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Esoterica Capital

Next Generation Investing.

04/27/2022

It might feel like a replay for many, but once again the stock collapsed right at the beginning of the earnings season. The subs number was alarming to investors: H1 net adds came in at -1.5M vs. 5M expected, the first time the net adds went negative since 2011.

Read our blog on Netflix Earnings and Ackman’s Exit of His $1.1B Bet. Link in bio!

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04/25/2022

reported stellar FQ1'22 results earlier last week driven by strong gross margins from its automotive business.
For context, Tesla’s cost of goods sold per unit increased a modest 3.5% to $36,300 in an environment where key components like lithium carbonate are up over 70% year to date. We’ve included a slide below that shows how Tesla is bending the cost curve lower through manufacturing innovations like single-cast parts, etc...

Read our newest blog on FQ1'22 earnings. Link in bio!

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04/06/2022

March 2022 will go down in history as one of those times. The Russia-Ukraine war has profoundly changed the geopolitical landscape, and sitting on the sidelines seems no longer an option for superpowers. The soaring commodities prices turned an already uncomfortable inflation outlook into a scary one. The Fed carried on its hawkish stance, igniting an intense selling-off in the rates market and ultimately the inversion of yield curves. Not to mention the unprecedented ups-and-downs of Chinese equities provoked by growth concerns, delisting fears, and a timely pro-market "policy put" by Vice-Premier Liu He. You would have expected risky assets to fare poorly. Well, not so fast. QQQ finished the month on a solid footing (4.67%), despite an intra-month 8.25% drawdown followed by a head-scratching rally. Welcome to investing.

Read our newest letter on Fed's front-loaded catching up, yield curve inversion, and the growth outlook of the software sector. Link in bio!

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03/28/2022

Investors have voiced concerns over negative earnings revisions of U.S. companies in the coming quarters, thanks to all the world's troubles...While the EPS YoY growth will undoubtedly slow down from 2021 due to the tough comp, we haven't seen a broad-based margin contraction yet.

Read our newest blog. Link in bio!

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03/07/2022

Read our Monthly Investor Letter, February 2022 where we discuss semiconductors and geopolitical risk, inflation outlook, and SaaS valuation. Link in bio.

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03/01/2022

The Semiconductor industry is an essential foundation for our daily lives and has significant implications for how everyone connects with the rest of the world. It also has probably one of the most complex and globalized supply chains among all industries.
A typical semiconductor device is manufactured in enormous fabs located in Taiwan and Korea, with equipment made in the US and Netherlands, critical materials from Japan, and tested and packaged in Southeast Asia.

Read our thoughts on geopolitical tension and semiconductor supply chain. Link in bio!

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02/17/2022

A heavy week of software earnings, but we walked out feeling good about high-quality growth companies more than ever. In the face of rising interest rates and a hawkish Fed, the market prefers assets with improving margins, efficient GTM, and sustainable cash flow. In a slowing economy, growth becomes a scarcity that investors chase. That's why we believe high-quality growth companies will continue to command premium valuation while companies growing at the cost of a huge cash burn will suffer…

Read our high-level recap on and .

Link in bio.

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02/14/2022

Earnings season is slowing down a little bit with only two semiconductor companies in our watchlist reporting this week. The messages were very consistent with what we've heard from companies over the past few weeks, strong revenue & gross margin, a growing backlog, and lean inventory. So we will skip the earnings detail and focus on M&A activities today.

The two blockbuster semiconductor acquisitions dominating the news headline over the past 15 months, AMD/Xilinx and Nvidia/ARM, both came to closure this week but with very different results.

Read our newest blog on semiconductor deals update. Link in bio!

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02/07/2022

In the spirit of “invest for the long term, but constantly vet,” we start this month’s letter with some thoughts on the latest quarterly earnings of companies of interest.

Semiconductor companies delivered a similar set of solid results, including substantial revenue and margin upside, a growing backlog, and a continued chip supply shortage...

Read our Monthly Investor Letter! Link in bio!

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02/03/2022

Regulatory pressure, especially the restriction on gaming, has weighed on Tencent's business. As Tencent ramped up its buyback and dividend programs, investors wondered if Tencent was becoming a value play. We disagree, and to be more specific, we see this is most likely a temporary phase. Instead of becoming a value stock, Tencent re-emphasizes its business focus and breeds new growth drivers. Let's not overlook these positive developments.

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02/02/2022

Semiconductor shortage has dominated news headlines for much of 2021. In 2021, whenever asked about when the supply constraint will improve, the answers from semiconductor companies have always been "it will get better in 6 to 12 months."

However, "6 to 12 months" turned out to be a moving window, and the date of eventual supply-demand balance keeps getting pushed out. It is the same old story this time around, with no sign of shortage easing so far, but it is expected to get better in the second half of 2022 or 2023, i.e., another 6 to 12 months.

Read our blog on semiconductor shortage. Link in bio! 👆🏻

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01/31/2022

Happy Lunar New Year!

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