Monthly Newsletter 05/17:


Topics: Quote, Portfolio Update, Portfolio Discussion, More Books, What’s your “WHY”, & Monthly Munchies.

A great monthly update as always with insightful personal notes :) I've added Modern Monopolies and The Almanack of Naval Ravikant to my reading list. Also really cool that you found the free version of the book on the web. Thanks for sharing Yegor
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$CVS Digitalization
I find $CVS digital healthcare strategy very interesting. Digital is higher ROIC for healthcare as there is less capital intensity for serving these customers.

The flip side is customers do not walk through CVS stores and buy front-of-the-store merchandise.
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$CVS Q1 Growth
$CVS Reported earnings today and presented very strong same-store sales growth...

As well as strong revenue growth in general...

The dividend growth and large share repurchases are also a nice touch.
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Digital Ad Revenue Jumped 35% in the U.S. Last Year, Biggest Gain Since 2006
So WSJ just published this interesting article about last year's ad spending, based on some new reports: https://www.wsj.com/articles/digital-ad-revenue-jumped-35-in-the-u-s-last-year-biggest-gain-since-2006-11649759401

TL;DR

  • The growth accelerated from 12% in 2020 to 35% in 2021
  • Digital Audio (Streamed music, Radio and Podcasts) grew 58% YoY to $4,9B and still makes up only 2,6% of all digital ad spend
  • Main struggle for Digital Audio advertising is a lack of measurement of just how successful the reach is -- very bullish for $SPOT which appears to have figured this out
  • The largest 10 digital publishers and platforms made up 78% of all the digital ad spend
  • E-commerce expected to drive the growth in digital channels
  • Companies like $DASH $WMT $CVS expected to benefit from their consumer data by offering that to advertisers so they can better target their customers
  • Midterm elections should also boost ad spend on streaming TV -- bullish for $ROKU $TTD $TWLO

Overall, I expect this growth to continue this year as well, as inflation weights on consumer sentiment and buying power, businesses will continue to seek data driven advertising to target the customer who's willing to spend money. Therefore I'm excited to catch that opportunity by investing into such companies who enable this.

I'm mostly thinking of $GOOGL $AMZN $MSFT $KIND $ROKU $SPOT $SNAP $TTD

Let me know down below what you think!
Monthly Newsletter 04/10:
Current Holdings: $VMD $IAC $SFM $SPOT $PYPL $LKQ $FF $OZK $CVS $WWE $HII $TWTR $DISCK $OPFI $GOOG $MITK $OPRA (from largest to lowest)

Topics: Announcement, Quote, Portfolio Update, Portfolio Discussion, More Books, Tax Season, & Monthly Munchies.

For this month I (got some courage) and decided to do two types of posts.

One regular with the usual stuff and one with an audio format in the beginning to be used as a companion while reading the post.

I always loved the idea of podcast or making videos on youtube (I actually used to make youtube videos as a teen when I played Call of Duty on Xbox with commentary) but I do not have time to trim and edit video format but when it comes to audio I think its a bit easier to manage so I gave it a go!

If you want regular format without audio you can click here

If you want the new format with audio in the beginning you can click here

Your honest feedback would mean a lot to me, but do give me a bit of a credit and some slack as this is my first attempt and I did it around 10-11pm.

Hope to get some feedback and to keep on trying it at least a few more times (unless everyone will hate it lol)

Thank you!
Awesome write up! CVS processing about a third of all US prescriptions is insane. I had no iea.

But I do know that politicians are always mentioning affordable healthcare but I don't really see that being much of a disruption to $CVS IF things started to move in that direction. It is a risk, I agree, but I think it's small one.

Also, great point you brought up about how an increase in mailing prescriptions can potentially threaten their own retail business. I guess an argument to that could be that people actually want to go pick up their prescriptions specifically to be able to grab a few other miscellaneous items in the store. Thoughts?
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$CVS Overview (Full Article on Monday!)
CVS competes in three segments: health care benefits, pharmacy services, and retail/LTC. The health care benefits segment includes Aetna insurance. While the pharmacy services segment and retail/LTC segments include filling prescriptions and the MinuteClinic respectively.

Horizontal and Vertical Integration protects CVS from competitors. CVS customers are able to come into the Minute Clinic and immediately get the needed prescriptions from the pharmacy creating a convenient one-stop-shop. Aetna insurance provides customers with cost advantages.

CVS’s scale also provides another competitive advantage. Since CVS has a ~27% market share, they are able to better negotiate prices with drug producers. They also have a pharmacy within ten miles of 85% of the US population making replication highly capital intensive.

CVS is taking steps to protect itself from mail-order competition. They offer mail orders and ~40% of CVS pharmacy revenue comes from mail orders. In other industries, the omnichannel approach has proven to be superior.

Karen Lynch, CVS’s CEO, has reinvested into the MinuteClinic, increased the dividend, and authorized a large share buyback. The MinuteClinic is a smart investment because of its high
ROIC and horizontal integration. Also, $10bn or ~7.5% of the float is remaining from share repurchase.

While CVS does have all of these strong competitive advantages, I think Wall Streets’ assumptions make sense. I believe CVS is a fairly valued stock and is worth a buy on a pullback. Subscribe here to get the full CVS article in your email on Monday!
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