Stocks

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

Stocks

Intangible Value

  • We covered the topic of the misuse of intangibles by some participants in our innugral blog post.
  • This is an interesting academic paper that corrects this by appreciating that the question is one of developing better valuation metrics.
  • The authors improve on the classic value factor by adding intangible assets (based on cumulative SG&A spending) – creating a new and better performing valuation measure.
Stocks

Airbnb

  • The stories of the early days of Airbnb, who recently filed to go public, are the stuff of legend including how the founders turned to selling themed cereal to survive.
  • The cereals were called “Obama O’s, the Cereal of Change,” and “Cap’n McCain’s, a Maverick in Every Box.” – a throwback to their first success housing delegates of the Democratic National Convention in 2008. It was also what got them a spot on Y Combinator.
Stocks

Analysing Impact of Covid – History

  • Although the events of 2020 are in many ways unprecedented one can look at the 2002 SARS outbreak in Asia as a possible analogy, after all it involved a lot of people in China staying at home.
  • Netease, a gaming company, was one of the few publicly listed stocks that reported financials at the time.
  • This table (h/t Selcouth Capital Management) shows what happened to quarterly financials at Netease at the time.
  • Netease saw a huge boost to revenue and a re-rating. Yet, eventually revenue slowed against tough comps and the stock deflated.
  • Will the same happen to the current crop of beneficiaries?
Stocks

Brick and Mortar the Real Winners?

  • A fascinating and thought provoking read on why it is the category leading brick and mortar retailers who will be the real winners in the post Covid era.
  • In one word – omni-channel.
  • “Wal-Mart’s digital revenue in Q2 was an annualized $42 billion, growing 94% — faster than Amazon … Perhaps the simplest way to express what has happened during Covid is to note that Amazon has actually lost share in e-commerce during Covid.”
  • A nice quote – “nothing accelerates change like success“
Stocks

Toyota on Tesla

  • “I am hesitant to say this — Tesla’s business, if you want to use the analogy, is like that of a kitchen and a chef. They have not created a real business in the real world yet. They are trying to trade recipes. The chef is saying ‘Our recipe is going to become the standard of the world in the future!’ At Toyota, we have a real kitchen and a real chef too, and are creating the dishes already. There are customers, who are very picky about what they like to eat, sitting in front of us, and eating our dishes already.” Toyota President Akio Toyoda.
  • Source.
Stocks

NYT Transformation

  • Great set of slides on the transformation at New York Times since 2011.
  • The company just crossed a milestone where digital overtook print.
  • This is also a fascinating read about what happened inside the NYT newsroom during the Trump years and whether this boost was partly responsible for its growing business success.
Stocks

Long Term Stock Exchange Blog

  • We previously covered the LTSE here and some companies (e.g. Airbnb) are indicating a desire to list there.
  • They have started publishing a blog where they discuss all issues related to long-term shareholders and companies.
  • The latest piece covers grading fund managers on how long term they are – LT Score.
  • “This shows that the companies with the highest LT Scores trade at volatility levels that are as much as 30% lower than those with the lowest LT Scores when looking at average 100-day and 250-day historical volatility levels. This is a striking difference.“
Stocks

Spotify Transition

  • Spotify is transitioning and not just via their podcast investments.
  • They are starting to enter the world of advertising and arming artists with tools to reach audiences, at a price.
  • First via Marquee mode – mobile app pop ups to advertise new releases. These see 20% conversion rates, 2.2x lift on saved/playlisted tracks which itself leads to increased playing by 250%.
  • Second via a new Discovery mode – where an artist can boost a track in Spotify’s algorithm in return for a lower take.
  • Interesting post covers the logic behind this as well as price increases.
Stocks

Advertising

  • “Marc Pritchard, Chief Brand Officer at P&G, the world’s largest advertiser, dropped a bombshell at the ANA conference a few weeks ago. He said that P&G would be moving away from the upfront model of TV ad buying. With TV advertising going digital, it makes no sense to make massive uninformed bets just because that’s the way it’s been done for decades. Now they can apply data to those decisions and be more deliberate ” The Trade Desk CEO Jeff Green.
  • Source.
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