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Leandro's avatar
$134.4m follower assets
Visuals, visuals, visuals
For the last couple of months, I have been doing some visuals about a wide variety of topics. The objective is to try to simplify complex concepts.

I decided to do a post with all of the ones I have created up to now.

  1. When to sell a stock

The first visual I did (around 8 months ago) was a simplified framework on when to sell a stock.

Of course, the majority of the time it's not this easy but simplifying things always helps see the big picture. Several steps require deep knowledge of the company and the thesis.

  1. 4 steps to find worthwhile investments

Not long ago, I also shared this simple 4-step process to find worthwhile investment.

Again, it's simplified, but it's what I think about before starting (or deciding not to start) a position.

  1. Types of M&A deals and their success rates

I also shared this simple visual that should help you to think about M&A.

Many companies (especially when they reach maturity) rely on acquisitions to fuel growth, so understanding how these might play out is important.

  1. Return on Invested Capital Cheat Sheet

ROIC is one of the most important metrics to look for in any company. If not where it is today, it's important to try to predict where it might be in the future.

I prepared this cheat sheet with the relevant aspects of the metric.

  1. Sources of competitive advantage according to McKinsey

Sustainable ROIC above the cost of capital is only possible if a company enjoys a strong competitive advantage.

This framework by McKinsey should help you understand the sources of a moat.

  1. The semiconductor industry at a glance

Jumping to the semiconductor industry, I shared some visuals to simplify this complex industry.

The first one was this visual that summarized how the different segments are connected. While I was studying the industry, this is what I would've loved to see in step 0.

  1. Digging deeper into the semiconductor industry

I then decided to dig a bit further and elaborated a 3-page summary on the industry

  1. When to buy or sell a stock according to Phil Fisher

I also prepared the following graph with Phil Fisher's advice on when to buy and sell a stock.

  1. François Rochon's 10 most important lessons for investors

François Rochon writes excellent shareholder letters and in one of them he shared the 10 most important lessons for investors.

  1. Adyen one pager

Reality is that the majority of these summaries started with individual companies. I have done one-pagers for $ADYEY $APPS and $TDOC. They are not fully up to date, though

This is the one on $ADYEY, which received a reply from the company (quite impressed by that!)

  1. Digital Turbine One Pager

  1. Teladoc One Pager (no longer hold it)

This is what I have up to now! I think I will upload these more frequently, although there won't be a pre-determined index, just random thoughts when I feel like it!
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Dan Loeb and Disney
Note: I just posted an update on Disney, which you can read here

In October 2020, investor Dan Loeb of Third Point sent a letter to Bob Chapek, the CEO of The Walt Disney Company. In the letter, Loeb wrote the following (bold added for emphasis):

"We understand that a more aggressive investment strategy may pressure short-term earnings on the path to creating long-term value. Lest there be reservation about making such a trade off and any potential shareholder concerns, we highlight an observation from Warren Buffett: “companies get the shareholders they deserve.” Disney deserves growth-minded, long-term oriented investors, and we believe that a strategy centered around using Disney’s many resources to drive growth in the DTC business will further attract them..."

While Loeb implored $DIS management to seek out the "long-term oriented investors" they deserved, his actions should make one question whether he belongs in that group. As disclosed in subsequent filings, Loeb went on to sell his Disney stake; 18 months after that letter was sent, Third Point didn't own a single share in The Walt Disney Company.

This is relevant because Loeb has once again decided to invest in Disney, and he's once again pushing for strategic / financial changes that would meaningfully impact the long-term value and strategic direction of the business. Personally, as someone who has owned shares of The Walt Disney Company for many years (and with the expectation that this will not change for many years to come), I think management should engage with Loeb accordingly.

His ideas may be valid and worth considering; management should live up to the fiduciary responsibility that it has to the long-term owners of the business. That said, management should also ask themselves whether the requests of an activist investor (trader) are truly aligned with the objectives of its owners and the long-term interests of the business.

Personally, if Loeb truly believes that his proposed solutions (like spinning ESPN) are additive to the overall value of the enterprise, I think he should put his money where his mouth is.

It would greatly increase my willingness to trust Loeb if he publicly committed to maintaining his current position in the company for a meaningful amount of time (say 3-5 years), especially if his ideas are adopted. (For what it's worth, and since he likes quoting Buffett, Loeb should consider the approach Buffett took at Cap Cities, as discussed in the 1985 shareholder letter).

For management, I think the solution here is to keep focused on the task at hand. The strategy is working, and Disney is positioned to have a much more profitable business with a wider moat over time. The focus shouldn't be on pursuing actions that might provide a small pop to the benefit of short-term traders; instead, the goal should be to make decisions that will lead the company to be worth multiples of its current market cap in the decades ahead.

As a shareholder, not sure how I feel about this resurgence of interest. Whilst some of his ideas have merit, his intentions are probably slightly different than that of the LT shareholder. Great memo Alex.
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Eric Pelnik's avatar
$286.2m follower assets
Inflation goes international
Hits 10.1% in the UK

Source: Axios
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Nathan Worden's avatar
$342.2m follower assets
Prediction: Ethereum at $2,300
The Ethereum Merge should happen approximately one month from now. It sits at $1,891 as I write this.
I’m going to go out on a limb and predict that $ETH.X threads the macro environment needle and sees a meaningful run-up leading up to the merge.
This could go sideways if:
  • The market begins to believe that the Fed will raise interest rates faster than expected later in the year.
  • If technical trouble arises
But this could go great if:
  • The removal of structural sell pressure surprises short term traders and they realize all the lines in their charts need to be re-drawn because of new flow dynamics.
  • Institutions realize that there is a 5.2% real yield (not nominal) to be had by staking $ETH.X . The highest real yield in crypto.
What am I missing?
Fill in the blank:
Nathan’s prediction will be wrong if ___
Prediction:
$ETH.X will be over $2,300.00/share on 9/16/2022
49 Votes
One thing that is nice about Commonstock is that you can verifiably see how much of my portfolio is riding on this prediction: ~3%.

So not Yolo’ing but also not insignificant.
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Emmet Barta's avatar
$17.5m follower assets
My trades for BBBY on Commonstock
BIG Sale for the day almost 200$ for the day
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Retail is my money maker this year. Was banks and oil last time I tried this. Whatever the most out of favor sector is, usually ends up being my significant other🤣

Beautiful exploitation of the markets😉
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Paul Cerro's avatar
$37.9m follower assets
How Walmart took on inflation
Walmart’s latest earnings showed inflation is still making an impact but not as big as analysts expected.

$152.9 billion: Walmart, Inc.’s total revenues in Q2 2022, the company said Tuesday, up 8.4% over the previous quarter and outpacing analyst expectations. Ecommerce sales increased 12% year over year (YoY).

75%: Walmart’s food market share gains from customers earning over $100,000, according to CNBC. Inflation has impacted consumer behavior not only in grocery, which saw double-digit comparable sales growth, but also in general merchandise, which saw sales drop in apparel, electronics, and home products.

8.9%: Increase in Sam’s Club membership in Q2, reaching an all-time high. The warehouse club saw a 9.5% increase in same-store sales.

$2.53 billion: Our forecast for Walmart’s ad revenues in 2022, a 58.0% growth YoY. Global ad business grew 30% in Q2. The retailer recently added four API partners in its Walmart Connect retail media network: Quartile (ecommerce cross-channel ad platform), Sellozo (ad optimization platform), and ecommerce ad platforms Perpetua and Intentwise.

30%: The increase in Colgate-Palmolive’s new customers for its line of dorm necessities after it used Walmart’s retail media network. The campaign resulted in an 8% increase in sales and an $11.16 return on ad spend.

11%: The number of US consumers who subscribe to Walmart+, lagging behind Amazon Prime (62%), Costco Wholesale (28%), and Sam’s Club (26%). Walmart said Monday subscribers would receive Paramount+ for free, as it hopes to encourage user adoption.

44%: The percentage of US shoppers who said retailers don’t have the technological infrastructure to deal with increased or fast-changing customer demand, per Retail Insights. In order to get more insight into merchandising data, Walmart is acquiring Volt Systems. The retailer said the platform will help it forecast and optimize product assortment.

Why we care: After a rocky start, Walmart is outpacing expectations. The retailer’s reputation as a low-cost provider is bringing in new customers—and sales—during this inflationary period. Its retail media network is another bright spot: We forecast US digital retail media ad spending will reach $40.81 billion this year, more than triple its pre-pandemic total.
🙋🏼‍♂️ we’re part of the statistic. We subbed Walmart in for our local grocery chain last quarter.

We have cut out Sam’s Club visits. Still have our membership, though.
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Pat Connolly's avatar
$127m follower assets
Rethinking position sizing
New information has surfaced to make me consider reducing the size of my position in $SEDG

I entered the trade based on increased demand for their products, which remains to be true. However, the supply side of the equation was a problem in Q2. Now the heatwave in China is causing some factories to shutdown for a few days. I am unable to determine if SolarEdge's supply chain is actually effected or not but this seems like a fool me once shame on you, fool me twice shame on me situation.

Last quarter the company's margins & output were negatively effected by factors outside of their control, and now it looks like there is a risk of this occurring again. Core to my bull thesis was rising energy costs in Europe but I also failed to recognize how this could be a double edge sword for a company that has a factory in Europe. Rising input costs and potential limitations of energy use is a problem for all European manufacturers.

So to sum it up SolarEdge may once again be negatively effected by supply chain issues in China, are facing rising input costs at their European factories, and also face currency headwinds due to the EUR weakening relative to USD.

I still believe in the company long term and believe investing in inverters is the simplest method to bet on a widespread increase in demand for solar energy. It's like if you were bullish on new car sales you could bet on tire sales, inverters are that essential to the functionality of a complete solar system. $ENPH trades at a richer multiple than SolarEdge but now this premium is starting to make sense, as Enphase may be the superior instrument to bet on inverter sales.

For now I am keeping my position intact as the technicals of the chart remain solid. The company is above the 50 & 200 moving day averages but if momentum begins to fade I now have stop orders to trim my position accordingly.
I read somewhere that they’re trying to reposition some of their supply chain to Mexico. Would that adjust your thesis at all?
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StockOpine's avatar
$42.6m follower assets
What moves this stock - $PYPL
In this memo we will discuss 5 key metrics that we believe any PayPal investor/potential investor should constantly follow/monitor so as to get an insight where PayPal stands and how it performs. Please note that the below list is not exhaustive but reflects what we are closely following.

  1. Total Payment Volume growth ("TPV")

Although PayPal shares were recently punished from the slowdown in growth in the post pandemic and post eBay era it is important to see TPV growing at double digit growth rates or close to it (at least in line with e-commerce growth rates) on a y/y basis otherwise it is very likely that investors will revisit their thesis and push the stock into a further decline as it will reveal a competitive position weakness.

Source: PayPal 10K, 10Q filings, StockOpine analysis

  1. Venmo TPV and Revenue growth

Venmo is one of the key growth drivers and one of Management’s strategy priorities (along with PayPal digital wallet, Braintree and Checkout).
The recent slowdown in Venmo TPV (only 6%) is a bit worrisome, however the fact that revenues grew at +50% rates makes any concerns fade away. As Venmo impacts take rates positively we want to see both metrics increasing and we look forward to the Pay with Venmo on Amazon launch.

  1. Braintree

PayPal does not explicitly report Braintree figures, however, throughout the earnings calls they give insights on how Braintree is performing and most likely you will see a commentary on the transaction expense part as Braintree has higher cost of funding and negatively impacts margins. Don’t let this unfavorable transaction margin impact put you off, as Braintree is one of the growth drivers and the SMB and Europe spaces have attractive profitability characteristics (management comments).

  1. Engagement - Active accounts and Payment transactions per active account (“TPA”)

Management recently shifted its focus from growing the number of active accounts exponentially (previous target of 750M accounts Vs current number of 429M) to a more steady growth while achieving higher engagement. A metric that gives some insights on engagement is TPA which in the most recent quarter had a y/y growth of 12%. TPA should continue increasing as any slowdown will reveal Management’s weakness to execute on the revised strategy and could push the price down.

Source: PayPal 10K, 10Q filings, StockOpine analysis

  1. Take and expense rates and we mean all rates (total, transaction, expense etc.)

These rates faced a steep decline compared to earlier years mainly due to eBay and tougher competition. Please note that we do not expect these to return to prior levels as competition is more intense and Braintree places a downward impact on take rates and upward push on expense rates. Despite this, we want to see total take rates above or close to 2%, transaction take rates close to 1.9% and transaction expense rates close to mid 80bps.
Note that Venmo could be a tailwind for take rates and the recently announced cost optimization program could be a tailwind for transaction expenses.

Source: PayPal 10K, 10Q filings, StockOpine analysis

In our opinion, these 5 metrics could move the needle for PayPal as they impact what matters most to investors, i.e. growth, profitability etc.

A close candidate to the above list was operating margin but we believe the above are the roots of any increase/decrease in margins. Of course we follow it and we expect to see an increase given the recent cost optimization program announcement but this will (if it does) materialize in future periods.

Feel free to share your thoughts and let us know if you think a different measure would do a better job.

Disclaimer: Not a financial advice
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What are your concerns regarding major tech companies all delving into payment solutions, including their own payment buttons + low-friction integrations? Long-term, this seems like a concern. I feel like I can understand the 2 major networks ($V and $MA) better and sense they are in a substantially more defensible position, and there's less guesswork. Obv, relative valuations reflect that this is consensus, but if looking for aggregate exposure to payments, they still seem more appealing?
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ParrotStock's avatar
$275.5m follower assets
Energy Crisis
Maybe I should change my name to the “Oily Bird”! 🤣🤣

I’ve been writing a lot about Oil & Gas on CommonStock, and gotten some great feedback. So I’m putting together this larger piece on the state of Oil and Refined Products.

I attended the American Petroleum Institutes (API) “Inspection & Mechanical Integrity Summit” last week, and was able to visit with representatives from several of the major oil companies, along with a keynote from API’s Chief Economist, Dr. Dean Foreman.

This one is going out in my (free) newsletter. I hope you'll jump over and read, and come back here to leave me your thoughts.


Appreciate you guy's!

🦜
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sam stribling's avatar
$119.3m follower assets
FUBO!
Just do it a few more times for me baby c’mon!

$FUBO had its investor day today and 167M shares traded hands today. Their float is ~185M so what a wild day! With 33% short interest hope this we get a bit of a squeeze from this action.
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$COIN Earnings
Some key takeaways from reading the $COIN earnings report. I believe $COIN has had one significant positive development and two negative developments from the last earnings call. Disclosure: I remain short Coinbase.

On the positive side, Coinbase cash burn was not nearly as bad as I expected. They posted a loss of $1.1bn, but that included lots of non-cash expenses. While the non-cash expenses are “real”, it does not affect their liquidity.

Their balance sheet shows a decline in cash from $6.1bn to $5.7bn. They have done a better job in rolling in expenses than I thought they would and they lowered their guidance for expenses for the year.

On the negative side, the biggest red flag is them admitting that the “Crypto Winter” is a Coinbase problem and not a Crypto problem. Crypto industry transaction volume declined 3%, but Coinbase’s declined 30% showing a major loss in market share!

Exchange data shows daily average volume this quarter is down ~30%. This is after two straight quarters of a 30% decline. Revenue should decline even more (as the take rate continues to decline) and more costs need to be cut.
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While I am no $COIN fan I find it interesting that despite trading volume falling 30% Monthly Transacting Users only fell 2% from 9.2m to 9m in Q2.

It seems that $COIN is keeping retail users on the platform but having a hard time to actually get them to trade.

On top of that a loss of $69m from crypto investments. What a junk company.
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Neil's avatar
$37.5m follower assets
Sea Limited Earnings
  • Garena is still experiencing headwinds from the reopening, with quarterly active users down 15% year-over-year (YOY) but it is slightly up quarter over quarter (QOQ). When it comes to paying users, that number is down 39% YOY and down QOQ.
  • Shopee and Sea Money are still growing fast but are also unprofitable. This is why Garena's continued profitability is extremely important.
  • Total gross profits in Q2 grew 17% year over year to $1.1 billion, but it's down QOQ from $1.2 billion.
  • Net loss increased to $931.2 million from $433.7 million in the prior-year quarter.
  • The company previously guided for full-year GAAP revenue for e-commerce to grow 71.8% at the midpoint but has now removed that guidance due to the ever-changing macro environment.

Seems to mostly be priced in, we’ll see the opening response. You cutting, buying, holding?
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Christian's avatar
$18.6m follower assets
Next buys??
Two names I’m looking at are $RTX and $DE. If anyone wants to provide information about these names please feel free. John Deere is legit a monopoly in my eyes and it’s slowly just taking over the whole industry with its pricing power. And Raytheon makes sense to me, I want a little more exposure to defense and space and I think LMT is a little pricey for me
Both interesting companies in their own ways unfortunately $RTX has too much debt and $DE is too expensive for me
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Introducing Equity Ideas
Hey everyone! My name is Markus, and I publish Equity Ideas @ Substack. My goal with Equity Ideas is to bring in-depth equity research to Nordic and U.S. companies. Coming from Sweden, I saw a growing interest on #fintwit regarding Nordic companies and decided to start writing.


Easily convinced by @investmenttalk to join @commonstock. Hopefully, I can bring some exciting research on Nordic companies you never heard of or interesting insights into U.S. companies.
SLT Research's avatar
$17.6m follower assets
Roblox ($RBLX) - What Moves the Stock?
Roblox uniquely offers investors exposure to multiple growth megatrends, including mobile gaming, social networking, user-generated content, and digital identity, and ultimately the Metaverse.

We have analyzed the company a few months ago and what stood out is Roblox "aging-up" challenge. https://sltresearch.wixsite.com/slt-research/post/roblox
We believe that Roblox efforts to expand its TAM to older cohorts, particularly given the potential supportive network effects that come as a byproduct of the growing aged-up userbase, is key to drive steady long-term returns for investors, with significant optionality tied to several drivers, including advertising, ecommerce, and the wider Metaverse opportunity.

As per recent earnings, 13+ cohort is now making up the majority of DAUs. Unsurprisingly, the developer side of the marketplace is moving in lockstep with users, with the mix of
experiences classified as "aged up" expanding by almost 4x over the last year to 40%, up from 12% in 2020.

Roblox network effect is stronger if the userbase is aged-up. Indeed older developers are more likely to develop better and more sophisticated games, attracting older players on the platform and increasing monetization, which is attracting better developers and so on...
As a result, 13+ users spend more time on the platform quarters after quarters.

Roblox would have sufficient runway to more than double total DAUs by FY25 from aging-up alone. It would also allow the platform to keep its young users as they age through the years. Roblox loses a growth opportunity if can't retain this group as it ages and discovers more mature gaming options. Genre-diversification efforts in categories such as racing and shooting have improved the experiences for older audiences, but Roblox's blocky art style may not be attractive to such players.

To conclude, DAUs and Hours Engaged by Age are metrics you monitor carefully:
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This might be a contrarian take but I think Roblox will have no problem 'aging up' with their user-base. The question I have is:

"Is Roblox a one-generation fad?".

ie, will all Gen-Xers have fond memories and nostalgia for Roblox while the next generation doesn't get what is so great about it?

Seems like there is a generational cycle in culturally relevant apps (social media example): instagram --> snapchat --> TikTok. Seems like there's always a new platform for the next generation that takes hold and doesn't let go, but doesn't have the same appeal to following generations.
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SentinelOne - $S - Automating the $HIT out of cybersecurity
SentinelOne is set up for success with a long runway, hypergrowth, excellent execution, high sales efficiency, and being founder-led with a never-ending mission to change cybersecurity.

Why Do You Invest?
Everyone invests for a different reason. Some enjoy the educational side of it, to have a broader understanding of the world. Others enjoy the process, some want to leave wealth to their family, and some wish to compound wealth (ideally we all will).

I enjoy the process, I love the joy that studying companies brings me. But one of my longer-term goals is to generate enough yield so that I can afford not to work anymore. Or at the very least, it will grant me the freedom to be picky with work.

What is your why, and what is one of your LT goals?
At the point when I started investing, I wanted to simplify my life and set into play my long-term financial goal of saving for my future self. I realised the best way for me to do this was by buying index funds, making regular purchases through DCA and then letting time do the rest.

However, as I learned more about investing I decided to take a dip in the waters by also purchasing a few individual stocks that I had researched. I love that you can learn so much about companies with a little skin in the game.

In the next year, I want to build a diversified dividend portfolio that I am comfortable holding long-term. I want to understand how best to recognise companies that fit the bill and have a stronger grasp of the metrics that evaluate their performance. My plan is to take advantage of DRIP and benefit from the effects of compounding over time.
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Eric Pelnik's avatar
$286.2m follower assets
Housing market cools as the Fed hikes rates
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Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.