Optimal Portfolio Positioning In Q4
Before the bulls dump a cement mixer full of concrete onto the lurid bearish arguments being carelessly bandied about since 2019 kicked off, it's time to review optimal portfolio positioning moving forward. To be clear, apart from the frustrating short-term fluctuations that have more than achieved the markets intent to fry the brains of participants, the 2900 range we have been fluctuating in for some months now is as good a buying opportunity as late-December when Zenolytics was begging investors to load up on technology while ALL of Wall Street was purchasing a permanent plot in the market cemetery for the current secular bull market. Let's review what has happened in 2019: The S&P is up 20% The SOX is up 40% Home construction etf ITB is up 46% QE4 has kicked off, meaning that the Fed has the markets back in a big way and it's not planning on backing off Long-term rates are as accommodative as when QE1 kicked off in 2009 The S&P has been consolidating near all-time highs in as a brilliant a bullish range as possible Pessimism by some measures is the same as during the 2008/2009 crisis Money markets are at record cash levels, meaning there are latent bids galore out there that will come into the market with each successive new high All the meanwhile, the favorite topic remains recession and all the rubbish arguments that have accompanied recessionary fervor since the middle of last year. That's right....nearly 18 months of recessionary arguments. All the meanwhile the markets are cow tipping their way up to new highs, telling investors a completely contradictory story to what the media and a majority of Wall Street analysts are selling. You can take advantage of a market that is screaming from rooftops to embrace market risk in two ways: Sell short safe haven assets, including bonds (we are short), gold (we are short), bitcoin, consumer defensive sectors Go long risk: Semis (we are long), SaaS (we are long), banks (we are long), anything having to do with a mortgage (we are long), anything having to do with building a house, anything having to do with non-recessionary prosperity Positioning for Q4 is simply a matter of allocating away from consensus, media and institutional led fear into what has been and will continue to work in 2019 and well beyond. ...
GRUB Is Set To Be THE Story Of The Second Half With A Price Target Of $150
It wasn't that long ago that Zenolytics put out a note detailing how Zillow had the potential to be a great first half story given its track record of outperformance during the first half of nearly every year in its existence. The stock didn't disappoint, creating a gain in the 40% range during the first half of 2019. As we turn our attention to the second half of 2019, with every intention of replicating Zillow's results with another big swing type of opportunity, GRUB has popped on the radar in a big way. Well, let's be clear, GRUB has been on the radar since it went public some years ago. The current pullback is not something that was forecast by any stretch of the imagination. It is an opportunity, however, to take advantage of the fear related to the massive turbulence that is taking place in food delivery presently. The turbulence in GRUB's space has been related to a well funded group of competitors making life for the only profitable player in the space (GRUB) difficult. This has led to compressed margins and declining net income as GRUB has had to grab its WuTang Sword to drive back the oncoming swarm. All the meanwhile, due to the various incentives competitors such as DoorDash and Postmates are offering, which basically equates to free food in some circumstances, the competition is picking up market share. To be sure, DoorDash now has greater overall market share than GRUB for the first time ever. All the meanwhile, DoorDash is getting late round funding at a $13 billion valuation. GRUB is currently trading at a $7 billion market cap for a relative comparison. Why step into this seemingly crowded market with GRUB? Total addressable market here is substantial. To date, we are only seeing 5% saturation in the restaurant digital delivery space. Either GRUB is terribly undervalued or venture money is insane for valuing DoorDash at a near 100% premium to GRUB. Highly likely its the former. Management at GRUB is terrific. The CEO is the original founder, having grinded from near nothing into a company with a billion plus in revenue. He recently purchased a million dollars worth of stock in the open market. The chief product officer of the company is a former Amazon executive with a vast amount of experience delivering for consumers as AMZN's head of consumable customer experience. GRUB possesses an end to end solution for restaurants wanting to enter the digital space, with everything from customer relationship management, reward programs and an end to end digital presence. The 95% of restaurant sales that aren't online is the target...
The Bullish Nature Of The Blackstone/KKR Connection
KKR has been discussed here extensively over the years. In 2018, Zenolytics described KKR as a "long term compounder." Most recently, certain dynamics on both a macro and micro basis forced further discussion of the potential for the investment, as KKR was recommended again for conservative portfolios. One of the dynamics that will continue to fuel KKR on the upside in the near to intermediate term is that BX (Blackstone) continues to ride a wave of investor driven fury to the upside following news that they are converting from a partnership to a corporate structure. This has numerous advantages for Blackstone, both tax related and otherwise. However, one of the key advantages when it comes to share price is that conversion to a corporate structure allows for all kinds of institutional participation that wouldn't otherwise be possible when being a K-1 totting partnership. Blackstone has ridden the wave of new investor participation to what is commonly known on Wall Street as a "value unlocking" appreciation in share price. This value unlock in shares of Blackstone, which was terrifically undervalued prior to the conversion, has no end in sight as the piling into private equity leaders who are collecting fees from return hungry investors worldwide is only at mid-stride presently. To be sure, private equity has a special place in the current economy with low rates, return hungry investors and deals being flipped back and forth in as fluid a manner as anytime over the past decade. Bringing us to KKR. The boys over at Kohlberg, Kravis, Roberts & Co. benefit not just from the favorable economic landscape for private equity, but the lustful manner in which investors are chasing its primary rival Blackstone. That lust will naturally spill over to shares of KKR. In fact, they already have, as KKR shares hit a 10 month high yesterday. Perhaps more importantly, the multiple factors working in favor of private equity here with the added bonus of Blackstone suddenly being a favorite among investors creates a margin of safety in KKR that only further bolsters its positive attributes as an investment in the financial space. Margin of safety.... Check. Momentum in the sector.... Check. Outstanding fundamental backdrop.... Check. KKR remains a buy with a near-term target of $30. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of...
AMD Becomes A Buy Following 10% Pullback, With A $41 Price Target
It has been a little over a month since Zenolytics became boisterous about the prospects of AMD moving forward. The first note issued when the stock was trading in the $27 range, put an initial price target of $34 on the stock, seeing a test of that price level as being imminent. Shortly thereafter, on May 28th, Zenolytics once again went over the bubbling nature of AMD's stock price on the heels of new product announcements by the CEO of AMD at the Computex Conference, reiterating our $34 price target. The price target was met on June 10th, with a high of $34.30, followed by what has been a 10% plus slide since then. AMD's weakness in recent weeks has been a sympathy play on the overall weakness in the semiconductor index and the wobbly nature of the markets, in general. Zenolytics believes that secured footing for the markets should result in leadership qualities to emerge for names that have distinct advantages over their peers. AMD's advancements and advantages in the current semiconductor product cycle have created a natural leadership role for the company that will likely remain intact for the remainder of 2019. As a result, Zenolytics believes that the current 10% pullback represents a new buying opportunity for AMD following our earlier recommendation to exit at $34. With the productive nature of the pullback from a technical perspective and the aforementioned fundamental advancements, Zenolytics has a new price target of $41 for AMD over the intermediate term. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or...
To Understand Why SNAP Will Keep Rising Investors Need To Understand This
Things should have gone a lot differently for shares of SNAP following a much vaunted IPO. After all, the company was touted as the next social media darling. It's CEO was touted as a cooler version Mark Zuckerberg. And perhaps most importantly, its product is ingrained in the fabric of teenage society like MTV in the 90s. SNAP as a company, however, screwed up somewhat badly. They went public before having a cogent means of monetizing their user base. Their advertising model simply didn't work. They pushed through a rushed redesign that didn't go over well with their users. There was a ton of turnover at the executive level. Increasing cash burn became an issue and the stock sold off to the 2018 lows in the $4 range. Investors need to understand that the SNAP of today is the company that should have IPO'd in March of 2017. Their advertising product is now functioning like it should have been in 2017. Advertisers are able to take advantage of the fact that SNAP reaches 90% of 13 to 24 year olds in a multitude of new and creative ways. The company is also taking control of costs at the corporate level, which was always a complaint of current and prospective investors. Additionally, the company has been increasing offerings such as introducing games and significant enhancements to its already substantial augmented reality product. The opening tick on SNAP when it IPO'd in March 2017 was $24. In the first iteration of SNAP's business model the $24 price only functioned as an attractive exit for insiders. In the current version of their business model that $24 price should function as a goal post for investors to where SNAP's stock is headed. When Zenolytics originally profiled SNAP last month when it was $11 per share the $24 IPO price was one of the factors that caused our price target to be 100% higher than the price back then. The analyst community is just now catching on as today's upgraded target on SNAP by BTIG analyst Rich Greenfield to $20 is the street high target, meaning that all of the street's price targets are not quite high enough. BTIG in today's report says "too many investors are ignoring Snap's recovery, which was driven by the overpromising/missed expectation cycle of the first two years after the IPO." Exactly right. Zenolytics continues to see SNAP as a $22 stock and it may get to that point a lot faster than investors think. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes...
What Just Happened To AMD and When Does It Deserve Another Look?
A little timeline before we get to the entree. Zenolytics originally suggested investors take a look at AMD in mid-May in a note titled Zenolytics Goes Bullish On AMD, citing the upcoming Computex Conference as an immediate catalyst to the stock price. AMD price at the time: $27.50 The next note titled AMD New Product Announcement Sets Stage For $34 Stock Price came out shortly after the Computex Conference delivered the expected melodious message to investors with analysts tripping over themselves to deliver backup vocals to the CEO who announced a number of new product offerings that lit a fire under the stock price. AMD price at the time: $29 This past Monday AMD hit a high of $34.30. A high that remains in place to this day, hitting our $34 price target almost exactly causing this Tweet to be delivered in a timely manner. Since Monday, June 10th AMD has declined 11.50% as the semiconductor sector has unraveled mostly due to Broadcom's woes, which Zenolytics believes are completely isolated in nature. The decline in AMD, completely based on sympathetic algorithms that only observe "semiconductors bad" and decide to blanket the entire sector with sells, should be taken advantage of in the case of AMD and likely a handful of other names. There is a turning point coming for AMD that will continue to deliver separation between the company and the rest of the semiconductor sector. AMD is not Broadcom. AMD is not Intel. AMD is a company that has evolved into a manufacturer with top flight products aimed at high growth industries such as gaming and mobile all coming in at attractive price points. Incumbents like Intel are beginning to fall behind in the product race, allowing AMD a substantial window to create earnings momentum over the next few quarters. While it is likely still early to reinitiate a position in AMD, the time is quickly approaching. Eyes wide open. Zenolytics now offers Turning Points and ETF Pro premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is...
Here Is The Bottomline With Zillow At This Point In Their Business Cycle
Let's back up a little bit before we proceed. In case you've been living in a dumpster, Zillow announced earlier this year that they were fully transitioning their business model to Ibuying, which basically means they are now a market maker for homes in certain geographic regions. At first blush the news of Zillow moving into a capital intensive business that translated into potentially tens of thousands of homes sitting on their balance sheet was greeted with a great deal of trepidation. Nowhere was the reluctance to participate in this "Uber of real estate" more present than long-time institutional shareholders who were happy with the capital light business of getting money from realtors for having their listings appear on Zillow's website. Q4 earnings were announced by Zillow in February. The market initially boosted the stock up to the mid-40s range mostly on elation over stud-muffin tech entrepreneur Rich Barton coming back into the mix as CEO. In the weeks and months following their Q4 report the stock steadily sank from the mid-40s to the low-30s. In March, Zenolytics put out a note detailing how Zillow had been one of the best performing stocks in the first half of the year for every year going back to their IPO aptly titled, "There Are Few Things As Reliable As Zillow Outperforming During The First Half of Any Year." After releasing Q1 earnings earlier in May everything has suddenly changed. Investors are suddenly eager to participate in Zillow's growth. The losses created as a result of Zillow Homes are acceptable as long as revenues keep growing at a rapid (greater than 50% annualized) clip. Here is why this change in attitude among investors is so bullish for the stock: Investors have accepted the IBuying or Zillow Homes model Investors have accepted that the Zillow Homes model comes with sequentially increasing losses Zillow simply has to accelerate the pace of their home buying in order to create greater revenue growth With respect to point #3, this isn't building a car or having the marketplace accept the newest release of your software to gain revenues. This is telling a guy in Phoenix that I'll give you $300,000 for your home in a week if you want to sell it to me. Nothing created. Very little man power. A relatively simple transaction. And Zillow has all the credit and cash they want to effect such transactions. Never mind the fact that Zillow is the first destination (and it's not even close) for those seeking to effect a purchase or sale of a home. For that reason, they can continue an attractive level of growth in...
Zenolytics Sees Upside of 100% in SNAP Shares From Current Levels
Zenolytics is recommending shares of SNAP for aggressive portfolios with an intermediate to long-term time horizon. Initial price target on the shares is $22. SNAP's problems post-IPO had everything to do with the fact that while company is extremely popular among younger individuals, it didn't have in its possession a cogent pathway towards gaining revenue from advertising. Initial plans were scatter-brained and poorly executed. This lack of vision led to a precipitous decline of greater than 80% from 2017 to the end 2018 in the share price post-IPO. Recently, however, the company has been executing on an ad strategy to its young audience. SNAP reaches 90% of 13 to 24 year olds in the U.S., putting it in a leading position among advertisers who want to reach this audience. A recent report by Statista show that Generation Z users rate SNAP as their favorite destination with Instagram a close second. In a perfect world, SNAP should have waited for their traction and consistency in advertising to reach present levels prior to issuing shares to the public. The company's lack of patience in going public is an opportunity for new investors. Among the many improvements, SNAP has tweaked its Android offering recently, allowing previously disgruntled advertisers to come back to the company. There has also been a broad diversification of their social media offerings, focused on gaming and ecommerce, allowing the company to greater leverage its massive user base. Some highlights from the recent conference call: CEO Evan Spiegel: “As of March, our ads can now reach more 13 to 34 year olds than Instagram in the United States. Our business generated revenues of $320 million in Q1, an increase of 39% year-over-year and our year-over-year revenue growth increased by three percentage points versus the prior quarter. Our adjusted EBITDA loss in Q1 was $123 million, representing a 43% improvement year-over-year. This is the second consecutive quarter, where more than 100% of our incremental year-over-year revenue flowed through to our bottom line.” CEO Evan Spiegel: “As of the end of Q1, our new Android application is available to everyone. Compared to the prior version it is 25% smaller, opens 20% faster on average, and is modularized to allow for efficient ongoing innovation. On some of the lowest-performing devices, this resulted in a 6% increase in the number of people sending Snaps, within the first week of upgrading to the new Android build.” CEO Evan Spiegel: “We recently launched Snap Games, which allows our community to play high quality mobile games with their friends in real-time through our chat service. This was the result of more than two years of investment...
AMD New Product Announcement Sets Stage For $34 Price Target
On May 17th, Zenolytics released a bullish note on AMD with a $34 price target. Mentioned in the note as an "immediate upside catalyst" was the Computex Conference with the CEO of AMD giving the keynote. As expected, the release of key new products that specifically target Intel was announced with the release date for these products being within the next six months. A Cowen analyst had this to say following the presentation: "With 7nm Ryzen 3 PC and Rome server CPUs launching in mid-2019, Intel will no longer be able to rely on its n-node silicon advantage, and will instead lean on its incumbency and breadth of silicon as its 10nm chips are not expected out until late 2019 in PCs and 2020 in servers." Intel is running far behind on product development giving AMD an opportunity to pull ahead as 2019 progresses. Advanced product development should be reflected in earnings throughout 2019, justifying AMD's relative strength throughout the carnage of the past month in the semiconductor sector. Zenolytics maintains its $34 price target over the short-term. Zenolytics now offers Turning Points Premium service for unparalleled insight into critical junctures for stocks, indices and commodity issues. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with a professional advisor of his or her choosing. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding capital markets or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor...
Zenolytics Goes Full Buy Mode On KKR For Conservative Portfolios
Discussions about KKR on this site have been numerous over the past few years. KKR has all the attributes that an investor should pursue in a conservative investment: Adept management Steady history of producing returns Aligned with shareholders in seeking appreciation of equity through creative corporate manuevering A transformed, long-term shareholder base with their recent conversion from partnership to corporation Almost exactly one year ago KKR was discussed here in an article titled, KKR Has Long-Term Compounder Written All Over It. Zenolytics continues to view KKR as a long-term compounder driven by earnings power levered to low interest rates. The stock has immediate intermediate-term upside to approximately $30 per share for a gain of 20% from current levels. In the recent earnings calls that took place on April 30th, management painted an appealing picture for investors built on acceleration in assets under management, fees derived from those assets and opportunities available given their sizeable amount of dry powder. Among the highlights: Book value of $16.99 has increased by 17% over the 12 months Earnings have increased by 29% over the past 12 months Fee paying assets under management has increased by 23% over the past 12 months Additionally, with the recent steep decline in long-term rates, KKR gains significant advantages in that it allows the company to obtain leverage at more attractive rates AND it further differentiates KKR's overall ability to produce returns, as competitive fixed income yields decline, creating greater demand for enhanced returns. Overall, given the relative weakness in the financial sector, KKR's ability to outperform should be viewed by investors as a reflection of their earnings power in the face of an otherwise difficult operating environment for financial companies, mid to large sized banks especially. Zenolytics now offers Turning Points Premium service for unparalleled insight into critical junctures for stocks, indices and commodity issues. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction,...