Author: Snippet.Finance

Misc

Biology

  • A fascinating piece from a16z, the US venture capital firm, on biology.
  • They run a $650m Bio fund and invest in many new technologies.
  • “Bio today is where information technology was 50 years ago: on the precipice of touching all of our lives. Just like software—and because of it—biology will one day become part of every industry.” 
  • Lots of links within to articles (written by a16z) on various aspects of how healthcare is transforming.
  • This piece is a shout out to the now famous 2011 article by a16z “Why Software is Eating the World”.
Stocks

Grubhub

  • Grub Investor Letter after their recent profit warning (and -43% fall in the shares) is worth a read.
  • We have previously pointed out how alternative data was suggesting competitors were beating Grub.
  • The letter points out how the online takeout market is getting a lot more competitive.
  • “Furthermore, we believe online diners are becoming more promiscuous … our newer diners are increasingly coming to us already having ordered on a competing online platform, and our existing diners are increasingly ordering from multiple platforms … the easy wins in the market are disappearing a little more quickly than we thought.”
  • Well done Chanos on shorting the stock.
Stocks

Vodafone Idea in India

  • Indian supreme court, after 10 years deliberation, hands a real shocker for Vodafone’s merged entity in the country (Vodafone Idea).
  • Essentially the court is forcing all companies to pay levies for spectrum on total revenue (not just telecoms revenue).
  • Vodafone Idea are forced to pay $4bn.
  • This is likely to put Vodafone Idea under (It has net debt of $14bn or 20x Net Debt/EBITDA).
  • Hard to see in the share price chart but that last drop was 35%.
  • Upstart Jio, which has been waging the mother of all price wars (it gave services away for free!), is unscathed by this ruling.
Stocks

Third Point

  • Latest Investment Letter for Q3 from Third Point is out.
  • It contains their view on activism and their edge in this strategy.
  • They review of the successful Sotheby’s (BID) investment (acquired recently at a 61% premium).
  • It also has an analysis of their new big holding in EssilorLuxottica (EL) and why they like it (mostly the merger synergies).
Macroeconomics

National Happiness

  • Two academics have used digitised books and newspapers since 1820 to measure happiness based on word usage.
  • They control for the change of meaning in some words (e.g. awful – used to mean ‘to inspire awe’).
  • You can see clearly in the chart that war is bad for happiness.
  • They also find that wealth does lead to an increase in happiness but it is dwarfed by the impact of increases in health.
  • In fact, 1 year of longevity has the same effect as 4.3% of GDP Growth.
  • Source: The Economist.
Stocks

Spotify

  • SPOT have reported Q3 and there are lots of interesting points.
  • The latest initiative, Podcasts, is seeing exponential growth (+39% Q/Q)
  • They are also launching paid recommendations.
  • On competition – “We continue to feel very good about our competitive position in the market. Relative to Apple, the publicly available data shows that we are adding roughly twice as many subscribers per month as they are. Additionally, we believe that our monthly engagement is roughly 2x as high and our churn is at half the rate. Elsewhere, our estimates imply that we continue to add more users on an absolute basis than Amazon. Our data also suggests that Amazon’s user base skews significantly more to ‘Ad-Supported’ than ‘Premium’, and that average engagement on our platform is approximately 3x.“
Stocks

Nokia

  • Big profit warning from Nokia last week.
  • They are seeing margin pressure from competition, and are having to make bigger investments into next generation mobile networks (5G).
  • As a result they are also cutting the dividend.
  • This competitor driven intensity ahead of a new investment cycle (5G) is very typical of the telecoms equipment industry.
  • Their customers merging is not helping as they likely standardise on one supplier. They are also delaying 5G roll outs as a result.