Stocks

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

Stocks

Apple Wearables

  • Pretty stunning how far Apple is ahead in wearable technology.
  • This was a good article discussing their lead.
  • Start by watching the AssistiveTouch for Apple Watch video – truly science fiction come to life.
  • The article attributes Apple’s success to (1) being early (2) voice controlled devices distracting competitors (3) wearables requiring hardware design expertise (4) ecosystem synergies (5) and no price umbrella.
https://youtu.be/xlrnxP7XIho
Stocks

WeWork Resurrection Pt2

  • We previously mentioned WeWork‘s resurrection.
  • This was a really great bit of analysis which is positive on the stock ($BOWX).
  • For one there is this chart from CBRE – flexible work could be the option for lots of companies post pandemic.
  • WeWork could also pull off their turnaround ($2bn EBITDA targeted, implying EV/EBITDA of 5.8x vs. peer IWG on 9.5x)
  • The market could also look at the company and its community once again as a platform. It has certainly completed the hype cycle.
  • Interesting point also on incentives – Management don’t get paid until shares cross $25 and operating cash flow crosses $1.3bn.
  • Usual caveats apply.
Stocks

Hosking Partners on Value

  • Interesting latest piece (page 15) from Hosking Partners on why the rotation into value stocks will persist.
  • (1) They perform well at the end of recessions (2) stimulus favours value (3) Covid recovery will be long and is only getting underway now in some countries (4) fund managers are entrenched (5) Interesting ESG angle.
  • There is also a full webcast that is worth listening to.
Stocks

Big Oil and Renewables

  • Low carbon businesses (renewable power, retail power and bioenergy) represent an estimated 7% of EU big oil enterprise value (EV) on aggregate with Repsol and Eni leading the pack.
  • Investment in these areas has really accelerated in the last four years.
  • This analysis excludes future technologies like hydrogen and electric vehicle charging, that are not material today but are a big part of the transition at these companies.
  • This surge in investment has meant the energy sector is now a leading consumer of minerals.
Stocks

iOS 14.5 App Tracking Opt-in Rate

  • This site tracks daily the number of users* opting in for App Tracking with the new iOS 14.5 update.
  • Useful for those invested in Facebook and other players in the mobile advertising industry.
  • Here is the chart from May 14th for the World, the figure is 5% for the US.
  • *they count app users not individuals users. So it is for every app.
  • Good article on what participants are doing in the early days.
Stocks

The Art of Execution – Review

  • Really interesting review of Lee Freeman Shor’s “The Art of Execution”
  • “Shor’s most powerful point is that investment performance is largely dictated by what an investor does after they buy a stock, specifically by how they deal with both losing and winning positions over time.” 
  • The book uses a dataset of 30,874 trades made by 45 top managers who ran money as part of Shor’s “Best Ideas” fund from June 2006 – October 2013.
Stocks

Market Expected Return on Investment

  • Intangible assets matter more and more in the stock market.
  • Yet, they are generally poorly accounted for and valued.
  • This is a useful paper on a new metric – the market expected return on investment – that aims to give a more accurate view of returns in a world increasingly dominated by intangible assets.
  • Though technical it is worth a careful read.
Stocks

Apple’s M1 Positioning

  • Apple is upending the traditional (x86) CPU markets.
  • It is doing this by offering the same M1 chip in laptops, tablets and desktop PCs.
  • The same M1 chip at all price points (from $699 to $1,699).
  • “Apple’s willingness to position the M1 across so many markets challenges the narrative that such a vast array of x86 products is helpful or necessary. It puts Intel and AMD in the position of justifying why, exactly, x86 customers are required to make so many tradeoffs between high performance and low power consumption. Selling the M1 in both $699 and $1,699 machines challenges the idea that a computer’s price ought to principally reflect the CPU inside of it.“
Stocks

Teen Survey pt 2

  • 41st edition of the semi-annual survey of 7,000 teens and their preferences has been released.
  • Female clothing spend is inflecting upwards – strongest since 2015.
  • Nike is the No. 1 fashion brand for teens—up 200 bps Y/Y; Nike is the No. 1 footwear brand—up 900 bps Y/Y
  • Instagram losing share to TikTok and Snapchat.
Stocks

Sector Neutral Value

  • Value stocks’ underperformance against growth (yellow line) is well documented.
  • Things look different at the sector neutral level (blue line) i.e. picking the cheapest stocks within a given sector.
  • This measure actually worked very well from 2002 to 2017/18, while the overall measure continued to fall.
  • It only fell apart in the last few years as growth mania took hold, but has bounced back very sharply.
  • Source.
Stocks

Walmart Marketplace

  • The end of March saw a floodgate open with WMT accepting what appears to be thousands of applications to its Walmart Fulfilment Services (WFS)
  • As a result WFS seller numbers have tripled since October.
  • WMT has also started to allow vetted international sellers on the platform, another big move as these make up the majority of Amazon sellers.
Stocks

Amazon Ads

  • Pictured below are Ebay and Amazon pages.
  • Staggeringly, everything shaded in blue is an ad.
  • Both have now replaced product recommendations with advertising.
  • It makes sense as surveys show nearly 50% of product searches start on Amazon.
  • Amazon’s advertising business now likely has the same profitability as its cloud business.
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