Weekend Reading

22 July 2017 | by Paul Perrino, CFA

A summary of this week’s best articles. Follow us on Twitter (@INTRINSICINV) for similar ongoing posts and shares.

In Urban China, Cash Is Rapidly Becoming Obsolete (Paul Mozur, @paulmozur, NYT)

China is stepping up and leading the world in mobile payments. Adoption has been staggering. $5.5 trillion payments were made via mobile devices in 2016, compared to $112 billion in the US.”Enterprising musicians playing on the streets of a number of Chinese cities have put up boards with QR codes so that passers-by can simply transfer them tips directly.” This shift doesn’t come without problems. Foreigners (tourists and businesses) may find it more difficult to transact.

Visa Takes War on Cash to Restaurants (AnnaMaria Andriotis, @AAndriotis, WSJ)

The US isn’t stagnant in the cashless endeavor. Visa is helping small businesses purchase the technology to process payments of debit cards, credit cards, and mobile phones. “Visa has long considered cash one of its biggest competitors and has been taking steps to chip away at it. Getting rid of cash is a priority for Visa.” One benefit in the favor is millennials, who often prefer cashless payments.

Why the Post Office Gives Amazon Special Delivery (Josh Sandbulte, WSJ)

“In 2007 the Postal Service and its regulator determined that, at a minimum, 5.5% of the agency’s fixed costs must be allocated to packages and similar products. A decade later, around 25% of its revenue comes from packages, but their share of fixed costs has not kept pace. First-class mail effectively subsidizes the national network, and the packages get a free ride”

Buffett’s Bet on Store Capital Shows Not All Retail Real Estate Is Equal (Sarah Mulholland and Noah Buhayar, @SMulholland_ and @NBuhayar, Bloomberg News)

The rise in Amazon (AMZN) has lead to the downfall of many retail companies and their landlords. During these broad sell-offs good business become attractive for investment. For Buffett, it was Store Capital. Their properties focus on “internet resistant” businesses, such as “preschool facilities, health clubs, dine-in movie theaters and pet-care sites.”

Sign of the Bottom? New ETFs Will Bet Against Beaten-Down Retail Stocks (Chris Dieterich, @chrisdieterich, WSJ)

New ETFs can be the signs of a market top. By the time a fund company takes notice of a trend (or hot trade) and builds an ETF product to participate in that trade, it’s usually too late.  REMX and YLCO are both examples of the launch of the ETF is followed by the peak in their respective market. ProShares has ” filed plans with securities regulators last week for new double- and triple-levered ETFs designed to rise on days that retail stocks fall. Also coming is an ETF that goes “long” online retailers while “shorting” traditional ones.”




While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

The information contained in this post represents Ensemble Capital Management’s general opinions and should not be construed as personalized or individualized investment, financial, tax, legal, or other advice. No advisor/client relationship is created by your access of this site. Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. If a security discussed in this blog entry is owned by clients invested in Ensemble Capital’s core equity strategy you will find a disclosure regarding the security held above. If reviewing this blog entry after its original post date, please refer to our current 13F filing or contact us for a current or past copy of such filing. Each quarter we file a 13F report of holdings, which discloses all of our reportable client holdings. Ensemble Capital is a discretionary investment manager and does not make “recommendations” of securities. Nothing contained within this post (including any content we link to or other 3rd party content) constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instrument. Ensemble Capital employees and related persons may hold positions or other interests in the securities mentioned herein. Employees and related persons trade for their own accounts on the basis of their personal investment goals and financial circumstances.