🔥Weekly Digest 24.05.21🔥
Portfolio rebounds, Wall St stabilises as the crypto bubble burst, Buffett's selling spree and more.
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📮Portfolio Performance Report
◆ Highlights of the week
Our portfolio had mostly rebound from last week’s pullback, as it always does cyclically. The good thing is the tech sell-offs had seemingly paused for the time being.
Shopify partners with Google on online shopping expansion
During Google’s I/O Developer event last week, Google announced its plan to partner with Shopify by enabling the e-commerce platform’s more than 1.7 million merchants to reach consumers through Google Search and its other services such as Maps, Images, Lens and Youtube.
This was not the first major partnership Shopify had ever acquired. In fact, it had integrated with other large platforms, such as Facebook, TikTok and Walmart, to expand its online marketplace.
Wall St was definitely excited about the latest partnership, given that the stock closed up more than 12% by the end of last week.
Nvidia rose on 4-for-1 stock split.
The chipmaker giant had announced on Friday its plan to issue investors three additional shares for every one they own. This marks its first stock split in 14 years.
After more than doubling its value in 2020, the company seeks to make its shares less expensive for investors by opting for stock splits, a similar move that Apple and Tesla opted for last year. Traditionally, stock splits tend to attract retail investors who make small trades. Still, as fractional shares purchases become permitted in most brokerages nowadays, the advantage of share splits may seem negligible over time.
That being said, investors were definitely happy about the announcement. The chipmaker shares were up 5.26% by the end of last week. The announced stock split will require stockholder approval at the company’s annual meeting in June.
The company is also due for its Fiscal Q1 2022 earnings release on Wednesday after the market closes. Its EPS is projected to be $3.28, whereas its revenue is projected to be $5.39b.
“I think the chipmaker has a lot going for it, but I still want to hear how confident they feel about getting regulatory permission for the Arm Holdings acquisition,” Jim Cramer said on Mad Money.
AMD announced first $4b stock buyback since 2001
Advanced Micro Devices Inc. had announced a $4b stock buyback plan, its first buyback plan since two decades ago.
“Our strong financial results and growing cash generation enable us to invest in the business and begin returning capital to our shareholders,” Chief Executive Officer Lisa Su said in the statement.
The buyback plan, valued at about 4% of the company’s market value, will be funded by its cash from operations. The company also said that the repurchase program has no termination date and may be suspended or discontinued at any time.
AMD was up 3.46% by the end of last week.
Last month, AMD reported better-than-expected Q1 earnings along with a solid near-term sales forecast, driven by improving chip demand and stronger pricing amid global chip shortage. Its earnings per share were reported to be 45 cents per share, a 150% year-over-year increase, which beat Wall Street’s consensus forecast of 44 cents per share. Revenues were $3.45b, a 92.75% year-over-year increase, which topped Wall Street’s forecasts of $3.2b.
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📖 What have I learned this week?
Crypto investors’ dream comes crashing down.
It all started getting more dramatic ever since Elon Musk tweeted about the environmental impacts of crypto mining after months of praising and supporting crypto adoptions on social media.
The decline in the crypto market was further exacerbated by China’s crackdown on mining and trading of cryptocurrency, a drastic move following creating its own digital currency, the cyber yuan, which is the first for a major economy that is not linked to the dollar-dominated global financial system.
Cryptocurrency mining in China accounts for 70% of the world’s crypto supply. Following the Chinese government’s latest move, the country will lose its crypto computing power to foreign market as crypto mining companies like Huobi Mall and BTC.TOP seek to export their mining rigs overseas.
The recent crash had sent bitcoin to as low as $31,179 at one point, which is half of the mid-April peak at $64,829.14. However, the declines have probably brought more damage to new investors than the early investors as bitcoin is still up more than 16% this year, not to mention Ether which is up 175% and dogecoin, which is up more than 5800% this year.
Buffett is on a selling spree.
In the latest Form 13F filing, Berkshire Hathaway had once again revealed its latest activities in Q1 2021, which have shown more selling than buying in the first quarter of the year.
Perhaps the most notable selling of the bunch would be Wells Fargo, which has shrunk 98.71% in that quarter. Most people had linked it to the bank’s account fraud scandal, which gained wider attention back in 2016 when the US Justice Department fined the bank billions of dollars. In fact, this is not the first sale of Wells Fargo for Berkshire Hathaway, Buffett and his team began regularly slashing their positions in Wells Fargo ever since the announcement of the scandal.
Berkshire Hathaway had sold off 51.19% of its positions in Chevron, which brought about a 1% impact to its portfolio. This move is particularly notable considering that the position was only opened in Q3 2020, which is considerably recent given that Buffett is famous for his “buy and hold” strategy in most of his investments. That being said, his position in Chevron was still up around 16% by the end of the short period.
All in all, Berkshire Hathaway had sold off 3% of its portfolio (around $8b) in Q1 2021, while it only bought 0.9% of its portfolio (around $2.5b) in the same period.
🐦 Tweets to start the week
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Best, HaoNing