Did I tell you that I split my original Premier holding between two funds back in March. ?I used one fund for trading – and took a short term profit here – then bought back at an average price around today’s level. As this second trading attempt has pulled back from loss making to break even I have once again sold this part of my holding. That leaves the other half in my longer term fund, where the exposure is less than 3%. It also leaves the trading side with a nice overall profit on the two trades since March.
I am also wondering how the Roku share price will react to the next quarterly numbers due early August. Roku remains a pure streaming play – the only other one is Netflix who will need to spend more on creating content now that competitors are removing their toys from the playpen. The next wars will be all about content and getting people on the hook with low starting subscriptions, which should not harm Roku’s user numbers. However ARPU cannot be expected to rise while there is intense competition for new premium channel subscribers.
Let’s start with Snap. When I bought the market cap was around 19.4bn dollars. A few days later this had risen to 25 bn after some promising user data was announced. The business is unprofitable and will remain so for a time, so I thought it best to take a profit at 18.03. That gave me a very quick return of 28%. I will watch and wait for any sign of testing of new support levels as I may buy back on a correction.
The enormous valuation on Snap got me looking at some other media valuations, and was surprised to see that Roku is valued at “only” 12.57 bn at present.
The tech boom is centred on US markets, because these have the largest concentration of tech stocks on the planet. Compare and contrast with the U.K.- where the decent tech companies like Arm Holdings ( now owned by SoftBank) are no longer investment options. The standard of analysis in the U.K. is also appalling – wise to assume either short pants or not up to the job – they can copy stuff about Amazon, Microsoft, and Alphabet from the companies own website information to investors, or plagiarise US analyst reports.
As readers will know I have a small holding in Bango, where the share price has been all over the place this year. The price has improved recently- giving a market cap of £92.7m (USD 115m). The best way to describe the business is that their audiences double revenues from the 5% of cellphone users who deliver 80% of app developer revenues, and they have contracts with all the major players who provide the apps to download. They were followed by an analyst at Cenkos – the company’s broker – who produced a forecast in March that was clearly wrong – or so thought Investors Chronicle ( U.K. Barron’s equivalent). But we had to wait until updated figures were available in July for action – Cenkos were sacked and later withdrew their forecast, and a new broker appointed .My problem with this is that if an institution was given a new mandate to manage – including a Bango holding – between March and July – they would have relied on Cenkos research and institutional salespeople to decide whether to retain or sell, thus creating a false market in the shares.
Although it will not make huge profits anytime soon, Bango has also moved into profitability this year, and the business seems to be growing at a fast pace. As it is a small holding and a small market cap I will let it run.
After doing and reading some research over the weekend I decided to buy a holding in SNAP, the owner of SnapChat. The price paid was just under $14.09.
I had not really looked at the company since early last year when it was recommended as a chart buy at $17.50 just before the price started to collapse. I downloaded the app and had a look around, and in my opinion it looks well suited to the 13 – 35 age group target – where it is claimed to have reach of between 75% and 90%.
As some quarterly figures are due later today, and the stock has high volatility, I did not buy a full unit – as valuation remains high and the kind of improvement that I am looking for in the business will be a slow process.
Read a piece in Barron’s online about Rupal Bhansani’s MANG investments which she believes are more attractive than FAANG at the present time.
Nokia is part of MANG and manufactures telecom equipment for 5G inter alia. The US currently wishes to ban Huawei Technologies – a competitor – from US networks. Nokia stock is believed to be on about 12 times forward earnings, and has started to pay quarterly dividends. I originally bought a small holding at $5.38 in April and have just increased to core holding size at $5.12. Orders and quarters for this type of business can vary a lot, but the hope is that Nokia is starting a multi year recovery.