04/21/2022
Looking at the market: Munger and Ackerman fail, the biggest nightmare of technology stocks is Davis double play?
Today, judging from the trend of the Hong Kong stock market, the volatility of Hong Kong stocks is low throughout the day, and we continue to maintain our judgment on the bottom trend of the Hong Kong stock market, and we are not in a hurry to enter the market:
In the first and second quarters, under the current domestic epidemic situation, the performance of the technology giants will continue to be under pressure, and the inflection point of performance is expected to wait until the third quarter. The pressure of US dollar capital returning to the United States and the depreciation of the RMB will cause Hong Kong stocks to continue to be under pressure in the short term;
Judging from the trend of U.S. stocks, after the yield on Treasury bonds exceeded 3% last night, U.S. stocks ushered in a wave of violent rebound after Fed Evans’ more dovish speech. Evans believes that the inflation rate will not reach 3% next year 2%. It stands to reason that the idiosyncratic factors that cause high inflation will stop rising. When dealing with inflation, you can choose the timing of monetary policy wisely. The Fed will maintain a neutral interest rate level of 2.5% by the end of the year, which is obviously a little more dovish than the market has expected to raise interest rates more than ten times. Basically agree with Evans.
But today, the trend of US stocks has ushered in a sharp differentiation. The Dow Jones is strong, but the Nasdaq is weak. The main reason is that Netflix (NFLX.US)$ announced extremely lower-than-expected results, which directly led to the Nasdaq. Dak is under pressure, Adviser Jun, the first two articles have been reminding that the best strategy for dealing with the current financial report season is to sell before the financial report is announced and wait for the verification of the performance, otherwise it will be very difficult to encounter a slump like Netflix. It's uncomfortable. At this time, if Bill Ackman, who bought Netflix after the last quarter's earnings report, took advantage of the slump in Netflix, and didn't sell it, it should be very uncomfortable.
Today we will mainly analyze the matter of bargain hunting.
First, Netflix plummeted after the market, and the hedge fund bosses who were bottom-hunting suffered serious book losses:
Netflix stock price trend
When the market panics and sells, the legendary fund manager, Bill Ackerman, buys Netflix and becomes the top 20 shareholder
After the market on January 26, as the market panicked due to the Fed's hawkish remarks, Bill Ackerman, founder of Pershing Square Capital, a well-known hedge fund manager, issued an open letter to investors stating that the company opened a position in the latest round of US stock market adjustments. Streaming media The track shares have become the top 20 shareholders of the latter. They value Netflix's business very much and believe that Netflix's business has very favorable characteristics, including subscription-based recurring revenue, first-class management, efficient culture, economies of scale, high Quality economics, strong competitive moat, pricing power, substantial marginal expansion, and improving free cash flow, among others.
Therefore, Ackerman chose to hunt for the bottom when the market was sold off because Netflix's business fell short of expectations. It is safe to say that he was looking at the investment potential of the streaming media track and Netflix's own core capabilities. It is believed that it can take the lead in the future competition and win the increasingly escalating competition.
But in the past earnings season, Netflix's users declined for the first time in decades, and it is expected to continue to lose users, which directly led to consecutive quarterly earnings reports. 70%, a very exaggerated decline, Ackerman's floating loss should exceed 40%.
The biggest risk of growth stocks comes from Davis’ double play. If the growth of growth stocks is falsified in stages, it will usher in a very tragic double play, killing valuation + killing logic. Since November last year, Netflix has gone through such a process. Due to the slowdown in performance, during the interest rate hike cycle, the valuation has dropped significantly. At the same time, due to intensified competition, user growth has stagnated or even lost. It directly kills logic. After two rounds of killing, Netflix has been killed. current predicament.
Therefore, if your bottom-hunting growth stocks have not shown an inflection point in performance, or are even deteriorating, you must sell them before the earnings report, and don’t hesitate.
Second, Alibaba $Alibaba (BABA.US)$ plummeted in a row, Munger's half-position stopped loss, and the loss was serious:
Recently, the news of Munger's insistence on Alibaba's $Alibaba (BABA.US)$ has been clamoring, directly causing a wave of investors who followed the trend of Munger to buy the bottom of Alibaba. ?
Figure Alibaba stock price trend
On April 11, Daily Journal Corp, of which Munger had previously been chairman, filed its latest 13F holdings with the SEC. The Daily Journal sold 302,060 Alibaba American Depositary Receipts (ADRs) in the first quarter of this year, reducing its holdings from 602,000 to 300,000, cutting Alibaba's investment position in half. Since Munger bought Alibaba ADR at a high level in the first quarter of last year, and then increased the position significantly, the average cost of holding a position may be above $160, and the loss may exceed 40% this time.
From buying to selling, Munger has only held Alibaba for one year. For Munger and Buffett, who are marked by long-term holding, it can be said to be a very short-term investment. Inhuman and non-human, changed the human world.
So, why did Munger stop losses on Alibaba?
As we all know, under the suppression of domestic anti-monopoly, the Internet that has been blindfolded in the past ten years has finally been forced to press the pause button to prevent the disorderly expansion of capital from becoming the main theme of the industry, and Ali is the eye of the storm. Almost peeling off a layer of skin, and the competition in the traditional e-commerce field continues to intensify, and the impact on the fundamentals is getting bigger and bigger. Therefore, Ali's stock price is also losing ground with the in-depth progress of anti-monopoly, and it is necessary to buy Ali at the bottom. Faced with the dilemma of the stock price falling again and again.
So, why didn't you close the position early in the process of falling, but waited until it fell to such a position before rushing to clear the position?
Oversold is not a reason to decide to buy or sell:
It doesn't mean that you will lose more if you fall too much, because you can fall again after the plunge. From 10 yuan to 5 yuan is a cut in half, but it can also fall from 5 yuan to 2 yuan, 3 yuan, commonly known as ankle cut, Netflix cut in half After that, it was cut in half again, and the stock price plummeted by 70%. The same is true for Ali. It was cut in half, very tragic.
It is not to say that a large drop is a reason to buy. The core is whether you can see a clear inflection point, otherwise it is a gamble, and it is very likely to be costly.
Therefore, when Munger stopped Ali, he was admitting his mistake and reconciling with the market, rather than standing on the opposite side of the market.
Buying the bottom is an art and a skill, especially when it comes to bargain-hunting growth stocks. When the external environment is harsh, the risk that must be avoided in bottom-hunting growth stocks is Davis double play. If it really comes, please Remember to stop losses in time.
