Weekend Reading

28 April 2018 | by Paul Perrino, CFA

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

Electric Buses Are Hurting the Oil Industry (Jeremy Hodges, @jeremylawhodges, Bloomberg)

China is in full speed in deploying electric buses to combat pollution. Shenzhen replaced all 16,359 buses with electric buses. China is rolling this out in other cities throughout the country. “Every five weeks, Chinese cities add 9,500 of the zero-emissions transporters—the equivalent of London’s entire working fleet, according Bloomberg New Energy Finance.” Buses fuel consumption is approximately 30 times cars. This is starting to impact the oil industry. “BYD estimates its buses have logged 17 billion kilometers (10 billion miles) and saved 6.8 billion liters (1.8 billion gallons) of fuel since they started ferrying passengers around the world’s busiest cities.”

Insight: Waymo – Google’s self-driving division (Jim Holder, @Jim_Holder, AutoCar)

Waymo’s CEO says “We are not the enemy. Yes, you can have self-driving cars and enthusiasts’ cars.” The goal appears to be to “disrupt the utilitarian market, because we can likely cover those needs in a cost-effective way.” Unlike other car start-ups, they quickly realized that building their own car was difficult and “is best left to the experts.”

Expensive stocks may not be so dear after all (John Stepek, @John_Stepek, MoneyWeek)

Financial metrics offer a quick and easy way to talk about a company. Be careful about creating an investment strategy focused on them. In a study of companies from 1993 to 2017, Travis Fairchild at O’Shaughnessy Asset Management, shows that “firms with negative book value (ie, liabilities apparently worth more than their assets), and companies that looked expensive on a p/b basis, but cheap on other measures, tended to beat the wider market. In other words, if you avoided these stocks on the basis of the p/b, you’d miss out.”

Visa, Mastercard Talk About Cooperating in Online Shopping (AnnaMaria Andriotis, @AAndriotis, WSJ)

To compete against PayPal’s payment tab and the growing competition in the payment industry, MasterCard and Visa created their own in 2012 and 2014, respectively. After years of testing they got together and decided to adopt a single pay tab for both MasterCard and Visa.


As of the date of the post, clients invested in Ensemble Capital Management’s core equity strategy own shares of Google (GOOGL) and MasterCard (MA). These companies represent only a percentage of the full strategy. As a result of client-specific circumstances, individual clients may hold positions that are not part of Ensemble Capital’s core equity strategy. Ensemble is a fully discretionary advisor and may exit a portfolio position at any time without notice, in its own discretion.

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.