Young Research & Publishing Inc.

Investment Research Since 1978

Landmark E-Commerce Decision by the Supreme Court

By

Today the Supreme Court has decided states are allowed to collect taxes from online retailers. Ten states already have laws requiring out of state sellers to notify buyers of taxes owed and to inform states of unpaid sales taxes. Retailers opposed the laws on the grounds that they had no presence in the states where taxes were being levied. In a 1992 decision, the Supreme Court ruled that companies with no physical presence in a state didn't need to collect that state's sales taxes. But now that online sales account for 10% of shopping, the old rule doesn't work anymore. The change in … [Read more...]

GE Kicked Out of the Dow

By

It is a sad day for General Electric. The Dow Jones Industrial Average index committee has decided to give GE the boot. GE was an original member of the Dow and had been part of the 30-stock index continuously since 1907. It was the Dow’s oldest constituent. Once America’s most venerable industrial company, GE stumbled badly at the hands of former CEO Jeff Immelt. Mr. Immelt should have been shown the door years ago, but the board kept him around. GE is now a shadow of its former self and the current CEO was pushed into cutting the dividend (another poorly handled decision) and selling-off … [Read more...]

This is One Ugly Looking Chart

By

Emerging markets stocks have gotten clubbed since hitting a high in January. The iShares Emerging Markets ETF is down 14% from its January peak and more than 5% on the year. And if you believe the charts, EM could hit an air pocket before the asset class sees support. For what was one of the most lauded investments of year, it has been an ugly five months. … [Read more...]

Short-Sellers Bet Against Twitter

By

After posting its first two profitable quarters, Twitter's share price has been soaring, but Ben Eisen reports for the Wall Street Journal that short sellers have the social media network in their sights. He writes: Now, as optimism about the company prompts a slew of analysts to lift their price targets, some short-sellers are betting on a reversal. They have amassed positions worth more than $2 billion this month through Thursday, according to s3 Partners, a financial analytics firm. “Shorts have been selling into this rally, backing up their original bets and looking to double up on … [Read more...]

Peak Greater Fool

By

The NYSE FANG+ Index has been on a tear that rivals the dotcom era mania. The chart below shows the relative performance of the NASDAQ composite from year-end 1997 (about 26 months prior to peak) through its collapse and the relative performance of the NYSE FANG+ index from April of 2016 (nearly 26 months ago). Both rose parabolically over these time periods and strongly outperformed the broader S&P 500. The good news, if you are growing tired of hearing about how much money your nephew is making in Netflix shares, is peak greater fool (or peak stupid if you prefer plain language) may … [Read more...]

A Private Equity Quant Fund?

By

Yup, as the FT reports here, the folk at Man Group and AQR are developing quant funds to track the returns of private equity. How does one invest quantitatively in private companies? You don’t. The private equity quant funds will seek to replicate the returns of private equity in the public markets. It turns out that buying highly leveraged small-cap value stocks has a return profile similar to the returns of the private equity asset class (see research here for example). One has to applaud the quants for lifting the veil on many Private equity managers sole competitive advantage (that’s … [Read more...]

Who is Buying Long Bonds Today?

By

Thirty-year Treasuries yield 3.11% today. Ten-year Treasuries yield 2.97%. You get an extra 0.13% in income each year for lending the government money for an additional 30 years. Sounds like a raw deal. Not according to some institutional investors as reported here by the FT. The 30-year or “long bond”, currently yielding 3.10 per cent, is attractive for so-called buy and hold investors such as pension funds and insurers who need to offset lengthy liabilities over the coming decades. A steady rise in yields from below 2.70 per cent in December has been accompanied by stronger demand at … [Read more...]

Schwarzenegger on Investment: We Learn More from Our Failures

By

In a recent interview with The Wall Street Journal's Chris Kornelis, actor, former Mr. Olympia, and former governor of California, Arnold Schwarzenegger said “We learn not only just from our success, but we learn actually more from our failures.” Schwarzenegger was speaking about the investments he's made in his life, both in his time and his money. Schwarzenegger says his best bet was coming to the United States, and his worst was the film Hercules in New York. He explains why saying of his immigration: “Coming to America opened up all the doors that I didn’t even think about,” he says. … [Read more...]

Amazon’s Amazing Business

By

Amazon has an amazing business, but the retail operation that so many Americans are familiar with isn’t it. There is of course no denying Amazon is one of the most dominant forces the retail world has seen in decades. But from a profitability perspective, Amazon’s retail operation is marginal. Over the last twelve months Amazon retail has made only a single cent in operating income for every $1,000 in sales. That translates to $188 million in operating income on $174 billion in sales. Contrast that with Amazon Web Services, Amazon’s cloud business. Web services made $4.8 billion in … [Read more...]