![]() | submitted by budgetguru to u/budgetguru [link] [comments] |
https://www.thehindu.com/news/national/other-states/warrants-against-bjp-leaders-in-muzaffarnagar-riots-case/article21822982.ece
![]() | submitted by series-of-tubes to SPACs [link] [comments] https://preview.redd.it/waj4ibegysb61.png?width=1500&format=png&auto=webp&s=240de7dfc1546a958ec4542875715f50806ff4a2 www.spacroadone.com Initial Trust Fund $300,000,000 Initial Offering 25,000,000 Units Target TMT (Tech/Media/Entertainment) Completion by Date 11-24-2022 Former Acquisitions of Note by Team Members ABC, Pixar, Marvel, Lucasfilm, 21st Century Fox, and BAMTech by Disney. My position disclosure 3700 Units at $10.32 Whatsup SPAC friends! I wanted to take the time to write my first DD in order to share the findings of my favorite SPAC near nav. Obviously if this post were to in any way “pump” the stock and increase my units’ value, I would be thrilled. But my primary motivation here is to give back to the SPACs community a bit, since I have learned and profited so much from other DD posts in the past. FRX is often referred to as “Shaq SPAC”. While enhanced by the advisory presence of Shaq and MLK III, I believe the true value of FRX lays within the proven track record of the core leadership team. FRX includes former Disney senior executives: Tom Staggs was the former 2nd in command at Disney from 2015-16. He was instrumental in the successful acquisition of ABC and Marvel. His body of work at Disney has been overwhelmingly looked at as successful and from all accounts is widely respected as an executive leader. Kevin Mayer, former Head of Streaming at Disney & former TikTok CEO (3 months). He served as Disney’s chief strategy officer, helping to orchestrate the purchases of Pixar, Marvel, Lucasfilm, most of 21st Century Fox and BamTech, now known as Disney Streaming Services (https://www.theverge.com/2017/8/9/16118694/disney-bamtech-espn-streaming-netflix). Tom and Kevin were both “passed over” for the CEO position to replace Bob Iger. This can be seen as a negative on Tom or Kevin for not being chosen, or a mistake by Disney to not promote either. The consensus from what I’ve read is that both are very talented and separately accomplished a lot, but the Board at Disney’s vision did not align with their vision for the future of the company. We really just don’t know all the dynamics behind Disney’s decision here, but this happens in business, and I like to think we are not defined solely by our failures… or especially for the promotions we did not achieve. Regarding the Big Diesel. I’m just a fan of him as a human being. Comments are expected to the effect of “A SPAC with Shaq is a gimmick” or worse. Dr. Shaquille O’Neal holds a PhD in Education. Shaq has made more money in entrepreneurship and investing than he earned in the NBA. I encourage you to take some time aside and watch Shaq Fu talk about investing before you prejudge. (Links below) In addition to truncating my findings from FRX’s SEC S-1 filing and their website, I also take due diligence in studying the character and morality of the team. In the past I’ve changed from bull to bear on some SPACs just by researching the controversies and ethics of the individuals involved (See XPOA DPCM Capital, yuck. I can create a DD for them if there’s interest). In this case I did not detail character concerns simply because I could not find any of real note. Even when looking into MLK III’s past, I expected to find something worth mentioning. Since the nature of his pursuit for Social Reform can lend itself to controversy. The worst I can find is that his sister and he had sued their brother Dexter for misuse of funds tied to their father’s estate. The case was settled out of course and the siblings have reconciled. Much like his father, he advocates non-violence and working together across racial and economic lines. Honestly, my biggest concern is Mark Burg who produced Two and a Half Men, one of the biggest blights on American Culture since the advent of television. Anyway… I seek to take as objective a view as possible when researching and present as much information below in a factually, non-emotional way. Attempting to fight confirmation bias to in order to change or strengthen my opinions. So please, if you find any holes in my posting, share in the comments and I will edit appropriately! FRX Team (Synopsis from SEC S-1)https://www.sec.gov/Archives/edgadata/1826889/000121390020030635/fs12020_forestroadacq.htm#T11https://preview.redd.it/rh0jc02pwsb61.jpg?width=963&format=pjpg&auto=webp&s=7d777db4d68076f70a0efab7e3ca6608c0fc5029 TOM STAGGS, DIRECTOR AND CHAIRPERSON OF THE STRATEGIC ADVISORY COMMITTEE: https://en.wikipedia.org/wiki/Thomas_O._Staggs After joining Disney in 1990, Mr. Staggs held a number of key roles, including Chief Financial Officer of Disney, Chairman of Walt Disney Parks and Resorts, and Chief Operating Officer of Disney. Mr. Staggs played an integral role in Disney’s acquisition of Capital Cities/ABC, which significantly expanded Disney’s position in cable and broadcast television. As Disney’s Chief Financial Officer from 1998 until 2010, Mr. Staggs was deeply involved in a range of strategic and financial initiatives including the acquisitions of Pixar and Marvel Entertainment. In the five years he spent as Chairman of Walt Disney Parks and Resorts from 2010 to 2015, Mr. Staggs oversaw the expansion of existing locations, a substantial increase in the size of their cruise fleet, and the geographic expansion into Shanghai. KEVIN MAYER, STRATEGIC ADVISOR: https://en.wikipedia.org/wiki/Kevin_A._Mayer After joining Disney in 1993, Mr. Mayer led strategy and business development for Disney’s interactive and television businesses worldwide. Mr. Mayer later became Executive Vice President of the internet group, responsible for the operations, business plans, creative direction, and distribution of Disney’s popular websites, including ESPN.com and ABCNews.com. Mr. Mayer departed Disney in 2000 but returned in 2005, eventually rising to the role of Chief Strategy Officer before accepting the position of Chairman of Direct-to-Consumer & International until his departure in May 2020. As Chief Strategy Officer, Mr. Mayer helped shape and spearheaded several Disney strategic initiatives and major acquisitions, including Pixar, Marvel Entertainment, Lucasfilm, and 21st Century Fox*. Additionally, Mr. Mayer was responsible for Disney’s direct-to-consumer strategy, starting with the* acquisition of a controlling interest in BAMTech, a live and on-demand video streaming company, and culminating with the launch of the Disney+ streaming platform*, with nearly 55 million subscribers during his tenure.* KEITH HORN, CEO, SECRETARY AND DIRECTOR: https://www.linkedin.com/in/keith-horn-83813529/ Keith L. Horn, our Chief Executive Officer, Secretary, and director is the founder and managing member of Loring Capital Advisors, LLC, a firm providing investment advisory and consulting services to hedge fund managers, asset management firms, and early-stage and start-up businesses. From 2003 to 2015, Mr. Horn served as Chief Operating Officer and a member of the Management Committee and Valuation Committee of Elliott. Prior to Elliott, Mr. Horn spent 16 years at Merrill Lynch, serving in various capacities, including Global Head of Leveraged Finance, Head of Latin America Debt, and Chief of Staff to the Chairman and President. Other Notable Members: SHAQUILLE O’NEAL, STRATEGIC ADVISOR Beyond basketball, Mr. O’Neal has a keen eye for investing in successful ventures, having invested in Google prior to its initial public offering and Ring prior to its sale to Amazon. Mr. O’Neal owns many leading franchises, including Auntie Anne’s and Papa John’s Pizza, as well as several restaurants in Las Vegas. Mr. O’Neal moved into e-sports by assuming the role of General Manager of the Kings Guard (NBA 2K League), an e-sports team associated with the Sacramento Kings. Mr. O’Neal has exceptional experience in the sports and entertainment landscape, assuming the roles of player, media personality, owner, and operator. MARTIN LUTHER KING III, INDEPENDENT DIRECTOR The oldest son of Martin Luther King Jr. and Coretta Scott King, Mr. King is a celebrated human rights advocate who has devoted his life to promoting civil and global human rights. In 2011, he co-founded Bounce TV, an African American broadcast network. Since 2006, Mr. King has been the founder and Chief Executive Officer of Realizing the Dream, a non-profit organization that continues the humanitarian and liberating work of his parents, through which he has spearheaded nonviolence training in Bosnia Herzegovina, India, Israel and Palestine, Kenya, Sri Lanka, and the United States. Since 1997, Mr. King has been Chairman of the Nominating and Governance Committee of the Board of MetWest, a mutual fund complex. PETER SCHLESSEL, INDEPENDENT DIRECTOR: https://www.imdb.com/name/nm0772283/ Mr. Schlessel has been a member of the board of directors of Village Roadshow Entertainment Group, an American co-producer and co-financier of major Hollywood motion pictures, since June 2018. He is also a director of Redbox, an American and Canadian video rental company. From 2014 to 2016, Mr. Schlessel was the Chief Executive Officer of Focus Features of Universal Pictures, an American film production and distribution company. MARK BURG, STRATEGIC ADVISOR: https://www.imdb.com/name/nm0121117/ Mr. Burg is an entrepreneur, business executive, and American film producer. Mr. Burg personally financed the first production of the Saw films. He has been recognized in the Guinness Book of World Records for the Most Successful Horror Movie Franchise, has been nominated for three Emmy Awards, and has received multiple awards for previous films. SALIL MEHTA, CFO: https://www.bloomberg.com/profile/person/17271723 ZACHARY TARICA, CHAIRPERSON OF THE BOARD OF DIRECTORS AND CIO: https://www.linkedin.com/in/zachary-tarica-aa8686101/ TERESA MILES WALSH, INDEPENDENT DIRECTOR: https://www.linkedin.com/in/teresa-miles-walsh-48881a5/ SHEILA STAMPS, INDEPENDENT DIRECTOR: https://www.cit.com/about-us/corporate-governance/board-of-directors/sheila-a-stamps/ IDAN SHANI, COO: https://www.bloomberg.com/profile/person/21992639 Business TargetWe intend to concentrate our efforts on identifying businesses in the technology, media and telecommunications (TMT) space. The TMT landscape is rapidly evolving as cutting-edge technologies and new forms of content consumption and distribution disrupt traditional businesses, unlocking new monetization models and attractive investment opportunities.FRX Business Combination Criteria Simple, predictable, and free-cash-flow-generative: We intend to seek companies with a proven track record of growth and profitability and predictable future financial performance that we expect will generate strong, sustainable growth in cash flows over the long term. Formidable barriers to entry: We intend to seek companies that have long-term sustainable competitive advantages, significant barriers to entry, including significant upfront investment costs, or “wide moats,” around their business, and low risks of disruption caused by competition, innovation, and new entrants. Well-positioned in evolving market landscape: We intend to seek companies that are well-positioned to benefit from new content and distribution dynamics, unlocking new growth opportunities. Attractive valuation: We intend to seek companies at an attractive valuation relative to their long-term intrinsic value. Positioned to benefit from public currency: We intend to seek companies that demonstrate public market readiness and will use access to public equity markets to pursue accretive acquisitions, high-return capital projects, strengthen the balance sheet, and recruit and retain key employees. Exceptional management and governance: We intend to seek companies that have trustworthy, talented, experienced, and highly competent management teams. These companies may be led by entrepreneurs who are looking for a partner with our expertise to execute on the next stage of their growth. For target companies that require new management, we will leverage our team’s experience in identifying and recruiting top talent. Platform for inorganic growth: We intend to seek companies that can serve as a platform for future synergistic acquisitions. References and Resources:See SEC S-1 for Defined Market Opportunity & Competitive Advantage:https://www.sec.gov/Archives/edgadata/1826889/000121390020030635/fs12020_forestroadacq.htm#T11 Tom Skaggs: https://en.wikipedia.org/wiki/Thomas_O._Staggs Good article on his departure from Disney: https://www.nytimes.com/2016/04/08/business/media/behind-the-scenes-at-disney-as-it-purged-a-favorite-son.html A video in case you’re tired of reading: https://youtu.be/2uz0RE9RYOM Kevin Mayer: https://en.wikipedia.org/wiki/Kevin_A._Mayer Departure from Disney to TikTok: https://www.nytimes.com/2020/05/18/business/media/tiktok-ceo-kevin-mayer.html https://variety.com/2020/digital/news/tiktok-kevin-mayer-why-left-disney-1234690320/ Shaq's Investment history & success: WSJ: https://youtu.be/w9eiTmNLvRk Real Sports: https://www.youtube.com/watch?v=Z6a66GNYygE CNBC: https://www.youtube.com/watch?v=SOx7zyRpJ-Q https://www.businessinsider.com/shaq-net-worth-jeff-bezos-investment-strategy-2019-7#:~:text=During%20his%2019%2Dyear%20career,Papa%20John's%2C%20according%20to%20Money. https://www.cnbc.com/2018/05/09/how-shaq-invests-his-money.html Join our awesome SPACFORCE community on Discord: https://discord.com/invite/spacforce |
![]() | Paypal was an early COVID investing pick due to its nature of contactless payments and its rise in young populations with Venmo. Paypal has a storied history, founded by some of the most influential Silicon Valley VC’s and entrepreneurs they started as two smaller companies founded in the middle of the tech bubble (1998 and 1999) as Confinity and X.com by Peter Thiel and Elon Musk. They were able to weather the storm of the 2000 tech fallout by being bought out by eBay for $1.5B beforehand. Under eBay, Paypal grew their services into what most of us know them for: digitized payments. Starting from effortless check transfers for unauthorized vendors to working their way to B(!)tcoin, Paypal has made it more convenient for payments to be processed, and in our consumerist economy that’s an absolute goldmine. Square is a relatively new player in the digital transaction space but they’ve had quite a run up this year under the leadership of Jack Dorsey, founder of Twitter. Their first product was a card reader that fit into the headphone jack of smartphones, so naturally Square expanded into the enterprise services market and continued developing solutions for small businesses like payroll management. I’ll further discuss the respective structures of both companies in this due diligence submitted by WannabeStonks69 to wallstreetbets [link] [comments] The Expansion of Digital Transactions Paper currency has been the standard means of exchange for ages, but the digital method of exchange, particularly mobile exchanges has now become far more convenient. In 2017, digital payments were expected to reach a market value of $726B in 2020, and here we are post covid with the value of digital payments at over 910B. https://preview.redd.it/mr9elex5z0561.png?width=800&format=png&auto=webp&s=18e6eb1b9039d738af6c2ea5277018d2749cbbfd Statista forecasts that most of the sales growth for digitized payments past 2020 will come from mobile POS, and that most of the user growth for digitized payments will also be in peer-to-peer transactions. Paypal has both bases covered with Venmo when it comes to mobile transactions and it has E-Commerce covered with its major retailer partnerships and with eBay. Square has Cash app, which is a peer-to-peer payments app plus they also have in-person small business products for digital payments like their “cash register” called the Square Stand which is useful for freelancing professionals and small businesses. So a pro of Square is that it has a far more established presence in the growing sector of digital payments which is mobile POS payments, not E-Commerce. However, E-Commerce is the much larger sector by users alone: https://preview.redd.it/x99o8v39z0561.png?width=800&format=png&auto=webp&s=c12fa73d91b1948acec47fe715cdefe8b4bfb3bb As you can see, mobile POS payments are expected to triple in the same time that E-commerce will grow by around 20%.This makes a lot of sense to me as E-Commerce still makes up a small amount of all transactions and its trajectory is very much fixed and established now. POS payments are definitely growing though, as on my last trip to India, one of the fastest growing countries, I observed that every small business had a PayTM barcode for transactions, and this is where both Paypal and especially Square will eventually expand to. CNBC also forecasts most digital payment growth will happen in emerging markets (which is why I’ll suggest an ETF at the end which incorporates emerging market companies) “Emerging markets are expected to grow at a rate three times that of developed economies in terms of digital transaction volumes. Digital payments in developing markets grew 21.6 percent between 2014 and 2015, compared to a 6.8 percent rise in mature markets. Non-cash payments in Asian emerging markets are projected to grow by almost a third (30.9 percent), led by powerhouses China and India”. According to CNBC analysts though, cash will still remain supreme for the following reasons: speed of exchange, universal acceptance, anonymity, absence of record and free of charge. Anonymity and absence of record are things that are being fixed by the incorporation of cr(!)ptocurrency into transactions, but it’s likely the biggest reason people don’t switch to cashless is because not all merchants use it and the fees add up especially for many transactions a day for the merchants. Eventually when the digital transaction economy grows fully, there will be enough competitors to offer sellers competitive rates to a point where they’ll choose mobile payments for the convenience it provides in terms of not having to use physical cash but as of now only small businesses are willing to make the opportunity cost of losing fees so they don’t have to store cash.Paypal Paypal is “a global, two-sided network at scale that connects merchants and consumers with 305 million active accounts (consisting of 281 million consumer active accounts and 24 million merchant active accounts) across more than 200 markets. PayPal helps merchants and consumers connect, transact, and complete payments, whether they are online, on a mobile device, in an app, or in person”. They have a variety of new products in development as they have made several acquisitions since their establishment. Paypal offers merchants a technology-agnostic platform that requires no hardware and little time to set up with its Braintree product which is primarily for online sellers and iZettle which is used for POS payments primarily in international markets and they have a user base of 19 million. This acquisition was made with the full intention of competing with Square and since Paypal has had an extremely talented eye for acquisitions in the past in Xoom and Venmo, this relatively new acquisition has a lot of potential, but it could also just be a last minute scramble to catch up to Square’s huge market share in POS payment offerings. Paypal has a great P2P ecosystem in Venmo and Xoom and a credit partnership with Synchrony bank as well which helps diversify revenue streams. Paypal also owns a company called GoPay, which basically provides the same services Paypal does but in China, which expands them into a market that’s more likely to grow in the future. https://preview.redd.it/w3vmknzbz0561.png?width=800&format=png&auto=webp&s=23c083f35611ffa86a997cf3a9f75a7c29de7a9f As you can see, Paypal has some pretty consistent revenue, profit, and EBITDA growth, but a bit more concerning may be the fact that margins have been relatively stable and they haven’t been increasing at all. I believe the reason for this is because PayPal’s full potential isn’t close to being realized, and even founder Peter Thiel said in his book “Zero to One” that Paypal wouldn’t start realizing a majority of their cash flows until 2020. https://preview.redd.it/78wifzfdz0561.png?width=800&format=png&auto=webp&s=9bce649ad199031a1c5ddbfbdb663324b7ae3454 While Paypal was able to increase earnings per share by a strong 21% from 2018 to 2019, they decreased cash flows from operating activities by 17% from 2018. This requires that we go into the capital expenditures in their CF statement, which will provide a clearer idea of why and how Paypal lost cash flow despite rising net income. Another thing standing out may be the fact that the operating margin is pretty constant, which can be a concerning sign for investors seeking a growth stock. Plus, considering how much the price for PYPL has run up in the past few months you’d expect better profitability to come with it hand-in-hand. But the future being factored into Paypal isn’t based on its face value, or else the price would be very stagnant right now and it wouldn’t have grown nearly as much as it has. Here’s what I mean: https://preview.redd.it/47r8msvez0561.png?width=800&format=png&auto=webp&s=2cefbcab0e52e1a1ca9e42b946f569f4a1595785 The amount of profit Paypal can squeeze out of its main product is pretty much at a maximum as transaction expenses are growing at the same rate as revenues are and operating expenses are still going up at a somewhat proportional rate to that of net income, meaning that no more value is going to come out of the existing product. While the existing product is still going to grow in popularity, its profitability is only going to decrease or stagnate as Paypal expands into developing markets that aren’t willing to cough up as much in fees. As Thiel himself puts it, that’s “horizontal innovation” AKA just globalism. That alone isn’t enough to justify the investment levels in Paypal, but investments and acquisitions into the future of transactions will expand it, and on top of this it is only recently Paypal has experienced such tremendous growth in cash flows YoY. Now you’ll see below PYPL’s historic cash flows, and if you go to the bottom you’ll see their free cash flow decreased from 2018 to 2019 as I previously mentioned. The root cause of this is investment purchases, which increased by $5B in 2019 and contributed to the Free Cash Flow decreasing by 800M. Again, if we look at Paypal’s track record when it comes to acquisitions they’ve been very successful, so there’s not much reason to expect much different this time around. If Paypal’s investing, investors are excited. They’ve piled up cash up until last year, and they’re finally using it now based off their cash per share: https://preview.redd.it/rq6x4g8kz0561.png?width=387&format=png&auto=webp&s=976d294dbc9ceb68d288570648b9a894fde8c1ac https://preview.redd.it/jh21m90lz0561.png?width=800&format=png&auto=webp&s=b77b71f08785127aea6cad5afa30e6ff37f78f11 https://preview.redd.it/z2kkuyilz0561.png?width=800&format=png&auto=webp&s=3dc69e6a4ecd333adf5c3e9fa851a266473fe4ec Add to this the tremendous increase in digital payment volume in the past year and we can expect a real change in the entire sector’s trajectory. Hedge funds have been piling up on this supposed legacy company for a valid reason: their time for expansion is now, and COVID-19 has only spurred in realizing this perfect storm, as net income and revenue has seen a jump in the past two quarters: https://preview.redd.it/v4cgyl1nz0561.png?width=800&format=png&auto=webp&s=272965de645fa1a9aac0ff763863cc28e7942035 So you must be wondering why Paypal’s cash from operations was down in 2019 from 2018, but in their most recent 10k Paypal explained cash from operations and free cash flow was only down due to “positive impact of $1.4 billion of changes in loans and interest receivable, held for sale, net following the sale of our U.S. consumer credit receivables portfolio” which was added into the operating income as it was a noncash expense and that’s why 2019 looks down about $1B in cash even though operating income for 2019 was up $0.4B: https://preview.redd.it/7i979ldoz0561.png?width=800&format=png&auto=webp&s=798113837df594aa112574facc98df32685c8c79 Paypal’s newly acquired capital is already being used and it’ll be put to good use based on the meteoric rise in transactions in the past two years. Contactless payments will eventually become a norm and their established e-commerce platform will set them up pretty well on this end. Now to address the flip side of the coin: POS or Point of Sale transactions, which is a market Square has wrapped around its finger as it’s had the head start since the iPhone 4. Here’s how Square got started, instead of giving 10$ to people for using their product, founder and CEO Jack Dorsey (who also is the founder and CEO of Twitter) gave them the product for free and built an infrastructure around it. It was simply a credit card scanner that could be inserted into the headphone jack of a smartphone. This simple product is still being sent out for free to small businesses and the software and business model that surrounded this tiny card reader has expanded like a wildfire since then. Square would collect 2.75% on each payment similar to Paypal. Square also made a “cash management” app, Cash App to dive into a non-retail market. About Cash App: “Cash App provides an ecosystem of financial products and services to help individuals manage their money. While Cash App started with the single ability to send and receive money, it now provides an ecosystem of financial services that allows individuals to store, send, receive, spend, and invest their money.” It appears as if Square is trying to become an all-round player in the consumer and producer financial ecosystem as Cash App has become more like a bank or brokerage account rather than just a P2P service like Paypal or Zelle. Now, Cash App makes 25% of SQ’s revenues. In Square’s 2019 annual report, they reported the following: In the year ended December 31, 2019, we processed $106.2 billion of Gross Payment Volume (GPV), which was generated by nearly 2.3 billion card payments from 407 million payment cards. At the end of 2019, our Square point of sale ecosystem had over 180 million buyer profiles and approximately 230 million items were listed on Square by sellers. As of December 2019, Cash App had approximately 24 million monthly active customers who had at least one cash inflow or outflow during a given month. The above image shows Square’s payment volume distribution across different industries, and as you can see in 2019 payment volume was very diverse which bodes well for SQ’s stability. This shows the increasing size of sellers who use Square, and this shows that Square’s mission of making small businesses big and having them stick to their product regardless of their stage in growth is working. Although their main business is in processing payments, Square is making itself a fin-tech institutional force with 30 different API’s for retail and e-commerce sellers along with invoicing, appointment, payroll, loyalty/gift card, and account management services. Square also has financing for small businesses in Square Capital, which I find to be the most interesting part of their model. They give small loans to businesses based on the data that they already have as Square manages the business’ finances, remember? And this puts them at an advantage to make good debt because of the transparency into the business’ finances. This will allow Square to make extremely profitable and high turnover loans that have virtually NO risk of default. The types of loans they give are generally small, and they could be as little as $500. They describe these loans as the type you’d ask for from your parents or relatives. Square has such in-depth data from these businesses that when they make loans they don’t even consider credit scores: “Generally, for loans to Square sellers, loan repayment occurs automatically through a fixed percentage of every card transaction a seller takes. Loans are sized to be less than 20% of a seller’s expected annual GPV (their payment volume) and, by simply running their business, sellers repay their loan in eight to nine months on average” Since 2014, Square has made over $6B in loans with a failure rate of only 4%, which makes sense because Square has access to all of its client’s financials so therefore they possess the ability to make fully transparent loans. When you jump into Square’s financials, there’s a lot of promise to say the least: https://preview.redd.it/a4zkobuvz0561.png?width=800&format=png&auto=webp&s=35c1273cb128c0d627add76e54bb36a9b34941a1 Not only has revenue grown by 42% from 2018 to 2019, net income finally became positive in 2019 and free cash flow increased from 232m to 400m in the same span. Here’s the revenue breakdown for Square, and as you can observe while transaction revenue saw much stronger compared to Paypal, the real deal was Square’s expansion of its enterprise solutions as those revenues increased by 74% last year, these are revenues recognized as the following: “Revenue from Cash App, Square Capital, and Instant Transfers for sellers currently comprise the majority of our subscription and services-based revenue. Cash App subscription and services-based revenue is primarily comprised of transaction fees from Cash App Instant Deposit and Cash Card. Our other subscription and services-based products include website hosting and domain name registration services, Gift Cards, Square Appointments, Customer Engagement, Employee Management, Payroll, Square Card, and other product offerings.” B(!)tcoin revenues from Cash App investing whose revenues increased by 210% (in this case B(!)tcoin is an asset that Square owns and sells to those using Cash App to invest in cr(!)ptocurrency.) https://preview.redd.it/6krvne7101561.png?width=800&format=png&auto=webp&s=87bb78977eaa222762e5f24f5061651850ad74e5 Also in that same span, Square’s cash has nearly doubled. This liquidity will be necessary as Square Capital continues to grow and will require financing. https://preview.redd.it/0b3gxlr201561.png?width=800&format=png&auto=webp&s=068b3f2d994b04f67fd2ad5c6de629851dd658ae Observing some long term trends now for $SQ: Lower SG&A expenses per $ of revenue Low receivables/sales despite expansion of Square capital because revenue has grown so fast Increasing return on equity (higher net profit margins and leverage) Consistently increasing free cash flow points to stability (especially since 2019 turned positive) While Square is far riskier than Paypal, they seem to be capturing a much larger market and have a bigger vision for the future at this point. Paypal becomes more like Microsoft and Square is kind of like Apple if we went back 10 years. One of them has widespread use and an established platform but still has consistent growth (about 15%) and the other is finding itself in a competitive market but is also slowly establishing absolute dominance. Square is absolutely overvalued, but for a growth stock that’s nothing out of the ordinary, and so is Paypal considering they don’t have nearly as much a prospect for growth unless leadership shows a huge change in direction some time soon. The “Paypal Mafia” however has surprised us before and I think there’s a solid chance of growth still plausible for them. Regardless, both of these companies should be a holding in your portfolio amidst a growing FinTech sector and a huge transition away from traditional payments. Tickers: $ARKF $PYPL $SQ ARKF 1/15/21 55c |
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![]() | Hello everyone, I mentioned a few days earlier that I was working on a comprehensive VDHG review and received a lot of interest in this community. After consulting with the very knowledgable snrubovic of passiveinvestingaustralia, I've finally finalised my review. You can read about it on my website here or simply continue browsing below: submitted by AussieFIREmovement to fiaustralia [link] [comments] VDHG - Is This a Good Investment to Help Reach your Financial Goals?https://preview.redd.it/kqbjua9evqz51.jpg?width=865&format=pjpg&auto=webp&s=2bb4d26fad98515b052d58436323cbb24aba0287Today I'm going to review the Vanguard Diversified High Growth Index Fund (VDHG) to determine whether this all-in-one, high growth diversified ETF is the right fit for your financial goals. I'll be covering what VDHG is, the asset allocation, what each holding is, why people may choose to invest in them and the pros and cons of investing in VDHG. What Is It?VDHG is a diversified ETF that is comprised of seven different ETFs that track multiple markets and assets. An ETF is firstly a fund (the ‘F’), and therefore holds multiple assets in it, and secondly, it is exchange traded (the ‘ET’), which means you can buy and sell the same ways as with shares via a stockbroker. This is opposed to unlisted funds, which you must buy direct from the fund manager. They are often chosen by long-term investors as a convenient way of diversifying their portfolios, as ETFs track market indexes that can encompass hundreds or thousands of individual assets. Vanguard has taken this one step further, by providing an all-in-one type of investment vehicle. VDHG subsequently, provides exposure to the Australian market, large-cap, mid-cap and small-cap companies in developed and emerging markets and bonds. These holdings equate to VDHG being 90% growth (equities) and 10% defensive (bonds).https://preview.redd.it/ltljv2usboz51.png?width=800&format=png&auto=webp&s=f385355873076258f8ace146fc668b7abbcf00d4 VDHG is made up of seven different ETFs, that equates to the following target allocations:
What Are They?VAS – Australian Shares (36%)The Vanguard Australian Shares Index ETF or VAS is an ETF that tracks the performance of an index consisting of the 300 largest companies by market capitalisation on the Australian Securities Exchange (ASX). Its largest portfolio holdings are CSL LTD, CBA, BHP, NAB and WBC. Sector-wise, it is primarily allocated towards Financials, Materials and Healthcare. VGS – International Shares ex-Australia (26.5%) The Vanguard International Shares Index ETF or VGS is an ETF that tracks the performance of an index consisting of the 1547 large-cap and mid-cap companies listed on exchanges of the world's major economies, excluding Australia. Its largest portfolio holdings are Apple, Microsoft, Amazon, Facebook and Alphabet (Google). Sector-wise, it is primarily allocated towards Technology, Healthcare and Consumer Discretionary. The top-weighted countries are the US, Japan, the UK, France and Switzerland. VGAD – Hedged International Shares ex-Australia (16%) The Vanguard MSCI Index International Shares (Hedged) ETF or VGAD is the same as VGS but it is hedged to Australian dollars. Hedging is an investment strategy in which the fund manager takes active steps to offset the impact of currency fluctuations. The intent behind this is to ensure that the returns (income and capital appreciation) are not impacted by currency fluctuations. By incorporating VGAD, the overall returns of VDHG are less susceptible to being impacted by currency fluctuations, adding a defensive measure against these potential impacts. VISM – International Small Companies ex-Australia (6.5%) The Vanguard International Small Companies Index Fund or VISM is an ETF that tracks the performance an index consisting of 4032 non-Australian small companies from developed countries. Its largest portfolio holdings are Etsy, Pool Corp., Horizon Therapeutics, Monolithic Power Systems and Generac Holdings Inc. Sector-wise, it is primarily allocated towards Industrials, Information Technology and Consumer Discretionary. The top-weighted countries are the United States, Japan, the United Kingdom, Canada and Sweden. VGE – Emerging Markets (5%) The Vanguard Emerging Shares Index Fund or VGE is an ETF that tracks the performance of an index consisting of 1252 companies listed in emerging markets. Its largest portfolio holdings are Alibaba, Tencent Holdings, Taiwan Semiconductor Manufacturing Co., Samsung and Meituan Dianping Class B. Sector-wise, it is primarily allocated towards Consumer Discretionary, Information Technology and Financials. The top-weighted countries are China, Taiwan, Korea, India and Brazil. VBND – Hedged Global Aggregate Bonds (7%) The Vanguard Global Aggregate Bond Index Fund (Hedged) or VBND is an ETF that tracks the return of Bloomberg Barclays Global Aggregate Float-Adjusted and Scaled Index hedged into Australian dollars. It comprises of 9286 bonds spread across 2404 global issuers. Sector-wise, most funds are derived from Treasury, Corporate-Industrial and Corporate-Financial Institutions. The top-weighted countries are the US, Japan, France, Germany and the United Kingdom. 77.3% of bonds in VBND have an A credit rating or higher. VAF – Australian Fixed Interest (3%) The Vanguard Fixed Interest Index Fund or VAF is an ETF that tracks the return of the Bloomberg AusBond Composite 0+ year Index. It comprises of 586 bonds spread across 187 Australian issuers. Sector-wise, most funds are derived from the Treasury, Gov-Related-Sovereign and Gov-Related-Agencies. 97.4% of bonds in VAF have a credit rating of A or higher. Why Would Someone Invest in These Holdings?https://preview.redd.it/lf7wss26pqz51.jpg?width=749&format=pjpg&auto=webp&s=f50ba99e8d7e4c212a3c8481636b48add4565995 Each one of the seven underlying ETFs offers different incentives for people to invest in them. VAS provides exposure to the strongest companies on the ASX. While the Australian market only accounts for roughly 1.7% of the world's global economy at the time of writing this, a lot of Australians choose to invest heavily in Australian assets. Through investing in the Australian market, Aussie shareholders receive higher dividends than those offered by other markets, in addition to receiving tax benefits through the franking system. This often makes investing in the ASX an appealing prospect for Aussies. VGS is currently the largest ETF by fund size offered through VDHG, which does not come as a surprise, given that it holds major tech giants such as Apple, Amazon, Google and Microsoft. This ETF provides exposure to the world's dominant global market and the tech-sector which in recent years has become one of the highest performing sectors. VGAD tracks the same index as VGS, however, it is hedged to Australian dollars. This acts as a safety buffer and added precaution against currency fluctuations, which can impact the income and capital appreciation of VGS. Also, if the Australian dollar were to increase in relation to the USD by the time that you wish to sell down your VGAD, this hedged option would provide greater returns. VISM provides exposure to small-cap companies. Small-cap companies are more volatile than large-cap and mid-cap companies because they are less defensive, more leveraged and are impacted more by currency fluctuations. However, having a small market cap can also be viewed as advantageous, as these companies have more room to grow. Subsequently, VISM provides a higher risk, higher return layer of diversification to VDHG, which may potentially result in higher returns over a long-term investment horizon. VGE is probably considered the riskiest aspect of VDHG, as it comprises of emerging markets. These markets are more susceptible to currency swings, political corruption and economic volatility, due to things such as natural disasters. However, given that these economies are new and have a lower overall market cap, their growth potential is significantly higher than in developed markets. For this reason, VGE can be a useful asset to hold if you're willing to tolerate the high-risk, high-reward potentiality of emerging markets. VBND provides exposure to bonds, which are considered a defensive asset. Defensive assets are used as a mitigation strategy for market fluctuations. For example, while bonds typically underperform equities over long investment horizons, they typically hold up better during market corrections and recessions. In fact, they can often increase in value, as bond prices typically increase when interest rates fall. The government often lowers interest rates during recessions to provide people with more money to spend on goods and services to help prop up the economy. Lower interest rates can also incentivise people to use leverage to purchase luxury items that they otherwise wouldn't. As such, VBND offers diversification into defensive assets that can potentially offset some losses encountered to the other underlying funds during market corrections. VAF is similar to VBND, in that it provides additional exposure to bonds and provides a further level of risk mitigation. Although, VAF primarily utilises Australian bonds, meaning that you have an added layer of investment in the Australian economy. This can be viewed as a positive or a negative depending on which side of the fence you sit on. However, VAF has a significantly higher allocation of A, AA and AAA credit rated bonds, making it a lower yielding, yet potentially more stable defensive asset than VBND. Advantages of Investing in VDHGDiversificationDiversification is an investment strategy in which investors invest in a range of different assets and markets to ensure that they gain exposure to multiple forms of revenue. This is akin to the saying 'don't put all your eggs in one basket'. The benefit of having a diversified portfolio is that even if a few of your holdings under-perform in a given year, your other holdings may prove above-average returns. This provides more stability to your investment portfolio, which tends to yield more consistent returns. As seen in the above portfolio holdings, VDHG contains exposure to the Australian market, large-cap, mid-cap and small-cap companies in developed and emerging markets and bonds. Another way of looking at this is that by investing in VDHG, you are essentially investing in 8,000 + stocks split across the global market and almost 10,000 bonds. Subsequently, by investing in VDHG, you gain access to one of the most diversified investment vehicles on the market. For investors who want to invest in all of the underlying holdings of VDHG, this provides a cheaper alternative. Through purchasing VDHG, you only need to pay one transaction fee to buy a fund that comprises of these other seven ETFs, making VDHG a very convenient way of diversifying your investment portfolio Convenience Like the above point, VDHG and other diversified ETFs are perhaps one of the most convenient forms of investment products. The reason behind this is that they offer an all-in-one, set and forget type of product. Unlike more active portfolios that require you to stay on top of your underlying holdings, file separate tax documentation for each asset and require manual rebalancing, VDHG has this all covered. Admittedly, this convenience comes with a cost of having a higher Management Expense Ratio (MER) than most ETFs at 0.27% p.a. However, the convenience of being able to have your portfolio remain diversified, whilst also automatically rebalancing is often regarded as worth it in the eyes of investors who like this style of investing. Lastly, by not having to think about your asset allocations, having to manually rebalance your portfolio on a frequent/semi-frequent basis or having to make frequent purchases of different ETFs, VDHG is very much a set and forget type investment. As such, for passive investors who do not have a great understanding of different markets or those who wish to spend their spare time on other ventures, VDHG is one of the best-suited investment vehicles. Mitigates Against Human Error When it comes to investing, there is always a risk of human error. Inherently, some people are better suited to investing than others. Things such as personal bias, fear of missing out (FOMO), panic selling or constant changes in investing habits can significantly diminish returns and in some instances, can result in losses. Regarding personal bias, people with an affinity for certain stocks or ETFs may greatly overweight their profile towards a certain market or sector. This can of course work in their favour, but a lack of diversification can also result in significant losses should that asset take a hit. By utilising VDHG, you have enough diversification to suffer a loss to one or several of your holdings. This is because -you avoid having all of your funds in the worst-performing asset class, mitigating against permanent decimations to your profile and providing more overall stability. FOMO occurs when an investor decides to buy something at an all-time high, expecting it to rise even further. It can also occur with someone selling at an all-time low, expecting it to lower further. These are usually impulsive, emotionally based decisions that result in people losing a lot of their hard-earned, compounded growth. In other portfolios, it can be easy to liquidate one or two of your assets under stressful circumstances. However, if VDHG is your only investment vehicle, it is less likely that you will FOMO your way into a poor decision by selling off your only investment under times of stress. For this reason, it is advised that you hold VDHG for a long investment horizon and check on it as infrequently as possible, as it has been designed to grow over time without external manipulation. Lastly, some people change their investment strategies frequently. While this may be useful in some instances, it most often hurts the overall returns of a profile. This can be seen in investors who hold 10 or more holdings, as they are constantly chasing a new product under the guise that it may outperform their previous ones. Through constantly picking up new ETFs or other assets, investors can encounter significant costs concerning brokerage fees and MER. Investing frequent, lower sums of money into different assets can also result in over-diversification or performance drag, which can reduce your overall returns. This occurs due to owning so many investments that you are more at risk of having poorer performing ones that can offset better-performing ones, lowering the likelihood of experiencing high growth. For these reasons, VDHG is an excellent option for impulsive buyers who are prone to these common investment mistakes, as it is designed as a set and forget type of product that doesn't need human interference to work. Disadvantages of Investing In VDHGRisk of Performance DragWhile diversification is a good thing, some people may view VDHG as being too diversified. For example, before the inception of VDHG, a very common practice among the FIRE community was to invest in VGS and VAS. This meant that Aussie investors had only two holdings, which gave exposure to two of the most invested markets. Similar allocations exist with people simply adding VBND for more bond exposure or VGE for exposure to emerging markets. While these require manual rebalancing and more diligence in deciding on an appropriate allocation, it offers the benefit of giving investors the ability to invest solely in holdings that they wish to invest in. Subsequently, investors who have portfolios that consist of fewer holdings may find it easier to track their overall returns and they can adjust their asset allocations accordingly to suit their intended investment outcomes. For example, if someone decides that they want to be a more dividend-focused investor, they can increase their allocation to Australian assets such as VAS or LICs that utilise dividends as a more prominent investment strategy. Alternatively, someone who is nearing retirement age and is planning to live on their investments may wish to have a higher bond allocation to reduce portfolio volatility while they are drawing down on their funds. With VDHG, you are also locked into your asset allocations. This wide range of diversification can be viewed as a positive, as more holdings mean more spread. By having a greater spread, it is less likely in each time frame that all assets will under-perform, meaning that even if some of the underlying ETFs perform poorly, the high-performing ETFs can offset this to some degree. However, this may also be viewed as a con, as some investors who would prefer to roll their portfolios may not want such a wide spread, due to the higher likelihood of VDHG containing more under-performing holdings. At the end of the day, this widespread and diversification can be viewed as a good or bad thing depending on which side of the fence you are on, so it's important to consider whether you want such a wide diversification. Pre-Determined Holdings/Allocations VDHG offers a lot of convenience as an all-in-one investment vehicle, with exposure to seven different ETFs. However, the holdings and more particularly, their percentage allocations of the overall portfolio may discourage some investors. A risk-averse investor may want a higher allocation of bonds and no exposure to emerging markets or small-cap companies, as this will provide more stable returns. Investors with higher risk tolerance levels may want no exposure to defensive assets and a greater allocation of exposure to these riskier markets, however, as the potential for growth will be higher. Subsequently, VDHG will likely contain ETFs that investors would otherwise not invest in and these investments may impact on your overall returns by being too volatile or too defensive. Similarly, to the above point, an issue that comes with VDHG and all diversified ETFs is that their holdings and allocations are pre-determined. By having pre-determined allocations, you must weigh the inner investments per VDHG's management. This may be considered a pro for people who are happy with the way that the portfolio is constructed or investors who are perhaps new to the game or don't want to think about their allocations. However, certain investors such as dividend investors would likely prefer a higher portfolio weighting towards Australia, as they offer higher dividends with tax advantages. Similarly, growth-oriented investors with long investment horizons may want a 100% equities-based portfolio, to optimise growth. Alternatively, someone may prefer to only hold large-cap companies in developed economies, as they are less susceptible to volatility than their developing country counterparts. If you fall into this category, you may find that a roll your own approach is more appropriate, as you can choose the holdings that you would like and give them allocations that you are happy with. This comes at the cost of doing more research into holdings, rebalancing your portfolio and requires more upkeep when doing taxes. However, investors who have a sound understanding of markets and prefer to take a more active role in their investing journeys may outperform VDHG by using this method. Allocation of Defensive Assets Defensive assets are a touchy subject for investors. Some people prefer to have a no exposure to optimise growth, others like having a small amount for peace of mind and some prefer a much higher allocation to prevent volatility. Given that VDHG is a high growth asset, these defensive assets while useful for mitigating against short term market fluctuations, such as market corrections or recessions, can hinder long-term performance. This is because equities have a history of outperforming bonds over greater periods, due to their higher annualised returns. Subsequently, these defensive assets may not be appropriate for people who either have higher risk tolerances or people who want to invest over a 10+ year timespan. Conversely, investors who are closer to retirement age may wish to have a greater bond allocation to avoid dramatic fluctuations in their portfolios. If this is the case, VDHG's 10% allocation may be perceived as too low. For more risk-averse investors or those nearing retirement age, Vanguard offers other diversified ETFs with higher allocations of defensive assets. These are VDGR – Growth (70/30), VDBA – Balanced (50/50) and VDCO – Conservative (30/70). https://preview.redd.it/tv71k9jxjpz51.png?width=650&format=png&auto=webp&s=58ba1b18c5658841cb5b82b15873abf5ceff0661 If you have already invested in VDHG and wish to increase your defensive asset allocation, you can simply buy more VBND, VAF or a similar bond ETF. This requires manual rebalancing and will incur additional MER; however, it may be a useful strategy for people in this situation. Summary of Pros and Cons
ConclusionVDHG is one of the most popular investment vehicles among Aussie investors chasing financial independence and for good reason. It offers a convenient and cost-efficient way of diversifying into almost 18,000 assets split across Australian, developed and emerging markets. This simple, all-in-one, set and forget type of investment vehicle offers convenience, diversification and mitigates against human error.However, it may not be suitable for more active investors who would like to narrow down their investment holdings and decide on their asset allocations. Similarly, higher-risk investors and risk-averse investors may prefer other alternatives that cater to a more aggressive or defensive type of investment approach. For individuals who fall into these categories, a roll your own approach may be more appropriate, as you can augment your portfolio to reflect your risk tolerances and financial objectives. Alternatively, other diversified ETFs such as DHHF which is 100% equities may be more suited to investors with higher risk tolerance. Whereas more risk averse investors may prefer to utilise more defensive diversified ETFs such as VDGR, VDBA or VDCO. All things considered, I personally like VDHG and view it as a suitable investment vehicle for most Aussie investors. Beginners, passive investors, emotional investors and people who are happy with the underlying holdings of VDHG, can utilise VDHG over a long-term horizon to reach their financial goals. This comes without the hassle of rebalancing, doing frequent market research and making frequent brokerage transactions, making it one of the most convenient ways of reaching financial independence. Want to Have a Look at Similar Products?Currently, VDHG’s main competition is the BetaShares Diversified All Growth ETF (DHHF). This is a more aggressive diversified ETF that contains exposure to global and Australian equities without any exposure to defensive assets (bonds). You can read my in-depth review of DHHF and how it compares to VDHG here.Special Thanks to Eli at Passive Investing AustraliaEli at passiveinvestingaustralia.com provided inspiration in writing this review from his previous review entitled: VDHG or roll your own. He was also kind enough to go over this review to make sure everything was correct. I highly recommend his website and VDHG review to gain a more holistic overview of passive investing options in Australia.That concludes my review. Hopefully, it sheds some light on VDHG, its underlying assets and the pros and cons of investing in it. Thank you to everyone who expressed their interest and if you have any feedback or topics that you would like for me to cover next, I'd love to hear about it. |
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