Stocks

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

Stocks

History of Semiconductor Cycles

  • Semis are notoriously cyclical and it pays to study historic cycles.
  • This is exactly what this post does – looking at the 1980s and trying to draw lessons about the industry.
  • A key thread is probably how strong domestic support tips a geopolitical in-balance (Japan vs. US then). Something eerily similar is happening today.
Stocks

Biotech Bearishness

  • Fundamentals have been bad in biotech land, something that is reflecting in share prices and IPO performance (XBI has halved since peak).
  • Positive news flow among small and mid-cap biotechs, which hit 60% in 2020, has just fallen below 30%.
  • “But it’s not just small caps, it’s across the sector: Jefferies’ Michael Yee said of 45 major clinical readouts from large and small players, only 20% were positive.”
  • Clinical holds have also spiked – 2022 is off to a bad start (13 holds in 8 weeks) and could surpass the already bad 2021 (>50 vs. 30 average historically.
  • The full article offers some explanations of what is going on.
Stocks

Venture Landscape

  • Thoughtful analysis of the venture landscape given the current state of public markets from Redpoint ventures.
  • The background is – public high performing SaaS firm valuations have fallen below their 10 year average now (see chart).
  • Past public market corrections led to 10 quarters of decline in venture dollars invested of varying severity. The great recession, for example, saw a 30% fall.
  • “Currently many companies in private markets (particularly at late stage) are in “price discover” mode in fundraises with everyone trying to figure out market price – rounds are taking longer to get done and “willingness to pay” spreads are wide“
Stocks

Terry Smith

  • Long profile of Terry Smith of FundSmith.
  • The fund is having a tough start to 2022, but as he says himself.
  • “The analogy I use is that of the Tour de France, no cyclist has won every stage and they never will. You can’t be a sprinter and win the time trial, they require different physiques. Several times the overall race has been won by someone who didn’t win any of the individual stages. You need to be the best overall, and that’s what we are trying to achieve.“
Stocks

Tech Salaries

  • Meet levels.fyi – they collect actual like for like data on salaries, benefits, levels etc. for the US tech industry.
  • They use this to help people negotiate salaries (how they monetise).
  • Levels recently published a report for 2021 that has some fascinating data (h/t The Diff).
  • The table attached shows entry level engineer salaries.
  • Lots of other interesting stats – comp has been rising (generally highest entry-level salaries are growing +3.4% annualised since 2019) and the Bay Area still wins (40% higher than LA for example).
Stocks

Sales Tactics

  • John Foley, founder of Peloton, was so determined that “one of his sales techniques was to have customers test out the bike; he’d give them headphones and turn up the volume so when they talked to him about how much they liked the product they’d end up shouting an endorsement to passersby.“
  • In the early days of Salesforce “when a competitor was holding an event at Cannes, they booked all the taxis in Nice for the night and had sales reps stationed in each one to pitch their product to people going to the competitor’s event” (h/t The Diff).
  • These remind me of an old Snippet on how some major consumer apps got their first 1,000 users – often in surprising ways.
Stocks

Japanese Equities

  • Fundamentals in Japan are improving.
  • Japanese companies bloated their balance sheets with low-yielding cash and unproductive assets. This has meant that companies delivered just 3% return on capital compared to 6% fo the developed world for the majority of the past four decades.
  • Returns look to be improving according to GMO, the change is structural and not cyclical, and the result of improving margins and not improvement in inefficient balance sheets.
Stocks

Spotify’s TikTok Problem

  • 63% of TikTok users (1bn worldwide) discover new music on TikTok before any other platform.
  • This is worrying for SPOT.
  • TikTok has already launched a competing service – Resso – in key emerging markets (Brazil, Indonesia and India).
  • iOS App download rank data for the recent 90-day period from App Annie (pictured, link) shows it still hasn’t hit Spotify’s dominance (it has only reached 2nd place in Music category in Indonesia, and lingers in 4th for the other two launch countries).
Stocks

Archegos

  • Credit Suisse, who suffered $5.5bn in losses in the Archegos debacle earlier in 2021, have published a full report of what happened by an external firm.
  • Nice read for those interested in the inner workings of the Prime Brokerage business.
  • If you aren’t familiar with it, this is a brilliant introduction and history (paywalled).

Stocks

Moderna

  • Two part investigative report into Moderna.
  • The first part looks at the company pre-Covid – “From 2016 right up until the emergence of COVID-19, Moderna could barely hold it together, as it was shedding key executives, top talent, and major investors at an alarming rate.”
  • The second part covers how the Covid crisis “bailed” the company out and the circumstances around this.
  • A very deep and in places troubling read.
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