Very good article on CoCos mean (Additional Tier 1 capital).
For Credit Suisse, equity holders lost 60-70%, but CoCo worth $17 billions were written off completely.
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Brilliant presentation deck on macro and strategic trends in the tech industry. Tremendous amount of work would have gone to cherry-pick relevant data and present concise and meaningful insights out of it.
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With the increasing EV adoption, recycling of batteries will be a major issue to be dealt with. Li-Ion batteries need replacement after 2-3 years. Currently, more than 90% of batteries are dumped in landfills which is hazardous. This a good article to read for the same.
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Peterson Capital Management just published its annual shareholder letter, Matthew Peterson is the managing partner and follows a long-term value investing approach, with a cumulative performance of 14.3% against the 13.7% for the S&P 500 Index, over 11 years, he is one of the few funds managers who are beating the market.
Peterson-Investment-Fund-I-Annual-Report-2022.pdf (2.3 MB)
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Some of the lifehacks in this listicle are excellent!
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Newsletter of Xponent Tribe PMS
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Aquamarine-Fund_Manager-Letter-2022.pdf (123.9 KB)
Guy Spier Letter to Shareholder, good read.
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Thanks for this. I started reading this just to pass time and ended up reading the whole thing. Its an honest and refreshing account of a seasoned fund manager. Just goes to show how very difficult it is to stick to the philosophy of value investing, especially in todayās times where it is very easy to be influenced by the crazy over the top valuations people are willing to pay for unprofitable businesses, which are perennially bankrolled by VC money, in the hope of a fairytale turnaround in fortunes. Not everything can become an Amazon. It was also good to see that a conservative fund like theirs, see IEX as a long term value compounder and is among their their largest holdings.
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Jamie Dimon Letter to Shareholder
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Copied from Mail I receive from Trendlyne, the implementation of ASBA, itās impact on retail investor and brokerage firms.
When Zerodhaās founder Nithin Kamath says that ārapid regulation changes can disrupt business modelsā, itās not an exaggeration. Over the past year, RBI and SEBI rule changes in areas like BNPL and index funds have impacted both startups and established companies.
In this weekās Analyticks,
SEBI turns off the music: Regulatory changes hit business models, could force discount brokers to hike fees
Screener: Finance sector stocks with high momentum and positive forecaster estimates for Q4FY23
Changes in regulations will impact investors and discount brokers
The Indian equity market has grown substantially in the past couple of years, both in terms of returns and investor participation. Indian investors opened a record 14.2 million new demat accounts in FY21 as equity markets recovered post-pandemic. This number is nearly three times the new demat accounts that were added in FY20. The growth continued in FY22, as new accounts rose 63% YoY.
Many of these new retail investors began day trading and options trading - risky segments where only a small percentage of traders make money. This resulted in high trading volumes, and the volume of stocks traded on Nifty 50 hit an all-time high in 2020 as it rose around 40% YoY.
SEBI watched for a while, and waited. Now it has stepped in, and is pushing back with regulations.
In February, SEBIās consultation paper proposed that brokerages transfer idle cash lying in their client accounts to Clearing Corporations (CC) daily. This impacts brokers, as they generally use a part of this idle money to earn interest as a source of income, called float income.
However, during SEBIās board meeting last Wednesday, Madhabi Puri Buch, Chairman of SEBI, reassured everyone, and said that SEBI will maintain the status quo - which requires transferring the idle balance to the CC quarterly rather than daily, implying no immediate impact on brokersā float income.
But then in the same meeting, the regulator approved a move where clients need not transfer their money to brokersā accounts at all, for trading or investing.
Photo: SEBI Chairman Madhabi Buch smiles as she pulls the rug out from under brokerages
The ASBA framework is already in place and mandatory for IPO subscriptions. With the ASBA option now available for secondary markets, traders and investors need not transfer funds to brokersā accounts. The amount will simply get blocked in investorsā bank accounts. SEBIās Chairman, Madhabi Puri Buch said that the transition to ASBA will be rapid.
In a separate announcement, the Centre also increased the securities transaction tax (STT) on futures and options by 25%, making derivatives trading pricier. These two regulatory changes will hit both retail investors and brokerages.
Brokerages search for new opportunities to revive slowing revenue growth
These rule changes come at a time when brokerages are diversifying away from their broking business.
The post-Covid bull run brought millions of people into the stock market, but now retail investors may be losing interest as markets become volatile. The active client base has declined for the eighth straight month in February. Top listed players in this industry include Angel One, 5Paisa Capital, Motilal Oswal Financial Services, IIFL Securities and ICICI Securities.
New client additions are also on the downtrend, and are back to pre-Covid levels.
Due to this, brokers have shifted their attention to new levers for growth. Float income for instance, helps brokers earn interest on idle client funds. For reference, 8% of Zerodhaās 9MFY23 was derived from float income. But this is expected to reach zero in the long term with SEBI pushing ASBA.
The full implementation of ASBA will especially hurt discount brokerages like Zerodha, 5paisa, Angel One and Upstox, which currently boast low or zero brokerage fees. According to HDFC Securities, Angel Oneās earnings will be impacted by 20% due to the new rule. Currently, the top five discount brokers have nearly 60% of the overall market share.
Nithin Kamath, CEO of Zerodha, said that brokerage fees will have to increase to offset this loss, and the business model will change accordingly for discount brokers. As of Q3FY23, Angel One had the highest revenue contribution from broking.
Wealth management, advisory services, and margin trading facilities are some of the paths brokers may bet on going forward. Margin funding, which provides funds in lieu of securities held by the client in their account, is one way to generate interest-based income for Indian brokers.
ASBA framework will safeguard retail investors. But at a price
ASBA adoption is safer, and is a positive for retail investors as it limits any possible misuse of clientsā idle balances in broker accounts. It also aims to benefit investors through interest on blocked funds in a clientās savings account, till the time the amount is debited.
This is all good news for investors but comes at a cost, as brokerages will not have float income. Brokerage fees will likely be hiked to offset losses, impacting retail investors.
Additionally, the STT tax hike of 25% on derivatives is expected to increase the centreās revenue from this segment marginally at best, as options volumes could reduce due to higher taxes and decreasing active monthly clients. The tax hike is primarily aimed at discouraging novice traders.
According to SEBI, the number of retail traders has increased by over 500% between FY19 and FY22. But it looks like most of them are not really making money - SEBI found that 9 out of 10 individual traders in equity derivatives incurred losses, with an average loss of Rs 1.1 lakh in FY22. The regulator is clearly concerned about the losses piling up as traders make risky investing decisions.
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Excellent technical primer on AI.
Explaining the New AI Paradigm | ColossusĀ® (joincolossus.com)
P.S. The last time I posted a link to an Invest Like the Best podcast on this thread, it was deleted as āself-promotionalā. So, just making it clear that Iām in no way connected to the podcast. 
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Interesting and insightful. Marc talks about a range of topics. I liked his insight on two flavors of capitalism: bourgeois and managerial capitalism.
Came across this video while searching for something else. This is how share trading used to be in the early 1990s. Enjoyā¦
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Stock does not know you own it:
- Because great businesses do not always mean great stocks. Especially if the market already believes it.
- Because great businesses often do not stay great. Some declined rapidly, like Nokia, and many gradually, like GE and IBM.
Thereās little to gain from identifying with a company or its promoters as āyour ownā. In believing that its advantages are insurmountable and everlasting. In reserving an eternal spot in your portfolio because of what itās done in the past. Instead, practice a level of detachment from your holdings.
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Blumeās report highlight key themes and the various shades of the Indian startup ecosystem. Interesting narratives!
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