, the impact could send ripples—if not waves—throughout the world economy.

Defining Value Stock by Stock

Earlier in this letter we noted that 2020 was a generationally difficult year for value. We should clarify that last year was a generationally difficult year for statistical measures of value; that is, for market indexes—and the passive strategies that seek to track them—composed of stocks considered cheaper than average by some fundamental valuation metric or combination of metrics like price-to-book-value or price-to-earnings. The primary flaw with such indexes and strategies is that the quantitative process used to build them assumes that, while price may diverge across securities, business character is homogenous.

In our view, a far better approach to value investment begins with defining the character of a business before assessing its price. By avoiding the assumption of homogeneity, the quantification of price becomes conditional to a comprehensive appraisal of a business and the concept of value becomes a much broader tent. Rather than being limited to only the statistically cheapest group of stocks, this approach centers on identifying the intrinsic value of a business based on the specific tangible and intangible attributes that can be expected to drive its cash flows over time. In this manner, any business available for purchase at a discount to our estimate of its intrinsic value should be considered for investment independent of the style bucket into which index providers have placed it.

The knowledge-based businesses emblematic of today’s economy increasingly are focused on the development of intangible assets rather than the property, plant and equipment investments that were the hallmarks of the old guard. However, these intangible assets for the most part are not captured by current financial accounting standards, which presents a challenge to investors seeking to identify undervalued stocks based on traditional metrics that seem to have become increasingly unmoored from the intrinsic value of many businesses. As a result, it seems more likely that indexbased value strategies would be skewed toward the stocks of cheap but flawed companies. These businesses may have falling market shares or be subject to adverse shifts in customer preferences. They may be in structural decline or at a persistent competitive disadvantage or even in financial distress. In other words, they may be cheap for good reasons, though ones not necessarily captured in their published financial statements.

We’ve found that high-quality intangible assets often manifest as an advantaged market position for the company in possession of them. Dominant players in their space—whether it’s bicycle gears or commercial ice makers or computer software—typically are able to scale fixed costs across a larger volume of production, which should result in lower production costs compared to the competition and thus greater free cash flow per unit. This cash flow generation allows these companies to steadily reinforce their already advantaged positions; that is, it may enable them to expand the moat around their business. The incumbency of such companies—typically already well-entrenched in their industries and in possession of the unique management and technical expertise that implies—can be difficult to unseat.

Seeking All-Weather Portfolios

We are confident that recent market conditions, while difficult for both quantitative and fundamental value investors, have reinforced the importance of business character, of which intangible assets are an integral part. Though balance sheets, income statements and cash flow statements remain essential to an analyst’s toolkit, intangibles in many cases can only be fully appreciated through rigorous and often personal due diligence: facility tours and meetings with managements, supply-chain check-ins and discussions with consumers. Though the potential benefits of intangible assets can be difficult to quantify, understanding their impact on business performance is essential to effectively estimating intrinsic value and to sidestepping the distortions that have emerged in traditional valuation metrics.

At First Eagle, we believe that ongoing and substantive investment in our fundamental research platform positions us to better appreciate the intangible assets and serves as a differentiating factor between us and other managers. First Eagle's Global Value team has evolved in a measured and deliberate fashion over the years, developing existing talent, broadening responsibilities, adding resources and building out discreet areas of competency with an eye toward supporting the needs of our clients now and in the future. While structural challenges have tested the resolve of many active value managers in recent years, our dedication to our investment philosophy has not wavered.

The portfolios managed by First Eagle’s Global Value team generally performed as we would expect in 2020. Our portfolios generally demonstrated resilience in the face of the first quarter’s selloff, and we took advantage of market dislocations to selectively allocate capital, on what we believed to be advantageous terms to what we viewed as wellpositioned, well-capitalized, well-managed businesses with the potential to demonstrate resilience over the long term. At the same time, remembering the guidance of our former colleague Jean-Marie Eveillard, we avoided conflating cyclical opportunism with blind contrarianism, resisting the temptation to double down on stocks that suddenly had become “cheaper” in the course of a handful of weeks. We lagged the broader market in the growth-led recovery that eventually took hold, as we maintained our commitment to our core investment philosophy and strict valuation discipline.

As we enter 2021, we believe our portfolios are appropriately positioned for the future while continuing to represent an attractive all-weather option for long-horizon investors. Our largest holdings tend to be focused on cash-flow generative, compounding businesses that have what we view as strong market positions and clear lines of sight into their forward prospects. Looking deeper, we have a range of smaller allocations that we believe are positioned to potentially benefit from the re-opening of the physical economy. And our big-tent approach to value investing, discussed earlier, has enabled us to gain exposure to stocks not typically associated with value-oriented portfolios from industries that have benefited from the transition to a virtual environment, including social media, online advertising, cloud software and factory automation.

Meanwhile, we maintain strategic allocations to gold and gold-related equities as a potential hedge, positions that served portfolios well in 2020 as real interest rates declined in the wake of massive central bank stimulus; in fact, price appreciation during the year prompted us to trim our gold holdings to avoid maintaining a position size that would represent a directional perspective. Gold continues to be an important source of ballast in our portfolios as well as a source of deferred purchasing power in the face of ongoing fiat currency debasement.

We want to close by thanking you for your continuing support. We look forward to serving as prudent stewards of your capital in the years ahead.

Sincerely,

Matthew McLennan

Head of the First Eagle Global Value Team

Portfolio Manager

Global, Overseas, U.S. Value and Gold Strategies

T. Kimball Brooker, Jr.

Deputy Head of the First Eagle Global Value Team

Portfolio Manager

Global, Overseas, U.S. Value and Global Income Builder Strategies

The post First Eagle Global Value 2020 Annual Letter appeared first on ValueWalk.

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Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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March 10, 2024

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act. 

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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‘I couldn’t stand the pain’: the Turkish holiday resort that’s become an emergency dental centre for Britons who can’t get treated at home

The crisis in NHS dentistry is driving increasing numbers abroad for treatment. Here are some of their stories.

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March 10, 2024

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This clinic in the Turkish resort of Antalya is the official 'dental sponsor' of the Miss England competition. Diana Ibanez-Tirado, Author provided

It’s a hot summer day in the Turkish city of Antalya, a Mediterranean resort with golden beaches, deep blue sea and vibrant nightlife. The pool area of the all-inclusive resort is crammed with British people on sun loungers – but they aren’t here for a holiday. This hotel is linked to a dental clinic that organises treatment packages, and most of these guests are here to see a dentist.

From Norwich, two women talk about gums and injections. A man from Wales holds a tissue close to his mouth and spits blood – he has just had two molars extracted.

The dental clinic organises everything for these dental “tourists” throughout their treatment, which typically lasts from three to 15 days. The stories I hear of what has caused them to travel to Turkey are strikingly similar: all have struggled to secure dental treatment at home on the NHS.

“The hotel is nice and some days I go to the beach,” says Susan*, a hairdresser in her mid-30s from Norwich. “But really, we aren’t tourists like in a proper holiday. We come here because we have no choice. I couldn’t stand the pain.”

Seaside beach resort with mountains in the distance
The Turkish Mediterranean resort of Antalya. Akimov Konstantin/Shutterstock

This is Susan’s second visit to Antalya. She explains that her ordeal started two years earlier:

I went to an NHS dentist who told me I had gum disease … She did some cleaning to my teeth and gums but it got worse. When I ate, my teeth were moving … the gums were bleeding and it was very painful. I called to say I was in pain but the clinic was not accepting NHS patients any more.

The only option the dentist offered Susan was to register as a private patient:

I asked how much. They said £50 for x-rays and then if the gum disease got worse, £300 or so for extraction. Four of them were moving – imagine: £1,200 for losing your teeth! Without teeth I’d lose my clients, but I didn’t have the money. I’m a single mum. I called my mum and cried.

Susan’s mother told her about a friend of hers who had been to Turkey for treatment, then together they found a suitable clinic:

The prices are so much cheaper! Tooth extraction, x-rays, consultations – it all comes included. The flight and hotel for seven days cost the same as losing four teeth in Norwich … I had my lower teeth removed here six months ago, now I’ve got implants … £2,800 for everything – hotel, transfer, treatments. I only paid the flights separately.

In the UK, roughly half the adult population suffers from periodontitis – inflammation of the gums caused by plaque bacteria that can lead to irreversible loss of gums, teeth, and bone. Regular reviews by a dentist or hygienist are required to manage this condition. But nine out of ten dental practices cannot offer NHS appointments to new adult patients, while eight in ten are not accepting new child patients.

Some UK dentists argue that Britons who travel abroad for treatment do so mainly for cosmetic procedures. They warn that dental tourism is dangerous, and that if their treatment goes wrong, dentists in the UK will be unable to help because they don’t want to be responsible for further damage. Susan shrugs this off:

Dentists in England say: ‘If you go to Turkey, we won’t touch you [afterwards].’ But I don’t worry because there are no appointments at home anyway. They couldn’t help in the first place, and this is why we are in Turkey.

‘How can we pay all this money?’

As a social anthropologist, I travelled to Turkey a number of times in 2023 to investigate the crisis of NHS dentistry, and the journeys abroad that UK patients are increasingly making as a result. I have relatives in Istanbul and have been researching migration and trading patterns in Turkey’s largest city since 2016.

In August 2023, I visited the resort in Antalya, nearly 400 miles south of Istanbul. As well as Susan, I met a group from a village in Wales who said there was no provision of NHS dentistry back home. They had organised a two-week trip to Turkey: the 12-strong group included a middle-aged couple with two sons in their early 20s, and two couples who were pensioners. By going together, Anya tells me, they could support each other through their different treatments:

I’ve had many cavities since I was little … Before, you could see a dentist regularly – you didn’t even think about it. If you had pain or wanted a regular visit, you phoned and you went … That was in the 1990s, when I went to the dentist maybe every year.

Anya says that once she had children, her family and work commitments meant she had no time to go to the dentist. Then, years later, she started having serious toothache:

Every time I chewed something, it hurt. I ate soups and soft food, and I also lost weight … Even drinking was painful – tea: pain, cold water: pain. I was taking paracetamol all the time! I went to the dentist to fix all this, but there were no appointments.

Anya was told she would have to wait months, or find a dentist elsewhere:

A private clinic gave me a list of things I needed done. Oh my God, almost £6,000. My husband went too – same story. How can we pay all this money? So we decided to come to Turkey. Some people we know had been here, and others in the village wanted to come too. We’ve brought our sons too – they also need to be checked and fixed. Our whole family could be fixed for less than £6,000.

By the time they travelled, Anya’s dental problems had turned into a dental emergency. She says she could not live with the pain anymore, and was relying on paracetamol.

In 2023, about 6 million adults in the UK experienced protracted pain (lasting more than two weeks) caused by toothache. Unintentional paracetamol overdose due to dental pain is a significant cause of admissions to acute medical units. If left untreated, tooth infections can spread to other parts of the body and cause life-threatening complications – and on rare occasions, death.

In February 2024, police were called to manage hundreds of people queuing outside a newly opened dental clinic in Bristol, all hoping to be registered or seen by an NHS dentist. One in ten Britons have admitted to performing “DIY dentistry”, of which 20% did so because they could not find a timely appointment. This includes people pulling out their teeth with pliers and using superglue to repair their teeth.

In the 1990s, dentistry was almost entirely provided through NHS services, with only around 500 solely private dentists registered. Today, NHS dentist numbers in England are at their lowest level in a decade, with 23,577 dentists registered to perform NHS work in 2022-23, down 695 on the previous year. Furthermore, the precise division of NHS and private work that each dentist provides is not measured.

The COVID pandemic created longer waiting lists for NHS treatment in an already stretched public service. In Bridlington, Yorkshire, people are now reportedly having to wait eight-to-nine years to get an NHS dental appointment with the only remaining NHS dentist in the town.

In his book Patients of the State (2012), Argentine sociologist Javier Auyero describes the “indignities of waiting”. It is the poor who are mostly forced to wait, he writes. Queues for state benefits and public services constitute a tangible form of power over the marginalised. There is an ethnic dimension to this story, too. Data suggests that in the UK, patients less likely to be effective in booking an NHS dental appointment are non-white ethnic groups and Gypsy or Irish travellers, and that it is particularly challenging for refugees and asylum-seekers to access dental care.

This article is part of Conversation Insights
The Insights team generates long-form journalism derived from interdisciplinary research. The team is working with academics from different backgrounds who have been engaged in projects aimed at tackling societal and scientific challenges.

In 2022, I experienced my own dental emergency. An infected tooth was causing me debilitating pain, and needed root canal treatment. I was advised this would cost £71 on the NHS, plus £307 for a follow-up crown – but that I would have to wait months for an appointment. The pain became excruciating – I could not sleep, let alone wait for months. In the same clinic, privately, I was quoted £1,300 for the treatment (more than half my monthly income at the time), or £295 for a tooth extraction.

I did not want to lose my tooth because of lack of money. So I bought a flight to Istanbul immediately for the price of the extraction in the UK, and my tooth was treated with root canal therapy by a private dentist there for £80. Including the costs of travelling, the total was a third of what I was quoted to be treated privately in the UK. Two years on, my treated tooth hasn’t given me any more problems.

A better quality of life

Not everyone is in Antalya for emergency procedures. The pensioners from Wales had contacted numerous clinics they found on the internet, comparing prices, treatments and hotel packages at least a year in advance, in a carefully planned trip to get dental implants – artificial replacements for tooth roots that help support dentures, crowns and bridges.

Street view of a dental clinic in Antalya, Turkey
Dental clinic in Antalya, Turkey. Diana Ibanez-Tirado, CC BY-NC-ND

In Turkey, all the dentists I speak to (most of whom cater mainly for foreigners, including UK nationals) consider implants not a cosmetic or luxurious treatment, but a development in dentistry that gives patients who are able to have the procedure a much better quality of life. This procedure is not available on the NHS for most of the UK population, and the patients I meet in Turkey could not afford implants in private clinics back home.

Paul is in Antalya to replace his dentures, which have become uncomfortable and irritating to his gums, with implants. He says he couldn’t find an appointment to see an NHS dentist. His wife Sonia went through a similar procedure the year before and is very satisfied with the results, telling me: “Why have dentures that you need to put in a glass overnight, in the old style? If you can have implants, I say, you’re better off having them.”

Most of the dental tourists I meet in Antalya are white British: this city, known as the Turkish Riviera, has developed an entire economy catering to English-speaking tourists. In 2023, more than 1.3 million people visited the city from the UK, up almost 15% on the previous year.

Read more: NHS dentistry is in crisis – are overseas dentists the answer?

In contrast, the Britons I meet in Istanbul are predominantly from a non-white ethnic background. Omar, a pensioner of Pakistani origin in his early 70s, has come here after waiting “half a year” for an NHS appointment to fix the dental bridge that is causing him pain. Omar’s son had been previously for a hair transplant, and was offered a free dental checkup by the same clinic, so he suggested it to his father. Having worked as a driver for a manufacturing company for two decades in Birmingham, Omar says he feels disappointed to have contributed to the British economy for so long, only to be “let down” by the NHS:

At home, I must wait and wait and wait to get a bridge – and then I had many problems with it. I couldn’t eat because the bridge was uncomfortable and I was in pain, but there were no appointments on the NHS. I asked a private dentist and they recommended implants, but they are far too expensive [in the UK]. I started losing weight, which is not a bad thing at the beginning, but then I was worrying because I couldn’t chew and eat well and was losing more weight … Here in Istanbul, I got dental implants – US$500 each, problem solved! In England, each implant is maybe £2,000 or £3,000.

In the waiting area of another clinic in Istanbul, I meet Mariam, a British woman of Iraqi background in her late 40s, who is making her second visit to the dentist here. Initially, she needed root canal therapy after experiencing severe pain for weeks. Having been quoted £1,200 in a private clinic in outer London, Mariam decided to fly to Istanbul instead, where she was quoted £150 by a dentist she knew through her large family. Even considering the cost of the flight, Mariam says the decision was obvious:

Dentists in England are so expensive and NHS appointments so difficult to find. It’s awful there, isn’t it? Dentists there blamed me for my rotten teeth. They say it’s my fault: I don’t clean or I ate sugar, or this or that. I grew up in a village in Iraq and didn’t go to the dentist – we were very poor. Then we left because of war, so we didn’t go to a dentist … When I arrived in London more than 20 years ago, I didn’t speak English, so I still didn’t go to the dentist … I think when you move from one place to another, you don’t go to the dentist unless you are in real, real pain.

In Istanbul, Mariam has opted not only for the urgent root canal treatment but also a longer and more complex treatment suggested by her consultant, who she says is a renowned doctor from Syria. This will include several extractions and implants of back and front teeth, and when I ask what she thinks of achieving a “Hollywood smile”, Mariam says:

Who doesn’t want a nice smile? I didn’t come here to be a model. I came because I was in pain, but I know this doctor is the best for implants, and my front teeth were rotten anyway.

Dentists in the UK warn about the risks of “overtreatment” abroad, but Mariam appears confident that this is her opportunity to solve all her oral health problems. Two of her sisters have already been through a similar treatment, so they all trust this doctor.

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An Istanbul clinic founded by Afghan dentists has a message for its UK customers. Diana Ibanez-Tirado, CC BY-NC-ND

The UK’s ‘dental deserts’

To get a fuller understanding of the NHS dental crisis, I’ve also conducted 20 interviews in the UK with people who have travelled or were considering travelling abroad for dental treatment.

Joan, a 50-year-old woman from Exeter, tells me she considered going to Turkey and could have afforded it, but that her back and knee problems meant she could not brave the trip. She has lost all her lower front teeth due to gum disease and, when I meet her, has been waiting 13 months for an NHS dental appointment. Joan tells me she is living in “shame”, unable to smile.

In the UK, areas with extremely limited provision of NHS dental services – known as as “dental deserts” – include densely populated urban areas such as Portsmouth and Greater Manchester, as well as many rural and coastal areas.

In Felixstowe, the last dentist taking NHS patients went private in 2023, despite the efforts of the activist group Toothless in Suffolk to secure better access to NHS dentists in the area. It’s a similar story in Ripon, Yorkshire, and in Dumfries & Galloway, Scotland, where nearly 25,000 patients have been de-registered from NHS dentists since 2021.

Data shows that 2 million adults must travel at least 40 miles within the UK to access dental care. Branding travel for dental care as “tourism” carries the risk of disguising the elements of duress under which patients move to restore their oral health – nationally and internationally. It also hides the immobility of those who cannot undertake such journeys.

The 90-year-old woman in Dumfries & Galloway who now faces travelling for hours by bus to see an NHS dentist can hardly be considered “tourism” – nor the Ukrainian war refugees who travelled back from West Sussex and Norwich to Ukraine, rather than face the long wait to see an NHS dentist.

Many people I have spoken to cannot afford the cost of transport to attend dental appointments two hours away – or they have care responsibilities that make it impossible. Instead, they are forced to wait in pain, in the hope of one day securing an appointment closer to home.

Billboard advertising a dental clinic in Turkey
Dental clinics have mushroomed in recent years in Turkey, thanks to the influx of foreign patients seeking a wide range of treatments. Diana Ibanez-Tirado, CC BY-NC-ND

‘Your crisis is our business’

The indignities of waiting in the UK are having a big impact on the lives of some local and foreign dentists in Turkey. Some neighbourhoods are rapidly changing as dental and other health clinics, usually in luxurious multi-storey glass buildings, mushroom. In the office of one large Istanbul medical complex with sections for hair transplants and dentistry (plus one linked to a hospital for more extensive cosmetic surgery), its Turkish owner and main investor tells me:

Your crisis is our business, but this is a bazaar. There are good clinics and bad clinics, and unfortunately sometimes foreign patients do not know which one to choose. But for us, the business is very good.

This clinic only caters to foreign patients. The owner, an architect by profession who also developed medical clinics in Brazil, describes how COVID had a major impact on his business:

When in Europe you had COVID lockdowns, Turkey allowed foreigners to come. Many people came for ‘medical tourism’ – we had many patients for cosmetic surgery and hair transplants. And that was when the dental business started, because our patients couldn’t see a dentist in Germany or England. Then more and more patients started to come for dental treatments, especially from the UK and Ireland. For them, it’s very, very cheap here.

The reasons include the value of the Turkish lira relative to the British pound, the low cost of labour, the increasing competition among Turkish clinics, and the sheer motivation of dentists here. While most dentists catering to foreign patients are from Turkey, others have arrived seeking refuge from war and violence in Syria, Iraq, Afghanistan, Iran and beyond. They work diligently to rebuild their lives, careers and lost wealth.

Regardless of their origin, all dentists in Turkey must be registered and certified. Hamed, a Syrian dentist and co-owner of a new clinic in Istanbul catering to European and North American patients, tells me:

I know that you say ‘Syrian’ and people think ‘migrant’, ‘refugee’, and maybe think ‘how can this dentist be good?’ – but Syria, before the war, had very good doctors and dentists. Many of us came to Turkey and now I have a Turkish passport. I had to pass the exams to practise dentistry here – I study hard. The exams are in Turkish and they are difficult, so you cannot say that Syrian doctors are stupid.

Hamed talks excitedly about the latest technology that is coming to his profession: “There are always new materials and techniques, and we cannot stop learning.” He is about to travel to Paris to an international conference:

I can say my techniques are very advanced … I bet I put more implants and do more bone grafting and surgeries every week than any dentist you know in England. A good dentist is about practice and hand skills and experience. I work hard, very hard, because more and more patients are arriving to my clinic, because in England they don’t find dentists.

Dental equipment in a Turkish treatment room
Dentists in Turkey boast of using the latest technology. Diana Ibanez-Tirado, CC BY-NC-ND

While there is no official data about the number of people travelling from the UK to Turkey for dental treatment, investors and dentists I speak to consider that numbers are rocketing. From all over the world, Turkey received 1.2 million visitors for “medical tourism” in 2022, an increase of 308% on the previous year. Of these, about 250,000 patients went for dentistry. One of the most renowned dental clinics in Istanbul had only 15 British patients in 2019, but that number increased to 2,200 in 2023 and is expected to reach 5,500 in 2024.

Like all forms of medical care, dental treatments carry risks. Most clinics in Turkey offer a ten-year guarantee for treatments and a printed clinical history of procedures carried out, so patients can show this to their local dentists and continue their regular annual care in the UK. Dental treatments, checkups and maintaining a good oral health is a life-time process, not a one-off event.

Many UK patients, however, are caught between a rock and a hard place – criticised for going abroad, yet unable to get affordable dental care in the UK before and after their return. The British Dental Association has called for more action to inform these patients about the risks of getting treated overseas – and has warned UK dentists about the legal implications of treating these patients on their return. But this does not address the difficulties faced by British patients who are being forced to go abroad in search of affordable, often urgent dental care.

A global emergency

The World Health Organization states that the explosion of oral disease around the world is a result of the “negligent attitude” that governments, policymakers and insurance companies have towards including oral healthcare under the umbrella of universal healthcare. It as if the health of our teeth and mouth is optional; somehow less important than treatment to the rest of our body. Yet complications from untreated tooth decay can lead to hospitalisation.

The main causes of oral health diseases are untreated tooth decay, severe gum disease, toothlessness, and cancers of the lip and oral cavity. Cases grew during the pandemic, when little or no attention was paid to oral health. Meanwhile, the global cosmetic dentistry market is predicted to continue growing at an annual rate of 13% for the rest of this decade, confirming the strong relationship between socioeconomic status and access to oral healthcare.

In the UK since 2018, there have been more than 218,000 admissions to hospital for rotting teeth, of which more than 100,000 were children. Some 40% of children in the UK have not seen a dentist in the past 12 months. The role of dentists in prevention of tooth decay and its complications, and in the early detection of mouth cancer, is vital. While there is a 90% survival rate for mouth cancer if spotted early, the lack of access to dental appointments is causing cases to go undetected.

The reasons for the crisis in NHS dentistry are complex, but include: the real-term cuts in funding to NHS dentistry; the challenges of recruitment and retention of dentists in rural and coastal areas; pay inequalities facing dental nurses, most of them women, who are being badly hit by the cost of living crisis; and, in England, the 2006 Dental Contract that does not remunerate dentists in a way that encourages them to continue seeing NHS patients.

The UK is suffering a mass exodus of the public dentistry workforce, with workers leaving the profession entirely or shifting to the private sector, where payments and life-work balance are better, bureaucracy is reduced, and prospects for career development look much better. A survey of general dental practitioners found that around half have reduced their NHS work since the pandemic – with 43% saying they were likely to go fully private, and 42% considering a career change or taking early retirement.

Reversing the UK’s dental crisis requires more commitment to substantial reform and funding than the “recovery plan” announced by Victoria Atkins, the secretary of state for health and social care, on February 7.

The stories I have gathered show that people travelling abroad for dental treatment don’t see themselves as “tourists” or vanity-driven consumers of the “Hollywood smile”. Rather, they have been forced by the crisis in NHS dentistry to seek out a service 1,500 miles away in Turkey that should be a basic, affordable right for all, on their own doorstep.

*Names in this article have been changed to protect the anonymity of the interviewees.

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Diana Ibanez Tirado receives funding from the School of Global Studies, University of Sussex.

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Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

The struggling chain has given up the fight and will close hundreds of stores around the world.

Published

15 hours ago

on

March 10, 2024

By

It has been a brutal period for several popular retailers. The fallout from the covid pandemic and a challenging economic environment have pushed numerous chains into bankruptcy with Tuesday Morning, Christmas Tree Shops, and Bed Bath & Beyond all moving from Chapter 11 to Chapter 7 bankruptcy liquidation.

In all three of those cases, the companies faced clear financial pressures that led to inventory problems and vendors demanding faster, or even upfront payment. That creates a sort of inevitability.

Related: Beloved retailer finds life after bankruptcy, new famous owner

When a retailer faces financial pressure it sets off a cycle where vendors become wary of selling them items. That leads to barren shelves and no ability for the chain to sell its way out of its financial problems. 

Once that happens bankruptcy generally becomes the only option. Sometimes that means a Chapter 11 filing which gives the company a chance to negotiate with its creditors. In some cases, deals can be worked out where vendors extend longer terms or even forgive some debts, and banks offer an extension of loan terms.

In other cases, new funding can be secured which assuages vendor concerns or the company might be taken over by its vendors. Sometimes, as was the case with David's Bridal, a new owner steps in, adds new money, and makes deals with creditors in order to give the company a new lease on life.

It's rare that a retailer moves directly into Chapter 7 bankruptcy and decides to liquidate without trying to find a new source of funding.

Mall traffic has varied depending upon the type of mall.

Image source: Getty Images

The Body Shop has bad news for customers  

The Body Shop has been in a very public fight for survival. Fears began when the company closed half of its locations in the United Kingdom. That was followed by a bankruptcy-style filing in Canada and an abrupt closure of its U.S. stores on March 4.

"The Canadian subsidiary of the global beauty and cosmetics brand announced it has started restructuring proceedings by filing a Notice of Intention (NOI) to Make a Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). In the same release, the company said that, as of March 1, 2024, The Body Shop US Limited has ceased operations," Chain Store Age reported.

A message on the company's U.S. website shared a simple message that does not appear to be the entire story.

"We're currently undergoing planned maintenance, but don't worry we're due to be back online soon."

That same message is still on the company's website, but a new filing makes it clear that the site is not down for maintenance, it's down for good.

The Body Shop files for Chapter 7 bankruptcy

While the future appeared bleak for The Body Shop, fans of the brand held out hope that a savior would step in. That's not going to be the case. 

The Body Shop filed for Chapter 7 bankruptcy in the United States.

"The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday (March 9), it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution center that still holds millions of dollars worth of stock," The Guardian reported.

After its closure in the United States, the survival of the brand remains very much in doubt. About half of the chain's stores in the United Kingdom remain open along with its Australian stores. 

The future of those stores remains very much in doubt and the chain has shared that it needs new funding in order for them to continue operating.

The Body Shop did not respond to a request for comment from TheStreet.   

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