Anchors & Rockets: Using Unit Economics to Evaluate Equities; Guest Lecture at Columbia Business School
Columbia University Securities Analysis Anchors & Rockets Feb 25 2021 website version
February 25, 2021
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Columbia University Securities Analysis Anchors & Rockets Feb 25 2021 website version
Containing the virus will make the impact of future stimulus payments much more powerful, according to analysts. Even so, retailers continue to face challenges “because the demand environment is pretty uncertain, particularly on a near-term basis,” said John Zolidis, a retail analyst and president of New York-based Quo Vadis Capital.
Last month, shares of a marginal retail company briefly rose to $500 from $20. Some thought
this was a bad sign, but does it mean anything at all?
There is almost no way for any typical U.S. investor to know what is going on. That’s not a recipe for investment success. Quo Vadis Capital, an independent registered investment advisor, said in a Friday report that the stock is likely going to zero.
Academy (ASO) QV investor deck v2 Jan 31 2021
“Under Mr. Lore’s leadership, Walmart pursued an aggressive and ultimately successful e-commerce strategy,” wrote retail analyst John Zolidis of Quo Vadis Capital. “We view Mr. Lore’s departure as an incremental negative in that it removes a visionary and entrepreneurial executive from the company.”
“We view Mr. Lore’s departure as an incremental negative in that it removes a visionary and entrepreneurial executive from the company,” Quo Vadis analyst John Zolidis wrote in a research note. His planned exit could also “suggest that further transformational moves within the digital and e-commerce channels are becoming more difficult to achieve.”
Conditions appear very good for equities heading into 2021. Governments are spending trillions to stimulate economies and we estimate > $50 trillion of fixed income or bank deposits earning nothing or next to nothing. Meanwhile, globalization and technologies are concentrating profits in corporations and a greater number of individual investors are entering the market at a time when the number of public companies has shrunk. Markets have momentum, comparisons are easy, and investors aren’t requiring fast growing companies to show a profit.
John Zolidis, president of Quo Vadis Capital, is bullish about Academy as well, basing what the company can accomplish on Hicks’ history with Foot Locker Inc.
“We followed Foot Locker through this period and feel confident that Mr. Hicks and his team will find operational and merchandising improvements to maintain positive sales and margin momentum for Academy,” wrote Quo Vadis, which is long on the stock.
Despite media and political fear gauges boiling over, consumer behavior has continued to normalize. That’s at least according to the company management teams with whom I have spoken over the past two weeks. Various data sources also continue to suggest that consumers remain chill. Will this change? Will people freak out during the gap between now and when the vaccine is widely available?
My response from a purely investment standpoint: It does not matter.