Weekend Reading #114

Photo by Jessica Ruscello on Unsplash

This is the hundred-and-fourteenth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 17th April 2021.

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What we're doing.

This week many of us went out to eat for the first time this year as the UK’s lockdown restrictions eased somewhat. Restaurants opened for outdoor dining and even though it was extremely fresh outside, it was just fantastic to be out and about again. Our view for the UK’s blockbuster summer is hopefully coming to fruition following great vaccine success the country has seen to date. We have termed this summer the summer of love as people begin the outpouring of joy at doing many of the things all of us considered normal only a year or so ago.

What we're thinking.

We have written recently about our take on what growth investing is really about. As seasoned growth investors long before growth investing became a Twitter handle, we have always associated growth investing with finding companies that are growing profitability rapidly or growing revenues rapidly and having a high chance to later grow profitability rapidly. As time has gone on and new business models emerged, we too have had to amend our way of looking at stocks, but each time common sense prevails. 
 
One thing that has however remained clearer today than ever after the recent rout in what we call “lower tier” tech names, is that investors need to see a path to profitability, even if it is many years away. As we look at markets today, the premier growth names we like - companies like Sea Limited, Mercadolibre, Roblox, Peloton have all rebounded sharply from their lows and are challenging key breakout levels once again. Many second-tier names are nowhere close. DC
 
Something maybe a little esoteric for our traditional readers is the launch of the THORChain mainnet this week. It brings to life a glimpse into a multi-chain future where one can easily trade on bitcoin, ethereum, BSC and any other chain for that matter without having to wrap the underlying token. We think this is a game changer and are open to THORChain’s native token, RUNE, being a top ten candidate in the months and years to come. It’s come a long way already but that is the beauty of crypto. DC 
 
Also in the world of crypto this week Binance announced the first ever trade on its platform of a tokenised “stock. The chosen straying point was Tesla and Binance users can trade it for zero commissions. It’s a small window into what the future will hold. It trades 24/7 and is liquid from the start as Binance takes advantage of its enormous user base. DC

Perhaps this message posted by Binance on their official Twitter account congratulating Coinbase on their IPO summarises the extent of their ambitions: 



What we're playing.

As the school easter holidays come to a close, I've managed to squeeze in the odd hour of game time with my boys following their all-day footy camp activities. Holiday time is usually the time for hours of gaming in our household given their strict restrictions on “screen time” during the regular school week. This week, the boys have got me playing household favourites like Minecraft, Roblox, Gang Beasts, Lego Games and FIFA 21. I'm blown away by how advanced a 7- & 10-year-old are when it comes to gaming and more importantly technology... In my day, I was happy with a simple Mario brothers, Sonic and Street Fighter game (showing my age now) however, my eyes have been opened to the world of Roblox and all the games in its repertoire (hotly debated game/stock in our personal lives not to mention business lives). I’ve indulged on games like Jailbreak, Murder Mystery 2, Prison Life, Flee the Facility to name a few. I think another aspect of gaming where “times have changed” or evolved should I say, is the fact that the current child can “game” with all their friends and speak to each other via headsets, zoom, skype, FaceTime... Still blows my mind how far technology has come... DK 

What we're reading.

We love reading Jeff Bezos's letter to shareholders as CEO as this week he wrote his last one before stepping down to assume the chairman position. If you read one thing this weekend just read this. There is little point in hyperbole here (as it’s pretty obvious) but this almost brought a tear to my eye. Imagine the NACHAS (joy/fulfilment) he must feel after writing this. DC

Is Western civilization the pinnacle of human achievement? A very big question that gets tackled in a pretty short book that I read this week by war journalist, Sebastian Junger. Junger is a good writer with a vast body of experience having had a front row seat at some of the world’s most hostile conflicts, so he’s well positioned to talk with authority about humanity and its ills. In this book, Tribe: On Homecoming and Belonging, Junger assesses the achievement of Western civilization by looking at the shortcomings of our society and why, contrary to what other social scientists, such as Stephen Pinker, think, civilization is leaving many people less well off, less content, less grounded than in any previous generation. Specifically, Junger asks why a significant portion of colonial Americans left the burgeoning settlements to retrench and live with tribal Indians? Why today in the 21st Century technological advances are leaving us more “connected” but more disaffected than ever? Why we deal with the aftereffects of war, like PTSD, in such an antiquated way? Junger manages to tackle these enormously complex and deeply important issues and break down the ills of societal disconnection clearly, accessibly and compellingly, arguing that our society today, without tribes to rely upon, is creaking at the seams. His central thesis is that humans need 3 main things to be happy: struggle, community and purpose, and that we lack for these driving forces in society today. An interesting thought, and an interesting book, that’s worth a few hours of all our time. EJP

Helgoland by Carlo Rovelli is an enjoyable scamper through the history of quantum theory, and proposes an alternative to the many worlds interpretation that some of us (me) have a bit of a problem with. Taking its name from the island where Werner Heisenberg, fleeing hay fever, one night made a breakthrough that led to the uncertainty principle which sets out that there is a lower bound on the product of the uncertainties of a particles’ momentum and velocity, which means that you can only ever know either. LM 
 
Epic games announced earlier this week the closing of a private funding round of 1 billion dollars which values the company at 29 billion, up from 18 billion a year ago. Sony took 200m dollars of paper and this just highlights the significance of what epic is building. Currently embroiled in an era defining legal dispute with Apple and Google, there is little doubt in our minds that Epic is changing the world with their view of the metaverse as well as their championing of the “little guy” in their ongoing legal disputes. DC

What we're watching.

We mentioned Netflix’s show, Lupin, in the newsletter a couple of weeks back. Truth be told, at that point we’d only watched the first episode of the series and, whilst we were intrigued, we forgot all about it until this week when scrolling for something to watch we hit upon it and so dived into episode 2. We never looked back. The show is superb fun, very clever and keeps you gripped right up until the final scene on a beach in northern France. For the most part, Lupin is set in Paris and Paris, as ever, looks great. The story is based on the fictional character Arsène Lupin, also known as the “gentleman thief”, who is given a modern-day incarnation by Assane Diop, a man on a mission to avenge the death of his father and do it in the most stylish, ingenious way possible. This is a good-looking show with some great acting and a thrilling storyline, which means it’s perfect for sitting in front of after a hard day’s work. Sort of spoiler alert: The series consists of 10 episodes, however, only the first five episodes are available on Netflix having been released in January 2021. The remainder of the series is scheduled to be released in mid-2021, so the finale of the fifth episode ends with a tonne of unanswered questions that will only be answered once the remainder of the series is released. Still, the first five episodes are great, and I highly recommend watching them in advance of the rest of the series. EJP

Having trawled through what seems like an endless scroll of shows and movies unable to find something worth watching, we thought back to shows we’d previously enjoyed and decided to re-visit Billions. The hedge fund extravaganza starring Damian Lewis as Bobby Axelrod, an eccentric CEO of multibillion dollar fund, Axe Capital. It’s a great show and really sheds light on some of the issues faced by our industry whilst making sure to include plenty of Hollywood glitz. Although after speaking with non-finance friends that have seen it, it definitely seems to give them the (false!) impression that we too must secretly be living the same lifestyle. HS

For those of you who like to distract yourself with a bit of “fun tele” and love a bit of “reality tv” my recent cravings have led me to binge on Gogglebox. 'Gogglebox' is a series where regular people are filmed in their own homes while watching the highest-rated shows on British television. Each week, the recurring participants - families, friends and couples - are caught on camera with their reactions sharing their candid and often hilarious take on familiar entertainment shows and classic films. Each episode features the best and worst UK programming of the previous week. From their sofas, these opinionated viewers review everything that comes their way. It’s a bit of fun as you get opinions from all demographics and I feel like I know these select individuals more, based on their mini celebrity gogglebox status. DK 

What we're listening to.

The BBC Sounds podcast binge continues, this week with a 5-series thriller (45 episodes in total) entitled Tracks, written by Matthew Broughton. For fans of conspiracy thrillers involving illegal (and largely unethical, albeit ambitious) medical experimentation, this is an absolute treat. Tracks follows the story of Dr Helen Ash, whose encounter with her estranged father draws her into a global web of corruption around experimental medical research, seemingly supported even at the highest levels of government. It’s a riveting story, drawing on themes of neurology, ethics, palaeontology, physics and astronomy, and dishes out a generous number of interesting scientific snippets that will undoubtedly drive anyone to Wikipedia to find out more. Hours of listening pleasure, and while the entire collection of episodes was made over a span of 5 years, they’re available for non-stop uninterrupted audio binging. EL

Separately notable is the Taylor Swift’s re-release of her second album, Fearless, as “Fearless (Taylor’s Version)”. For dedicated fans, perhaps there is value in doing a side by side listen in an exercise in putting out notes on how different she sounds compared to 13 years ago. But the reason this interests us is because it is a masterstroke in the domain of intellectual property rights. This thread on twitter lays bare how Taylor’s move to re-record her back catalogue and exercise her rights as the original songwriter, despite having sold the rights to the original recording, may put a US$300m hole on the books of none other than the Carlyle Group which backed a buyout of Taylor’s first record label. Creators are taking back control of their content, exercising their rights with ever more finesse in a world where distribution is no longer bottlenecked by record labels. EL