A recent post by a followed SA author (John M. Mason) returned to the ‘ecosystem’ value chain narrative – i remember this from almost 10 years ago as my former employer tried to create “the third mobile ecosystem” behind Google and Apple. We failed miserably, but the learnings and strategy were invaluable. John has a solid way of tilting paradigms for investor evaluation, and I appreciate that. Ecosystems are a type of moat – but way more resiliant. Ecosystems take big money and years to evolve to that strength however, and that was our learning – we tried to make it happen on our timeline. They also seem cemented with differentiated and spectacular user / customer experience – not a ‘thing’.
Again, on these 5G posts … I am NOT pushing any position on 5G safety. I am just forcing myself to risk manage my investment priority in the IOT narrative over the next 10 years. I am making risks I find visible — no more.
I have already started a country (or region) coverage strategy focusing on US, China, UK and Canada. I was going to add another country and was looking at S. Korea, but this data suggests Japan the better target.
IHS did a great job then with use cases and specific industry impacts.
I am working on a value-chain guide to investment placements and timing, but will be a few weeks before ready. Key take-away from this IHS report is two-fold: a) pay attention to Japan and b) view opportunities with an industry overlay (like above table).
Bespoke pointed to this article on SaaS and the comparisons between the three companies. I am not sure that I totally agree with their differentiations, but their one chart is an interseting framework to use when evaluating technology companies. A matrix between use case innovation and customer relationships.
The post has some very good information for those of you who may not understand 5G technology and how it is different from 3/4 G. The author, then however, goes more into why Verizon (VZ) is an undervalued investment. As far as the post goes, the comments are probably worth more than the VZ content. There was a undeveloped recommendation to pay attention to other aspects beyond the towers (CCI in this case) and the carriers (VZ), but without sufficient information – hence why short for me.
I am starting to partition out the 5G businesses in an order of investments (and profits). My big buckets are in the order of profit hitting bottom line 1) Infrastructure equipment, 2) devices and their components, 3) services and 4) security (timing is hard on security) – i am NOT looking at applications at this point. In the referenced post, CCI is in infrastructure and VZ is services. I am long carriers to cover most global areas: T, VZ, CHL, TU and VOD; but those investments all yield (at entry prices) >5%, so i can afford to wait. The infrastructure is the first investment bucket to really dive into … i have just started.
Disclaimer: these are my opinions, not recommendations
I worked thru 4 of my Q1 earning conference call transcripts: HASI, WELL, CY and INTC. I find these conference calls both educational on a business strategy / communications perspective and a specific company performance level. There is also some value in learning which analysts ask good questions and which just toss a slow-pitch ‘gimme’ questions. Guess who you ignore?
The two that were terrific both in terms of company execution and depiction of strategy: HASI and WELL. My allocation to HASI is tapped out, but i will soon (Q2/3) turn back on the DRIP machine (i had turned off due to valuation). WELL is one to watch and I will both turn on DRIP and watch for opportunistic purchases to double my current holdings (in IRA).
CY was not bad, but their business is a tough one and they admitted that visibility is a bit opaque at best. This is an opportunistic purchase imho trying to get a dividend yield ~3.0% from the 2.6% today. With that said, I believe their IOT strategy is solid but will be a 2020-21 story. CY and MRVL are my favorite IOT connectivity plays (others like SWKS), but this is a longer term narrative and i strongly believe there will be lower prices ahead to take positions.
INTC was terrible on a couple of fronts – talk about new CEO birth with fire. Declining units, competitive ASPs, inventory write-down and worse a 2H hockey stick in demand because customers are working thru 2018 purchases / supply. Really? What happens if demand in cloud and enterprise does NOT pick up in 2H? I have seen this movie before and there will most like be much lower stock prices. The one ‘good’ nugget was the talk about 5G edge and infrastructure; however, that is a small portion of the overall product mix and a 2020-21 story as well (depends on 5g roll out plans across the globe)
One of the most complex / dense writers that I read regularly and usually read more than 1x, the Heisenberg Report, posted on SA today an article that reflects a point I was making earlier this week about the simplistic press narratives and marketing spin used to keep individual investors putting our capital in play.
This is a dense post and has at least two key themes, but the one that I am focused on is how simplistic narratives drive both human and headline algos to make investment decisions that may / may not be completely factual, or grounded on solid financial data. As marketing departments do what they are designed to do – drive more business, they will continue to get better and better and influencing consumers (amateur investors) to generate revenue for the professionals. The marketers / spinners are not evil or malicious; they are doing exactly what they were designed to do: drive revenue growth.
The key take away for me, which is the same point I made earlier here, is that we individual investors need to really spend the time and diligence behind our strategies and investment decisions – check, cross-check and corroborate all inferences and recommendations with our own data analysis. Our jobs are getting harder.
My observation (no data collected) over the last couple of months of daily monitoring the top analyst picks (only 4 and 5 star analysts) is that their picks between buy and hold are sentiment driven more than fundamental business driven. When sentiment is low, the ‘holds’ out pace the ‘buys’ and the inverse when sentiment seems positive.
Key observation and suggestion: don’t trust the recommendation poke and dig thru the data to understand exactly WHY they made that recommendation. It takes hard work to be a good stock picker and even more work to be a good portfolio manager.
Eugene, OR has groups that protest against just about every issue one can identify, so it is not surprising that a local effort against 5G roll out exists. For potential investors using 5G as a major investment narrative, these local push-back efforts will both slow the deployment and increase the costs of those roll outs.
One of my followed authors on Seeking Alpha – Dividend Sleuth – published an article on telecom industry and through the comments he posted some links to my question about health risks.
Dividend Sleuth shared the following and i pass along without deep review – so some may / may not be helpful. – Below copied directly from our comments:
Rockman’s September 2018 Forbes article, “Is 5G A CIA Plot?” (www.forbes.com/…)
a good November, 2018 Vox article by Julia Belluz about the mechanics of
radiation on the electromagnetic spectrum: “A comprehensive guide to the
messy, frustrating science of cellphones and health.” (www.vox.com/…)
website about radiation health risks has an interesting article about 5G and
home routers: “Why 5G Cell Towers are More Dangerous,” (www.radiationhealthrisks.com/…).
here’s an article by Michael Luciano at ECN: “Will 5G Affect Your Health?
Maybe…But Probably Not.” (www.ecnmag.com/…)
This is probably obvious to most, but like many things, I had to bang my head against the wall to learn it. My lesson is not investment domain specific though that was my classroom.
I am always receiving promos for different investment or trading platforms, most of which are subscription cloud services. Sometimes i see one that is worth giving it a spin. My first lesson awhile back was a ‘paper exercise’ is not a sufficient test; i always make exceptions or rationalizations of insufficiencies of the platform or my required responses to it. I have to put skin in the game, i.e., money, to learn.
I saw one that seemed like worth a try; I followed their daily recommendation but failied to exercise the stop/loss due to my inability to monitor every minute of trading hours. – i did not understand the behavioral requirements of the strategy. I lost all $200 of my test.
Looking back, I would do one of or both of deeply understanding the strategy and my required behaviors and / or follow a poorly undertood strategy to the letter of the prescribed behaviors. The risk of the second action is that I would not be able to innovate within the strategy when conditions change, yet conditions always change.
This then is the pain of a poorly understood strategy … failures of execution both due to mistakes and the inability to innovate within changing conditions. The remedy is simple – execute only strategies I know sufficiently to innovate; and ideally, constantly increase my strategy portfolio.
Reminder that this information is focused on helping understand and quantify the risk of public perception and scientific support for health issues impacting the investment thesis in the 5G infrastructure and user (machine too) experiences. Periodically, I will crawl thru a 7 day search to see what surfaces – I AM NOT advocating that there are or are not validated issues – simple risk management, and i cannot manage what i do not understand.
All this suggests that the noise level is starting to pick up … the comms industry would benefit us all be sponsoring an independent – completely – study, or if we had a functional federal government, they could help us all understand both for our health and our wallets.
Cisco published a whitepaper on mobile network traffic and of course had to include their view of 5G horizon. I found it telling on a couple of fronts … the timeline, the device types that will really benefit (think BIG), and how M2M deployments play.
All the data volume projections are familar and in the same vein that Mary Meeker has used for years. My enthusiasm for the investment opportunity has not changed, but I will start refining my timelines and risk (as posted earlier).
Full disclosure – CSCO is one of my largest stock positions and i have owned for 10+ years … the position grows and shrinks as opportunities arise, but CSCO will remain a core holding for my equity / income growth sub-portfolio.
Quote: “The undisciplined use of debt almost always comes back to haunt the debtor, or, the debtor’s relatives. That is, the major impact of this “haunting” almost always lands harder on the next generation. As Mr. Rattner concludes, “my principal fear is that all this irresponsible borrowing amounts to intergenerational theft.” Basically, this means that there will be no room from future spending programs, like for infrastructure, or lower taxes, say to help the middle class. And, this will be the case even if we avoid a financial collapse resulting from market disruptions.”
The US and global debt will be force to be reckoned with sooner or later and how that reckoning plays out will be most likely incredibly disruptive … where did all the fiscal conservatives go? I never agreed completely with them, but their tension in the system was necessary to maintain balance … are we titling off the map and leaving the mess for our children and grand children to clean up?
This post starts a thread to be continued for 12-18 months along two vectors around the roll-out of 5G networks, technology and devices. I have moved my thinking from, “Is there a risk?” to “What is the risk?”
As with all posts, this is fully my opinions and not investment recommendations.
5G is a core theme of my investment portfolio looking out the next 5-10 years as the Internet of Things (IOT) and Machine Learning (ML) lead the next technology profit cycle. As deployment pilots start showing results and new products surface enabling innovative machine and human experiences, this area will be one vector to follow. Key will be how to better anticipate 5G investable companies beyond the infrastructure and base component segment already in my portfolio.
The second vector connects to the first as a systematic risk management thread around 5G safety. There is a strengthing risk element to 5G – the technology perhaps, but surely the public perception of that technology. I am seeing an increase in publications and posts focusing on the potential health risks of wide 5G infrastructure deployments. History is full of examples of technology assumed safe (or presented as safe) that later turned out to be deadly for both humans and the companies behind the technology (and their investors). What is the risk associated with 5G deployments for portfolio success, humanity and social justic, and how should it best be managed?
A noteable US Senator is pushing a FCC review and seems like one important area to watch for additional clues. From a portfolio management risk perspective, either a factual support of or a public perception of dangerous technology creates material impact to portofolio assumptions and the probability of the latter risk seems to be increasing – a systematic review is required.