Daily General Discussion and Advice Thread - January 18, 2022 Investing |
- Daily General Discussion and Advice Thread - January 18, 2022
- Microsoft to Acquire Activision Blizzard
- Controversial opinion: Technical analysis is just astrology
- My oil/renewables pick for potential 10x returns in 2022/3
- Can the feds just jawbone the rate hikes?
- How do you decide when to sell a position? Am I a fool for never taking profits?
- Unilever Shares Fall 6% as it Defends £50bn Approach for GSK's Aquafresh to Panadol Consumer Arm
- Restructuring my portfolio using data and rational thought
- Daily General Discussion and Advice Thread - January 17, 2022
- What would a „Reddit sentiment indicator“ tell about the most popular investments and their future performance?
- What Is Considered A Big Investing Loss?
| Daily General Discussion and Advice Thread - January 18, 2022 Posted: 18 Jan 2022 02:01 AM PST 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! 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! [link] [comments] | |||||||||||||||||||||||||
| Microsoft to Acquire Activision Blizzard Posted: 18 Jan 2022 05:29 AM PST With three billion people actively playing games today, and fueled by a new generation steeped in the joys of interactive entertainment, gaming is now the largest and fastest-growing form of entertainment. Today, Microsoft Corp. (Nasdaq: MSFT) announced plans to acquire Activision Blizzard Inc. (Nasdaq: ATVI), a leader in game development and interactive entertainment content publisher. This acquisition will accelerate the growth in Microsoft's gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse. Microsoft will acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard's net cash. When the transaction closes, Microsoft will become the world's third-largest gaming company by revenue, behind Tencent and Sony. The planned acquisition includes iconic franchises from the Activision, Blizzard and King studios like "Warcraft," "Diablo," "Overwatch," "Call of Duty" and "Candy Crush," in addition to global eSports activities through Major League Gaming. The company has studios around the word with nearly 10,000 employees. Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company's culture and accelerate business growth. Once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming. "Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms," said Satya Nadella, chairman and CEO, Microsoft. "We're investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all." "Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them," said Phil Spencer, CEO, Microsoft Gaming. "Together we will build a future where people can play the games they want, virtually anywhere they want." "For more than 30 years our incredibly talented teams have created some of the most successful games," said Bobby Kotick, CEO, Activision Blizzard. "The combination of Activision Blizzard's world-class talent and extraordinary franchises with Microsoft's technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry." Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile. Through great teams and great technology, Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like "Halo" and "Warcraft," virtually anywhere they want. And with games like "Candy Crush," Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment. The acquisition also bolsters Microsoft's Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers. With Activision Blizzard's nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities. The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard's shareholder approval. The deal is expected to close in fiscal year 2023 and will be accretive to non-GAAP earnings per share upon close. The transaction has been approved by the boards of directors of both Microsoft and Activision Blizzard. [link] [comments] | |||||||||||||||||||||||||
| Controversial opinion: Technical analysis is just astrology Posted: 17 Jan 2022 03:25 PM PST I've tried to learn technical analysis and the different patterns of stock charts. There's obviously thousands of courses and online videos about this sort of thing. But it seems that almost none of these patterns can be used sustainably over long periods of time, as external news events always triumph over any chart reading. The conclusion I have come to is that technical analysis is no different than astrology. It's much better to look at the fundamentals of a business and it's growth potential than to try and guess the next stock price based on some lines on a chart. The only question I have is: why do so many people try to use it and why are there so many fake YouTubers and scammers who try to sell you on this stuff? [link] [comments] | |||||||||||||||||||||||||
| My oil/renewables pick for potential 10x returns in 2022/3 Posted: 17 Jan 2022 02:23 PM PST With the indices looking increasingly shaky and a further 10-15%+ SPY/QQQ downturn on the cards, I have been looking for sectors that are likely to outperform in 2022 to try and find some upside through the turbulence of the coming rate hikes. With oil at almost $85 per barrel, up 10% YTD already and showing no sign of slowing down; I find it highly likely that oil/energy stocks will continue their recent run of outperformance throughout 2022. I have seen several posts over the last week requesting tickers in this sector to start some DD on, so I thought I would do a very brief overview of my one stock pick that I believe will net investors significant gains over the next 2-3 months and a potential 10-15x over the next 2 years - $VTNR (Vertex Energy). Disclaimer: I own shares and LEAPs of VTNR. Overview Vertex Energy is a refiner of alternative feedstocks and producer of motor oil netting the company roughly $150m in revenue yearly on average, but has struggled to convert much of this into profit in what is essentially a low-margin business – but this is not what investors are here for in VTNR. The company announced a strategy change in May 2021 which sent the stock from $1.80 to highs of $14.32 (has now declined back to $5.12 following the decimation of all small caps over recent months – however, the stock has recently formed a base and started a strong uptrend). They are in the process of selling their legacy business of motor oil and recycling assets to Safety-Kleen systems for $140m – the sale is expected to close in the first half of 2022. Running alongside this is what investors are interested in - the purchase of a refinery in Mobile, Alabama from Shell for $75m which is expected to close in the first quarter of 2022. Mobile Refinery Once the acquisition of the Mobile refinery closes, Vertex plan to convert the existing hydrocracker to produce renewable diesel by the end of 2022. The refinery has capacity of 91,000 barrels of oil per day, with Vertex expecting 14,000 of these barrels per day to be renewable diesel by mid-2023. Vertex expect to spend an additional $85m on the conversion of the hydrocracker, and expect to be producing renewable diesel at the refinery by Q3 2022. They will also enter into a multi-year offtake agreement with Shell and others for the oil and diesel produced at the refinery. Here is what Vertex's VP of business development had to say on the offtake agreements. "As part of this transaction, we plan to enter into multi-year crude supply and product offtake agreements with several highly-respected counterparties, including Shell, who has been an exceptional partner throughout the sale process. We believe these agreements will position us to reduce our working capital requirements, while mitigating spot market risk on product sales. Upon closing, we expect to hedge a significant portion of the first-year production, reducing our near-term exposure to movements in refined product margins, as we focus on completing the planned asset conversion, which remains the most significant near-term economic driver resulting from this transaction." The share price dropped from its highs initially due to worries that Vertex would be unable to secure the funding required to buy the refinery and upgrade the hydrocracker. Those worries have been put to bed recently as Vertex have secured financing in the form of a combination of funds to be received from the sale of the legacy business along with convertible notes due 2027 and a credit facility. Investors should note that the convertible notes will likely be dilutive, though not in the short-term and I estimate maximum dilution around the 10% mark. Financial Projections In their recent Q3 2021 earnings call, management set out full year 2022 and 2023 forecasts for the refinery. FY2022
FY2023
These figures were based on oil at $72 per barrel, and oil is up over 15% since then, with Goldman analysts expecting oil to top $100 in 2022 and JP Morgan analysts seeing it go even higher to $125 ($125 unlikely IMO unless Russia invade Ukraine). To put into context why I think Vertex will see massive gains in 2022, the current market cap is only $324m (share price $5.12) at the time of writing, or less than 0.1x 2023E revenue.
(Assumes earnings is equal to 50% of gross profit in line with Wainwright's analyst report, ignored debt and potential dilution (not near term) from convertible notes (likely 5-10%) for ease of calculation, used P/E ratio of 15 – current oil & gas refining average P/E is 37, oil & gas production average P/E is 20 and oil & gas midstream average P/E is 18 per finviz). Short-Term Outlook The factor that could move the share price violently upwards over the immediate short-term is that a whopping 25% of the small 42m float is sold short with the closing of the purchase of the Mobile refinery expected within the next 2 and a half months. Vertex will likely have their earnings update during the second week of February where I expect management to provide an update on the acquisition or to announce the deal has closed successfully, at which point I expect the stock to 2x or more. A double over the next few weeks would still put the stock at less than 0.2x 2023E revenue. Risks If the refinery purchase falls through the stock likely falls into the $2-3 range. I find this highly unlikely (less than 5% chance); Vertex has been hiring for new positions at the Alabama refinery of the last week and they have already started with initial design and engineering work at the refinery, indicating to me that the deal close is imminent. Also, there is certainly execution risk following the closing of the transaction, particularly relating to the upgrading of the hydrocracker. Personally, for swing traders who are interested in a quick swing focused on the closing of the refinery purchase and likely subsequent short squeeze, I see relatively little risk. For those seeking larger gains in the hopes that management can execute on their earnings forecasts, they are definitely subject to a lot more risk. Size accordingly. This has been a very brief introduction to the company and if anyone wants to do some further DD, Vertex has released some very detailed updates on their strategy pivot here: [link] [comments] | |||||||||||||||||||||||||
| Can the feds just jawbone the rate hikes? Posted: 18 Jan 2022 03:34 AM PST I saw a chart where the 2 year matches the fed rates exactly for years and years...until now, where the fed rate is 0 and the 2 year t bill is at 1. Not sure I understand how the 2 year treasuries relate to real rates but it's currently run up to 1%. This implies 4 hikes by the fed. So my question is...do the feds need to do anything at this point? Do banks use the 2 year t bill rate or do they use what is set by the feds? [link] [comments] | |||||||||||||||||||||||||
| How do you decide when to sell a position? Am I a fool for never taking profits? Posted: 17 Jan 2022 10:53 PM PST I've been investing consistently for 2.5 years now. Mostly a 60/20/20 allocation between index funds, spec stock, and crypto. Index fund returns have been favorable (SWPPX and SWISX), ive made good money in crypto, and my spec stock returns have all been losses. Regardless of the returns, I've never sold out of a position. Like ever. I still own every asset I've ever purchased. Is this foolish? Should I be selling things and taking profits? P.S. I realize I'm opening myself to a lot of risk between crypto & spec stocks, but it's all within my risk tolerance. Not looking for feedback on my investments. Just trying to understand how to come up with an exit plan? [link] [comments] | |||||||||||||||||||||||||
| Unilever Shares Fall 6% as it Defends £50bn Approach for GSK's Aquafresh to Panadol Consumer Arm Posted: 17 Jan 2022 01:27 AM PST Shares in consumer goods giant Unilever have fallen after it defended its £50bn takeover approach for the consumer healthcare arm of GlaxoSmithKline (GSK), describing the business as a "strong strategic fit". The group, whose products range from Domestos bleach and Dove soap to Marmite and Hellman's mayonnaise, said the GSK deal would help it beef up its presence in key sectors as it seeks to refocus on stronger growth areas. GSK disclosed over the weekend that it had spurned a series of offers from Unilever towards the end of last year for the arm of its business that includes Aquafresh toothpaste and Panadol" It said the offers "fundamentally undervalued" the business - in which US drugs giant Pfizer holds a 32% stake - and its prospects. But reports suggest Unilever could try to sweeten the deal and in a statement to investors it showed little sign that its enthusiasm for the takeover had waned. It said a deal would add GSK's brands in oral care and vitamins, minerals and supplements to its own presence in those sectors and "create scale and a growth platform for the combined portfolio in the US, China and India, with further opportunities in other emerging markets". Investors were unimpressed, sending Unilever's shares 6% lower in early trading on Monday, while GSK added 5%. Victoria Scholar, head of investment at Interactive Investor, said: "It looks as ugh a deal is very much still on the cards despite GSK rejecting three offers including the latest £50bn offer" "Unilever will have to raise its bid to somewhere around £55bn and move fast in order to avoid a bidding war from rival private equity buyers who are likely to be eyeing up counter offers." Unilever has been targeting a refocused strategy after a corporate makeover which ended its Anglo-Dutch dual structure in 2020, making it a single London-based group, Unilever plc. That concluded that it should expand its presence in health, beauty and hygiene, which offer higher rates of growth, while spinning off lower growth businesses. It has already agreed deals to sell its tea business, including PG Tips and Brooke Bond, and its spreads brands including Flora. In its update on the GSK approach, Unilever said that it was preparing to announce "a major initiative to enhance our performance" later this month. "After a comprehensive review of our organisation structure, we intend to move away from our existing matrix to an operating model that will drive greater agility, improve category focus, and strengthen agility," the company said. The takeover offer comes amid plans for a spin-off of GSK's consumer healthcare business, led by former Tesco boss Sir Dave Lewis, later this year. That would see the division, which notched up more than £10bn in sales in 2020, listed as a separate company on the London stock exchange. Actual Sky News article here [link] [comments] | |||||||||||||||||||||||||
| Restructuring my portfolio using data and rational thought Posted: 17 Jan 2022 12:31 PM PST I'm 25 and currently doing my master's in real estate. Other than internships, I've never really worked. Until last year, I had never saved any money. My bank account was almost always at zero because I spent it on food, clothes, and entertainment. However, since September 2021, I have put some money aside. To date, I have about $7,000 invested. My portfolio structure is as follows:
To date, I am not happy with the allocation of my money. I absolutely despise crypto at the moment and am looking for an exit point. I would have to sell with losses (although only around $200). I have now decided to restructure my entire portfolio. I actually want to set a goal and build a portfolio based on rational thought and valuable data. I listened to a podcast that inspired me to restructure my portfolio as follows: 40% Base
60% Boost
My main goal is to structure it so that I have less of a headache, but I still want to take some risk because I think I have enough time to balance it out since I'm still young and my career is just beginning. I guess my question for the thread I'm anticipating here is whether I'm making the right decision, based on your thinking, and whether I should be less risk averse. I think a lot of my headache comes from current market conditions, which can change at any time (for better or worse). I would also love to hear your thoughts regarding my base/boost portfolio allocation and discuss further ideas with you. [link] [comments] | |||||||||||||||||||||||||
| Daily General Discussion and Advice Thread - January 17, 2022 Posted: 17 Jan 2022 02:01 AM PST 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! 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! [link] [comments] | |||||||||||||||||||||||||
| Posted: 17 Jan 2022 01:13 AM PST It is only one subreddit and represents not all investors, but a what would a Sentiment indicator tell about the most and least popular investments on this sub? What Is a Sentiment Indicator? „Sentiment indicators look at how bullish or bearish market actors and what they are thinking and feeling, which may help forecast investors' future behavior. When sentiment readings are unusually high or low, they may begin acting in a contrarian way." In other words: are we seeing unusual high or low reading for some investments and if what could that tell us? [link] [comments] | |||||||||||||||||||||||||
| What Is Considered A Big Investing Loss? Posted: 17 Jan 2022 02:00 PM PST So I've only been investing for a relatively short amount of time but during my time of investing I've seen it all from massive ups to tragic downs and that's where I currently sit now at the bottom. It's a tough feeling day in and day out to have lost money in the market, but I want to know how much money is too much money to lose when it comes to stocks? Now I understand it's different for each person but I guess the answer would be in a percentage based on the portfolio. [link] [comments] |
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