- Schlumberger’s Chairman, who sees everything in the oil patch, is predicting more deals in the US shale space as growth slows.
- “What is likely to happen over the next 5 to 10 years is that some of the smaller companies will get consolidated… get gobbled up by the majors,” Papa said.
Stocks
Interesting, and often contrarian, Snippets on individual companies and the stock market.
Drug Pricing
- Pharma companies are starting to really come into their own with introducing innovative ways of pricing.
- Alnylam only charges the $575k price for givosiran if the effect seen is on par with clinical trials.
- Novartis now collects the $2.1m price tag for Zolgensma over 5 years.
- Sanofi are offering $99/month subscriptions for insulin.
- Pricing is a big issue for US Pharmaceuticals. There are start-ups looking at this issue as well – Generics 2.0.
Stock Market Bulls
- A few hedge fund managers, worth listening to, continue to be bullish.
- David Tepper is one. “I love riding a horse that’s running” and continue to do so to a point”
- Stanley Druckenmiller is another:
- “I revealed a very bullish posture intermediate-term since October when Powell guaranteed he would not rescind the insurance [rate] cuts unless inflation was persistently above target,” Druckenmiller recalled. “Since then, both have worked out, and the Fed is still whining about inflation being below target.”
- Trump “election prospects have increased with two trade agreements and big win in Iran, which the Democrats have responded poorly to,” Druckenmiller added. “So I am still ‘riding the horse’ and bullish immediate term,”
- Disclaimer: Make sure you do your own work and use common sense when investing!
TV Series
- Original scripted series hit a new record in 2019 of 532.
- Growth was 7% this year, up from 1.6% in 2018 which was a previous record of 495 shows.
- The charts is from 2018 – showing massive growth in online – FX have stopped producing the split.
Concentration of ETFs
- Table showing weight of top two holdings of sector ETFs.
- Amazingly 3 ETFs have two holdings account for ca. 40% of the assets.
Oil Discoveries
- Oil discoveries in 2019 were at a four-year high (Rystad Energy).
- There were 26 discoveries of more than 100 million barrels of oil equivalent (boe).
- Exxon (XOM) was explorer of the year for a second year adding 1bn boe driven by discoveries in Guyana.
Dotdash
- Dotdash, a business created by IAC from the remnants of About.com, is a very interesting business you probably haven’t heard about.
- It reaches 100m monthly users, is profitable ($40m of EBITDA) and growing.
- It is also unique event in digital media – a turnaround.
- “Our job is to make great content that loads quickly with relevant non-intrusive advertising,” he insists. “If we execute, the search results will be fine.” His critics call this naive, but Vogel is trying to build a billion-dollar publishing business, not a search colossus. He’s betting that Google will drive traffic to the best content.
Fintechs Threat to Banks
- Interesting chart from Alphaville.
- This is analysis from the behaviour of 688,000 mobile banking users for 3 months of 2019.
- The x-axis shows the proportion of people who use each of the major banking apps at least once a month.
- The y-axis shows the proportion of those people that use that banking app exclusively.
- It suggests that high street banks not only have the highest share of mobile app usage, but also a far more loyal base of users.
- Lots of further interesting stats inside the article.
Softbank Continues to Invest
Value Factor
- Interesting piece by Cliff Asness of AQR on the value factor.
- Valuation of value stocks (the cheapest ones) are near historic levels against the most expensive stocks on several measures – suggesting now might be a good time to invest in this factor.
- This chart shows the price to book ratio of the expensive 30% of stocks divided by this ratio for the cheapest 30%, adjusted for industry.
- The spread is now in 97th %ile of the ex-tech bubble range.
Tech
- Fascinating read about one of the early backers of Silicon Valley.
- Roger McNamee first ran the T-Rowe Price Science and Tech Fund from 1989 and then co-founded private equity firm Silver Lake Partners.
- He has now turned a critic of big tech that he backed early on.
Tipping and Uber
Start-ups & Principal Risk
- Venture backed businesses are increasingly pivoting towards taking more principal risk and moving away from acting as brokers.
- Latest example is Leavy, an Airbnb copy-cat, who are guaranteeing payments for your apartment holiday rental upfront.
- The real estate sector has seen this already – with companies offering to buy your home directly.
- As is discussed here this type of model leads to better margins in good times, but is a lot riskier.
- It feels like late cycle behaviour.
Banks
- EU bank relative valuation is still below crisis levels.
- The banks are taking action by cutting costs.
- Banks are cutting 77,780 jobs this year the most since 2015.
- 82% of these cuts are originating from European banks with Deutsche bank topping the list with 18,000 through 2022.
Amazon
- Big read on Amazon from the New Yorker.
- Worth a read, as Amazon, now the second largest employer in the US, touches more and more companies.
- This chart shows the growing number of companies mentioning Amazon as a competitive threat in their annual report.
Fedex and ISM
- Fedex stock slightly leads/is coincident with the ISM composite.
- If you think ISM is heading up you should probably be buying Fedex.
- NB there are non-macroeconomic issues that one needs to consider.
Newspapers
- Media is a tough business.
- This article paints a clear picture of what is going on behind the scenes.
- All told, according to The Columbia Journalism Review, 3,385 journalists lost their jobs in the past 12 months. With some estimates double this figure.
- Considering there are only 37,000 people classed as reporters in the US these are huge numbers.
S&P vs Treasury Yield
- This chart suggests that relative to US Bonds equities are fairly priced.
- It correlates the S&P 500 P/E ratio vs. 10 Year Treasure Yield.
- Not a perfect correlation but a good guide.
Customer Value
- Really interesting model to calculate customer value.
- This essential tool is used to understand which bit of revenue comes from what customer cohort and combines four models of behaviour.
- Important reading for anyone analysing stocks but does require further disclosure (the customer cohort chart) from companies.
Financials
- S&P 500 Financials hit all-time high just once in the last 10 years.
- For reference the S&P 500 index has done so 236 times.
