Some Thoughts, Links, and a Watchlist

On time off, links from the past week and companies I'm watching

I am trying out a new format where I move beyond pure stock pitches. Every week (or two weeks) at the end of the week, I hope to publish a list of links to articles and podcasts

Quick thought: You know you’re on a roll when you start looking forward to Mondays.

On Time Off and Vacations

Recently, I went on a vacation for a week, away from work, away from twitter, away from writing and away from the market. Although I had access to my phone, I checked it maybe once during the week and generally stayed away from any market news, staying in the moment on my trip. If the world had fallen apart and my portfolio had dropped 50%, I would have found out, but acting on it would have been difficult. Usually my days are regimented and filled with information, work and meetings. I always have a podcast in my ears, an assignment open, or an article in my face trying to absorb as much information as possible. However, the last week provided some clarity on what's important from the big picture.

When I started investing, most of my 'research time' was spent looking at stock prices, constantly refreshing the page, in the midst of other activities, detracting from both my work and my stock returns. While such constant updating may be necessary for active traders buying and selling daily, I was(and still am) not that good (or that interested) in day trading. With experience, my time has shifted towards more deep research and less price-checking, but the vacation really reminded me how useless it is to check your portfolio everyday. Setting price triggers to buy and sell stocks while focusing most of your effort on research is much more effective than constantly watching the price. A week off to assure oneself that there is correlation between frequency of checking a portfolio and returns is needed in a market overloaded with information and some trading apps specifically aimed at engagement.

Although, a week off can help you zoom out, offering some perspective beyond the minutia of daily life, the hardest part is always jumping back in to work. The lethargy on a first day back is always worse than the relaxation of the week off. People love to bust their ass day in day out and use vacations as a way to escape, but that is impossible for me. I have to find small wins everyday to keep me going without long vacations. Once you stop the ball rolling, inertia naturally makes it difficult to both stop and start again. Anyone have thoughts on vacations and the effects of inertia on returning to work?

Articles and podcasts:

Could you imagine being Badass enough to buy a $100 million newspaper because you liked reading it as a kid? Well Stewart W. Bainum and a slew of other billionaires are trying to raise $680 million to buy newspaper company Tribune Publishing. (Podcast)

On finding great companies: There are a lot of different ways to do it, but a common theme is uncertainty. For great returns, a company usually has uncertainty involved due to industry dynamics, mismanagement, or business issues. The alpha stems from either a data insight or perception insight on the business. This often leads to the twin engines of stock growth (h/t Chris Mayer): multiple expansion and fundamental growth. (podcast)

If you're looking for a combination of hilarity and an in-depth explanation of payment for order flow, listen to this 'Odd Lots' podcast with Doug Cifu, CEO of Virtu Financial. It seems most of the public problem is a branding issue with sinister terms like payment for order flow and dark pools. In reality, what sounds good in politics doesn’t make too much sense in real life. The retail buyer is actually empowered by companies like Citadel and Virtu.

For a fantastic summary of some of the SPAC wheeling and dealing, Andrew Walker has an entertaining post on reality hitting the new wave of SPACs in the face. A quote: "The Executive Chairman did a valiant effort of trying to call a turd a raisin, but it was pretty clearly a giant, smelly turd" (Link)

Aswath Damodaran has a great post on the link between rates and stock prices. TLDR: Inflation leading to rising rates is bad, but growth leading to rising rates isn't. The fed doesn’t control rates that closely either. (Link).

Companies on my watchlist:

Lensar (LNSR) - maker of Femtosecond laser assisted cataract surgery devices for laser procedures for cataract surgeries. FLACS is a controversial topic in Opthamology with some doctors refusing to use it while others use only FLACS procedures. Results are mixed but revenue growth is strong with a new product that could expand the market ten fold possible in late 2022.

Pharmchem (PCHM) - Dark company with a patch for sweat testing of drugs. It hasn't filed since 2003 but releases annual letters and holds an annual shareholders meeting. I am attempting to contact IR asking about patent protection since the technology is fairly old. It's profitable, growing reasonably, and available for sale to the right buyer.

Immunoprecise Antibodies (IPA) - develops antibodies for big pharma. It has seen a run up in the last year but I have concerns on it's ability to distinguish themselves from competition and deliver on the results they promise. For example, they said they would have a Covid vaccine by April, but development is still in phase one. Needs more digging on why revenue growth is so fast.

Let me know what you think of the new post format