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š° 15 Compounding Machines
1) Adidas Sees First Loss In Over 30 Years 2) U.S. Interest Payments Reach $1T, 3) Compounding Machines and more!
Carbon Finance
March 22, 2024
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Happy Friday!
Yesterday, the Department of Justice launched a major antitrust lawsuit against Apple, alleging that the tech giant has monopolized the smartphone market.
Highlighted in the lawsuit is a notable comment from CEO Tim Cook, who, when questioned about improving iPhone-to-Android messaging, said, āBuy your mom an iPhone.ā
Apple shares fell over 4% by market close.
Some key data bites from this week that you should know:Ā
Chipotleās $CMG board approved a 50-for-1 stock split.
Reddit $RDDTĀ jumped 48% on its first day on the NYSE.
Stripeās total payment volume crosses $1T.
Corporate defaults are at the highest rate since 2008 crisis.
Intel $INTC will receive $8.5B to build chip plants.
Nearly 80% of websites have Google $GOOG trackers.
Bank of Japan raised rates for the first time in 17 years.
Saudi Arabiaās Sovereign Wealth Fund plans to create a $40B fund to invest in AI.
In todayās newsletter:
šĀ Adidas SeesĀ First Loss In Over 30 Years
šŗšøĀ U.S. Interest Payments Reach $1T
š° 15 Compounding Machines
Letās dive right in!
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šĀ Adidas Sees First Loss In Over 3 Decades
The breakup with Kanye West has been tough for Adidas.
The company saw its first annual loss in over three decades.
The brand has hit a rough patch following the subsequent halt of its lucrative Yeezy sneaker line back in October 2022.
Looking forward, Adidas presented a mixed forecast for 2024.
The brand anticipates mid-single-digit growth in currency-neutral sales, with its core business aiming for a high single-digit increase, excluding Yeezy revenue.
Growth is expected across all regions except for North America, where a mid-single-digit decline is anticipated for 2024.
šŗšøĀ U.S. Interest Payments Reach $1T
For the first time ever, the interest expense on the U.S. public debt has exceeded $1T, more than doubling in just the last three years.
The national debt now looms at a whopping $34.6T.
An even more surprising data point?
This figure is increasing by nearly $1T every 100 days.
This growth could continue to accelerate if high-interest rates persist.
However, despite a recent uptick in inflation, the Federal Reserve signaled its intention to implement three rate cuts in 2024 in its FOMC meeting this week.
š° 15 Compounding Machines
What is one of the most important metrics you should look at before investing in any company?
Return on Invested Capital, or ROIC.
ROIC measures how well a company generates profits from its total capital, demonstrating the efficiency of its investments.
A high ROIC suggests a company likely has strong operational management and a competitive advantage.
Above, Iāve highlighted 15 companies that have maintained a consistently high ROIC over the past decade.
Of the 15, all of them have outperformed the S&P 500 over the last 10 years, with the exception of Nike.
Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns.
If the business earns 6% on capital over 40 years and you hold it for that 40 years, you're not going to make much different than a 6% return -- even if you originally buy it at a huge discount.
Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive-looking price, you'll end up with one hell of a result.
šĀ Recommended Reading
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šĀ Buyback Acceleration. Berkshire Hathaway $BRK.B has increased its stock buybacks this year, repurchasing more than $1.8B so farĀ -Ā R
šĀ Ketamine Defense. Elon Musk $TSLA said his ketamine use is in the best interest of his investors -Ā BB
š¾Ā New Nvidia Chips. Nvidiaās $NVDA new B200 AI Chip will cost between $30,000 to $40,000Ā -Ā R
š¤Ā AI Partnership. Apple $AAPL plans to use Google Gemini $GOOG for AI features in the iPhoneĀ -Ā BB
š„Ā Short Seller Roast. Palantir $PLTR CEO Alex Karp says he loves burning short sellers to stop them from being able to afford cokeĀ -Ā CNBC
Notable Companies Reporting Earnings Next Week:
Tuesday (3/26):
McCormick & Company $MKC,Ā GameStop $GME
Wednesday (3/27):
Cintas $CTAS, PayChex $PAYX
Thursday (3/28):
Walgreens Boots Alliance $WBA
All of the companies that are reporting earnings next week can be viewed here.
Major Trades Published 03/15 - 03/21
Buys
L3Harris ($LHX)
Insider: William Swanson (Director)
# of Shares Purchased: 1,250
$ Amount: $268,738
SEC Forms: [1]
Sells
Dell ($DELL)
AIG ($AIG)
Insider: Peter Zaffino (Chairman & CEO)
# of Shares Sold: 333,000
$ Amount: $25,265,116
SEC Forms: [1]
Arista Networks ($ANET)
Insider: Jayshree Ullal (President & CEO)
# of Shares Sold: 87,418
$ Amount: $24,372,681
SEC Forms: [1]
Booking Holdings ($BKNG)
Insider: Glenn Fogel (CEO & President)
# of Shares Sold: 5,827
$ Amount: $20,137,703
SEC Forms: [1]
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