Market scorecard
On Tuesday, the US markets closed with a mixed performance. The S&P 500 saw modest gains, bringing its year-to-date returns to 9.4%. However, the Nasdaq, experienced a slight decline, although its year-to-date performance remains impressive at 10.6%, despite the pullback it faced in April.
In company news, luxury sportscar maker Ferrari fell 4.7% after reporting an outlook that disappointed the market despite a solid start to the year. Elsewhere, Coupang, South Korea’s biggest online retailer, saw its stock dip 5% after hours following earnings that fell short of expectations. The acquisition of Farfetch resulted in more losses than anticipated, impacting the company’s performance. Lastly, entertainment giant Disney shed 9.5% as its quarterly loss and earnings outlook fell shy of Wall Street’s forecasts.
Here’s the lowdown, the JSE All-share closed up 0.20%, the S&P 500 rose 0.13%, and the Nasdaq was down 0.10%.
Our 10c worth
Byron’s beats
Last week, our favourite specialist medical devices business, Stryker, reported solid quarterly numbers. They beat expectations on both revenues ($5.2 billion) and earnings ($2.05 per share). Geographically, sales in the US comprised nearly 75% of overall sales and grew by 11.4%. Revenues in the rest of the world were up around 6.8%.
Sales by segment is really well spread out. You can pretty much build an entire human skeleton with Stryker products. The outlook is positive with strong procedural volumes continuing to keep demand for their products healthy. We believe this will continue for decades as the global population gets older and wealthier.
Over the last 5 years, Stryker is up 74% which is similar to the S&P 500. Over that same period, they have grown sales on average 8.7% per annum. This is a slow and steady business that offers something unique in our tech-heavy portfolios. We continue to accumulate the stock for clients at these levels.
One thing, from Paul
The latest Berkshire Hathaway shareholders meeting took place on Saturday. I read that Warren Buffett sold 116 million shares of Apple in the first quarter, about 13% of their position.
At the end of March, Berkshire had $182 billion in cash. If he keeps this up, the cash pile will be $200 billion soon, around a quarter of their market capitalization.
He also said he doesn’t mind accumulating more cash in the current environment, because “things aren’t attractive.”
I’m sorry to have to do this, because Buffett is an investing deity, but that is just sad and wrong. In August he will be 94 years old, so why do you think he’s not feeling optimistic about the future of humanity’s current best efforts, as represented by our leading companies? He’s tired and mortal. It’s understandable.
Interest earned on cash in the US is around 4.5% in treasury bonds, but that will be coming down soon. To my mind, that’s just not good enough. We are looking for more than just the risk-free rate of return. To my mind, “things look very attractive”.
Michael’s musings
Apple’s iPad is a bit of a sideshow compared to the sales of iPhones and Apple services. The iPad’s revenue is also down 20% over the last year. Even still, Apple generates around $25 – $30 billion a year from iPad sales. At an event yesterday, Apple launched its new range of iPads to help reinvigorate sales.
The new iPads are super sleek, coming in at only 5mm thick! There are two versions, the iPad Pro and the iPad Air, both are available in 11-inch and 13-inch screen sizes. Like all Apple products, the new versions look very sexy. Part of the launch included the release of an upgraded Magic Keyboard and a new Apple Pencil Pro.
More exciting than the look of these products is what Apple has done inside. The iPad Pro will be the first device to feature the super-fast M4 chip. Additionally, Apple has introduced what it calls Tandem OLED, where there are double the number of LED panels on the screen. OLED screens are already amazing, but Apple has found a way to make them better.
All in all, it is a pretty and powerful tablet. You wouldn’t expect anything less from Apple.
Bright’s banter
After a lengthy investigation by US authorities into Binance, its founder Changpeng Zhao (CZ) pleaded guilty to charges brought against him in November last year. A court has now sentenced the Binance founder to four months in prison for his failure to address money laundering issues at his cryptocurrency exchange.
As the largest exchange globally, Binance propelled Zhao to the forefront of the crypto world, leading to his accumulation of a fortune exceeding $30 billion. With this sentence, CZ is poised to become the wealthiest inmate in US history.
In his settlement with the US government last November, CZ agreed to step down as CEO of Binance and pay a $50 million fine. Although he no longer holds a leadership position at the exchange, he still retains approximately 90% ownership, according to CNBC.
This development marks the latest significant sentencing in the cryptocurrency realm, following FTX founder Sam Bankman-Fried’s recent sentencing to 25 years in prison for mishandling customer funds.
Linkfest, lap it up
Apple is the king of share buybacks. Last year it spent $78 billion buying back its stock, and this year it is going one step further to $110 billion – Apple spent more than $600 billion over the last 10 years buying back its own shares.
With high university fees, applicants need to think carefully about where to go. Matriculants need to pick the right tertiary education institution for themselves – Things to consider when going to Uni.
Signing off
Asian markets slid as tech shares tumbled. Benchmarks fell in India, Hong Kong, Japan, mainland China, and South Korea. Video game giant Nintendo was down 5.4% on a weak outlook for the year.
US equity futures are unchanged pre-market. The Rand is trading at around R18.54 to the US Dollar.
Amazon launched Amazon.co.za yesterday, offering South African customers a brand-new online shopping platform. The kicker is the fast same-day and next-day delivery and free delivery for orders above R500. Takealot was found shaking! As you know, Amazon is one of the anchor positions in our model portfolio, so give them a try.
Today Toyota, Uber, Arm Holdings, Airbnb, and Shopify report quarterly earnings.
Have a good one.
Sent to you by Team Vestact.
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