Stocks

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

Stocks

Amazon Logistics

  • Amazon’s logistics investments are coming into their own.
  • They employ 90,000 people and delivered 46% of amazon’s own packages in the latest datapoint.
  • In 2019 they are on track to deliver 3.5bn packages – more than FedEx.
  • Likely a big issue for parcel companies if they open up the network to non-AMZN volume.
Stocks

Bank of Fintechs

  • Interesting article about the bank fuelling lending focussed fintechs.
  • They have been writing $1bn of new loans per month all sourced from 15 or so VC backed fintech start-ups.
  • They effectively provide the regulatory infrastructure. Most loans are then sold off with a portion retained.
  • Some choice quotes – “Our strategy is to be the only financial services provider to the fintech ecosystem globally,” Gade says excitedly. “Changing people’s lives is why we do this, before anything else.”… “The talk about a recession or a credit cycle that’s going to start going the other way is much ado about nothing.”
Stocks

Direct Lending Revolution

  • There is a big new trend in the world of finance – direct lending.
  • Private equity firms are grabbing a slice of the leveraged lending market from the big wall street banks.
  • It is leading to lots of competition – leveraged loan syndication fees are down 29%.
  • Apollo think that private could gain as much as 10% share in the $2.5 trillion high yield loan and bond market in the next 5 years.
  • This could be a function of higher bank risk weights eroding balance sheet advantage and huge fund raising capacity of private equity.
  • Returns as well could be an explanation.
  • The risks are clear as more and more lending is slipping into less regulated corners of the financial markets.
Stocks

HSBC

  • Moody’s downgrades HSBC rating to negative outlook.
  • Credit rating is the key cost of goods sold variable for banks so this should be monitored carefully for any investors.
  • “The negative outlook on HSBC Holdings’ ratings is driven by the execution risk attached to the planned repositioning of HSBC Bank and of the group’s US business“. These businesses are 34% of risk weighted assets. HSBC has been restructuring for nearly a decade.
  • “and our expectation of subdued profitability in 2020 and 2021. It also reflects pressures on asset quality and profitability in Asia due to a more difficult operating environment in Hong Kong and the rest of the region“
Stocks

Cloud Computing

  • “What is happening with cloud computing at large is to think about what the total spend in technology today is, it’s around 5% of GDP. On a secular basis, I think it’s going to be 10% which is going to double in the next 10 years. And that’s because every industry, whether it’s in retail, whether it’s in healthcare, whether it’s in manufacturing, they’re all being transformed by digital technology and this technology stack we have and the platform approach Microsoft has, means we will be able to participate in that 10% on the doubling of tech spend, but more importantly, really helping the global economy grow because of digital technology. And that’s what I think is the way to think about our opportunity.” Microsoft CEO
  • Sometimes it is about thinking about the big picture runway. Microsoft (MSFT) have a long one in front of them.
Stocks

VC Investing by Sector

  • Interesting chart showing year on year change in Venture Capital investing by sector in Europe 2019 vs. 2018.
  • This is useful to track for equity market investors – it shows you where capital is being added.
  • Fintech, Enterprise Software and Energy are top additions, while Fashion, Home living and Transport seeing less money going in.
Stocks

Online Ad Targeting

  • Two years ago Apple introduced Intelligent Tracking Prevention for Safari browser in mobile and desktop.
  • This meant that advertisers lost the ability to target ads on Safari.
  • It has been remarkably successful – the cost of reaching Safari users has fallen 60% in the last two years, while other browsers have risen.
  • That is a huge change in the landscape especially in mobile where Safari market share is 53% and tend to be higher value eyeballs.
Stocks

Brunello Cucinelli

  • Interesting article about the “cashmere king”, who, over 40 years, built the business that bears his name from nothing.
  • His company doesn’t allow any emails after 17:30 among many other interesting ideas about how a business should be run.
  • Those who come to me and say, “You know, I work 15 hours a day,” I say, “I am not interested.” I am interested in the quality of working hours, not the quantity. The brain of the human being. Do you think that during the first five hours of the day you are the same as you are in the last five hours? No way. You’re tired, and if you’re tired, you stop listening, and the decisions you make are risky.
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