⁠Hidden Value Gems
Quote of the day #54

#VentureCapital #investing https://t.co/K72aWvEpzM
tweet

⁠Hidden Value Gems
As some big tech names have come off their all-time highs, I thought it is worth reminding of the points raised by @JohnHuber72 earlier this May.

$QQQ

A great post by @JohnHuber72 on the rising capital intensity of the Big Tech and the implications for earnings quality and future returns.

1/ Capex [of Big 4 Tech companies] is now over 3 times depreciation expense.

2/ This spending hasn’t yet hit the income statement, but it will in the next few years as depreciation expenses are set to triple in the coming years as D&A catches up with today’s capex spending.

3/ If the returns on these investments are good, then sales growth will be able to absorb these much higher expenses. But this is not a sure thing.

4/ While the P/E ratios range from 25 to 35, the P/FCF ranges from 40-50.

5/ “I’m not predicting a poor result, but I’m mindful of how difficult it will be given how different the companies are today.”

6/ They used to grow with very little capital invested, but now they have a mountain of capital to deploy, which is obviously much harder at 7 times the size. - Hidden Value Gems
tweet

⁠Hidden Value Gems
$AXL.L
Another excellent results from the 2nd horizontal well.

$110m Mkt Cap, $11m net cash. Could be easily $50-60m FCF next year at $80 oil price. https://t.co/fPpJwrVfyB
tweet

⁠iinvested
2Q'24 White Falcon Capital Management on $RTO

Read the full letter here:
https://t.co/WRGkdL2eBG https://t.co/xL7rAuqOJX
tweet

⁠Invest In Assets 📈
Small miss on Cloud sends Microsoft down -6% in the after-hours.

Rough market $MSFT https://t.co/a2b2xboRuK
tweet

⁠Invest In Assets 📈
RT @InvestInAssets: 10 Must-read Investing Books that will take your investing to the next level:

1. 100-Baggers https://t.co/nHSDBf8pGc
tweet

AkhenOsiris
Microsoft says AI supply is constrained and will keep pounding capex to capture that AI revenue, so I guess we are now at the stage of chips AND Hyperscalers making tangible/sustainable AI revs and the nitpickers can now focus on all the rest of the companies. Until a John Deere or a Dow Chemical says "AI has saved us money" or "AI has increased our revenue", that jury will still be out.
tweet

AkhenOsiris
Anecdotally hearing observability seeing some benefit out there, especially post CRWD outage, but also due to AI workloads...any meat on this bone @mdsmaldon @SaaSletter ?
tweet

AkhenOsiris
Every Asian supply chain company from TSM on down keeps telling us this is a multi-yr high cagr story...maybe they aren't bullshitting?

MSFT 10-K: We expect capital expenditures to increase in coming years to support growth in our cloud offerings and our investments in AI infrastructure and training - Fabricated Knowledge
tweet

AkhenOsiris
RT @bucketshopcap: Lol, just skimmed the whole MSFT transcript. Analyst who closed out Q&A with gaming...my god. Next time just skip it man.
tweet

⁠Librarian Capital
"Diageo: FY24 Not That Bad; Growth Outside the Americas"

Shares fell ~10% initially after results and remain near their multi-year low; P/E is ~17x even on FY19 EPS

$DGE $DEO $RI $BF.B $RCO

Article link: https://t.co/mCRPLV05lb https://t.co/Q4FOEeSTnJ
tweet