Domo’s Cash Burn, Frozen Food Battles, Melinda Gates, Atul Gawande – Things I Learned Today (June 27th, 2018)

Conagra Acquires Pinnacle Foods for $10.9bn, FT

Conagra (CAG) gains more control over the frozen foods aisle. This seems to be a very good move.  So called healthy frozen foods are making a comeback on the backs of convenience and calorie control. This may be very positive for Conagra shareholders.

General Electric: Breaking Up is Easy to do, FT

GE (GE) has paid more than $6bn in fees for M&A advice, as well as debt, equity, and loan underwriting services since 2000. (Thomson Reuters). Larry Culp (Former CEO of Danaher) is now GE’s new lead independent director. Culp had huge success at Danaher where the stock returned 10-fold during since 2000.

A Closer Look at Domo’s Cash Burn, Forbes

This article provides a detailed look at various expenses that Domo is incurring to support its business.  It’s customer acquisition costs are sky high. According to the article, Domo spends $500K acquiring each customer. It would be interesting to see how Domo could successfully go public in the face of so much no so positive coverage.

My Favorite Commencement Speeches of 2018, Melinda Gates on LinkedIn

This article brought me to tears. You should read this.

I am a huge fan of Atul Gawande and his interview on Charlie Rose remains a memorable one for me.

In his commencement speech he said:

“You’re going to meet plenty of people in life who are difficult, or who you disagree with—but never let that be a reason to stop listening. Our curiosity is what teaches us how people became who they are and believe what they believe. It’s the seed for understanding and empathy. And it’s absolutely essential to rebuilding trust in our society.”

I am glad I was already working on becoming a better listener this year. It takes a lot of mindful corrections each day. Atul’s advice is very timely.

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German Unicorn, GE Break-Up, Robots, China Port In Sri Lanka – Things I Learned Today (Tuesday, June 26th, 2018)

Celonis – Process Data Mining Start-up – Joins Unicorn Club – FT

  • German data mining company is one of the very few European companies to join the Unicorn club.

GE Break-up Intensifies with Large-Scale Spin-offs – FT

  • GE (GE) to spinoff it’s oil and gas tie-up with Baker Hughes and its healthcare unit. It could trim 30% of its revenue and 25% of its total profits.

Robots or Job Training: Manufacturers Grapple With How to Improve Their Economic Fortunes, NY Times

  • Companies are struggling to find qualified employees to fill their open positions. Some are turning to the in-house training of high-school students to create a pipeline of new employees.
  • Others are turning to use more robots. Use of robots might, in a few years, lead to a productivity boost.

How China Got Sri Lanka to Cough Up a Port, NY Times

  • A fascinating story of how the Chinese government is dangling high-interest debt before smaller countries to build infrastructure and then take over land and infrastructure when the countries are unable to repay the loan.
  • The Chinese government has been funneling money to political players in countries like Sri Lanka and influencing them to support their position.
  • Read this! It’s a fascinating report by the New York Times.

Yield Curve, AT&T + AppNexus – Things I Learned Today (Monday, June 25, 2018)

AT&T Takes Aim at Big Tech with AppNexus, Financial Times

AT&T buying AppNexus may be its most important acquisition in its battle against Google and Facebook. Managing a technology company is far different from managing a telecommunications company.

What’s the Yield Curve? A Powerful Signal of Recessions has Wall Street’s Attention, New York Times

The yield curve is dangerously close to inverting. The gap between the 2-year and the 10-year treasury was at 0.34%. It’s not inverted yet, but dangerously close.

Vertical Media Mergers are Just So 19th Century, Financial Times

A couple of new books are arguing that vertical mergers do not make any sense in the current business environment.

Unscaled: How AI and a New Generation of Upstarts Are Creating The Economy of the Future by Hemant Taneja

This book argues that fast-growing companies customize their goods and services to a market of one.

Reinventing Capitalism In the Age of Big Data by Viktor Mayer-Schonberger, Thomas Ramge

This book argues that markets are shifting from relying on price to relying on data to determine the true value of an item.

 

 

Deficits, Gene Therapy, S&P Earnings Growth – Things I Learned This Week – April 15, 2018

Article: Deficits Won’t Matter – Until They Do, Barron’s

  • We are entering unchartered territory with the budget deficits in the U.S.
  • For the past three months, retail sales have fallen. This has happened only five times outside of recessions, according to Liscio Report.
  • Slowing spending growth and rising inflation suggest the worst of all possible worlds.
    • The Fed remains focused on the latter, while investors are ignoring the former.

Article: Gene Therapy’s Big Endorsement, Barron’s

  • Replacement gene therapy company AveXis (Ticker: AVXS) accepted an $8.7 billion or $218 a share, takeover bid from Novartis (NVS).
  • The deal is good for Regenxbio (RGNX), which makes the viral delivery mechanism for AveXis’streatment for severe spinal muscular atrophy.
  • Gbola Amusa, an Analyst at Chardan: “Regenxbio is the platform and AveXis is the product”

Article: Can Soaring Earnings Rescue The Market? – Barron’s

  • Corporate tax breaks have given a short-term boost to earnings this year.
  • GDP has been strong so far this year.
  • Subsequent years aren’t looking good, with average GDP growth projected to be 1.7% for the next nine years according to CBO prediction.
  • Industrial companies should do well late in this bull market.
  • Healthcare related stocks such as Becton Dickinson (BDX) should continue to do well given the secular demand trend in healthcare.
  • In my opinion, we may be entering a phase in the economy where we experience very low growth, high inflation, and high-interest rates.  Scary!

Article: This Small-Cap Value Fund is a Good Buy Now, Barron’s

  • Royce Special Equity Fund (Ticker:RYSEX)
  • “Dreifus eschews traditional valuation metrics like price/earnings ratios that are dependent on the market. Instead, he uses those based on actual transactions, such as earnings before interest and taxes divided by enterprise value, looking for companies where that ratio is higher than the cost of borrowing to buy the company.

Royce_Equity_Fund

 

 

Things I Learned This Week, March 4th, 2018

Article: Reports Of Oil Demand’s Death HaveBeen Greatly Exaggerated, FT.com

Key Points:

  • Electric vehicles have barely dent oil demand.
    • Today’s 3m EV’s displace less than 60,000 barrels a day of oil consumption.
    • Less than 0.06% of total global demand.
  • The cost of batteries have come down sharply over the past seven years, but further cost reductions will prove to be tough when the price of lithium and cobalt have tripled.

 

 

 

Things I Learned This Week – February 25th, 2018

Article: Oil Industry’s Swagger Takes Knocks From Gas Boom, FT

Article: Walmart’s Online Challenge to Amazon Falters, FT

Article: How Low-Code Can You Go? IT Tests Disruptive App Development, WSJ

Article: Kenya Seeks to Raise 30-Year Debt after Ratings Downgrade, FT

Article: BP Says Oil Demand to Peak By Late 2030s, FT

Article: Nobody Wants to Let Google Win the War for Maps All Over Again, Bloomberg

Article: The race to map the world for autonomous cars is on—and messy, MIT Technology Review

Article: Crude Calculus: Oil’s Next Move Could Be Higher, Barron’s

Key Points:

  • If Venezuela descends further into chaos, then oil production from that country could falter and could push oil prices even higher.
  • Venezuela produced 2,072,000 barrels of oil per day in 2017. It was down from 2,373,000 barrels in 2016.
  • There could also be oil production outage in Libya and Nigeria due to terrorist attacks. This could further boost oil prices.

Article: Playing with $100 Billion, Warren Buffett is Giant Trader of U.S. Treasury Bills, WSJ

Key Points:

  • Berkshire Hathaway has amassed a lot of cash, but Warren Buffett does not see any good acquisitions.
  • Treasury bills give him some return while protecting his liquidity.

 

 

 

Article: Chinese Regulator Seizes Anbang Insurance, Owner of Waldorf Astoria, WSJ

Key Points:

  • The insurance company and its founder have fallen out of favor with Chinese rulers.
  • Mr. Wu Xiaohui had been detained by Chinese authorities eight months back.

Article: Buffett’s Annual Letter: Berkshire Records $29 Billion Gain From Tax Law, NY Times

Key Points:

  • The tax law contributed nearly two-thirds of Berkshire’s $44.9 in net earnings for 2017.
  • The company’s book value rose by 23% in 2017 and its stock price rose by 21.9%. The S.&P. 500 climbed by 21.8%.

Article: Black Panther Again Shows its Strength, WSJ

Key Points:

  • Box Office take of $108 million for the second week.
  • Only the fourth film ever to gross $100 million on the second million.
  • Grossed $400 million in the U.S. and $704 million in rest of the world in two weeks.

Article: How Internet is Changing Life for the World’s Poorest People (Smartphone Optional), WSJ

Key Points:

  • This article debunks the notion that a smartphone is required for poor people to have access to services.
  • Millions of the poorest people cannot afford a smartphone or even know how to use a feature phone.
  • PayGo Energy Markets is delivering gas to homes via an internet-connected canister that meters out small amount of gas for cooking and charges for it.
  • World Cover is providing low-cost farm insurance to farmers in rural Africa. It connects with its customers via a handful of people in a village who have a feature phone and have the ability to read. The company uses satellite data to trigger automatic payments to the farmers.

Press Release: Smartphone, IoT, and Connected Car Fueling Rise in LTE Network Traffic, Oracle Corp.,

  • Connected cars continue to show strong network traffic momentum 9.4 million messages per second (MPS) and a CAGR of 30%
  • Voice Over LTE shows a CAGR of 22% with 62 million MPS
  • Africa has the highest CAGR of 63% but currently has one of the lower MPS of 1.8 million (2016 data)

Article: 2018 Energy Roundtable: Don’t Give Up on Oil, Barron’s

Key Points:

  • Global demand continues to exceed supply.
  • Supply side disruptions are possible in Venezuela or Nigeria.

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Things I Learned This Week – February 18th, 2018

Article: ArcelorMittal Submits Bid For India’s Essar Steel, FT

Key Points:

  • The forced sale of Essar Steel seen as a test for India’s new bankruptcy rules.
  • Essar Steel has a production capacity of 10m tonnes per annum.
  • Essar Steel invested heavily in its main plant in Hazira in Western Gujarat, only to be hit by falling prices and gas supply issues.

Article: Oracle Leaps into the Costly Cloud Arms Race, WSJ

Key Points:

  • Oracle plans to build 12 new data center regions.
  • Oracle had $2.04 billion in capital spending in the 12-months ending on Nov 30th.
  • Gartner estimates that cloud services market should total about $411.4 billion by 2020.

Article: A Powerful Mix of Solar and Batteries is Beating Natural Gas, Bloomberg Businessweek

Key Points:

  • Solar combined with battery storage is giving natural gas a run for the money.
  • Florida’s utility NextEra just added battery storage to their solar farm.
  • First Solar has won a contract from Arizona’s biggest utility to supply power during peak hours of 3 PM to 8 PM.
  • California has called on PG&E to use batteries and other non-fossil fuel resources to meet peak demand.
  • Federal Energy Regulatory Commission is set to decide on a proposed rule that would allow energy storage services to participate in wholesale markets.

California_Battery_push

Article: Demystifying Machine Learning: An Overview, Oracle Blog

Key Points:

  • Simple and easy to understand explanation for machine learning.
  • Explains the business situations where machine learning can be used.

Article: 4 Stock Picks for an Aging Bull Market, Barron’s

Key Points:

  • Financials would benefit from rising interest rates
  • Stocks never fully priced in low interest rates, because the spread between earnings yield of 5.7% (P/E ratio turned upside down) and 10-year treasury yield was 2.9%.
  • Over half-century the spread was less than 0.6%
  • So, there may be more to this bull run.
  • Alphabet (GOOGL), Lam Research (LRCX), Citigroup (C), and Cummins (CMI) look like good buys.

on-ck903_late_t_16u_20180216195115Article: Of Medals and Melting, The Economist

Key Points:

  • The Dutch haven’t seen an Hellmann Number above 100 since 1997.
  • Hellman number measures the severity of the winter.
  • Hellman number is an index which is the inverse of the sum of daily average temperatures below zero.
  • Since rivers are not freezing, it is upending their culture and endangering their dominance in skating.   20180217_euc758

Article: Bebe Delay, The Economist

Key Points:

  • The French seems to delaying having children despite great benefits from the French government.
  • If the birth rate recovers, French would surpass Germany as the most populous nation in Europe.
  • The gap between births and deaths – which demographers call the natural increase – fell to its lowest point since the 1950s.
  • 20180217_euc750