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.”
For more information about positions owned by Ensemble Capital on behalf of clients as well as additional disclosure information related to this post, please CLICK HERE.
While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.
Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites. Please follow the link above for additional disclosure information.