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Roger that

Published 2024/06/19, 12:29
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Market scorecard

US markets climbed yesterday, fuelled by a surge in chipmakers that propelled stocks to another record-breaking session. The S&P 500 marked its 31st record close of the year. The whole information technology sector continued its momentum, securing an eighth consecutive gain, its longest winning streak since November.

In company news, Nvidia (NASDAQ:NVDA) closed up 3.5%, becoming the world's most valuable company, surpassing Microsoft (NASDAQ:MSFT) and extending its record-breaking surge this year to 181%. Meanwhile, Occidental Petroleum (NYSE:OXY) shares rose 1.5% after Warren Buffett's Berkshire Hathaway (NYSE:BRKa) bought about 2.9 million shares of the oil company between Thursday and Monday, spending roughly $176 million, according to an SEC filing. Finally, Zentalis Pharmaceuticals fell 50.7% after it halted clinical trials of cancer treatments due to two deaths among patients being studied.

In short, the JSE All-share closed up 3.5% on post-election euphoria, the S&P 500 tacked on another 0.25%, and the Nasdaq managed to eke out a gain of just 0.03%. We'll take it.

One thing, from Paul

Roger Federer made a speech to graduating seniors at Dartmouth College in New Hampshire that has made some waves in investment circles. In his address, he shared this interesting statistic:

"In the 1 526 singles matches I played in my career, I won almost 80% of those matches. What percentage of the points do you think I won in those matches? Only 54%. When you lose every second point, on average, you learn not to dwell on every shot. You want to become a master at overcoming hard moments. That to me is the sign of a champion."

The point is that elite investors only need a small edge, if they stick to their guns. Not every stock you own will shoot the lights out. When you make mistakes (Illumina (NASDAQ:ILMN), PayPal (NASDAQ:PYPL)) you can cut your losses. Those errors will be outweighed over time by your successes (Apple (NASDAQ:AAPL), Nvidia). Stay in the game.

Byron's beats

According to App Economy Insights, YouTube is still the king of streaming in the US. The best thing about their model is that they get most of their content for free.

Take a look at the picture below. As of April 2024, YouTube had 9.6% of the TV time market. The next biggest was Netflix (NASDAQ:NFLX) with 7.6%, Amazon (NASDAQ:AMZN) Prime with 3.2%, Hulu with 3.1%, Disney (NYSE:DIS) with 1.8% and the rest made up 13%.

Add that all together and you get 38.3% which is the percentage US TV time that is occupied by streaming. To be honest I am surprised it is not more. Maybe a lot of viewers are entrenched with cable because of live sports? Michael and Bright have both written recently about the big money being spent on live sports, mostly from the streaming companies.

TV and the selling of content is a very competitive industry, and we are happy with our current exposure to the sector through Google, Amazon, and Netflix. The consumer is the real winner here.

Michael's musings

Tesla (NASDAQ:TSLA) is one of the worst performers in the S&P 500 this year. We've had a number of clients email us, saying that they are tired of all the negative news articles about Elon Musk. The sentiment tide seems to have turned positive lately, and the stock is up 8% over the last week.

The recent vote to approve Musk's pay package spurred the shift. The lead-up to the AGM galvanised investor support for his long-term vision for Tesla. Strong shareholder support ensures that Musk will stay at the helm for the foreseeable future, which is a good thing for the company. It would be nice if he spent less time on Twitter, though.

Another boost to Tesla came from fund manager Cathy Wood of Ark Invest. Wood shot to fame when she called Tesla's initial rise, and now has a bit of a cult following. Ark Invest recently released a research note, with a share price forecast for Tesla of between $2 000 and $3 100 a share by 2029.

Tesla currently trades at about $190 a share, so the forecast is for at least a 10x return over the next five years. Wow! In their low-end forecast, Tesla would have a market cap of $7 trillion, making Musk the world's first trillionaire. Central to Ark Invest's model is the potential for Tesla to launch fully-autonomous robotaxis.

Remember that this is only a forecast, and note too that Ark Invest sold out of their Nvidia shares just before the mega-rally of the last 18 months. Tesla is a very volatile holding, but one to consider for those with a high risk tolerance.

Bright's banter

AlphaSense is in the process of buying Tegus, a Chicago-based corporate intelligence provider, for $930 million, with the deal closing in the third quarter of 2024. This move will add Tegus' extensive research platform and financial data to AlphaSense's AI-powered platform.

Founded in 2017 by brothers Mike and Tom Elnick, Tegus boasts the industry's largest and most comprehensive database of primary company data and market information, covering over 35 000 public and private firms across various sectors.

AlphaSense also raised $650 million, boosting its valuation to $4 billion. This round was co-led by BDT & MSD Partners and Viking Global Investors, and included existing backers like Goldman Sachs Alternatives and Alphabet (NASDAQ:GOOGL)'s CapitalG, plus new investors such as Alkeon Capital, Blue Owl, JP Morgan Growth Equity Partners, and SoftBank Vision Fund 2.

The only reason I know of Tegus is thanks to their aggressive advertising on literally every single finance/investing podcast.

Signing off

Asian markets are mostly higher this morning with the MSCI Asia Pacific index advancing by over 1%. Benchmarks rose in India, Hong Kong, Japan, and South Korea while mainland China slipped. Japan's exports grew more than 13.5% year-on-year; their fastest clip since late 2022 as the weak Yen boosted their value. Things like cars and chip manufacturing equipment led the gains.

Locally, furniture retailer Lewis reported a 9.8% increase in revenue and a 13.1% rise in operating profit, driven by more customers purchasing household items on credit. Meanwhile, Sanlam (JO:SLMJ) Life has agreed to acquire 60% of MultiChoice (JO:MCGJ)'s insurance division, NMS Insurance Services, for R1.2 billion in cash. This move aims to expand insurance and financial services to MultiChoice's 21 million subscribers across Africa.

Today the US is celebrating the Juneteenth holiday, so equity and bond markets are closed. The Rand is trading at around R18.03 to the US Dollar, in recognition of South Africa's market-friendly government of national unity. Thank you GNU.

Over and out.

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