In today’s briefing:
- The TOPIX Liquidity Factor Adjustment – Still a Trade To Do
- Musk Buys Twitter, You Should Buy Facebook
- Hon Hai (2317.TT): March Revenue Was Highest at the Same Period of Record.
- Elon Buys 9.2% of Twitter, and Starbucks Suspend $20B Buyback Program
- Hashicorp: Cloud Infrastructure Layer…Impressive
The TOPIX Liquidity Factor Adjustment – Still a Trade To Do
- Every year in April there are two TOPIX rebalance changes – the FFW review for July-September FY-end companies, and the annual liquidity factor adjustments.
- This year, the former is replaced by the TOPIX FFW Methodology Change for the new Market Structure. This is a big change, but it will not necessarily overwhelm the latter.
- Janaghan Jeyakumar, CFA‘s piece of 5 weeks ago discussing the Liquidity Factor basket has seen generally good performance. There are two days to go.
Musk Buys Twitter, You Should Buy Facebook
- Since Elon Musk bought his 9.2% stake in Twitter, the stock is up 30%
- We are doubtful Musk can alter the trajectory of Twitter’s slow product development and weak monetization of direct response advertising and SMB customers.
- Twitter trades 6.5x forward sales / 61x forward earnings / 28x forward EV/EBITDA while Facebook trades 4.5x / 19x / 10x those same metrics…essentially 1/3rd the valuation on earnings.
Hon Hai (2317.TT): March Revenue Was Highest at the Same Period of Record.
- All of the Hon Hai’s 4 product-lines were growing double digits in March.
- In 1Q22, Hon Hai’s revenue was NT$1,408.2bn, which was -25.5% QoQ and 4.83% YoY respectively. The 1Q22 revenue was a bit better than the original expectation.
- Although Hon Hai is confident, we think the visibility is still a bit of ambiguous in 2Q22.
Elon Buys 9.2% of Twitter, and Starbucks Suspend $20B Buyback Program
- This morning I had two of my larger holdings, Starbucks and Twitter, become embroiled in headlines. It was announced this morning that Twitter has a new shareholder, Elon Musk
- And Starbucks would be axing their $20B buyback program as Howard Schultz looks to make a stamp on his welcoming party.
- Shares of Twitter were trading as high as +26% in the early pre-market hours this morning, after an SEC filing from Twitter shows that Elon Musk, founder and current CEO of Tesla has acquired a “passive” but sizeable 9.2% ownership stake of Twitter (~73.5M shares).
Hashicorp: Cloud Infrastructure Layer…Impressive
- The company sells software tools that that allow businesses to automate cloud infrastructure
- Next gen VMware… onboarding technology for cloud transitions. Impressive parallel.
- Terraform and Vault are 85% of revenues today, but big TAM for the future.
Before it’s here, it’s on Smartkarma
