🤑 Super Investors Are Buying

MARKET UPDATE

Good Morning Investor! On Thursday, shares of Dutch payments processing darling Adyen ($ADYEN) skyrocketed 13% faster than a tourist's heart rate in Amsterdam's Red Light District, all thanks to a sensational earnings report that was hotter than stroopwafel fresh off the griddle. Despite the consumer spending contraction that had most retailers crying into their empty cash registers, Adyen managed to see 30%+ growth in North America. Of course, July's retail sales figures did come in better than expected yesterday, suggesting that perhaps consumers aren't quite as cash poor as we’ve been led to believe.

TODAY’S BIG HEADLINES

Super Investors Are Buying

GoDaddy, the Unexpected Winner

The Gaming Industry Looks Poised for a Comeback

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SUPER INVESTORS & PORTFOLIOS

Super Investors Are Buying🤑

Peeping Tom's Delight, Wall Street Edition: It's that time of the quarter again, where super investors and their funds reveal the updates they've made to their portfolios, in the form of a 13F filing. It's like a financial striptease, with investors slowly peeling back the layers of their strategy. These money mavens have been surprisingly active, gulping up "undervalued" and beaten-up stocks.

Buffett’s Midlife Crisis: It's already common knowledge that Berkshire Hathaway has trimmed over 55% of its position in Apple ($AAPL), like a retiree ditching their smartphone for a flip phone. But the 13F revealed that Buffett has bought up shares in both Heico ($HEI) and Ulta Beauty ($ULTA), both of which saw a significant rally Thursday morning. Given that Ulta is down 25% year-to-date, Buffett potentially bought it at its lowest valuation in years.

• An interesting possibility behind the Ulta purchase is that historically, when the US enters a recession, women tend to alter their spending habits, focusing on makeup and lipstick instead of pricier handbags and jewelry. It's the "look good, feel good" approach to economic downturns. Berkshire has taken a 1.45% stake in Ulta and a 1.25% stake in Heico, because nothing says "diversification" like aerospace and mascara.

Ackman’s Walk Down Memory Lane: Bill Ackman over at Pershing Square has also made an interesting purchase, one which he has a history with. Ackman trimmed his Chipotle ($CMG) position by roughly a fourth. He reallocated those funds by initiating a position in apparel giant Nike ($NIKE), which is now a 2.17% position. Brookfield ($BN) was also purchased and now has a 2.70% weighting. News of the purchase sent shares of Nike up over 4% on Thursday, proving that Ackman can still make the market "Just Do It."

• Ackman previously purchased shares of Nike back in 2018, a trade in which he made a whopping $100 million in profit for his fund. It's like finding your favorite old sneakers and realizing they still fit perfectly.

Michael Burry Doubles Down: Michael Burry has made some very interesting changes, doubling down on his Chinese equities thesis like it's the last order at a dim sum restaurant. Burry added Shift4 Payments ($FOUR) as a 14% holding, which is likely already a double-digit winner for the fund, given that the stock is up 15% in the past month after earnings.

• Additionally, Burry has now made Chinese tech giant Alibaba ($BABA) a 21% holding in the portfolio, Baidu ($BIDU) a 12.3% holding and ecommerce company JD ($JD) a 12.3% holding — making Scion Asset Management's portfolio allocated roughly 45% towards Chinese equities. It's a move which, up until today, is likely still in the red. But hey, who doesn't love a good game of financial Mahjong?

The B-List, Investors' Edition: Europe's top-performing fund since 2020, Bit Capital, has made Hims & Hers Health ($HIMS) its largest holding with a 10.30% weighting. Because nothing says "I believe in the future" like betting big on erectile dysfunction medication and hair loss treatments. Meanwhile, Chuck Akre has initiated a 1.25% position in the beaten-up short-term rentals company Airbnb ($ABNB).

INTERNET & SAAS

GoDaddy, the Unexpected Winner🚀

Best of the Bunch: Despite operating in a space more crowded than a clown car at a circus, GoDaddy ($GDDY) is proving it's got more game than a poker champion with a royal flush. Competing with the likes of Squarespace ($SQSP), Wix ($WIX), and to some extent Shopify ($SHOP), this website-builder and domain host is rocketing its way up the S&P 500, with its share price up a whopping 57% year-to-date.

Buzzword, or Money Printer?: It might come as a surprise, but GoDaddy was added to the S&P 500 back in June, sneaking in like a teenager past curfew. Now it's bordering on the edge of the top 10 best performing stocks in the index this year, leaving investors wondering if they've stumbled into a get-rich-quick scheme that actually works. What's causing this rapid rise? Well, much like your neighbor's new smart fridge, it's all about AI, baby!

• In February, the business launched GoDaddy Airo, a set of AI-powered tools to help small businesses automate the process of finding domains, building websites, and creating social media posts. It's turned out to be a money printer so effective, the Fed is taking notes.

• In its most recent earnings call, GoDaddy reported a profit of $146.3 million, a whopping 76.1% increase from the same period last year. Plus, it raised its 2024 revenue guidance by 7%.

Go Daddy, Go!: This growth doesn't appear to be slowing down anytime soon either. Starboard Value — an activist investor with a 4.5% stake in the company and apparently a penchant for ambitious goals — is claiming that GoDaddy should be aiming for 40% growth and profitability in fiscal 2025.

VIDEO GAMES & HARDWARE

The Gaming Industry Looks Poised for a Comeback👾

The Year of Woes: It hasn't been all fun and games for the gaming industry this year (pun intended). We've seen mass layoffs at gaming studios, declining sales steeper than a Skyrim mountain, and a distinctive lack of growth that has investors reaching for the "restart level" button. Many analysts claim the industry had a significant amount of demand "pulled forward" during the pandemic, and that this slowdown is apparently the industry's way of sleeping it off.

Rosy Future Projections: 2024 is projected to provide a mere 2.1% growth year-over-year for the games industry — up from 0.6% last year but still less exciting than watching paint dry in Minecraft. Next year, however, the industry looks poised to replace its controller batteries and recharge growth faster than you can say "micro-transaction," largely thanks to China. The 2025 launch of Nintendo's new Switch console and Take-Two's Grand Theft Auto 6 are widely anticipated to provide a new stimulus for the industry.

China Enters the Room: There's certainly some data to back up these projections, with Chinese entertainment firm Tencent Holdings ($TCEHY) reporting an 82% increase in net income in its latest quarterly results. It's an indicator that some of the industry angst is expiring in China faster than a power-up in Mario Kart.

• Following a decline in 2022 that had the industry looking more down than Eeyore, YoY growth returned last year, with revenues reaching a new record. Competition heated up among goliaths like NetEase and Mihoyo, turning the market into a battle royale that makes Fortnite look like a friendly game of patty-cake.

MORE NEWS

Additional market-moving events🌎

Panama Canal Faces Water Crisis: Authorities planned a $1.6 billion dam project to combat drought-induced shipping restrictions. The six-year project would displace 2K people, sparking local opposition as officials seek to ensure the canal’s long-term viability. (nytimes)

BNPL Goes Personal: Swedish fintech BNPL firm Klarna is taking on banks with a personal account and cashback rewards ahead of its planned IPO later this year. (CNBC)

Cisco Layoffs: Cisco Systems ($CSCO) plans to slash 7% of its workforce — roughly 6,000 jobs — in its second major layoff of 2024. (nytimes)

Britain’s Growth Returns: The UK economy grew by 0.6% in the second quarter of the year, after having grown by 0.7% in the first quarter — inline with expectations. (CNBC)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “superperformers” stock pick which we believe will provide significant outperformance compared to the S&P 500. Then on the 14th of June we released our next stock selection. Lastly, on August 6th, we initiated a position in Celsius holdings.

Here’s how the stocks have performed since:

• Hims & Hers Health: $15.86 (📈+9.61%)

• PayPal: $67.96 (📈+12.04%)

• Celsius: $41.95 (📈+3.89%)

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