Stock market is in need of a pull back in September
Whether or not we'll get one though is the big question
I wrote last month that I expected a decent sized pull back in the stock market and that didn’t really happen, well at least not at the broader index levels of the S&P 500 or Nasdaq.
It’s debatable though that there was an underlying correction happening on small-caps & speculative tech stock. However it seems that the money flowing in from stimulus and a relatively positive earnings season was strong enough to keep the broader market afloat.
Then on Friday August 27th, Jerome Powell spoke and let everyone know that the money will keep flowingand that interest rates are unlikely to rise until 2023. The market then rallied that day in full-on party mode.
Never to learn from my past mistakes, I’m again leaning towards a correction in September. This could happen around September 17th since it’s a quad-witching. Or later in October according to Tom Lee of Fundstrat.
Regardless of when its happens, we’re continuing to make new all-time highs and September is also not a great month for stocks so I’m still being cautious and keeping some cash on the sidelines to try to buy on weakness.
This month, I’ll start off with some insider buys from companies that I like, which I tend to view as long-term floor prices or good places to start buying.
In this update:
SoFi insider buys
One of the new super-apps in fintech, $SOFI, saw insiders picking up shares this past month. On Aug 18/19 the CEO purchased ~14k shares between $14-14.5 & the CFO purchased 3.5k shares at $14.
SEC form links: CEO 1 & 2, CFO 1
I’ve just been watching SoFi recently and as the price gets closer to $14, I’ll be adding to my positions. This insider buying came after the stock price dipped after a strong earnings report. Here you can watch a short interview with the CEO after the earnings report.
FireEye insider buys
A name that you may be less familiar with is FireEye ($FEYE). They play in the the cyber security space and this has been in focus recently since Biden invited several companies to the White House to discuss hacking protection.
Recently we saw several insiders buying in August starting around $17 through $18.6 a share. An easy way to be notified of insider trades is to follow The Insider Bot on Twitter.
Here are recent insider buys: Pres & COO 1, 2, 3 Director 1, EVP & CRO 1.
Sports Betting is back again
As the American football season kicks off, sports betting is once again in focus for investors who are looking to capitalize on a strong season of betting activity & renewed growth. Roundhill Investments is currently projecting that there will be more than $20 billion in legal wagers just this season.
In related news…
A former list pick Golden Nugget Online Gaming ($GNOG) was acquired by another list pick DraftKings ($DKNG) for $1.56 billion.
ESPN is exploring licensing their brand to sportsbooks such as Draftkings & Caesars ($CZR).
And several companies are putting together ‘super-bids’ for New York mobile sports betting.
Upstart is expensive but keeps delivering
Upstart ($UPST) is an AI-powered lending technology & personal loan company that has been growing like gangbusters. Their stock has a tendency to go vertical, quickly, on the back of good news. This time it was after delivering a monster quarterly result.
Part of the enthusiasm was improved guidance for the year and that they were seeing traction among car loan products. The analysts applauded the move & future prospects; Bank of America ($BAC) has a buy rating & increased it from $135 to $200.
Here’s an interview with the CEO after earnings, discussing how they are reinventing consumer lending, replacing the FICO score and seeing massive growth ahead.
Unity had a good quarter & an interesting acquisition
Unity ($U), the software & gaming company, reported solid earnings this past month. From the earnings call, “Unity reported a 48% year-over-year increase in revenue to $274 million for the quarter. This quarter was the first in Unity’s history as we crossed a $1 billion revenue run rate. We also raised our revenue guidance for the year by another $45 million to a range between $1.045 billion and $1.060 billion.”
Not bad. The stock also popped after earnings since the company announced that they had acquired a company called Parsec, which basically allows anyone to remotely access their powerful computers at work. This is obviously useful for game developers and creatives but also allows Unity to sell additional services to their wider client base who does things such as 3d modeling & development.
You can watch an interview with the CFO after earnings where he also touches on the acquisition and growth plans for the company.
Affirm partnered with Amazon, bam
Affirm ($AFRM) is recently-public company that I mentioned in previous newsletters (IPO, travel, Apple?, Shopify partnership). They provide ‘Buy now, Pay later’ services that are quickly being integrated into both shopping and fintech. They announced a new partnership with Amazon which sent the stock up more than 40% the following day. They are still trading below their post-IPO highs so it might be a good name to watch.
The blurring lines of fintech & ecommerce & payments
Shopify ($SHOP) has traditionally been thought of as ‘WordPress-for-ecommerce’. As they’ve grown though they are encroaching further into both fintech (partnered with Affirm) and into retail, even powering offline events. This is bringing them closer to Square ($SQ) in some respects who acquired a rival buy-now-pay-later company.
Then there are other players like PayPal ($PYPL) who are planning to add stock trading to their platform. It seems like any company or app that has do with the exchange of money online is quickly starting to find a whole new set of competitors as they try to grow & diversify across each other.
If you combine this trend with the rise of crypto then it looks like traditional banks & brokerages are going to be under attack from every side. They may have a decent couple of years when interest rates rise but in 5 years, the landscape around money & finance is going to look incredibly different.
Crypto; this time it’s different. Maybe.
I’ve been getting more bullish on crypto over the past year after going deeper into some of the opportunities and businesses that are being built on the back of web 3.0.
Last month I put together a list of resources that I used to expand my thinking on crypto. This month there were quite a few headlines that make me think this time the crypto boom might be different.
You can see below the wide spectrum of people & businesses now being impacted or discussing Bitcoin & Crypto. Massive retail adoption, ecommerce integration, derivatives, billionaires, banks & even Walmart.
Coinbase $COIN smashes earnings
Binance is bringing crypto payments to Shopify ($SHOP) via Alchemy Pay
FTX.us acquires LedgerX to support trading crypto options & futures
Billionaire Ray Dalio has a small position in Bitcoin ($BTC.X)
JPMorgan Chase ($JPM) pitches in-house Bitcoin fund to clients
Walmart ($WMT), yes that Walmart, is hiring a crypto role
Then Chris Dixon, crypto@ a16z, published a couple of epic tweet threads. If you don’t want to be blindsided by the next generation of billion-dollar organizations changing the business world then you must read & internalize the implications of these threads on crypto & web3.
Turning networks into economies
Blockchains are the new app stores
That’s all for this month. If you got some value out of it, I’d really appreciate you sharing this newsletter with friends.
-B
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