Incremental Insights #9
Concentrate! Is It like 2000?
Yes, the S&P 500 in 2000 and 2024 have very similar concentration levels but quality companies dominate the 2024 market whereas average businesses dominated the 2000 market.
Based on an assessment of the level and stability of profitability, alongside balance sheet strength, 2000’s top 10 were barely better than the median business. By contrast, today’s top 10 sits squarely in the high-quality camp, with the midpoint just shy of the 10th percentile globally. That fits well with our fundamental assessment of quality – most of the current crop have stronger barriers to entry, interesting optionality (e.g., in AI and digitalization), and a better record in capital allocation, too.
The Most Under-Appreciated Growth Stock
The most under-appreciated growth stock in today's market?
— Porter & Company (@Porter_and_Co) July 31, 2024
Our vote: Philip Morris $PM.
After a decade of stagnant revenue and earnings, $PM is transforming into a growth stock - with revenues consistently increasing at a mid-single digit rate, and earnings growing by… pic.twitter.com/0S24ksxQ00
Zyns, Vapes and the Very Weird Market for New Nicotine Products (Podcast)
Why is nicotine, not cigarettes, a growth market?
Odd Lots discusses how these new nicotine products are made and the regulatory burden that comes with getting them to market. It explains why Phillip Morris had to buy Swedish Match to get control of Zyn.
Some thoughts on the Andrew Left indictment
John Hempton analyzes the legal complexities and potential outcomes of the indictment against activist short-seller Andrew Left, questioning the strength of the Department of Justice's case.
