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@paulcerro
Paul Cerro
$42M follower assets
PM @ Cedar Grove Capital | Multi-strategy investment fund | Thematic investing | Ex IB @MerrillLynch | Disclaimer: Not investment advice www.cedargrovecm.com
40 following1,781 followers
Spec Sit Update: Latch $LTCH Making A Deal
Since our initial special situation post on $LTCH, the company has rallied ~47%

Just last week, Latch announced an acquisition of Ring founder Jamie Siminoff's company, Honest Day's Work

See what we think this deal means for shareholders going forward

www.cedargrovecm.com
Spec Sit Update: Latch $LTCH Making A Deal
Why this recent M&A deal suggests that LTCH has a lot more room to run
Spec Sit Update: Latch $LTCH Making A Deal

Overstock CEO says customers are using BNPL for purchases as low as $10
  • BNPL purchases had a “slight uptick” lately to make up 2%-3% of Overstock’s sales.
  • They are most popular with younger, tech-savvy customers.
  • Overstock customers are part of a larger trend of using BNPL to fund smaller purchases.

BNPL purchases can be for low amounts
BNPL purchases account for a small number of total sales, just 2% to 3%, Johnson told Digital Commerce 360. He said there’s been a “slight uptick” recently, though they’re still a small part of the business overall. Overstock uses Swedish payment service Klarna to facilitate those sales.

Customers who do choose to use BNPL services are mostly buying less expensive items from Overstock’s catalog.

Average products purchased with Klarna range between $10 and $400, he said. This is a wide range that encompasses Overstock’s average order value of $215 in the fourth quarter of 2022, and notably includes items priced far lower than that AOV. For example, a small throw pillow priced at $25.19 can be purchased through four payments of $6.30 over six weeks.

The trend is bigger than Overstock
Overstock is an example of a larger ecommerce trend. More consumers turned to BNPL services in 2022 than in previous years, according to Adobe’s data. Online purchases made with BNPL were up 14% in 2022 over 2021, and revenue from BNPL purchases grew 27% year over year. Adobe did not share the total portion of online orders that use BNPL.

BNPL trends are shifting in 2023 so far, according to early data. In January and February 2023, BNPL use increased 10% year over year, while revenue decreased 19% over the same period. This shows that shoppers are using payment plans to fund lower-priced purchases, like Overstock reported.

Furniture sales and groceries were the two categories where consumers used BNPL more so far in 2023 than in 2022, Adobe found. BNPL furniture purchases were up 38% in the first two months of the year.

“The strong online growth of home furnishing purchasing is expected to bolster buy-now-pay-later adoption, given the higher ticket prices in this category,” Adobe Digital Insights lead analyst Vivek Pandya said in a press release.
Digital Commerce 360
Consumers are buying more groceries online and using BNPL for purchases, Adobe data finds
Adobe's retail data found ecommerce grocery spending was up over 10% in 2022, and in 2023 consumers are using BNPL more for groceries.
Consumers are buying more groceries online and using BNPL for purchases, Adobe data finds

🚨 Quick Poll: Should We Bring Back Weekly Recaps?
Hi everyone, this is a super quick post that just needs 60 seconds of your time. I’m thinking about bringing back our Consumer and Retail Weekly Recaps but wanted to get a pulse on if people found it valuable/want it back.

This would be for all subscribers, not just paid as an FYI.

If you have 5 seconds, please select your choice below. If you need a refresher, you can click the link to our last edition of the weekly recap for a refresher.

www.cedargrovecm.com
🚨 Quick Poll: Should We Bring Back Weekly Recaps?
Hi everyone, this is a super quick post that just needs 60 seconds of your time. I’m thinking about bringing back our Consumer and Retail Weekly Recaps but wanted to get a pulse on if people found it valuable/want it back.
🚨 Quick Poll: Should We Bring Back Weekly Recaps?

Joey Hirendernath
@joeyhirendernathMay 11
Voted ✅
+ 1 comment
CPG brands seize on the high-inflation environment to boost profits
The trend: Consumer packaged goods (CPG) companies are using the inflationary environment as cover to increase prices beyond their costs, boosting their profit margins.

Prices keep rising. This is despite the fact that many of the issues that led CPG companies to hike prices, including supply chain disruptions caused by the pandemic, surging energy costs, and raw material shortages, have subsided.

That has helped inflation remain high. Prices for cereal and bakery products rose 13.6% year-over-year in March, for example, and snacks were up 9.5%, per the US Commerce Department.

Yet, consumers, for the most part, have been unusually willing to pay for name brands. That trend drove companies such as Kellogg, PepsiCo, and Hershey to boost their outlooks for the remainder of the year even as many of them saw their volumes decline.

What’s going on: A survey by Kroger-owned 84.51° found that 27% of consumers are more loyal to their preferred brand than last year. However, only 5% define loyalty as exclusively buying a single brand and 26% say that while they have a “preferred” brand they’re willing to try something else.

The survey also flashed a clear warning sign: Sixty-two percent of consumers prioritize “good value for money” when buying grocery or household items, which suggests companies need to tread carefully as they continue to pull the price hike lever.

More than a third, 36%, of grocery shoppers have traded down to cheaper alternatives of the same products, such as store brands, per a new PYMNTS survey, and 47% have switched to retailers that offer better prices.

Many CPG brands saw some declines in sales volume in the wake of the price increases. For example, Kraft Heinz’s volumes fell 5.3% YoY in Q1 and Procter & Gamble dipped 3%.

Finely targeting consumers: To minimize the number of consumers who trade down, CPG companies are turning to sophisticated data analytics tools to finely target existing customers and attract new ones.

Kraft Heinz, for example, is using tools developed in-house to produce more effective promotional events that are likely to resonate with specific consumer segments based on their past behaviors or actions, said CEO Carlos Abrams-Rivera, during the company’s earnings call.

Hershey is paying close attention to any shifts in consumer behavior so that it can quickly optimize “media and our in-store activations,” said Melissa Poole, Hershey vice president, investor relations.

The big takeaway: With even loyal consumers increasingly willing to try another brand’s products, CPG brands need to tread carefully as they increase prices.
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Joey Hirendernath
@joeyhirendernathMay 11
Reassuring as a holder to know that Hershey is paying close attention to any shifts in consumer behavior so that it can quickly optimize $HSY
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Housing taking a beating in Q1
In one quarter, the median price of a house sold in the U.S. has dropped 8.9%.

Where's the bottom

?
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Nathan Worden
@nathanwordenMay 9
Interesting— a one off data point I have observed is that in Dallas Texas, housing prices a have already started to rebound.
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Portfolio Update #4 for Cedar Grove Capital Management
Just published our monthly update for CGC.

Since our Q1’23 update, we have

  • Added 3 net new positions
  • Resized 6 positions ⬆️
  • Exited 2 positions
  • Traded 2 positions

We also gave two updates in the beginning around the $TRNR IPO and the $MSFT / $ATVI trade.

www.cedargrovecm.com
CGC Portfolio Position Update #4
Changes made to our portfolio as of 05.05.2023
CGC Portfolio Position Update #4

Retail media ad spend will double by 2027
Retail media isn’t a passing trend. Advertisers are spending more on retail media due to its ability to target consumers effectively and push them closer to the point of purchase. In an advertising landscape devoid of clear data, expect marketers to double down on retail media.
post media

Joshua Simka
@tomatoMay 5
Growth in CTV ad spend is such an impressive story that retail media can get overlooked. Retail media is on track to overtake social soon enough!
+ 2 comments
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