Stocks

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

Stocks

Doordash

  • At Snippet we are huge fans of alternative data sources.
  • Thinknum is a website that uses numbers to tell stories.
  • It is very useful in terms of tracking investments.
  • For example this article shows that using online data sources Doordash (the food delivery service) has started beating its rivals.
  • This gap opened up in 2019 and is consistent across data sources.
Stocks

RIT Capital (RCP.LON)

  • An interesting investment trust we have come across is RIT Capital.
  • It is run by the Rothschild family.
  • It trades at a small premium to NAV (Net Asset Value) – so it is down to NAV growth and dividends to deliver returns.
  • They are invested in a broad range of assets – from hedge funds, to real estate, to gold.
  • Their goal is steady, long term wealth compounding.
  • Disclosure. We owns shares in RCP.LON
Stocks

Forever 21

  • Interesting to see Forever 21 file for bankruptcy.
  • They experienced huge growth that was perhaps too much to swallow.
  • “We went from seven countries to 47 countries within a less-than-six-year time frame and with that came a lot of complexity” EVP Linda Chang.
  • Clearly online competition and declining mall traffic (F21 was big in malls) were the key culprits.
  • Full story here from NYT.
Stocks

FTCH

  • Shares of Farfetch (luxury online clothing retailer) have collapsed.
  • Looks like a huge over-reaction to slowing GMV and an acquisition.
  • In fact, GMV only slowed a tiny bit and the deal looks interesting (a vertical integration).
  • More concerning is the departure of the COO (online retail is an operationally heavy business).
  • FTCH trades below 1x GMV – attractive if 40%+ growth can continue.

Common Sense Disclaimer. We plan to ponder about stocks and other investments here on Snippet. Some will look attractive and some we might recommend. Some we are buying/own ourselves (always disclosed). You should always do your own work, use common sense and invest responsibly!

Stocks

Private Equity

  • Last week shares in private equity firm EQT saw a 25% pop on the first day of trading.
  • Interesting to see private equity listing again – something that marked the top of the last cycle (except Carlyle/Oaktree both listing in 2012).
  • EQT raised 5.3bn SEK of new money and 13.5bn of sales by shareholders – a telling sign.
  • In the meantime over the last year the existing listed players have also started to convert their shares from limited partnerships to common stock – widening investor bases.
Stocks

Zero-click Searches

  • June was a milestone.
  • For the first time, since the advent of the modern search engine, more than 50% of Google searches resulted in zero-clicks.
  • In other words, people searched on google and didn’t click on an ad or an organic search result.
  • This trend has been steadily building and has profound implications for businesses around the world.
Stocks

Boeing

  • A fascinating article on Boeing and where it all went wrong.
  • In 1997 Boeing was pushed to merge with MacDonnell Douglass.
  • This turned into a reverse take-over – “McDonnell Douglas bought Boeing with Boeing’s money” – corrupting the engineering-first culture.
  • The results of this are only now being felt.
  • It is important to always look at the long-term history of a company.
  • There is an even longer read on the topic over at The New Republic.
Stocks

Gold Miners

  • Despite the gold price at a six year high, miners are showing restraint at the latest industry conference, preferring mergers instead.
  • “A general theme of this conference has been the need to maintain discipline” CEO of Agnico Eagle Mines.
  • This should be taken as a positive (looking past the fact that gold isn’t actually ever consumed).
  • Read about it here.
Stocks

Consumer vs. Industrial

  • “…we still see consumer spending really strong ….the consumer continues to be strong so the caution that we see is really on the commercial side…So the consumer, despite the headlines we all get up and read every day, looks pretty good.” American Express CFO.
  • “…you are starting to see some places where the slowing is beginning to hit and I mentioned Germany as an example for Europe. But the channel slowness that we have seen in a few places does definitely continue… I think, as we look out, I think there’s going to be continued cloud for some time.” Honeywell CFO.
  • Interesting contrast between these two companies, suggesting consumers are doing well while there is clearly slowing in the industrial economy.
  • h/t The Transcript
Stocks

Disney & Twitter

  • Turns out Iger considered buying Twitter but decided against it.
  • “The troubles were greater than I wanted to take on, greater than I thought it was responsible for us to take on. There were Disney brand issues, the whole impact of technology on society. The nastiness is extraordinary.”
  • Full Interview in the NYT coinciding with the release of his memoire.
Stocks

Hedge Fund Letters

  • We have recently discovered this site.
  • They have a big store of the latest investment letters from all the hedge funds.
  • Naturally stay tuned for interesting snippets as we trawl through these.
  • However, if you can’t wait we thought we would share it for our readers to dig themselves.
  • Common sense disclaimer. Just because a big hedge fund is buying a stock doesn’t mean you should. One never knows what offsetting hedges or positions they hold. Be smart, do your own work, use common sense and invest responsibly. 
Stocks

Value vs. Quality

  • Markets have a tendency to push prices further than anyone thinks.
  • As Keynes said “The market can stay irrational longer than you can stay solvent”.
  • Markets also have a tendency to snap back against trends – often violently.
  • A painful example of this has been value stocks.
  • The last few years have seen value stocks underperform strongly while quality has been relentlessly bid up.
  • This has cost many value investors, including some titans of the industry, as the trend persisted and persisted.
  • The last two weeks have been an example of a violent reversal.
  • On a long-term valuation chart (below) it looks like a blip – the valuation dislocation built up over the last many years is still present.
  • Is it the start of a trend or just a counter trend move?
  • h/t Soc Gen Research via FT Alphaville.
Stocks

AT&T

  • Elliott have gone activist on AT&T.
  • They have set up this website – https://activatingatt.com/
  • “Elliott made the investment in AT&T – among  its largest ever – because it exhibits a unique combination of historical underperformance, a  depressed  valuation, well-positioned  assets and  a clear path forward to generate extraordinary value  for shareholders and other stakeholders.”
  • h/t Market Folly
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