Daily General Discussion and spitballin thread - July 07, 2021 Investing |
- Daily General Discussion and spitballin thread - July 07, 2021
- Daily Advice Thread - All basic help or advice questions must be posted here.
- I experimented with committing to a $25 dollar per week investment in TSLA for at least a year and here are my results.
- Chinese Regulators Suggested Didi Delay Its U.S. IPO
- This is sort of a philosophical question about the mechanics of the stock market, but why can't active investing beat the average market return?
- The experts kept telling us that International Stocks would boom- they have been a bust!
- Your picks for the best dividend growth stocks of 2030, 2040 and beyond? (Future predictions/thoughts/guesses)
- What is Junior Mining and how to decide which stocks to buy?
- DD and thesis on Sea Limited ($SE) - Bet on EM and TAM of ecommerce, gaming, and financial services model).
- Question on what to tell my advisor at merrill lynch that manages my blackrock investments?
- Kaleyra price target increase to $26 by order.market
- The Role of Binance in Bitcoin Volatility Transmission
- Mutual Fund / ETF Historical Screener
- what would you do if you had two roth ira accounts? One for myself, one for my wife..
- Redbubble (ASX: RBL) - My investment thesis and valuation
- SHEN (DD) - $18.75/Share Special Dividend From Undervalue Company
- MKSI: Due Diligence and discussion
- Lets say I'm doing the "Big Short" but on Bonds reaching new ATHs, what would be the other plays on this apart from just buying Calls on TLT?
- How do I loan out my shares for a fee?
- Change my view: The market's reaction to $SHEN this week is completely irrational.
- Canadian Pacific Company Profile and Developments
| Daily General Discussion and spitballin thread - July 07, 2021 Posted: 07 Jul 2021 02:01 AM PDT Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! This thread is for:
Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google. If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions. Any posts that should be comments in this thread will likely be removed. [link] [comments]  |
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 07 Jul 2021 02:00 AM PDT If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! {{date %B %d, %Y}} [link] [comments]  |
| Posted: 06 Jul 2021 12:29 PM PDT Last year I challenged myself to invest at least $25 automatically in Tesla each week using a recurring transfer. I figured it would be a good way to build up my investment in the company while taking a manageable risk and potentially getting some market gains. Since my brokerage offered partial share investments I figured it would be a fun way to see where my money was in a year. After 1 year here are my results: Start Date: July 6, 2020 Initial investment: $30 (.023017 shares at 1,300.38 edit: after 5:1 split ~$260) July 6 2021 Investment Value: $2,546.70 Total Invested with Auto-Transfer: $1,300 Total Return: $697 (+37.64%) Extra periodic market buys: ~$550 Average Cost of entire stake: $447.40 Current price of Stock: 657.54 (about 150% gain since initial investment date) Conclusion: Although it would have been great to be able to increase my investment on each dip, having the recurring transfer helped me take advantage of the partial share feature offered by my brokerage and keep my average cost low. During the same time period SPY has gained about 36% so my results are comparable to investing in SPY during the same time so, i potentially took on more risk than if I had just been investing in SPY the whole time. Although it would have been nice to be able put $1300 back in July 2020 and see it more than double, because I didn't have cash on hand, I only got about 1/3 of the potential gains of holding the stock the entire time. Although my returns aren't much better than SPY, I am happy with the results of my little experiment and plan to continue this process and add a few more dollars per week into other companies and ETF's that I feel strongly about. Let me know your thoughts. I know this isn't groundbreaking stuff, but it's a small look into what you can do if you are literally storing the equivalent of 3 lunch meals a week in an investment account. Obviously one side note, the biggest downside to this way of investing is that my tax lots are all over the place and if I have to sell, I have an ongoing 1 year rolling date for "long" tax rates but, I don't plan on selling any time soon, so as time goes on, that will be less of an issue. Edit: Forgot to add a little more context: I currently have $150 a month going into a Traditional IRA, 9% of my income going into a 457 (~350 per check 2x a month) and a bunch that goes into my public servant pension. In addition to that, I regularly put ~200-300 into various stocks and ETF's that I hold each month. Although this investment represents a small amount of what I invest and save, it was probably the most exciting thing to watch all year. Edit 2: this was posted as a comment but here it is here too. A number of people point out that the price of the s&p has gone up YOY an amount equivalent to what I earned on this investment. Now a couple disclaimers: I don't believe that this is a viable investment option for someone to do with their whole check. But here is an apples to apples comparison (excluding dividend which wouldn't only affect it a few bucks since we are dealing with such a small amount.) But, here is the apples to apples comparison. This is using the weekly open price on yahoo finance for a year investing $25 per week. Again not trying to say this a better investment than spy, I don't think it is but this is apples to apples. [link] [comments]  |
| Chinese Regulators Suggested Didi Delay Its U.S. IPO Posted: 06 Jul 2021 06:44 AM PDT Weeks before Didi Global Inc. DIDI -22.73% went public in the U.S., China's cybersecurity watchdog suggested the Chinese ride-hailing giant delay its initial public offering and urged it to conduct a thorough self-examination of its network security, according to people with knowledge of the matter. But for Didi, waiting would be problematic. In the absence of an outright order to halt the IPO, it went ahead. The company, facing investor pressure to list after raising billions of dollars from prominent venture capitalists, wrapped up its pre-offering "roadshow" in a matter of days in June—much shorter than typical investor pitches made by Chinese firms. The listing on the New York Stock Exchange raised about $4.4 billion, making it the biggest stock sale for a Chinese company since Alibaba Group Holding Ltd. BABA -2.27% 's IPO in 2014. Back in Beijing, officials, especially those at the Cyberspace Administration of China, remained wary of the ride-hailing company's troves of data potentially falling into foreign hands as a result of greater public disclosure associated with a U.S. listing, the people said. Long article finished at: https://www.wsj.com/articles/chinese-regulators-suggested-didi-delay-its-u-s-ipo-11625510600 [link] [comments]  |
| Posted: 06 Jul 2021 05:44 PM PDT Sparing the reference to one in a million investors like Buffett, I have been trying to find out why beating the market is so difficult from a core principles perspective. Theoretically, it shouldn't be that hard. The market return is an average of stocks going up and down. Some go up, some go down. For instance, if I mirrored a portfolio of the SPY holdings, I will have 500 stocks in various amounts. Some of these will do better than others. For active portfolio managers whose full time job it is to manage funds, all they would have to do is identify one stock that may not match the SPY and either sell or buy more of that. And yet it is notoriously impossible for any fund to ever beat the market consistently. For example, right now stock xyz seems to be increasing its debt. Company ABC is paying down its debt. I think that means ABC will do better so I sell some xyz and buy more ABC. It seems simple but obviously it isn't as no active funds ever beat the market average consistently. Why is beating market return so difficult? [link] [comments]  |
| The experts kept telling us that International Stocks would boom- they have been a bust! Posted: 07 Jul 2021 01:22 AM PDT Ten years ago I put a significant amount of my invested money in mutual funds that mirrored the International Stock Market. I, of course, foolishly believed the experts who said that up to 50% of my money should be in international stocks based in Europe or Asia. While these investments have made some money, they did not do as well as a simple total market index fund. Here are some stats about how much of a bomb international stocks have been in the last ten years vs a total stock market fund: $10,000 invested from June 1, 2011, to June 30, 2021 Total Stock Market (VTI) $22,779 (17.90% CAGR) Fidelity Total International Index Fund (FTIHX) $16,868 (11.02% CAGR) Vanguard Total International Index Fund (VGTSX) $16,882 (11.04% CAGR) Every year I say to myself that I should bail out of these International Mutual Funds but the experts say hold on. And I lose money by listening to them. (These are the same silly experts who told me the best stocks have higher than normal dividend yields.) What should I do? Stay invested in International or put the money in VTI? [link] [comments]  |
| Posted: 06 Jul 2021 08:54 PM PDT As the title suggests... I'm tweaking my dividend growth portfolio and I have a lot of the classic Abbvies, LMTs, JNJ, MO, etc... But I've been thinking a lot lately and my concern with some of the great dividend kings of today is that I question their growth prospects from here until retirement (probably 20-30 years out for me). I weighted heavier into Microsoft and Apple and a couple of Pharmas, JNJ, Amgen... Because I sense these will do well and grow dividends for decades to come (same with LMT, RTX, Northrup).. But, I'm curious to hear other peoples insights as to what you view as the best dividend growth company(s) in the 2030's? Predictions? Since retirement is a ways out for me I'd prefer to weight most of my dividend stocks into the growth-heavier spectrum which will grow into high dividend payers. P.S. please don't say Coca Cola or PG... The goal is not great dividend stocks today that saw most of their growth over the previous 30+ years, but which will be the best contenders to do so 2030-2050? [link] [comments]  |
| What is Junior Mining and how to decide which stocks to buy? Posted: 06 Jul 2021 02:44 PM PDT Junior Mining companies are low market cap and thinly traded exploration companies that are primarily involved in the exploration of gold, silver, or other elements & minerals. Juniors seek potential opportunities by acquiring properties that can yield large resource deposits. These companies usually start off as private companies and then go public to raise capital for their different stages of exploration to reach the ultimate goal of mining. Junior Mining Companies go through various stages throughout their lifecycle of discovering minerals. Check out our blog explaining every stage in detail: The Company stagesLifecycle of Junior Mining Companies. How to decide which Junior Mining Stock to buy
Note: If you don't want to do your own research by analyzing every aspect then you can follow someone else's analysis. Be aware of the biased and sponsored analysis while following others. How has your experience been with Junior Mining Stocks? Share your experiences with us and happy investing! [link] [comments]  |
| Posted: 06 Jul 2021 12:05 PM PDT Hello everyone! Wanted to share my thinking on $SE... which is my largest position! I think Sea Limited ($SE) will see growth in e-commerce, gaming and financial services businesses in its South East Asia and Latin America markets. I think $SE's revenues will grow from $8.9B in 2021 > $48B in 2025, or about 41% each year (compound annual growth rate or CAGR). $SE has a leading share in SE Asia, where e-commerce is still early (penetration or share is 10% of retail) so I think its e-commerce revenues can increase 7x to reach $30B by 2025. SE Asia + Taiwan + LATAM population is roughly size of China. I think it could scale like $PDD. Based on the size of gaming markets, I think gaming business can increase 3.5x to reach $15B by 2025 and which will be ½ the current size of a leading gaming company, Tencent, $TCTZV, by comparison. Expansion of battle royale games in Latam + India. Plus new developments. And finally Financial Services to grow rapidly with the e-commerce business and become a $3B business by 2025, based on adoption on the e-commerce platform. I look at AliPay in $BABA as a model of growth (has $7.6B in revenues). I assume business will deliver profits as it starts to become more efficient with logistics and marketing costs, once it gets to a larger size (i.e.it "scales"). The e-commerce model seems similar to $AMZN (i.e. fixed costs), which has scaled profitably. I think management will likely continue to invest the profits into new businesses. They acquired asset management firm to help with capital allocation. Founder-CEO owns 25% of shares. Insiders and Tencent another 50%+. Think all aligned in terms of share-return focus. I apply a forward 10x "multiple" of sales based on similar companies, one e-commerce and one gaming (Tencent and PingDuoDuo), on 2025 estimated revenue. This estimates $SE's share price will reach $520 / share over the next five years. Risks in the bet IMO Gaming is mostly based on one-title and needs to be evolved. Shopee e-commerce could be challenged by other players. Execution of financial services as a new business. Bet on the execution and strategy of Forrest Xiaodong Li. (Has been amazing so far.) Summary: Bet on lots of growth from EM with TAM size of China using business models (e-commerce, gaming, financial services) that have worked in other markets. And also bet execution and strategy Forrest Xiaodong Li. Shareholders set up mostly owned by insiders and leaders. [link] [comments]  |
| Question on what to tell my advisor at merrill lynch that manages my blackrock investments? Posted: 06 Jul 2021 12:16 PM PDT So I'm 22 and had an investment plan ever since i was a kid in 05. It's grown a bit but I notice there is majority holding in bonds. Even some holdings that are down and negative. Overall the account is appreciating but I was wondering if I could fix up the plan and remove the depreciating holding and move away from bonds? I have largest holding 5.38 percent in a bond and since 05 it has only moved up 200 dollars. Can I tell them to move it towards large cap stocks? What are some better alternatives than bonds? I just am trying to make it more suitable for a younger person that isn't trying to play conservative and would like to play a little more aggressive. Ideas? The ticker for what I have is BHYAX [link] [comments]  |
| Kaleyra price target increase to $26 by order.market Posted: 07 Jul 2021 03:37 AM PDT Source: www.order.market 107% upside potential Kaleyra, Inc. is a global group providing mobile communication services for financial institutions and enterprises of all sizes worldwide. Through its proprietary platform, Kaleyra manages multi-channel integrated communication services on a global scale, comprising messages, push notifications, e-mail, instant messaging, voice services and chatbots. Kaleyra's technology makes it possible to safely and securely manage billions of messages monthly with a reach to hundreds of MNOs and over 190 countries. After renaming itself Kaleyra in February 2018, the company acquired India-based bulk-messaging provider Solutions Infini in June 2018 and Virginia-based Buc Mobile, a transactional and promotional messaging service in July 2018. Kaleyra traded lower on the weaker-than-expected revenue outlook, but we expect the impact will be largely isolated to FY21 with little spillover to FY22. We expect recovery from COVID-related lock-downs in Europe, India and Brazil will lag the US by one, two and three-to-four quarters, respectively. We also note Brazil, the likely laggard of the group, is for Kaleyra the smallest of the four regions and represents ~10% of pro forma revenue. The bottom line is that while COVID-related revenue pressure will linger in FY21, the impact will significantly subside in FY22, and underlying business fundamentals remain extremely favorable, in our opinion. As such we think y/y revenue growth in FY22 could be well-ahead of the 20-30% rates seen pre-COVID. mGage Acquisition. Kaleyra is now among the top-5 global CPaaS platforms with strong positions in the Americas, Europe, and Asia Pacific regions. Perhaps best of all, the company's existing North American customer base now contributes ~30% of consolidated revenue. We expect significant cross-selling, given that a) despite the large combined size, the two companies have virtually zero overlap among a combined 3,800 enterprise customers; and b) the companies have to this point focused primarily on distinct phases of the customer transaction, with mGage specializing on marketing and customer acquisition while Kaleyra has focused on execution and customer support. COVID Impact. Though the pace of vaccinations and economic reopenings continues to impact near-term results, conditions are generally improving, with the US leading and India continuing to lag. Structurally, however, the industry is likely to remain in a high-growth phase for several years, with global revenues from CPaaS services like secure messaging and voice expected to see CAGRs of 25-35% through at least 2025. Potential Further M&A. Kaleyra acquired mGage for $215 million including $195 million of cash plus 1.6 million shares valued at $12.50 per share. In a related transaction, Kaleyra issued 8.4 million shares at $12.50 per share and raised $200 million in unsecured notes convertible into common shares at $16.88 per share. The financing added ~$90 million of cash to Kaleyra's balance sheet, i.e., leaves Kaleyra with ~$130 million of cash. The combined company generates positive free cashflow (seasonally-weak 1Q aside). While under no pressure to execute additional transactions (underlying organic growth should remain strong for at least several years), management will continue to evaluate any opportunities that might arise. Our target price of $26 per share (4.2x FY22E revenue) for cloud-based mobile messaging and telephony service provider Kaleyra represents >100% upside versus today's valuation that in our opinion places too great a discount on the growth opportunity in enterprise SMS messaging and, in particular, Kaleyra's secure mobile banking prowess. ~30% revenue growth and margin expansion, driven by U.S. market share wins, as well as the unwinding of preexisting SPAC commitments, should translate into multiple expansion, in our opinion. Source: www.order.market [link] [comments]  |
| The Role of Binance in Bitcoin Volatility Transmission Posted: 06 Jul 2021 05:53 AM PDT Abstract We analyse high-frequency realised volatility dynamics and spillovers in the bitcoin market, focusing on two pairs: bitcoin against the US dollar (the main fiat-crypto pair) and trading bitcoin against tether (the main crypto-crypto pair). We find that the tether-margined perpetual contract on Binance is clearly the main source of volatility, continuously trans- mitting strong flows to all other instruments and receiving only a little volatility. Moreover, we find that (i) during US trading hours, traders pay more attention and are more reac- tive to prevailing market conditions when updating their expectations and (ii) the crypto market exhibits a higher interconnectedness when traditional Western stock markets are open. Our results highlight that regulators should not only consider spot exchanges offer- ing bitcoin-fiat trading but also the tether-margined derivatives products available on most unregulated exchanges, most importantly Binance. [link] [comments]  |
| Mutual Fund / ETF Historical Screener Posted: 06 Jul 2021 02:40 PM PDT Is there a readily available screener that allows you to select a return time frame? Everyone will show you YTD, 1 yr, 3 yr, 5 yr, 10 year....from today or this year. Thats fine but for research purposes and my own inexplicable pleasure I'd like to see this stuff for different time frames. Example...in 2010, what Large Cap Growth Mutual funds had the best 5 year performance (from 2005-2010). Kind of like "what funds were being sold in 1998 because they were top performers?" I can mess around with charts on Morningstar but its not ideal for this. I have a few older Kiplinger magazines that have this for that specific time period but I'd like to find something digital if available. I'm assuming there are high end paid for databases where this kind of stuff is easy. [link] [comments]  |
| what would you do if you had two roth ira accounts? One for myself, one for my wife.. Posted: 06 Jul 2021 11:28 AM PDT I have two roth IRA accounts, one for myself and one for my wife, but I manage both of them. And I am currently doing lazy portfolio with ETFs. One with: VTI, VXUS, VNQ, QQQ One with: VTI, VXUS, VUG, VGT, VNQ, SCHD Also, I have individual stocks in my taxable account. Would you do the same if you were me, using safe ETFs for roths and individual stocks for taxable account? Or would you use one of these roth iras for individual stocks? [link] [comments]  |
| Redbubble (ASX: RBL) - My investment thesis and valuation Posted: 06 Jul 2021 08:37 AM PDT Redbubble (ASX: RBL) is an Australian listed website and mobile app (redbubble.com) which acts as a marketplace for independent artists to showcase and sell their art on a wide assortment of formats (T-shirts, mugs, stickers, bedsheets, coasters etc). They have a market cap of AUD ~ 958mn (USD 721mn). Redbubble is quite similar to another marketplace ETSY with a couple of exceptions: with ETSY, the artists creates the product an is responsible for producing and delivering to the buyer. Redbubble, on the other hand, handles all the production and delivery with the artist only needing to supply a digital format of their artwork . Redbubble's website allows the artist to choose which products their artwork gets printed on, while the company handling everything else. They sell the following merchandise categories (% indicates FY20 marketplace revenue):
They had high growth thanks to the COVID fueled eCom growth - YoY growth for all of these more that 30%, except for stationary & stickers which grew at 21% Source: Redbubble 2020 Annual Report Redbubble's take rate is 35-40% of the sale, while the artist gets 20% and the fulfillment partner gets 35-40%. The artist can also choose to increase his / her margin and list the product for a higher price (e.g. normal t-shirts sell for ~$20, but an artist can choose to list their t-shirt for $40 if they are well known, so they make more money on every sale). Redbubble has been growing at an impressive rate (40% revenue CAGR over the last 5 years). They also have zero debt and are free cash flow positive. Their strategy is focused on a 3 part marketplace "fly-wheel":
Source: Redbubble April 2021 investor presentation Management: The company was founded in 2006 by Martin Hosking, Peter Styles, and Paul Vanzella. Martin Hosking is still the largest shareholder, and currently owns 16.4% of outstanding shares. In June 2018, it was announced that Hosking would be stepping down as CEO. COO Barry Newstead, who has been with the company since 2013, would take over as CEO in August 2018. In October 2018, Redbubble acquired US-based peer TeePublic for AUD 57.7 million. After Redbubble reported below-expectations performance in 2019, Newstead was asked to leave with Hosking replacing him as the "interim" CEO. The 2 year search for a new CEO ended in Jan 2021, when Michael Ilczynski was hired for the role. Ilczynski was a former CEO at SEEK (an online job site matching jobseekers and employers) where he spent 13 years. Institutional ownership stood at 48% and the general public owned 29% of outstanding shares. They have issued new shares in the past year to fuel their expansion, with total outstanding shares growing by 3.3% Catalysts for growth: Artists are looking to capitalize on the eCommerce growth to diversify their income streams and increase their passive income. Redbubble provides a great way to do this , as the artist just needs to upload their art on to the platform and link their Redbubble page on their social media channels. Redbubble also provides a boost, by marketing the site on google and other social media sites. An artist can start selling almost instantly with zero capital required and no risk. Once the artists reaches a certain scale, they might choose to set up their own website and move to different production and distribution partners. However, I don't see this as a huge risk to Redbubble's long term prospects, as a good % of artists would still choose to use Redbubble's production and distribution networks and focus on producing art, which they are more interested in. Even though I'm not an artists myself , I did set up an account and uploaded a few simple designs. Each design took around 5 minutes to upload, tag and select which products I wanted my designs to be listed on. Because it is such a risk-free and easy process, everyone with access to a computer can become a seller on Redbubble. However, this has also caused Redbubble a bit of trouble, with many sellers uploading content they don't own and stealing other artists' works. Redbubble actively monitors this and tries to detect and take down any stolen content. Multiple influencers (such as Greg Gottfried, Wholesale Ted & Kasey Golden ) have used Redbubble to monetize their brands and huge online following to earn substantial amounts of passive income through the site. As long as Redbubble focuses on artists' needs , providing great production & printing quality and making the process as seamless as possible, they will be able to retain and grow their 800k artist base. The average number of Instagram followers for personal accounts is 150 (source). Hence, by my estimates, Redbubble already has an organic reach of ~120mn fans. Website ranking & competition: redbubble.com has ~28mn monthly visits, out of which ~10% are directly from social media pages (the biggest ones being Pinterest, Youtube, Twitter and Reddit). They have a few competitors (including Amazon who have starting to offer their own version of a "print-on-demand" store), but they had the advantage of being a first mover and also focus a lot on retaining and growing their artist base, so they have a market leading position and seem to be able to maintain this position even with a lot of new websites popping up offering similar services. Some artists also list their products on multiple sites (e.g. Redbubble, Threadless, Society6 and Amazon). There are some sites like printful and spreadshirt, which pursue a slightly different model - they do the printing and fulfillment, but artists need to set up their own page (using Shopify for example) to sell their artwork. In term of monthly site visits (28mn), they are 3~4 times larger than their closest competitors: society6 and threadless, but way smaller than Etsy as seen below. They also own the US based teepublic.com, which has 8.1mn monthly visitors in May-2021. Source: similiarweb Future growth and return on capital: I don't see Redbubble completely dominating this industry, but as long as they succeed in keeping their flywheel going, I expect them to grow by at least 10~15% in the next decade (their own growth estimates are a bit more optimistic at 20-30%). As they are a capital-light business, they have very respectable ROE (Return on Equity) and ROCE (Return on Capital Employed) of 31% and 36% respectively, which shows that the management has been allocating capital quite well. They also have a strong balance sheet, with zero debt and AUD 129.7mn in cash. Summary and valuation: I think Redbubble are a high quality compounder who is just starting to scale and has a long runway ahead. They also follow Nick Sleep's "scaled economy shared" model to an extent: the bigger they get, the more products they add for artists and the more markets they can reach with the products (they still have a lot of untapped markets like China & India) . One of the reasons I think they are not overpriced already is that they are listed mainly in Australia as of now and only have a US ADR as of now (RDBBY). After their recent earnings report, their stock price took a big hit , as they did not provide solid guidance for 2021 and committed to spending heavily on search marketing going forward. However, as you can see in my DCF valuation below, considering conservative and pessimistic scenarios, they still look significantly undervalued. Valuation: https://imgur.com/a/7b6QwU1 DCF calculation assumptions:
Potential risks:
Conclusion: Redbubble has established a sustainable marketplace fly-wheel and has solid fundamentals which should fuel its growth over the next 5~10 years. They do face high competition and other risks, but I think their current valuation and upside potential provides sufficient incentives for long term focused investors. I've initiated a position recently, with Redbubble representing around 10% of my current portfolio - I'm planning to hold for at least 5~10 years. Let me know what you think in the comments! Edit: this is not investment advice, please do your own research before investing. [link] [comments]  |
| SHEN (DD) - $18.75/Share Special Dividend From Undervalue Company Posted: 06 Jul 2021 11:16 AM PDT Hello fellow investors r/investing Long time lurker here, decided to make account earlier this year since everything went private and just causal browsing became almost impossible amongst all the market drama. I have decided to put together this DD, but I would appreciate any critical commentary if you see something I'm missing or if you know more on the topic. Disclaimer:
Take all the information here with the grain of salt and do your own judgement. About SHENSHEN, or Shenandoah Telecommunications Company is telecommunication company providing various broadband, wifi, fiber optic services. Totalling 1139~ employees and being in business since 1902, you can see that we are talking about a company that has been around for some time, managed to adapt and be a relative success in oversaturated market. SHEN has few major streams of revenue:
I won't go deep into the all of these streams, briefly what you need to know is that the Company has sold their wireless asset sale to T-Mobile US and is focusing more on their broadband infrastructure, further expanding their main source of revenue. FundamentalsRemember reading Intelligent Investor or listening to any financial legend talking about P/E ratios, EPS, ROE and bunch of other things that you barely understood even though they seemed important ? In the times when everything is priced in several years ahead, it's really hard to find a company with solid fundamentals, that is still going under the radar.
For a company in oversaturated market such as Telecommunications and controlled by giants such as T-Mobile, Verizon, Viacom, to keep such a great fundamentals is nothing but amazing. How did they achieve it ? Simple, while everyone was trying to dominate big cities and get the main piece of cake, SHEN was focusing on expanding their influence in the rural areas. Let's sum up why these fundamentals are a good sign of a healthy company. Anything with P/E under 20 is almost a unicorn nowadays, everything is being priced in several years ahead and on potential that might not be there yet, while SHEN goes under the radar this entire time. In Short, SHEN does better in fundamentals than most of the Industry respective to the company size. What this all mean ? In the most simplistic way, with 52 Week 38.77-57.65 you can be certain that the company is not going away anytime soon, they have been around for more than 100 years, they are slowly expanding, sure it's not Google, it's not T-Mobile, but they are keeping it lowkey in the rural areas where there is still plenty of room to expand, opposite to the big cities where you have to rival the giant companies. The company is beating expectations on quarterly basis. Regarding the potential market cap and share price targets. I believe the company just solely based on their fundamentals and stable revenue/earnings streams, could be worth much more. However, the average volume on the stock is barely 187K therefore it's been going under the radar for some time. Why there seem to be no interest in the stock? Even though it's only a speculation, we are living in the time where everybody wants to get rich quickly on the most notorious stocks or invest in the to known giants that took control over their respective industries. If you want something a growth stock, you can always just buy some giant company in the sector or just buy some index fund. That could be one of the reasons why it's hard to notice a company that had been around for a long time, is growing in the rural areas, expanding, closing deals and makes sure there is a stable income/revenue stream. However, that does not change the fact that the company has much more potential and could be undervalued. SPECIAL DIVIDEND - $18.75 / ShareNow to the actual play. To be honest, I too haven't known about SHEN since this announcement, I had couple of dividend paying stocks, but this opportunity was too good to ignore. SHEN is focusing more and more on their main revenue stream - broadband and decided to sell of their Wireless assets and operations to T-Mobile in an insane sale. The sale totaled 1.94 billion dollars which at the time was almost the amount similar to the company's market cap. SHEN is giving away 936.6mil of this sale back to the shareholders. ,making it 18.75$ per share, which is insane and will be payed out on August 2nd if you are a shareholder as of recorded date July 13th ! The rest of the proceeds they used to cover all of the debt and are expected more than 19.6mil to be reinvested back to the stock, further pumping the price up. Why is it such a big deal ? If you didn't just skim through the fundamentals, you would have found out that the company's fair value is around 56$/share. What is it trading as of this moment ? 56.81$ so even despite the news of crazy special dividend, we are trading around the fair value of the company ! Will the share price will always rebalance itself after the payout date? Yes and no, in some cases it doesn't have to, but if you enter anywhere under the 70$ in order for you to lose money on this play, the stock would have dump close to their 52 week low. This is basically free guaranteed gain. You don't have speculate if Richard Branson reaches the Space or if Elon finally delivers on the self driving system. This is almost free win. Just the fact that 19.6 mil is expected to be reinvested back. That's 345k shares bought at the current price, almost twice as much as your average daily volume. So even if the stock dumped right after the Dividend payout, you have guaranteed stock buybacks happening, all while the fundamentals and future outlook for the company is still holding strong. I don't know a lot about dividend stocks, how can I judge it ? One of the best metrics for the dividend stocks is to see if the company keeps increasing the dividend. Which they have continuously adjusted and kept increasing. https://www.nasdaq.com/market-activity/stocks/shen/dividend-history ManagementThe company has stable management with plenty years of experience. The current CEO has been in the position since 1988 ! That says something. The ability to close the deal with T-Mobile which created sales in value of more than 2/3rds of company's entire market cap shows that the management can deal with Giant competition in their sector. PROS:
Cons:
Final ThoughtsSpecial dividends does not occur that often, they are here and there and can cause massive spike in the share price in the short amount of time while. Especially if the pay out is literally almost 1/3 of the entire market cap. I believe that any entry below 70$ / share is still amazing because in order for this to go terrible, the stock would not only have to drop close to it's 52 Week low (38.77), but also stay there, all in while being fairly valued at $56/share Moreover, selling a big portion of their assets to T-Mobile could make the company an acquisition target. Since they are popular in rural parts of the country, acquisition of SHEN could be an easy entry for any of the telecom giants to enter rural areas. Which in turn could further skyrocket the price, but that's purely a speculation. I am planning on holding after the special dividend pay out with selling a small portion of the position on the dividend payout and holding rest for the longer term. I would like to hear any opinions on this play, any bull/bear case is very welcome. Any criticism is welcome, let me know what you think ! Buying Dates DisclaimerDue to special dividend being greater than 25% of comapany's value. You would need to hold through the ex-dividend date in order to receive the dividend. Therefore you need to hold shares from 9.7.2021 through 3.8.2021 in order to receive the $18.75 special dividend. There is a 2 day settlement period for transactions. Therefore your shares have to be settled in by this Friday (9.7.) the latest in order to receive the special dividend Possible play for traders who want it only short term:Givens:- SHEN share price $60 (right now)- record date 7/13- payable date 8/2- ex-dividend date 8/3 Since the market takes 2 days to settle. The shares need to be purchased by Friday, July 9th to be on record with the company. Due to the circumstances of this special dividend, in order to receive payment, you need to hold through the ex-dividend date which means tying up funds for a little over 3 weeks. Play: Purchase shares in multiples of 100, and buy an equal amount of puts with a $55 strike price expiring on 8/20. These currently trade for approximately $2/contract ($200 is the full value of contract). If purchased correctly your maximum downside potential is $7/share, even if the stock price falls below $53 after the ex-dividend date. However, here's the kicker. You are entitled to the full $18.75 special dividend because you held shares during the appropriate time frame. Therefore you are guaranteed to net approximately $11.75/share which is a return of 20% with little to no risk over the course of 3 weeks. TL;DRCompany paying out insane special dividend 18.75$/share on August 2nd if you hold shares before July 9th, while maintaining solid fundamentals. Position 598 shares at 56.96 avg [link] [comments]  |
| MKSI: Due Diligence and discussion Posted: 06 Jul 2021 12:01 PM PDT I came across this company a few months ago and after doing some research thought I'd do a little write up about what I found. MKS Instruments (Nasdaq: MKSI) is a global producer of measuring and controlling devices used in advanced manufacturing and semiconductor processes. They also provide services related to their products including installation, maintenance, repair and training. Primary industries are semiconductor, healthcare, research and defense. Recent News July 2021: announced acquisition of Atotech Ltd (ATC), a process chemicals technology company May 2021: announced acquisition of Canadian company Photon Control Inc. in an all cash transaction. Both these recent acquisitions broaden their product and service portfolio and increase future market share. It highlights the upwards trajectory of the company, liquid balance sheet and overall healthy financial position. Markets Semiconductors - A significant portion of sales (around 50%) are derived from products sold to semiconductor device manufacturers. This is an explosive growth industry where both demand and revenues continue to grow. With this demand and a chip supply shortage the semiconductor industry looks poised for a great 2021 and beyond. Advanced Markets - MKSI products are also used in the industrial technologies, life and health sciences, research and defense. International Markets - Overseas sales accounts for around half of MKSI's net revenues. Out-with the company's US facilities MKSI benefits from overseas manufacturing facilities located in Austria, China, France, Germany, Israel, Italy, Mexico, Romania, Singapore, and South Korea. Financials Market Cap: 9.88B In 2020 MKSI reported record EBITDA of $555.7 million and an EPS of $6.33 On Apr 26, 2021, MKSI reported Q1 2021 revenue of $693.90 million up 29.53% year over year. Revenue has increased annually by an average of 16% over the past 5 years. EPS has increased by an average of 45% per year over the past 5 years. This company demonstrates health and consistent growth. A healthy balance sheet and ended 2020 with a healthy debt to equity ratio of 0.35 Strong through cycle free cash flow. 70% of capital reinvested in growth initiatives such as acquisitions, debt management, product development and dividends. Stock Price & Valuations Currently trading around $166 at the time of writing. Consensus price targets of $226 have a more than 30% upside. Several analysts have price targets of over $240 P/E of 23.04x & PEG of 0.87x Why do I think this a buy? MKSI continues to benefit hugely from the high demand and revenues from the semiconductor market. Demonstrating revenue growth and a large and diverse product portfolio providing many revenue streams and growth opportunities. An even split of domestic and international sales puts the company in a strong position going forward without having to rely on a single market for success. Institutional investors now own 96% of the total shares outstanding. Bear case Operate in a highly competitive market Huge pressure to keep up with industry technological advances Political and economic risks involved with overseas operations [link] [comments]  |
| Posted: 06 Jul 2021 11:04 AM PDT Like what else would this affect? yes i am making a "Big Short" kind of play but its more like im playing the opposite side instead of shorting, for example me thinking that stocks are gonna crash im going long calls on bonds thinking they are gonna hit new ATHs within a year currently holding about 8 calls on TLT for $170 about a year out, actually expiring Dec 2022 im thinking bonds rise to Pandemic highs tbh but what else am i able to play if i think that bonds are going to go up? I know that yields in theory should go down but i have no idea how to shorts yields what else would i be able to do? [link] [comments]  |
| How do I loan out my shares for a fee? Posted: 06 Jul 2021 10:54 AM PDT On iborrowdesk I see the fee for certain tickers is ridiculous 197% for LEV for example. The most expensive borrow rates are listed on the homepage. How can I loan out my shares at these rates? I use chase invest and don't mind switching brokers. Links to tickers to meet 400char requirement: https://iborrowdesk.com/report/FNMAK https://iborrowdesk.com/report/AEMD [link] [comments]  |
| Change my view: The market's reaction to $SHEN this week is completely irrational. Posted: 06 Jul 2021 04:42 PM PDT Now, I'll start by conceding that I don't know very much about this company specifically, and there could be things I'm missing here. I'm hoping to gain some insight into the rationale of people buying this stock in response to its recent news. The context, for those unaware: Before last week, $SHEN had spent the last year trading mostly sideways around $50/share. Last Friday, $SHEN announced it will pay a special dividend of $18.75 per share to its shareholders, a total payment of around $1 billion. This money came from the company selling assets to T-Mobile of about $2 billion. $SHEN proceeded to shoot up to a close today (Tuesday) of over $61/share. People are going crazy over this dividend. This makes no sense to me, for several reasons. First, dividends are not free money, they come out of the company's purse, and thus decrease the current value of the company. The $18.75/share that the company is "giving away" was already priced in to the price of the company. If the company was worth $50/share before last week, and it pays out $18.75/share, the fair value of the company after the dividend should be $31.25/share, all else being equal. From a fundamental market efficiency perspective, this doesn't make any sense, unless the entire market had forgotten to price in this sale (which I'm assuming wasn't a massive surprise, but even if it was, the assets that were sold to T-Mobile should've been priced in anyway before their sale, so there shouldn't have been much price movement.) Instead, people seem to be jumping on the company just to get that sweet, sweet dividend. Why? It is irrational to buy a share just to get a dividend, so the price of the share can drop by the value of the dividend. This would result in a break-even. Except it's worse than that, because dividends are tax-inefficient compared to the capital gain of holding the higher valued share (especially if you're not planning on holding the share for 60 days, which I think many of these people aren't). On top of that, the $1 billion the company is giving out to its shareholders is $1 billion that could've been used to invest in the company and grow its future profits. If anything, the company has lost value by giving away so much money instead of getting a return on it. I'm not trying to insult or attack anyone who has bought this company, I'm open to having my mind changed and I hope I can gain some insight into why the market is reacting the way it has. [link] [comments]  |
| Canadian Pacific Company Profile and Developments Posted: 06 Jul 2021 08:00 AM PDT I will be referring to them as CPR Summary if you don't want to read a lotCPR has some good things going for it, but in general the outlook is bland. They have some deep problems, and they don't manage money well. Rating: Do not buy, but maybe hold. Company SummaryCanadian pacific is a transcontinental railway headquartered in Calgary, Alberta and founded in 1881. They transport bulk commodities, merchandise freight, and retail goods. They also are engaged in marine shipping, although this is a secondary business. They have 13,000 Miles of track across North America and own 22.9K freight cars and lease 12.2K. They own 1336 Locomotives and lease 76. I grew up with someone whose dad was an engineer for them. He said they treated him like shit and he was never home to spend time with my friend. I think his job at CPR was the reason he divorced his wife. Workers are non unionized. This goes to show that CPR can make the most out of their workers. They have one operating segment: rail transportation. The subsegments of this are bulk commodities, merchandise freight and intermodal traffic (transported multiple ways like train -> boat). Management Overview: The CEO has been in the business for 29 years. Only 55% of employees approve of him on glassdoor. The CFO has over 20 years of experience but there is something wrong with his teeth. The sentiment from glassdoor is that there is no respect for employees, especially at the lower level. The management has done a good job keeping the company running well, but they are neglecting their human capital. I have nothing bad to say about the COO. He seems well qualified and his teeth are more normal. Board Overview: The board looks like the husbands and wives of wealthy politicians who all meet up once a week to play bridge. Only 411 have past railway experience. There are a lot of finance people on the beard, which is good and bad. On one hand they will have good advice on capital structure, but less on general operations. Company historyThey have a long complicated history that includes a lot of death and a lot of labour so dangerous and cheap it was pretty much slavery. But all of that history won't have much impact on current operations. In 2020, they acquired the Central Maine and Quebec railway. This added 481 Miles to their track. In the third quarter of 2020, they acknowledged climate change. In 2020 they announced that they would be working on the development of a hydrogen locomotive. If it gets working, they will have to retrofit old locomotives with the new technology. I am not sure how cost effective this is. They recently bid and failed to buy Kansas city southern. I see this as a big loss. This could have brought their track miles up to almost 20000 and would give them a line direct from canada through to mexico. It would have been a 25 Billion dollar deal. RiskWhen I think about risk I tend to not look at the risk section in a 10K right away. CPR talked about the risk of transporting hazardous goods, environmental stuff, terrorism and war before they talked about supply chain and human capital risk. Seriously! If one of their trains blows up, they might lose 4 engineers, 100M of goods and assets, and cause 200M in damage MAX. This money doesn't mean anything to them. They're just trying to follow the trend of hyping up pointless risks while downplaying the real ones. The risks below are all from me, not from what the company has put in their risk section. CPR is uniquely exposed to economic risk. Its business is directly dependent on supply and demand. In prosperous times, there will be a lot of goods and commodities to transport, but in a slow economy, there will be less need for CPR, so they will follow along with the unfavorable economic conditions. Not as severe as seasonality. Naturally there are periods of high and low demand throughout the year, so CPR experiences seasonal sales and earnings fluctuations. Because they lost the Kansas city bid to CNR, CPR is more vulnerable to CNR - CNR has more capability to bring goods where they need to be, so clients will probably favour them. I don't see railways going anywhere soon. Trucking is much more expensive for now - but there is a risk that in the near future it becomes much much cheaper. This could disrupt CPR and potentially render them useless. Sure this is improbable but still something to think about. The way they treat their employees is a liability. 60 hours of work in 7 days is rough for anyone, and the lack of work life balance is a sure way to keep the employees miserable. If the employees decide to strike or demand less hours and higher pay, the business could be severely disrupted. Revenue Breakdown / Company segmentsThe subsegments of this are bulk commodities, merchandise freight and intermodal traffic. The breakdown of the segments is as follows: Bulk commodities: 43% (Grain, coal, potash, fertilizers) Merchandise freight: 36% (Cars, forest products, energy and chemical products, metals) Intermodal traffic: 21% (Moving containers around. Doesn't matter what's inside) These segments are very well diversified. I would be here for weeks talking about the different business sediments here so instead I added links and sublinks to the breakdowns of categories and subcategories. Two percent of their revenue comes from non-freight. This is related to fees for their tracks, leases, and random arrangements. Industry positionRelative analysis. Ratios, competitors, market share By track length, CPR is the sixth largest north american railway. They are also the sixth largest railroad by revenue in north america. Of the 10B+ market cap railroads, CPR is the fifth largest and they have the lowest PE out of all of them. They have a yield of .79 which is lower than average. Their PS, Profit margins and PB are very competitive. On the surface they look relatively undervalued - I will go deeper into their financial to see if they are intrinsically undervalued. Company base statisticsMarket Cap: 51 B Total Debt: 6B Cash & Liquid assets: 219M Goodwill:336M Total Assets: 23B Equity:7.3B Revenue:7.6B Earnings:2.6B Operating Cash Flow:2.8B Enterprise Value:61B Shares Outstanding:680M EV/Sales:8x ROE: 35.5% (Not much of this makes it to equity) Overview/Growth and DevelopmentsGrowth:
Margins/ratios:
Net reinvestment:
Share buybacks:
Costs:
Debts:
Assets:
Legal: Nothing worth noting Recent/expected developments:
Catalysts/Entry points
ValuationTheir market value is probably pretty close to their intrinsic value. I was hesitant with a DCF, but came up with a little bit under the market value. Their margin of safety can be assumed to be nil. Valuation Market ComparisonAll of the railroads seem to be sitting between a little bit undervalued and decently overvalued. CPR is fitting in nicely here. OpinionIf you have it already - fine, it could be a solid hold for now. There is some good cash generation here that seems to be lost before it becomes cash. But c'mon. Were retail investors. This company will not make us rich, and might even make us poor. There are better places for us to put our money. I would give this a "Warning: you will probably lose money with $CP" sticker and a weak sell rating. Notes and sourcesNotes: Note 1. I am not a financial advisor. This is my opinion not my recommendation. Do your own research. Note 2: I do not hold $CP in my portfolio and I will not profit in the event that their shares gain or lose value. Sources: Yahoo finance, Finviz, Wikipedia **Finviz data on them is wrong [link] [comments]  |
| You are subscribed to email updates from Lose money with friends!. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment