Stocks

Interesting, and often contrarian, Snippets on individual companies and the stock market.

Stocks

Gasoline Use Distribution

  • 10% of US motorists drive 30,000 miles or more and use 32% of all gasoline consumed.
  • This is more than the bottom 60% put together.
  • It is likely they also tend to live in rural areas and drive SUVs/pickup trucks, ubiquitous in those parts of the US.
  • Transitioning these users to EV will be crucial.
  • Source (good article).
Stocks

Amazon Ads

  • Fascinating development harks back to this.
  • “Direct-to-consumer brands moved 20–30% of their marketing dollars in Q4 2022 from Meta to Amazon due to the former’s declining performance metrics for ads. The shift occurred despite a recent reluctance from DTC brand to sell products on Amazon because of limited access to and ownership of sales and customer data—but now that brands are receiving only $2 back for every $1 spent on Meta ads (they used to get $8 back), they are more willing to work with the e-commerce giant. According to Advantage Unified Commerce, an estimated 75% of brands report customer acquisition is cheaper on Amazon than other media channels.”
  • Source (h/t Pipe).
Stocks

TSR across industries

  • Interesting chart from BCG.
  • It looks at TSR (Total Shareholder Return) over a 5-year period (2013-2017) across industries.
  • “The median TSR of the top ten companies in each industry was higher than the industry’s median by 9 percentage points (in insurance) and 32 percentage points (in media and publishing as well as metals).“
  • “The lesson is this: being in a sector whose market performance is below average is no excuse. TSR is a relative—as well as an absolute—metric, so whether an industry is under pressure or accelerating, every company has the opportunity to outperform its peers.”
Stocks

Electric Vehicle Pricing

  • “Since about 2021-Q4, prices for electrified vehicles significantly outpaced their internal combustion counterparts, largely owing to battery material prices.“
  • These vehicles are “on average about $15-20K higher than their internal combustion counterparts.“
  • This is probably the opposite of what one expects to see for a new technology – but TCO considerations still drive most purchase decisions.
  • Source.
Stocks

Index Monsters

  • The big three are increasingly dominant, even more so in small cap stocks.
  • “Last year, the big once again became even bigger. At the end of 2021, Vanguard, BlackRock and State Street, the three biggest index fund providers, together control on average 18.7 per cent of S&P 500 companies, according to Lazard. Their ownership of smaller companies is even more concentrated. By the end of last year, they held 22.8 per cent of shares in the midsized S&P 400 index, and 28.2 per cent of the small-company S&P 600 benchmark.“
  • Source: FT.
Stocks

Leverage at Record Highs

  • “This risk is particularly noteworthy given that many companies with loans outstanding are carrying significant debt loads. The average debt-to-EBITDA ratio in new U.S. loan transactions hit a record-high 5.5x in 1Q2022, above the 4.9x recorded just before the Global Financial Crisis.“
  • “Importantly, companies involved in these transactions were often more highly levered than they appeared on paper, as many used aggressive EBITDA adjustments (e.g., for synergies, cost cuts, etc.) when making these leverage calculations.”
  • Source: Oaktree.
Stocks

Cloud Vendors

  • Cloud Vendor market was $159bn annual run-rate market in Q2, still growing 37% (though slowing).
  • This growth has actually come with pretty good economics. (From this Battery VC deck).
  • One very interesting feature of these vendors is they also happen to run huge cloud based products (think Xbox for example) which means they are customers of their own infrastructure – utilising it and making it better.
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