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Adam Johnson

Adam Johnson anchored several business programs at Bloomberg Television over five years, interviewing CEOs, heads of state, and Nobel laureates. His daily video investment blog, Insight and Action was sponsored by a major U.S. lender. Previously he managed global risk assets for ING Furman Selz and Louis Dreyfus, trading oil futures, listed equities and equity options. Adam began his career at Merrill Lynch with a degree in economics at Princeton.


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Displaced Disruptor #1

Used Cars Like New

  • 40 million used cars change hands in the US every year, nearly three times the number of new cars sold
  • The used car market is highly fragmented and publicly traded dealers account for just 14% of annual sales
  • Only one operator offers an entirely online experience aimed solely at the national used car market

High growth stocks have gotten hammered over the past two weeks, in some case by as much as 30%. Many are exceptional companies changing how we live, and several should be bought… including one company revolutionizing how we buy cars. The auto market is highly segmented and ripe for disruption, especially at the high to medium end where millions of used cars with minimal mileage come off 36-month leases every year. The key to serving this market is speed, transparency and lack of friction. Just as we’re able to shop for clothes online in virtual environments and arrange next-day delivery, we can now do the same with cars… including pre-approved financing with a few swipes on an iPad. I’ve been eyeing the stock for months, and with last week’s selloff I feel like I’m finally getting a bargain too. This is exactly the kind of opportunity I like to sink my teeth into, a notable combination of long-term growth and near-term value.


October 20, 2018

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Displaced Disruptor #2

Doctors on Your Phone

  • Emergency room visits typically cost $1-2k and two-thirds take longer than two hours
  • 30% of emergency room visits are deemed non-urgent and unnecessary according to the CDC
  • Doctor appointments over the phone (aka Telemedicine) represents a potential $57B market opportunity

You may recall my write-up on CVS from August when I mentioned getting bitten by a dog while on vacation a couple of years ago. The episode made quite an impression, and I’m not just referring to the wound. I returned to the hotel a little shaken, and the concierge immediately put me in touch with a doctor on call… who literally appeared on my iPhone via facetime. He asked me to point the camera at my hand, took a look and offered his prognosis. No stitches, just a butterfly bandage and some antibiotics which he dispatched via messenger. The whole “appointment” took 5 minutes and cost about $35. He was an independent contractor, but what an incredible service, which is exactly why CVS has just signed a multiyear partnership with the world’s largest telemedicine provider. I’ve been eyeing this groundbreaking company since August, and with the recent selloff knocking about 20% off the stock price, I’m inclined to initiate a position. Dog bites and selloffs can be painful, yet they might be good for my portfolio.


October 20, 2018

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Displaced Disruptor #3

Lending Apocalypse Not

  • #1 rated bank in the country for 8 years running trades 25% lower after writing down 0.27% of assets
  • Shares now trade below their 2008 valuation AND book value for the first time since 2000
  • Management reiterates confidence in the overall loan book and guides to moderate growth in 2019

This has been quite a week. Stocks of every sort have gotten absolutely pummeled, though amid all the carnage I certainly never fathomed the nation’s top-rated real estate lender would descend into the mid-$20s. This is a bank I recommend at $40 only 12 weeks ago. So when it opened down 25% Friday morning I was shocked… and buying after listening to the earnings call. The decline comes as management writes down two loans of $46M in a loan book worth $16.7B… that’s just 0.27% of assets. As the CEO reiterated to a group of laser focused analysts concerned about one of their top picks, OZK has only booked five losses in 15 years, and that’s with an average of 300-400 loans in the portfolio at any one time. Despite having one of the most pristine lending records in the country since the 1980s, the bank now appears branded a canary in the cold mine by real estate bears convinced we’re witnessing 2008 all over again. Having run the numbers myself, I think the reaction is crazy. Again, I’m buying the stock.


October 20, 2018

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2.6

As in China’s benchmark stock index gained 2.6% on Friday despite weaker than expected GDP, following the government’s pledge to provide additional liquidity.
#Don’tFightTheFedWorksThereToo

31

As in Elon Musk tweets the new Tesla Model 3 costs $31k after tax credits, attempting to broaden appeal for his cheapest electric vehicle.
#HeBetterDoSomething

140

As in the Cass Truckload Index rises to 140, a ten-year high as the US economy posts strong gains and businesses build inventories ahead of the holidays.
#GrowthWillLastLongerThanPeopleExpect

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“Popularity has turned into concern about overcrowding, and outperformance has turned into concern about overvaluation. We think these risks are overstated.” 
–Goldman Sachs strategist Dave Kostin defending technology stocks and arguing they are a buy.

#Agreed

“Italy’s significantly higher budget deficits for the coming three years make it vulnerable to future shocks.”
–Moody’s rationale for downgraded Italian debt to one notch above junk. 
#GottaNoRespect 

“Matthew Korn from Goldman, you can run but you can’t hide. I’ll see you at the commodity conference very soon.”
–Cleveland Cliffs CEO Lourenco Goncalves calling out the GS analyst during the earnings call for a publishing a negative report.”

#WelcomeToTheBigLeagues