Fed Cuts, Jobs Report Dazzles, Heavy Earnings, And Baby Shark!

“An extra yawn one morning in the springtime, an extra snooze one night in the autumn is all that we ask in return for dazzling gifts. We borrow an hour one night in April; we pay it back with golden interest five months later.”
-- Winston Churchill  

On Sunday, we move the clocks back an hour to be consistent with local standard time. It represents a change from the end of the summer months and the beginning of the winter months. The practice originally sprang from the great one, Benjamin Franklin, and he wrote about it in a humorous letter to the Journal of Paris in 1784. When you reset the clock, it’s significance is the idea of a change of the season.

Consistent with that idea of moving from one season to another, the investment world may be embarking on it’s own important idea of change as well. It seems those making the capital allocation decisions may have tired of the ephemeral idea of non stop growth. In place of the water fountain of growth (delusion?), the meat and potatoes concept of cash flow, earnings, and low and behold, value, may be regaining favor. Let’s take a look at some examples of why this may be this case.

Last week, a few high profile non-earners reported their financial results. The market reaction was not pretty. The headline case of this is the funky food delivery service GrubHub (GRUB). After missing it’s earning estimate, investors fled to the tune of a 43% drop. In one day. Next up, also in the food realm, albeit the plant based domain (with preservatives I might add), BeyondMeat (nicknamed Beyond Belief, for the stock price). Beyond Meat (BYND) reported a nice quarter, but, alas, it was also taken to the woodshed, to the tune of losing 10 percent in one day, but over the last month, it has retreated from 140 down to 82, over 40%. Beyond belief still is suspended from reality, but markets have a way of correcting hallucinatory value. For our third entity, online home furnishings retailer Wayfair (Wreported results and also saw a similar result, losing ten bucks in a day. It’s stock is down from 120 to a touch over 80, a loss of nearly a third of it’s value. Let’s see what is happening in the value sphere to see if there is more popularity among these kinds of companies.

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Disclosure: Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the ...

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