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https://x.com/i/lists/1669153613199835138?t=R0mCicxs7zfJE_yOAek4gQ&s=09
LRCX $NVDA $MSFT $CRM $VRTX $TMO $AAPL etc.
This was my Achilles Heel when I first started my investment journey in 2016. I was TOO focused on valuation & lower multiples rather than QUALITY & growth at a reasonable price.
So when you’re building your club of equities, don’t buy a bench player in place of Lionel Messi or Cristiano Ronaldo. You’d just be downgrading your team & winning less.
If you made it this far, hope this helped!
Feel free to share your starting XI 😉
#stocks #investing - Dimitry Nakhla | Babylon Capital® tweet
Dimitry Nakhla | Babylon Capital®
$BF.B more than halved since Nov 2020 📉
This is what happens when you pay 47x earnings for a consumer staple stock that’s not growing EPS at a rate that justifies an aggressive multiple
It doesn’t matter that it’s a Dividend Aristocrat selling alcoholic beverages https://t.co/VkLRS1e6tH
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Stock Analysis Compilation
Artisan Partners on Intapp $INTA US
Thesis: Intapp’s AI-powered, purpose-built software solutions position it for expansion in the professional and financial services sectors
(Extract from their Q3 letter) https://t.co/s8tAKIxWXc
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Startup Archive
Netflix founder Reed Hastings on why startups should offer severance packages
Severance packages are unusual for startups, but as Reed explains, Netflix has offered 3+ month severance packages since inception:
“It’s real money, but it’s worth it… You’re going to spend three months managing the person out anyways.”
The legal release you get in exchange for the severance package helps avoid employee lawsuits. And as Reed puts it:
“You can think of the severance payment as a bribe to your managers. It makes it easier for them to do the right thing for the company. Without [generous severance packages], managers put the employee on a performance improvement plan and then the two of them go through this excruciating dance that takes 2-4 months, and it’s just a lot worse.”
Generous severance packages are aligned with Netflix’s focus on increasing talent density over time and what they call “The Keeper Test”:
“If someone in your team announced they were leaving the company, would you fight to keep them, or would it be a relief to see them go, so that you could find a better person?”
Netflix pushes managers to ask themselves this question regularly to ensure they have the best talent.
This method may seem brutal, but it’s shared in full transparency during the hiring process. And generous severance packages make the transition easier for both parties.
Video source: @GreylockVC (2015)
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InsideArbitrage
Singular Genomics Systems $OMIC to be Taken Private by Deerfield in an All-Cash Deal :
🧬As per the terms of the merger agreement, an affiliate of Deerfield Management Company, L.P will acquire Singular Genomics for $20.00 per share in cash, representing a premium of 2.30% from the stock’s last close.
🧬The deal is expected to close in the first half of 2025.
🧬Singular Genomics had received an offer from Deerfield for $10 a share in September. The company was trading at $5.65 per share before the offer was made.
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InsideArbitrage
RT @ReutersLegal: EU antitrust regulators are set to approve US chip design software company Synopsys' $35 billion acquisition of Ansys based on the former's pledge to sell two assets, people with direct knowledge of the matter said https://t.co/XZYajXtD1d https://t.co/ZJ1IiVBLQ1
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Dimitry Nakhla | Babylon Capital®
$NVO is down -42% from its highs 📉
10-Year Rev CAGR: 10.8%
10-Year FCF CAGR: 11.8%
10-Year EPS CAGR: 14.8%
10-Year Stock CAGR: 17.3%
5-Year Rev CAGR: 17.5%
5-Year FCF CAGR: 18.7%
5-Year EPS CAGR: 22.8%
5-Year Stock CAGR: 29.6%
NTM FCF Yield: 3.4% 💵
NTM P/E: 23.06💵 https://t.co/MuLzW9qnNG
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Stock Analysis Compilation
Pender Fund on Calian Group $CGY CN
Thesis: Calian’s diversified operations and strategic capital allocation offer strong long-term growth potential amid short-term headwinds
(Extract from their Q3 letter) https://t.co/VP6FIgrAbo
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InsideArbitrage
Prosus Acquires Despegar $DESP for $1.7 Billion in Cash Deal -
🏖️Each outstanding share of Despegar will be converted into the right to receive $19.50 per share in cash, representing a 33.11% premium from the stock’s last close.
🏖️Once the transaction is complete, expected in Q2 2025, Despegar will become a private company.
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Investing visuals
What's so special about $HIMS?
I've looking into the company but fail to see what durable competitive advantage they have. Can someone enlighten me? https://t.co/OQoUid2cAo
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InsideArbitrage
Nissan and Honda $HMC sign memorandum of understanding to consider business integration -
🚗The MOU is to start discussions and considerations toward a business integration between the two companies through the establishment of a joint holding company.
🚗Smaller Mitsubishi Motors, in which Nissan is a top shareholder, was also considering joining the MOU.
🚗Nissan and Honda aim to become a world-class mobility company with sales revenue exceeding 30 trillion yen and operating profit of more than 3 trillion yen.
🚗The companies aim to wrap up talks around June 2025 and then set up a holding company by August 2026.
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Stock Analysis Compilation
RS Investments on Northern Oil and Gas $NOG US
Thesis: Northern Oil and Gas’ capital-efficient model and superior returns position it to thrive across diverse commodity price environments
(Extract from their Q3 letter) https://t.co/gph1KIhsuB
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Quiver Quantitative
JUST IN: Senator Markwayne Mullin has bought up to $250,000 of the iShares Eurozone ETF, $EZU.
It is comprised of equities from countries that use the Euro.
This is the first time we have seen a member of Congress buy it.
Mullin sits on the Senate Armed Services Committee. https://t.co/89L77ufXrr
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InsideArbitrage
$KR enters into a $5 billion accelerated share repurchase agreement (ASR) under its recently announced $7.5 billion share repurchase authorization
Final settlement under the ASR agreements is expected to occur by 3Q of Kroger's FY 2025
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Quiver Quantitative
The House has voted against the new continuing resolution:
174 Yeas
235 Nays
Chip Roy (R) said:
“To take this bill and congratulate yourself because it’s shorter in pages, but increases the debt by $5T, is asinine”
https://t.co/u7v9EN6Jqo
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Dimitry Nakhla | Babylon Capital®
After Liverpool’s exceptional match, beating Tottenham 6-3, & a brace from both @MoSalah and @LuisFDiaz19 I can’t help but re-share this FUT themed post
If you haven’t already, take a few minutes to read this and elevate your investment decisions 🎯
Attention investors ‼️ — I am SURE this post will sharpen your investing mindset and skills. Take a couple minutes to read it in full - it'll be a game-changer for your investment journey.
Yesterday I shared a poll asking if you thought $BMY was undervalued or a value trap, given its 17.32% FCF Yield.
Before I share my opinion, I believe it’s CRITICAL to emphasize the importance of being selective when building a portfolio.
Imagine you were the manager of a fútbol club (in this case Liverpool FC 😉) and you have to choose your Starting XI.
Would you add $BMY? .. More on this later.
You can see my Starting XI in the photo below.
It’s a club of exceptional businesses that have wide moats, pristine balance sheets, excellent returns on invested capital and quality revenues & earnings.
$BMY on the other hand doesn’t really fit in this club as it fails to meet these standards.
Another way to demonstrate this is if you were building a fútbol club & you could choose ANY footballer, I’m sure your club may look something like this:
Cristiano Ronaldo, Lionel Messi, Kylian Mbappe, Vinicius Jr, Jude Bellingham, Alison Becker, Virgil Van Dyke, David Alaba, Kyle Walker, Trent Alexander Arnold, & Ilkay Gundogan.
INVESTING IS NO DIFFERENT.
You have the opportunity to build a SUPERTEAM of quality businesses & nobody is forcing you to buy “subpar players” for your club.
As Warren Buffett even said:
“I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 punches—representing all the investments that you got to make in a lifetime.”
The mistake MANY investors make is NOT being SELECTIVE enough.
Why add a subpar player to your squad when you could buy Ronaldo?
You’ll become a better investor and enhance your financial welfare by focusing on buying the world’s BEST & MOST QUALITY business when they trade at a fair or better valuation. This should be your focus.
Do not let the daily noise of the market sway you into buying a subpar company just because it trades for a low multiple.
So this brings us to $BMY.
Although $BMY may “appear” undervalued due to its low multiple & high FCF Yield, it could be a value trap and does not belong in my “superteam” of companies.
In short, it lacks many of the qualities I mentioned for the other businesses & has a poor history of performance.
Just have a look at the long-term growth of $BMY Revenues, EPS, & Balance Sheet and you’ll be very unimpressed.
Sure, $BMY may “have moments of excellence” (as any footballer may have in the occasional game) with nice rallies off its lows, but this doesn’t make $BMY a consistent performer for my club.
Yes, it’s important to consider the future when investing (which isn’t even bright for $BMY at the moment). However, it doesn’t mean we should forget about the poor performances $BMY has had over the last 15 years.
I wouldn’t want to count on a player who’s been performing poorly over 15 seasons and hope that this player will finally show me moments of consistent brilliance for the next 5 seasons.
Also, we should to be wise and consider the opportunity cost of owning subpar businesses over excellent businesses over the years.
I am sure there are many investors who have owned $BMY for the last ~5 years in hopes that $BMY would eventually see it supposed “value” realized.
Meanwhile, the same investors would have been better off, owning more shares of companies like $V $MA $GOOG $META $ASML $[...]
Quiver Quantitative
Rep. Ro Khanna (D) just said:
"It is outrageous that the Department of Defense is spending $32 billion a year on consultants and the federal government $70 billion"
Khanna is one of the only congressmen who we have not seen taking corporate PAC money.
cc: @DOGE, @elonmusk https://t.co/0zUS3pf5DW
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Quiver Quantitative
RT @InsiderRadar: $FREY stock has risen another 22% this morning, and is now up over 55% since we reported this insider purchase last week https://t.co/1qu6dBD3EV
🚨BREAKING: New CFO Insider Purchase
The interim CFO of $FREY has reported the purchase of ~$900K of the company's stock, increasing his ownership stake by 421%.
The stock had fallen over 82% since its IPO in 2021.
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InsideArbitrage
First Busey Corporation $BUSE and CrossFirst Bankshares, Inc. $CFB jointly announced that both the companies' shareholders have each voted to adopt and approve their merger at the special meetings of shareholders held on December 20, 2024. https://t.co/3zrh5Q0lRV
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Stock Analysis Compilation
Royce Invest on PAR Technology $PAR US
Thesis: PAR Technology’s innovative payment solutions and SaaS model, backed by growth outside the U.S., position it for strong market share gains
(Extract from their article) https://t.co/CqiI6jOn0K
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InsideArbitrage
Nordstrom $JWN Acquired by Nordstrom Family and Liverpool in a $6.25 Billion Cash Deal -
🛍️Nordstrom common shareholders will receive $24.25 in cash for each share of Nordstrom common stock they hold, representing a discount of 1.14% from the stock’s last close.
🛍️The founding family had offered to acquire the company in September for $23 per share in cash. Reports of the family looking to take the retailer private had been making rounds since March. The company had formed a special committee in February to evaluate the proposal.
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Ahmad Jivraj
Great investment ideas are rare.
Warren Buffett's legendary investment success came from fewer than 20 key investments throughout his career.
Successful investing does not require constantly finding and acting on new opportunities.
So don't chase every apparent opportunity; instead, wait (really wait) for exceptional ones.
Easier said than done though....
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InsideArbitrage
Fund 1 Investments, which currently owns 10.6% of Destination XL $DXLG, has made a non-binding proposal to acquire all outstanding shares of Destination XL that it does not already own, offering $3.00 per share in cash.
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Startup Archive
Marc Andreessen on Mark Zuckerberg’s founder “superpower”
“There are certain fields in which you really get to see somebody’s core personality. You get to see their core attributes, their core virtues, their core vices, and their core weaknesses. And it’s really only under situations of extreme stress where you really get to see that.”
Startups is one of those fields, and Marc points to Mark Zuckerberg as someone who handles extremely stressful situations well:
“A great superpower that Mark Zuckerberg has that is probably not well-understood enough is he does not get emotionally upset in stressful situations. He is able to maintain an analytical frame of mind even when other people would be bursting into tears and hiding under the table. And I’ve seen that many, many times… I’ve been involved almost for 20 years and we’ve been through almost everything good and bad, and I have literally not once seen him raise his voice.”
Marc explains why he believes this ability to keep your cool and maintain control of your emotions is such an important quality:
“Generally the thing that happens before a company goes down is the team cracks internally. The founders turn on each other. The management team dissolves. And so a big part of it with these things is just like: Can you keep the team together? If you can keep the team together then most these companies can battle through most things. I’ve seen just as many incredible last minute saves, rescues, and turnarounds as I have screaming disasters. And so, there is reason for optimism going into even the dark times.”
Video source: @ChrisWillx (2024)
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InsideArbitrage
Hyatt $H Evaluates Strategic Options, Including Potential Acquisition of Playa Hotels $PLYA -
🛎️Hyatt entered into an exclusivity agreement with Playa Hotels & Resorts, granting Hyatt a 45-day period during which Playa Hotels agrees not to engage in discussions or negotiations with any other party.
🛎️Hyatt is exploring various strategic options for its investment in Playa Hotels. These include submitting a proposal to potentially acquire most or all of Playa Hotels’ assets or stock.
🛎️Hyatt has engaged consultants and advisors and may seek outside capital or collaborate with other parties.
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Hidden Value Gems
In my latest Investment Notes I highlight Stella Jones (TSX:SJ) - a leading producer of wooden electricity poles, growing at a double-digit rate with 17-18% EBITDA margin. Trades at 12.6x PE.
Stock is down 5.5% YTD on softer demand this year, likely temporary given huge infrastructure spending ahead.
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InsideArbitrage
$EXPE Expedia Group appoints Scott Schenkel as CFO, effective Dec 30, 2024.
Julie Whalen remains CFO until the transition.
Schenkel’s previous roles include Interim CEO (2019-2020) and CFO (2015-2019) at eBay.
Compensation
Scott Schenkel will receive an annual base salary of $1M. He will also receive a $3M signing bonus on his start date, followed by an additional $2.2M signing bonus on December 15, 2025, contingent on his continued employment.
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Startup Archive
Patrick Collison on what most startups get wrong pre-product/market fit
“The main thing that I think companies screw up at the pre-product/market fit stage is speed of iteration. If you have some kind of meaningful—albeit perhaps small—initial set of users and you’re rapidly iterating in response to their feedback and observed behavior, I think that’s a really good spot to be in… You should be doing everything you can to tighten that feedback cycle.”
Patrick believes most startups get this wrong when it comes to hiring — either they hire the wrong people or they hire too many people. Hiring isn’t just expensive financially, but it often makes you move slower. You have to onboard them, get them up to speed, and then there’s a persistent communication and alignment tax that scales quadratically with more team members.
Patrick believes the ultimate arbiter for a new hire should be, “Will we be more responsive to what we’re learning about our users given the presence of this additional person?”
Empirically the “optimally responsive” team for a pre-product/market fit startup seems to be 2-10 people who are all either building the product or talking to users.
Video source: @ycombinator (2018)
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InsideArbitrage
🚛 $FDX FedEx shares surged ~8% after hours as the logistics operator 👇👇
📦Unveils plans to ✂️ spin off FedEx Freight in a tax-free separation, forming 2 independent public companies; Expected to be executed within the next 18 months
📦CEO: “This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market. Through this process, we will unlock value for our Freight business and position FedEx to create even greater value for stockholders.”
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Dimitry Nakhla | Babylon Capital®
My favorite time to deploy capital 🧘🏽♂️
You know the saying: “Be fearful when others are greedy & greedy when others are fearful”
Warren Buffett 🗣️"
JUST IN 🚨: Extreme Fear returns to the Stock Market 👻😱 - We did it 🫡🫂 "- Barchart
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