China’s going to let their currency devalue a bit and that’s a classic macro-economic news bite that the media will love to glom onto, but that probably doesn’t matter much to our overall thesis and economy and playbook and markets here in the US. Remember the same rinse-and-repeat macro-economic news cycle of panic to euphoria we’ve played out with Greece/EU crisis/Oil crash, etc, etc.
I don’t recall the last time I saw a market that had this many stocks at 52-week lows even as the broader averages are down barely 5-10% from their all-time highs. Energy and energy-related stocks remain untouchable, but there are some of our Revolution Investing stocks that I think look nibble-worthy while they’re down.
Twitter – Twitter has been terrible since they’re most recent earnings reports, as the company’s user growth has stalled and meanwhile nobody wants to bet on a company that’s CEO-less. Looking out two or three years from now, I think Twitter’s de facto standard as a news and public comment platform will lead to big revenue growth and their Periscope app, which allows users to live stream video, is a big kicker. Yesterday the company announced a deal with the NFL underscoring how the Twitter platform can be monetized as it becomes full of richer media like near-real-time video.
Whole Foods – Disappointing same store sales growth last quarter has this stock down to 52-week lows. The healthy-eating Revolution hasn’t been a great bet for us so far, but we are very early in this game of people moving from pink slime burgers to better food. Competition for organic and healthy groceries has been heating up, but Whole Foods is the de facto standard health food store and there’s still a lot of growth for the company ahead in the next decade. I’m personally going to nibble on some more WFM common stock, maybe about 1/4th-sized tranche scale in for now.
Google – The company’s going to restructure itself as a holding company, which will provide more transparency and flexibility for M&A. You’ve seen my sum-of-parts analysis for Google before:
Top of the head, back of the envelope, sum of parts for Google‘s businesses:
- Youtube $80-100BB,
- Chrome $3-5BB,
- Search: $100-150BB,
- Ad network: $150-200BB,
- Gmail: $5-10BB,
- Android: $100-150BB,
- Rest of business: $10-20BB.
I come up with a sum of parts valuation of: $450-600BB.
Google’s market cap when I wrote that back in June was $350 billion and its now at nearly $500 billion. I sold the last of my Google call options that I’d bought back earlier this year when Google was below $500 per share but Google common stock remains one of my largest personal positions.
Iconix – We bought this stock on the idea that the company was going to be monetizing their Peanuts/Charlie Brown/Snoopy assets as the new movie hits this Thanksgiving, and I have treaded very lightly and patiently since starting this position. The company warned that business isn’t as good as expected the last 90 days and that the CEO has basically been forced out. Most worrisome is that the company announced that the SEC is looking at some of their accounting reports. Accounting issues are impossible to game, as we have to have faith that the management, their board and their auditors are honest. This is my personal smallest position and I’m going to just let it sit there for now. Snoopy could be a multi-hundred million dollar franchise if the movie explodes and they merchandise it right, and the entire market cap of ICON is currently just $700 million. But the stock goes into the penalty box while the accounting questions are here.