Sunday Finds + 3 Thoughts From Last Week
Podcast episodes on Block and the banking industry this week
Welcome to Chit Chat Money’s Sunday Finds + 3 Thoughts From Last Week. In this newsletter you will find three topics I thought about last week, links to shows we’ve recently released, and links to some interesting articles, podcasts, and tweets. Check out the archive here.
Chit Chat Money Podcasts From Last Week:
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1. Let’s standardize Investor Relation Websites
This seems to have struck a nerve with a lot of people:
Is it too much to ask for publicly traded companies (some with billions upon billions in earnings each year) to have organized investor relation (IR) websites? I don’t think it is.
The SEC needs to drop its crypto investigations (just nuke the entire industry and get it over with already) and focus its efforts on the things that truly matter. I’m only partially kidding here.
Standardized IR pages would help serve companies by making communications with investors more efficient, the SEC by making it clear what is being communicated to investors and giving people access to SEC filings, and investors of all sizes by making it easier for them to access investor communications. It is a win for all stakeholders.
Here are five things all publicly traded companies should be required to have on their IR websites:
A table with the quarterly 10Q/10K, press release, and any other investor materials released that quarter organized by year. These should also go back as far in time as possible for each company.
A list of all filings with the SEC that you can organize by year or form type.
A (properly functioning) email list that lets you receive all investor communications directly to your inbox.
Transcripts of all conference calls or any other time an executive is speaking formally to the public.
A news section that organizes press releases into investor communications and business/product news.
And while we’re at it, let’s mandate that all conference calls with analysts be publicly available, recorded through modern video conferencing methods, and hosted in the same spot on an IR website. Enough with playing detective to find all these investor communications.
Apparently, a company called Q4 inc. is trying to bring this to reality. I have never heard of them but could be an interesting small-cap to study.
I should also mention our sponsor Stratosphere.io, a company that is trying to help investors of all sizes eliminate this kind of busy work.
2. Three companies where I just don’t know
There are a lot of stocks I don’t want to own. Really the vast majority of them.
But with most of the stocks I pass on, I can see why someone would own it. Even Tesla, a company I have been extremely pessimistic about (and wrong, so far) has some investing theses where I can go “ok, I can see why they own shares” when my views are the complete opposite.
Carvana, Opendoor, and Beyond Meat are three stocks where I am bewildered time and time again that any buyers exist.
Carvana lost money (negative 2.2% net margin in 2021) when used car prices went into the most aggressive price rise in history. They lost money before the pandemic, lost money during the pandemic, and are losing money now. They have such a high debt load that they probably won’t be able to make their interest payments with the cash they have on hand. Where is the path to this asset not filing for bankruptcy? It has almost assuredly disappeared by now.
Opendoor is much simpler. They are a home flipper, but online. A home flipper…but online. And one that lost money during a housing bubble. Think about that. Today, with the housing market getting more rational, Opendoor is seeing its unit economics (if it ever had any) go down the drain. This business generated a whopping $71 million in gross profit last quarter and had a net loss of $400 million. What happens if mortgage rates stay at 6% or higher for the next few years?
Beyond Meat is beyond saving. It is actually doing worse than Carvana or Opendoor, with negative gross margins last quarter. I don’t think there is much to even talk about beyond that. Nobody wants to eat fake meat, and I say that as someone who hasn’t eaten real meat in years. There is no product market fit, it was all a hype cycle.
Call me an overconfident a-hole if this doesn’t come true, but I think there is a 90% chance all three of these companies file for bankruptcy within the next two years.
3. $2.6 trillion in business payments volume will be processed by checks in 2026
We’re researching American Express for next week’s “Not So Deep Dive” episode.
On its latest investor day, management presented a chart that shocked me:
Apparently, it is estimated that $2.6 trillion worth of business payments will be made by check in 2026, and that is just in the United States. I personally haven’t used a check for years and see no reason why I will ever do so again (neither will anyone else in my age demographic). It is possible that people under the age of 20 have no idea what a check even is.
So why are businesses using them so frequently? It was almost half of SME payment volumes in 2019. I guess inertia is a powerful drug…
Seriously, it would be much better for all stakeholders if the use of checks were banned. They are slow, a waste of resources, and harder to keep track of. Let’s throw in the elimination of paper receipts while we’re at it.
Paraphrasing Rory Sutherland, author of Alchemy (highly recommend reading), you have to look at total costs (both real and psychological) when comparing two methods of doing things. Something like Bill.com may “cost” more upfront than the use of checks but will save a business on the backend in efficiency and employee/customer happiness.
This chart also makes me think that — even though the digital payments transition is close to over for consumers — we still have a long ways to go for business transactions. I wonder what companies are ripe to take advantage of this.
See you next week,
Brett
***Our fund, Arch Capital, may own securities discussed in this newsletter. Check our holdings page and read our full disclosure to learn more.***
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3 Good Reads
New Cracks Emerge in Elon Musk’s Twitter - Platformer
In this as in so many other things, Twitter hasn’t paid its Slack bill. But that’s not why Slack went down: someone at Twitter manually shut off access, we’re told. Platformer was not able to learn the reason prior to publication, though the move suggests Musk may have turned against the communication app — or at least wants to see if Twitter can run without Slack and the expenses associated with it. (Musk’s Tesla uses a Slack competitor called Mattermost for in-house collaboration, and Microsoft Outlook and Teams for email and meetings.)
On Blind, the anonymous workplace chat app, the disappearance of such critical tools was met with a mixture of disbelief, frustration, and (to a lesser extent) glee.
Don’t be a doomer - Noahpinion
In fact, Lorenz is far from the only one uttering such pronouncements — there’s an entire “doomer” subculture out there on the internet. To see some more examples, check out the substack “OK Doomer”, with lovely post titles like “We're Living through The End of Civilization, and We Should Be Acting Like It” and “You're Not a Fearmonger. You Have Sentinel Intelligence.” Most of the prophecies of doom center around Covid (which some doomers insist is a disease akin to HIV, whose true damage will manifest only later), climate change, environmental destruction, and — inevitably — capitalism. Meanwhile, doomer culture is debated in the pages of the New York Times and the BBC. It even has its own music.
Joe Biden’s “Cancer Moonshot,” touted in the State of the Union address; the effort to have Ozempic approved as an anti-obesity drug for Americans 12 and over, and paid for by the government; and the recommendation that all children have the full set of COVID vaccines to attend school in the fall are the final straws in a power and money grab that can devastate American health and longevity and drive up health care costs by the trillions of dollars — which, by the way, appears to be the plan.
1 Good Podcast
Ryanair: Low Cost Obsessed - Business Breakdowns
This is Matt Reustle and today we are breaking down Europe's largest airline, Ryanair. As we do more breakdowns, we start to look for patterns of successful business models that succeed across different industries. Ryanair is another case study in low-cost shared economies of scale. To break down Ryanair, I'm joined by Holland Advisors’ founder and portfolio manager, Andrew Hollingworth. Andrew was an airline analyst for a decade and has written extensively on Ryanair. He's a studier of business models and also joined me for our episode this past summer on Charles Schwab.
On this episode, we talk about what makes airlines such a difficult industry for investors, how CEO Michael O'Leary has taken a truly unique approach to building this business, and how to frame cyclical versus secular dynamics in the airline market.
Smart, Insightful, and Funny Tweets:
Love your take on investor relations pages. It will make our analyst lives so much easier if this happens.