Food for Thought #16 // Links🔗

This time the most interesting content I stumbled over includes: Pearson, stock options, the world in 10 years, Guy Spier, value investing, good questions for investors, …

Must read: I received a lovely email from Guy Spier. As usual, he does not hold back and shares plenty of insights. This is a character trait I truly admire and felt throughout his book (see my review). Additionally, this one email provides more referenced content than anyony could read during a weekend (even during a lockdown). So, you get a lot of Food for Thought in it.

Swen Lorenz with his newest weekly dispatch about Cevians activism directed at Pearson and the resulting investment opportunity. (if you want to become a paying member to his world-class content please use my affiliate link)

Methodology: Valuesque explains some basic techniques for Understanding Stock Options. This is an important issue since past and future employee stock options are ‘a claim on equity’ and thus lower ‘our’ equity value.

  • You may also read my take on Number of Shares Outstanding, incl. many references to Damodaran
  • Do not believe the many analysts or companies presenting their adjusted earnings before share based compensation or SBC. Afterall, if SBC is not an expense, what are they?

Klement Miller Value Partners thinks there is A Timely Opportunity in Value.

Morgan Housel has a few great questions and I did My personal QnA with Morgan Housel (collaborative) which helped me as an investor to question my #beliefs. It may be a worthwhile exercise for you too!

Marc Rubinstein discusses different forms of money or cash in The Politics of Money.

The Economist about Mexico’s outrages Coca-Cola habit, politicians fight against it might have some adverse effects on the business of Femsa.

Company news

  • SAP (-20%) slashed its sales guidance due to lockdowns which will have negative effects on its goals for cloud revenue and profits.
    • Is this a prime example for what can happen if a company, priced for perfection, does not deliver?
  • Ant Group’s IPO draw so much investor demand, that Hong Kong Monetary Authority (HKMA) had to intervene, curbing the HKD strength based on investors piling in
    • This IPO is massive! (maybe also a bit scary)
    • It could support (via Alibaba’s valuation) my small position in Softbank (9984 JP)
  • Auto insurance platform Root raised $724m, priced above the marketed range.
    • But I still feel comforable with my PGR US position
  • SES (SESG LX) strengthens its partnership with CANAL+, as it reported Oct 29th.
    • The new contract represents additional secured backlog of over € 230m and includes options for additional capacity and extensions. I like that and hope that a good profit margin is included 🙂
    • I wonder if someone knew beforehand, since SES shares rallied Wednesday in a falling market
  • Bed Bath & Beyond (BBBY) held its investor day as written in Quicky #8 on BBBY.

Many third quarter results were due

  • Gilead (GILD US) reported Q3 results. Q3 EPS beat est. but FY guidance dissappointed. It states to meet global remdesivir demand, even if demand surges in future.
    • It narrowed FY EpS guidance to $6.25-6.60, less than estimates.
      • implies only $1.70 (max) for Q4 after $2.11, 1.11, 1.68 in last three quarters
    • I added to my position on Oct 20, as written in Quicky #5 on Gilead.
  • Sberbank (SBER RU) reported record results for its Q3, beating estimates.
  • Grenke with reasuring Q3 results. I invested in Sept and enjoy the volatile ride since.
  • Shell (RDSA) reported surprisingly good Q3 results and beautiful slids as usual. But I wonder about:
    • How Shell wants to become carbon neutral by 2050, the latest?
    • Should investors take note of an oil major comparing itself on the basis of scale (markets x sites) against McDonals, Starbux (slide #19) to … become the ‘marketing platform of the future’ ?
    • Shell announced Q3 DpS of $0.1665 and annual increases of 4%, but is this dividend hike sustainable? And shareholders seem to like it (+5%)
  • Kraft Heinz (KHC US) reported better than expected Q3 results. Pandemic is a tailwind.
    • KHC raised its 2020 guidance

Best and happy investing, s4v


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