Weekly Update: 2/21/21
Bitcoin still bitcoining, Match Group, chips are the new oil, Farfetch & AMBUSH, Hayden Capital up 222% in 2020, Shopify, Ferrari, WildBrain investment thesis, Klutch Sports
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🔍 Tickers mentioned: BTC, MTCH, BMBL, CNQ, CVX, COP, PDCE, PXD, FTCH, LVMUY, PPRUY, SHOP, RACE, WLDBF
Meme of the week
Asset inflation in general is running rampant. It’s not a huge surprise, given central banks have printed trillions in fiat currency since COVID hit. Will we see BTC trade at $100-200k+ before this cycle’s inevitable crash?
📊 Charts of the week
Dating apps in the age of corona
Bumble’s IPO garnered a lot of spotlight in recent weeks, but this bubble chart illustrates Match Group’s unrivaled scale. Also, Match just announced its decision to acquire Hyperconnect, a leading social discovery and video technology company based in South Korea.
Semiconductor chips = the new oil?
Shouts to @FoolAllTheTime for sharing this. Click here for the full report from Deloitte.
📚 Good reads
Forbes — Billionaire Names Oil Stocks He Calls ‘The Investment Opportunity Of My Career’ (link)
Probably a hyperbolic headline and I know next to nothing about oil and exploration & production stocks, but this was an insightful read. TLDR for those in a rush:
Robb Report — How José Neves Became the Most Powerful Man in Fashion (link)
Arguably one of the best profiles I’ve read on Farfetch and its CEO, José Neves. Apparently, mans is Buddhist by philosophy, taught himself how to build dynamic user interfaces on early computers as an 8-year old, and ran a multi-brand boutique that won the British Fashion Award for Retailer of the Year in 2006. Bold quote from the article:
[Carmen Busquets, a founding investor in Net-a-Porter and a businesswoman dubbed the fairy godmother of e-commerce] doesn’t mince words: “I think [Farfetch] can be bigger than LVMH and Kering. No one else at the moment understands the luxury industry better than José.”
Dazed — How AMBUSH’s Yoon crafts a pop culture-defining career (link)
AMBUSH—a New Guards Group brand under the Farfetch umbrella—has been on quite the run when it comes to collabs, most recently linking with LVMH-owned Moët & Chandon for the brand’s first bottle redesign since its release in 1869. I’d like to see what the financials look like, but it feels like NGG is pushing for AMBUSH to become its undisputed #2 brand behind Off-White. Seeing as I’m a Farfetch shareholder and Yoon (AMBUSH founder) has ties to Seattle, I’m a big fan of the brand.
Hayden Capital — Hayden Capital Quarterly Letter 2020 Q4 (link)
Fresh off a 222% return for 2020, Hayden Capital’s letter is well worth a read. They have a unique portfolio, as it’s 59% invested in companies operating in Asia, 15% in an Australian company, 24% in North American companies, and a residual portion in cash.
Ben Evans — Shopify (link)
Last week, Shopify reported that consumers spent a total of $120bn on its platform, almost exactly double the figure from 2019. Ben breaks down three tech and e-commerce trends illustrated by Shopify’s success thus far: “No-one can compete with Amazon”, “Wasn’t this already solved?”, and going direct.
Ensemble Capital — Ferrari: a rare company that can turn away customers (link)
During Ensemble’s fourth quarter portfolio update, they profiled portfolio holding Ferrari (ticker: RACE). The above link includes a replay of their commentary on Ferrari from their quarterly portfolio update webinar and an excerpt from their quarterly letter.
In the webinar, Ensemble’s Arif Karim spoke about his experience attending an exclusive 2018 event where Ferrari premiered the limited-edition Monza SP1 and SP2 models. Ferrari invited their best customers to the launch event and gave them the opportunity to enter the bidding process to pre-order an SP1 or SP2. There was so much competition amongst customers that they were willing to sign up without even knowing the exact final pricing on the car (they had an idea it’d be $1-1.2 million give or take a couple hundred thousand)!
Ferrari ended up pre-selling all ~500 units and it was later reported that the price was ~$2 million per car. This illustrates their customers’ legitimate price insensitivity and Ferrari’s Veblen good status.
Here’s the link to Ensemble’s original report on the Monza customer event, written in January 2019. Disclosure: I recently opened a position in RACE after the stock sold off following the FY20 earnings release.
🎧 Press play
Yet Another Value Podcast — Joe Boskovich on WildBrain $WLDBF
Joe Boskovich, a partner at Old West Investment Management, dives deep into his investment thesis on WildBrian (WLDBF), including why he thinks Apple could drive the Peanuts brand to the next level and how WildBrain Spark could be a huge growth story.
Joe's Twitter: https://twitter.com/boskovic64
Old West Investment website: https://www.oldwestim.com/pressChapters
0:00 Intro
2:10 Quick discussion of IDT and their spins
5:55 WildBrain investment thesis overview
21:30 Devil's Advocate: Haven't these franchises been passed around a lot?
35:00 Could the Apple partnership get the Peanuts brand growing again?
46:35 WildBrain Spark: just another YouTube channel, or real growth asset?
1:00:45 How does this compare to LGF's valuation?
1:10:55 Quantifying WildBrain's upside ~3 years out
1:19:30 Bonus point: could WildBrain go D2C?
I thought this was a compelling pitch on an underfollowed Canadian small cap with a great management team, powerful secular tailwinds, and substantial upside. If you prefer the investment thesis in written form, click here (scroll to page 3).
Invest Like the Best — Matt Mullenweg - The Past, Present, and Future of the Internet
Matt Mullenweg is the co-founder and CEO of Automattic, the company on top of the open-source project WordPress. We cover the state of the internet, the symbiotic relationship between open source and proprietary projects, and how the best companies are master world builders.
Good interview with Matt Mullenweg, an Internet and remote work OG.
Topics discussed: early Internet days, centralization vs decentralization as a symbiotic relationship, new challenges of the Internet today, remote work, lessons from Microsoft and Amazon, platforms, Wix vs. Shopify, the future of interconnectivity via the Internet. Show notes and transcript: link.
📺 Video of the week
Bloomberg Quicktake — How Rich Paul, Fueled by LeBron, Built a Billion-Dollar Empire
Klutch Sports founder Rich Paul went from selling jerseys out of his trunk to representing the biggest names in sports. He’s changed how athletes view their careers while upending an industry.
“The dents in a man’s armor show that he’s battle-tested” (Rich Paul). Against all odds, Rich Paul and LeBron built Klutch Sports into a billion-dollar empire that’s upending the sports and media industries. How can anyone root against these guys?
Disclosure: None of this is investment advice. I own BTC, MTCH, CNQ, FTCH, LVMUY, SHOP, and RACE shares.
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