Stocks
Interesting, and often contrarian, Snippets on individual companies and the stock market.
DUC Inventory
- Drilled but uncompleted (DUC) well inventory (a form of hidden oil inventory) has almost normalised in the US oil patch.
Emerging Market Stocks
- Surprisingly, EM stocks make up the majority of the top 50 best performing stocks in the MSCI All Country World Index (ACWI).
Europe
- European equities relative to the US (blue) have largely followed relative earnings (orange).
- The latest readings suggests we should see an improvement in price action.
Oil Patch Borrowing Base
- Another key variable holding back capital expenditure in the US oil patch – lenders.
- Although borrowing bases are increasing it is only by 10-20%, likely not enough to recover the pandemic related drop.
- Source: HaynesBoone Survey.
Medical Waiting Lists England
- Treatment waiting lists have ballooned thanks to the pandemic – suggesting a lot of pent up demand for healthcare.
SPX around Hiking Cycles
- Historic stock performance of the S&P 500 around hiking cycles.
- Market usually softens 9-10 months after the first rate hike and lasts ca. 12 months.
Starship
- Starship, the fully reusable rocket under development by SpaceX, is a revolution the industry grossly under-appreciates. So goes this fascinating blog post.
- “Starship matters. It’s not just a really big rocket, like any other rocket on steroids. It’s a continuing and dedicated attempt to achieve the “Holy Grail” of rocketry, a fully and rapidly reusable orbital class rocket that can be mass manufactured. It is intended to enable a conveyor belt logistical capacity to Low Earth Orbit (LEO) comparable to the Berlin Airlift.“
- “Consider the two critical metrics: Dollars per tonne ($/T) and tonnes per year (T/year) … Starship is intended to reach numbers as low as $1m/T and 1000 T/year for cargo soft landed on the Moon. Apollo achieved about $2b/T and 2 T/year for cargo soft landed on the Moon.“
- It is developing in leaps – “Two years ago Starship was a design concept and a mock up. Today it’s a 95% complete prototype that will soon fly to space and may even make it back in one piece.“
Online Audio Brands
- Awareness of online audio brands in the UK.
- Source: The Infinite Dial (lots of other useful data).
Biotech Year in Review
- Excellent review by Bruce Booth, partner at Atlas Ventures, of 2021 Year in Biotech.
- It covers the impact of the pandemic (both good and bad), current pipeline (5,000 compounds, $180bn of R&D spend), policy picture, the abundance of capital against constrained talent (here and 25:30) and so much more!
UK Inbound Private Equity
- Bids from private equity into Europe, and especially the UK, are on the rise with 2021 seeing a record year (almost rivalling 2006 in value terms).
- H/T 361 Capital.
SaaS Unlocks Software Use
- Latest annual presentation is out from Benedict Evans.
- Absolutely worth a look as it nicely covers macro and strategic trends from the tech industry.
- This chart shows how software as a service (SaaS) has pushed up the amount of software companies can use (as there is no need to get IT to install/support/configure new applications).
- The move to cloud delivery for software has miles to go (it is just 10-15% of enterprise IT spend and 20-30% of workloads).
E-commerce Heat Map
- Nice heat map of the various business models employed by the world’s largest e-commerce companies.
- Source.
Spoken Word
- Spoken word audio (think podcasts, audiobooks etc) is taking share of listening away from music.
- 22m more people in the US are listening to spoken word than seven years ago.
- The biggest growth driver has been podcasts – which represent 22% of spoken word, up from 8% in 2014.
- Lots more stats in this NPR/Edison Research report.
SPACs Pt 2
- Time to look at SPACs?
- Source: Variant Perception.
Fintech Lending
- Interesting study by IMF on fintech’s experience during the Covid crisis.
- The chart shows continued strong growth through 2020 by fintech lenders, outpacing traditional institutions.
- But also a pronounced increase in non-performing assets, something traditional lenders did not see.
- This work is based on data from 20 economies and is part of the IMF Global Financial Stability Report.
SUVs
- The popularity of SUVs continues unabated.
- This is despite 20% higher fuel cost (which has improved due to increased mix of electric SUVs and improving fuel economy).
Factors
- Since its inception financial research has been on the hunt for factors that can consistently generate positive returns. Most famously Fama and French’s value factor.
- This search has led to a what one author has termed the “factor zoo” – a proliferation of factors – a direct consequence of data mining.
- There is also a replication crisis – that factors are not internally (i.e. the results can’t be replicated within the original sample) and externally (i.e. results can’t be replicated out of sample) valid.
- This paper (summary here) is a rebuttal of these issue – it uses Bayesian updating from a prior that a factor’s usefulness is zero. Their work finds that no crisis exists.
- One idea worth thinking about is that according to the authors the 153 factors explored actually cluster into 13 themes – “possessing a high degree of within-theme return correlation and economic concept similarity, and low across-theme correlation” (as seen in the chart).
- h/t AQR Research.
Video Game Developers
- Bet you haven’t heard of the top games developer by average Metacritic score for all reviewed games.
- Source (further reading inside).
SPACs Popularity
- Time to look at SPACs?
- Source: Variant Perception.
