Investors and changing media
I have previously written about how the media are changing, but, with most of the benefit likely to go to consumers and individual content creators, the more difficult question is how investors can profit from the change. However there are some areas likely to produce winners:
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How the media will change
I have little doubt that the media will be rapidly changed by technology (primarily the internet and mobile phones), and it is not too difficult to think up the most likely scenarios of that change, however this is a diffiult change for investors to profit from.
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Skyepharma – problems solved, price still down
Either the market is simply not prepared to be anything but negative on Skyepharma or I am missing something. The problems with Paxil continue, but Skyepharma has been shielded from the effects of this by a new agreement with Glaxosmithkline’s which gives Skyepharma the royalties on the budgeted sales until normal sales resume.
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Compass profit warning
I seem to be getting rather obsessed with strong market reactions to bad news, following my recent piece on Skyepharma with this. This time its Compass. Yesterday the price fell 5% on the back of a fairly minor profit warning.
Compass announced £24m in lower profits and extra costs, 3.7% of forecast EBIT, and with no change to cashflow expectations. (more…)
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Good stock pickers
What I am interested in is what makes a good stick picker, or an analyst who can really add value by finding the investments that outperform.
Firstly I will leave aside the obvious. A good stock picker or analyst needs to be good at financial analysis, understand the companies, sectors or economies they look at, understand valuation issues etc. There are simply too many people with these skills for them to give a stock picker an edge. What we need is the ability to consistently pick stocks that are mispriced (more…)
Successful site move
Lots of work, working late Saturday and Sunday, but I moved my investment research site site to the same platform as this blog.
So far so good, now I have to go back to writing stuff. I have about 30 more pieces planned for the re-named “what is?” section, so if it intersts you visit it next week and it should all be up. I think it compares very will with other similar sites on the web, I (most of that section is written by me) have taken the trouble to give detailed explanations and to explain how to use numbers, not just given defintitions. In any case my defintitions are mostly better, not all the accounting defintitions are technically perfect but they are pretty good given how accessibly it is written. In any case I am aiming at an audience that is looking at things from a finance (especially valuation) perspective, not accounting.
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Beer markets – and Microsoft
My dissatisfaction about the beers that a golf club bar stocks started me thinking about what gives a firm monopoly power in the absence of any apparent reason. Unlike in software there are no apparent network effects, a dominant player has little leverage to bias distribution channels and switching costs for consumers are zero. So how can an inferior product (and I am firmly convinced it is inferior) continue to dominate the market? (more…)
Closet trackers
Supposedly active fund managers often place a large chunk of the money they are managing in a few large caps, in effect ensuring that their fund’s performance can not deviate too far from the market. Brokers often do, or encourage clients, to do the same.
The reason is supposedly the control of risk, however it is interesting that what is being controlled is not the volatility of the portfolio (i.e. the risk of losing money) but the risk of under performing the market. There are plenty of ways of managing volatility directly so why choose to do it indirectly, and possibly less effectively, by tracking the market? (more…)
Skyepharma – Paxil manufacturing problems
Skyepharma bounced a little today but it is still well down on two days ago and is at low levels against historical prices – it has rarely gone below 50p since mid-2003 and has gone above 70p several times since then, most recently late last year. Of course it has always been fairly volatile but I was a little surprised at how sharp a reaction there was to the news of Glaxo’s manufacturing problems with Paxil CR.
Firstly, Skyepharma does not manufacture Paxil CR, it helped develop it and receives a (small percentage) royalty which does bring substantial income because Paxil brings Glaxo such huge revenues. On the face of it the effects of the problems should be that Skyepharma loses a fair amount of revenues (all the royalties from Paxil CR’s US sales, i.e. most of it) for about six months and then things slowly go back to normal, by next year everything should be back to normal. This does not look like something that should have much impact on how much Skyepharma is worth. (more…)
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