Written Post: http://stockpickinginsights.com/investing-in-timber-vs-buying-pulp-stocks

00:00 Intro

00:12 Summary

3:00 Investing in timber: oligopoly controls the market

4:58 There is also geographical concentration…

6:43 Final remarks

11:45 Action points

Summary

• Portugal is a huge Eucalyptus Globulus producer;
• Portuguese timber investors depend on Navigator and Altri;
• Pulp makers have other dependencies, like BHKP prices and China.

Action points

• Do the companies I own depend on a few customers?
• Do the commodities I own really protect me against inflation?
• Am I blindly expecting land to protect me against inflation? If so, will it really?

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/altri-production-costs-overview

0:00 Intro

0:17 Summary

3:30 Altri production costs

7:54 Summing it up

9:05 Action points

Summary

• Altri produces mainly BHKP, most of which BEKP;
• Altri’s operational costs are ~500€/ton;
• Its operational efficiency gains are getting more and more limited.

Action points

• Is the product that my companies make a commodity?
• What’s the production cost of the commodity producers in my portfolio?
• Are gains from operational efficiencies being exhausted, slowing/eliminating future gains?

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/inditex-shipping-and-returns-analysis

00:00 Intro

00:10 Summary 

03:15 Inditex shipping and returns: Europe

07:34 Inditex shipping and returns: United Kingdom (UK)

12:30 Inditex shipping and returns: United States (US)

15:16 To sum it up

18:19 Action points

Summary

• Inditex (Zara) ships the fastest, and is the most flexible when it comes to returns;
• Nike has free shipping and return, supported by the price premium of its great brand;
• Boohoo competes well in its home country (UK) with its subscription service;
• H&M is similar to Zara, Uniqlo isn’t competitive and Shein is the typical low-cost retailer.

Action points

• Are shipments and returns important for the companies in my portfolio? If yes,do the companies I own have defensible shipment/return competitive advantages?
  are they globally competitive, or only in their home country?
  are they offering differentiated services like same-day delivery, subscriptions or point schemes?
  
• What’s the impact of shipments and returns in my company’s margins?

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/inditex-store-profitability-per-store-per-m²

0:00 Intro

0:14 Summary

1:22 Inditex store profitability on a per store basis

3:31 Inditex store profitability on a per m² basis

5:51 Inditex profitability per concept, per m²

7:37 Action points

Summary

• Inditex has an EBIT/store of 450k€, compared to H&M’s 275k€/store;
• Their revenue hovers around 5000€/m² of selling area, EBIT is 900€/m² and Net Income is 700€/m²;
• Zara’s physical profitability is healthy and it is the main Inditex brand to monitor.

Action points

• What’s the revenue per m² of space for the companies I hold with physical presence?
• Is Zara working on further strengthening its brand?

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/inditex-expansion-of-physical-stores

0:00 Intro

0:14 Summary

4:10 Inditex expansion by physical store count

8:29 Action points

Summary

• Stores play a logistics and advertising role today, being an important chess piece;
• There’s 94k potential store openings worldwide, with emphasis on China and U.S.;
• Inditex expansion potential is high because the fashion retail market is highly fragmented.

Action points

• Do physical stores play a role in the companies I own, or are they liabilities?
• What’s the physical expansion potential of the companies I own?

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/investing-is-a-zero-sum-selfish-game

0:00 Intro

0:18 Summary

2:15 Passive ownership = zero-sum

4:48 Action points

Summary

• The company you own produces new goods and services, so it isn’t a zero-sum case;
• Passive ownership is useless to everyone but yourself;
• Entrepreneurship is a direct contribution to the world, unlike stock picking.

Action points

• Do I care about contributing to the evolution of humanity?
• Are the companies that I own focused on producing goods and services?

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/mcdonalds-expansion-potential

00:00 Intro

00:15 Summary

01:59 Mcdonald’s expansion due to volume

03:32 Mcdonald’s expansion sensitivity analysis

10:01 To sum it up

Summary

• The U.S. is the benchmark of restaurants per 100K, with a value of ~4;
• China is 1/3 to 1/2 of the potential restaurant count upside;
• Almost all of the restaurant count growth comes from developing countries with low ARPU’s.

Action points

• How is MCD’s china expansion working out?
• What top line growth do I expect of MCD? Where will it come from?

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/stock-analysis-checklist-updated-version

0:00 Intro

1:20 A few quick notes

3:24 Stock analysis checklist: latest questions

Because new analyses were made since then, new questions came in too. This is an update to that checklist, and here’s the updated pdf I promised.

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Written Post: http://stockpickinginsights.com/shareholder-focused-companies-no-thanks

00:00 Intro

00:12 Summary

02:11 Facebook’s shareholder focused approach

05:47 Alphabet: shareholder focused or not?

12:14 To end…

15:22 Action points

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/bitcoin-disruption-in-financial-services

00:00 Intro

00:13 Summary

02:34 Bitcoin disruption: merchant side

07:07 Credit cards, fraud and privacy

09:04 Bye Paypal, bye Wise, bye Revolut

11:36 Bitcoin disruption via Lightning Network (Strike)

20:03 Competition is good

25:57 Action points

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/the-impact-of-dividend-in-total-returns

00:00 Intro

01:15 Summary

02:17 Impact of dividend distributions: the good and the bad

07:25 Do you want risk or return? The impact of dividend in your portfolio

10:05 Action points

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/sp-500-historical-returns-with-dividends

00:00 Intro

00:27 Should we look at historical returns with or without dividends?

01:29 Accumulating (Acc) v Distributing (Dist) ETF’s

04:15 A look at S&P 500 historical returns with dividends

05:24 What about over a 20 year period?

08:25 40 Year rolling S&P 500 CAGR

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/sp500-rolling-returns-10-20-and-40-years

0:00 Intro

0:23 Why bother as a stock picker?

1:48 S&P 500 Rolling 10 Year Returns

4:40 A bigger picture: 20 Year Returns

6:43 The ultimate boss: 40 year S&P 500 CAGR’s

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/return-on-capital-formula-conservative-approach

00:00 Intro

00:27 Return on capital by Joel Greenblatt

02:18 What’s the problem with return on capital?

04:33 So, is ROE and ROCE ok?

05:58 My return on capital proposal

09:04 To end…

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Written Post: http://stockpickinginsights.com/dcf-alternative-reinvested-capital

00:00 Intro

00:22 Quick DCF model overview

02:03 DCF alternatives that are not CAPM related

05:00 The DCF alternative is: reinvested capital

08:36 DCF alternative: assumptions and adjustments

11:12 Where is the money going?

14:04 Summing up reinvested capital model as a DCF alternative

The reinvested capital model is meant to be used in growth companies, such as FAANG stocks.

Reinvested capital model is a DCF alternative for companies that reinvest into their business, so it doesn’t make sense to use with companies that aren’t expected to grow. It uses returns on capital, so by definition it penalizes companies with lots of debt and cash (some people don’t throw cash into ROC, I conservatively do). It favours companies that reinvest back into the business.

I love it because reinvesting profits for growth is my favourite capital allocation option. It is riskier for an investor than to distribute it, but more rewarding if the company has a long-term competitive advantage. An exception to this is reinvesting heavily into non-core businesses.

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Written Post: http://stockpickinginsights.com/spotify-churn-rate-39-hurdle

00:00 Intro

00:12 Spotify doesn’t fully disclose churn rates

03:41 Spotify churn rate sensitivity analysis

06:53 Final remarks

Spotify churn rates are just one of the forces that move revenues, although a concerning one: a 39% hurdle. If these assumptions are right, they are 10 to 20% short in revenue growth. 

Spotify: https://open.spotify.com/show/2uFjecBDw6KDEYA6Zbk7ah?si=aOPLtnfPRnuhdaEF_eMeZw&nd=1

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Written Post: http://stockpickinginsights.com/conservative-investing-measures-for-stock-pickers

00:00 Intro

00:24 Basic guidelines for conservative investing

01:58 Accounting for inflation in conservative investing

04:36 Getting specific

07:25 Normalize some things, but not others

10:04 Summing it up

Conservative investing is playing on the safer side and widening the margin of safety. The main focus is to protect purchasing power. There are quantiative measures you can do to make valutaions more conservative such as normalizing. Qualitatively, a conservative investor pays less for what he/she doesn’t know and vice-versa.

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Written Post: http://stockpickinginsights.com/twitter-mdau-doesnt-tell-the-whole-story

0:00 Intro

1:36 From Twitter MAU to Twitter mDAU: History

6:25 Can mDAU substitute MAU?

We will take a look at part of Twitter’s user growth history by analysing Twitter mDAU and MAU. The objective is to analyse the company as a potential investment.

One of the most important metrics in a social media advertising company is user growth. User growth allows the same ad space to reach more people, as explained when Facebook was analysed from a quantiative standpoint. It also increases network effects due to the volume of content created and data collected.

Rising mDAU is great because it means that users are engaging more with the platform than before. But it doesn’t necessarily mean that the total number of users accessing Twitter is growing (MAU). We can have rising mDAU with decreasing MAU, which is comparable to cost reductions in a business: how much more can you squeeze?

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Written Post: http://stockpickinginsights.com/index...

0:00 Intro

1:04 Why aren’t you buying the stock?

2:56 Indexing as an alternative 

8:45 Conclusion 

Indexing can be an alternative for a stock picker with parked cash. Is this a good idea?

Depending on the type of investor you are, you may be holding a hot potato (cash). And indexing may not help if you usually buy large-cap growth stocks, based on the historical performance of S&P 500. Bonds are not a good place to be either, and all these issues combined bid stock prices higher.

Are you confortable holding cash? What alternatives do you use to stock picking?

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Written Post: http://stockpickinginsights.com/indit... 

00:00 Intro

00:19 Where does Inditex growth in profits come from?

05:06 Volume as a revenue source

09:28 Pricing and pricing power

14:04 Inditex growth from product mix

17:16 Inditex growth in profit from cost reductions

18:36 Headcount savings

23:45 Profiting for a longer period

29:32 Putting it all together

Today we are going to estimate Inditex growth rates based on future profit streams. It will be heavier on the quantitative side, and I recommend you to check the qualitative analysis first.

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