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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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Power Me Up
Leveraging EVs
- Electric vehicles account for 2% of US auto sales but could rise to 10% by 2025 (Platt’s Analytics)
- US has just 41k EV charging stations according to DoE data, compared to 168k gasoline stations
- Largest provider of EV charging stations has 70% market share in the US and 20% in Europe
Go Big… Go EV – Ford CEO Jim Farley sent shockwaves across the auto industry last month with his $30B commitment to provide an electric version of every vehicle in the lineup by 2026. Electric vehicles may only represent 2% of current auto sales, but that percentage is clearly on the rise. Platt’s Analytics forecasts that EV share will grow to 10% by 2025, and I’ve seen multiple forecasts which predict 20-25%, especially in China and Europe. Whatever the exact figure, electric vehicles represent a massive change to the status quo, and there will be MANY companies to buy as this evolving ecosystem achieves scale. I think one of the most obvious and underserved opportunities is in chargers and charging stations that enable EVs to function. One company dominates, with 70% market share of all Level 2 chargers. It also operates the largest network of independent chargers across the country, providing consumers the first integrated platform for powering up and hitting the road.
July 23, 2021
Read MoreGolden Opportunity
Call Option Plus Cash
- Gold has risen since 2018 as real yields (interest rates minus inflation) have become increasingly negative
- Gold miners provide a leveraged bet on gold, with earnings typically rising 2% for a 1% gain in the metal
- The global #2 producer trades at a rare 12-15% discount to historic valuation as it realigns mining assets
Drilling Down – Long-time subscribers know that I’m not generally a fan of gold, but gold miners are a different story. This is due to a phenomenon called operating leverage, where earnings rise faster than the metal itself. At the risk of oversimplification, digging $2,000 gold is significantly more profitable than digging $1,000 gold… since the same machine is working the same 10-hour shift, but generating twice the revenue. Gold rose to a new all-time high last year as negative real yields undermined the purchasing power of paper currencies. Since governments are still borrowing, and central banks are still holding rates down, I think gold prices will trend higher. I could buy futures, but I think I’ll make more owning a miner… especially one returning cash to shareholders in the form of special dividends. It’s like owning a call option that pays cash in the meantime.
July 23, 2021
Read MoreFaster and Smaller
Technology’s Mantra
- Semiconductor fabrication techniques increasing apply to multiple industries requiring tiny components
- 5G, Robotics, Automation and Internet of Things (IoT) provide significant runway for nano-manufacturers
- Top supplier of mini-manufacturing solutions becomes increasingly vertical, dominant and profitable
Faster and Smaller – Legendary Intel Co-founder George Moore postulated in 1965 that semiconductor density doubles every two years, a trend which has enabled computers to become significantly smaller and exponentially faster. As a practical example, compare today’s handheld iPhone to the sprawling machine which guided Neil Armstrong to the moon in 1969. It’s 100,000 times more powerful, with 7 million times the memory according to MacObserver. This is a staggering accomplishment, requiring an entire ecosystem of specialized equipment capable of producing increasingly complex semiconductors and tiny circuit boards. Dust is the enemy, and chips are manufactured in some of the most controlled environments ever created. One company owns this niche, guided by its longtime mantra to Surround the Chamber. Now it’s broadening the mission to include Surround the Workpiece… a direct response to increasing demand fueled by 5G, Robotics, Automation and the Internet of Things (IoT).
July 23, 2021
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10
As in graphics chipmaker Nvidia becomes the 10th largest US company by market cap, more than AMD and Intel combined.
#3TrillionCalculationsPerSecond
66
As in Mr. Besos Blue Origin rocket traveled 66 miles above the earth’s surface.
#IsThatReallySpace?
1,158,401
As in LA Airport handled 1,158,401 tons of freight through May, 30% more than the pre-Covid baseline from 2018-19
#SupplyChainsStillCatchingUp
“My ideal investing is stuff that looks a little crazy now and in 3-5 years is obvious.”
– LinkedIn Co-founder Reed Hoffman
#AmericanIngenuity
“We are training the algorithms… and they are training us.”
– AlgoTransparency Founder Guillaum Chaslot
#SlightlyUnsettling
“They’re making it up as they go. I don’t mean that in a pejorative way, but this is a work in progress.”
– Obama WH Cybersecurity Advisor Michael Daniel
#WildWest
