Weekend Update #030
Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
$1 trillion wiped out <<momentarily>>
The entire cryptocurrency market dropped over 30% in value on Wednesday morning, wiping out more than $1 trillion, with popular cryptos like Bitcoin falling from $50,000 to nearly $30,000, Ethereum from $3,350 to $1,900, and Dogecoin from $0.40 to $0.25. The steep decline comes as Elon Musk's Tesla decided to suspend purchases with Bitcoin due to environmental concerns of Bitcoin transactions and mining. There has also been new pressures from governments as the U.S. is taking steps to crack down, requiring cryptocurrency transactions over $10,000 to be reported by the IRS, while the Chinese government barred all financial institutions from offering services related to cryptocurrency, including saving, transacting, or clearing and settlement. However, just 24 hours later, majority of cryptocurrencies rebounded roughly 40% from their lows — showing some resiliency in the future of crypto, but also the extreme volatility and risk involved with owning the digital assets.
We really enjoyed the conversation about cryptocurrency from Wednesday morning’s bullpen. It is impossible to say for sure how this will “end” but the key to remember is how you are feeling and what you are observing others are doing. This is an important behavioral moment to internalize, which may serve you well in the future when you encounter similar moments of intense discontinuity. Few securities offer a steady stream of continuous returns, and those that do — earn and tend to sustain big premium valuations in the marketplace, as measure by price-to-earnings, price-to-sales, enterprise value to EBITDA, etc.
///
LBRANDS
BULLPEN PRESENTATION BY
+ KELLEY JIANG +
2021 05 21 — BLUE ROOM Investment Team Bullpen
Friday
May 21, 2021
9:30 AM
BLUE ROOM
INVESTMENT TEAM BULLPEN
__________ __________
Kelley Jiang presents L Brands, of Columbus, Ohio, which owns Bath & Body Works, Victoria’s Secret and PINK.
MIN FISHING WITH HIS DAD THIS WEEK
—Pensacola,FL—
AND A RETROSPECTIVE LOOK
AT HOME TOWN
— Namyeol-ri, Korea—
A
R
T
desert X _
closing weekend
Over 600,000 visitors so far. The Passenger — family history, the installation and life in general. We are all connected.
@_desertx
Blue Room was honored to support Desert X, Eduardo Sarabia and his brilliant work shown here, The Passenger.
I see little of more importance to the future of our country and our civilization than full recognition of the place of the artist. If art is to nourish the roots of our culture, society must set the artist free to follow his vision wherever it takes him.
John F. Kennedy
November 28, 2019
— SOUTH KOREA —
HONORING GRAND PARENTS
CONTINUING WITH THE THEME OF REFLECTION — IN OUR THURSDAY GLOBAL MEETING MIN SHARED ONE OF HIS MOST MEANINGFUL MEMORIES WITH FAMILY — WHICH WE ARE ABLE TO WITNESS BELOW.
+
DRY STORAGE BY DAY
+
__________
CHOCOLATE HAZELNUT CROISSANTS
BASTA EAST BY NIGHT
+
__________
SQUARE PIE PIZZAS AT THE BAKERY
— MADE WITH DRY STORAGE FLOUR —
REGENERATIVE PRACTICES FOR THE WIN ++ PERFORMANCE / FLAVOR ++ #CHEFLED
🌾 from the San Luis Valley
2021 05 13 BLUE ROOM Meeting #052
Thursday
May 20, 2021
12 PM
__________ __________
BLUE ROOM
THURSDAY MEETING
NUMBER
FIFTY TWO
__________ __________
This week marked 52 weeks of Blue Room global weekly meetings. We were so happy to host Min’s father, Sang Hyun Sohn, and we decided to change it up a bit.
Each Blue Roomer was asked to create the question of their choosing and pick the recipient. Here are some to-do items that came forth:
> Read Setting the Table by Danny Meyer
> Try Adelitas Mexican Restaurant in Denver
> Borrowed from Max’s dream to use for a mindful minute: skiing in softy pillowy powder augmented by tricks
> Check out local thrift stores for good concert Ts
> Read Where the Bluebird Sings to the Lemonade Springs by Wallace Stegner
> Try Sushi Den’s Handroll Concept Inside The Source
> Next time in NYC try Miss Ada
My name is Emma Leary, I am from Washington, DC and am a Spring Intern for Blue Room. I am currently a Sophomore at Dartmouth College, majoring in Government with a minor in Studio Art. I started a business, out of my interest in art and design, in my first year at Dartmouth designing and customizing sneakers. This business led to my interest in finance and entrepreneurship. Through internet searches about business modeling, accounting, and marketing, I began crafting my own models and spreadsheets and found resources to help me address and eventually solve some of the operational challenges I was confronting. To deepen my understanding of finance, I was accepted as an analyst into the Dartmouth Investment and Philanthropy Program (DIPP). DIPP’s members are responsible for directing the investment of a portion of Dartmouth College’s endowment and my work for this program brought me to Blue Room. I am also currently working on a research project for a government professor at Dartmouth where I am collecting and analyzing detailed information about U.S. universities’ responses to violent incidents against racial minorities (more specifically, the death of George Floyd in June 2020 and the death of Asian-American women in Atlanta in March 2021). Our goal is to develop a public platform, which documents how U.S. universities have replied in the past and monitor their responses in the future. In my spare time at Dartmouth, I am a mentor for DREAM which is a program that aims to close the opportunity gap for youth living in low-income housing communities in Vermont by providing programming and mentorship. I am also on the club lacrosse and club rock climbing team at Dartmouth and enjoy competitively sailing in the summer. At Blue Room, I am researching Microsoft which has significantly increased my interest in the technology industry and the future of tech developments and capabilities. I have learned so much about how the industry has transformed and the goals Microsoft is working to achieve in the long-term. I have deeply valued how much I’ve learned thus far as an intern at Blue Room from the most basic formatting of a transcription to more complex financial modeling and analysis.
P L E A S E E N J O Y T H E
—WEEKLY—
company updates
from the BR intern team.
Kelley Jiang
Ticker: LB
Name: L Brands, Inc
Number of Shares Outstanding: 278.9M
Market Capitalization: $18.62B
Stock Price History
April 19, 2021 $65.90
April 20, 2021 $64.12
April 21, 2021 $65.31
April 22, 2021 $66.07
April 23, 2021 $67.38
April 26, 2021 $66.45
April 27, 2021 $67.59
April 28, 2021 $67.44
April 29, 2021 $66.65
April 30, 2021 $66.00
May 03, 2021 $67.63
May 04, 2021 $65.85
May 05, 2021 $65.69
May 06, 2021 $65.94
L Brands, Inc is a segment retailer focused on personal care goods, women’s intimate and other apparel, beauty and fragrance products. Based in Columbus, Ohio, L Brands hosts the flagship brands of Victoria Secret, PINK and Bath & Body Works under its name. With more than 3,000 stores across the globe, the company is focused on inspiring an aspirational lifestyle by making their customers feel bold and powerful.
Riding the news of a potential sale with Victoria’s Secret, L Brands’ stock valuation fluctuated around $67 before dropping around 100 basis points to $65.94 on May 6th, 2021.
In addition, Bank of America recently reported on the potential transactions of VS, commenting that they believe L Brands’ management will opt for a spinoff if Victoria’s Secret cannot obtain an offer from $4 to $5 billion. They also believe that with the potential spinoff or sale of VS, L Brands will greatly amplify the expansion of the Bath & Body Works brand.
Emma Leary
Ticker: MSFT
Name: Microsoft Corporation
Shares Outstanding: 7.53B
Market Cap: $1.836T
Microsoft Corporation develops, licenses and supports software, services, devices and solutions worldwide. MSFT has been a notable leader in the technology industry for decades now as the company was founded when the era of personal computers was emerging in 1975. The company currently offers three main segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.
Recent Stock Price History:
May 3, 2021 $253.40
May 4, 2021 $250.97
May 5, 2021 $249.06
May 6, 2021 $246.45
May 7, 2021 $252.15
May 10, 2021 $250.87
May 11, 2021 $244.55
May 12, 2021 $242.16
May 13, 2021 $241.80
May 14, 2021 $245.57
Microsoft is trading at a lower price this week than in April and prices have gone down this week, from around $253 to $241, as the company comes down from its record highs. The entire stock market as a whole took a hit this week, particularly on Wednesday, which resulted in the decrease in share price. This hit was especially harmful to technology companies because inflation increased price pressure more than was expected. Microsoft as a company is still doing well this year compared to its historical data and the drop is not significant from a longer-term perspective.
Following up on the Microsoft security breaches in January and March of this year, this issue has resurfaced this month but in a more positive light. The company’s recent partnership with Darktrace, an autonomous cybersecurity artificial intelligence company, showed stockholders their commitment to working on these issues and consumer privacy. Microsoft recently patched 55 vulnerabilities and exposures in their software products and computer programming which was a large step toward improving their privacy and security. Darktrace uses a specific type of AI that responds to threats at machine speed, which helps Microsoft to more efficiently address the breaches. This partnership will provide a new type of defense for the company against the sophisticated and complex attacks that it's been susceptible to, especially as the technology industry transitions to the cloud.
Julian Martelly
Ticker: AMGN
Name: Amgen, Inc.
Number of Shares Outstanding: 577.57M
Market Capitalization: $145.371B
Stock Price History:
May 14, 2021 $251.38
May 17, 2021 $252.38
May 18, 2021 $250.86
May 19, 2021 $248.63
May 20, 2021 $251.93
Amgen, Inc. Executive Summary
A biotechnology pioneer since 1980, Amgen is a values-based company dedicated to delivering innovative human therapeutics to areas of highly unmet medical need. These areas include: cardiovascular disease, oncology, bone health, neuroscience, nephrology and inflammation. Over the years, it has grown into one of the world’s leading independent biotechnology companies, reaching millions of patients around the globe. Most recently, Amgen is in the drug application process. Two examples of this can be seen with the U.S. Food and Drug Administration’s (FDA) acceptance of Amgen’s supplemental new drug application for Otezla – a product designed to address adults with mild to moderate plaque psoriasis, and that has the potential to be the first and only approved oral therapy for the mild to moderate population. The second example is the submission of a Biologics License Application (BLA) to the FDA for tezepelumab, a product shared equally between Amgen and its partner AstraZeneca, designed to be a potential first-in-class medicine for severe asthma. Moving forward, it will be interesting to see how the FDA responds to these applications, as it can truly determine where Amgen lies among its competitors.
Julia Martin
Ticker: TSLA
Name: Tesla, Inc.
Number of Shares Outstanding: 963.33M
Market Capitalization: $565.23B
Stock Price History
May 7, 2021 $672.37
May 10, 2021 $629.04
May 11, 2021 $617.20
May 12, 2021 $589.89
May 13, 3021 $571.69
May 14, 2021 $589.74
May 17, 2021 $576.83
May 18, 2021 $577.87
May 19, 2021 $563.46
May 20, 2021 $586.78
Tesla, Inc., produces electric vehicles and clean energy generation, storage and consumption solutions. Tesla is focused on accelerating the integration of clean energy transportation and production into society in order to more quickly achieve a zero-emission future. Additionally, all of the new automotive products include self-driving capabilities, and continuing to develop this Autopilot capability is at the core of Tesla.
Tesla’s stock has continued to decrease this week. This trend is in some ways reactionary to Tesla CEO Elon Musk’s tweet last week in which he shared that Tesla would no longer accept Bitcoin as currency in exchange for its vehicles due to the unsustainable practices involved in mining it. However, the public was frustrated when Tesla did not sell all of its Bitcoin holdings following this announcement, and so many individual investors look to Musk to determine what and how they should invest. Musk shared that he still supported Bitcoin and cryptocurrency as a whole, but did not want to encourage the continuation of mining for it by accepting it as currency until a more sustainable method is developed.
It appears that changes in Tesla’s stock price are mostly a result of reactionary tendencies of individual investors rather than negative news about Tesla as a company.
Asher Nyhoff
Ticker: NKE
Name: NIKE, Inc.
Number of Shares Outstanding: 1.27B
Market Capitalization: $210.563B
Stock Price History:
May 10, 2021 $136.40
May 11, 2021 $137.12
May 12, 2021 $133.39
May 13, 2021 $133.61
May 14, 2021 $135.93
May 17, 2021 $136.41
May 18, 2021 $135.56
May 19, 2021 $132.96
May 20, 2021 $133.27
NIKE, Inc. is the largest seller of athletic footwear and apparel in the world. NIKE sells its products primarily through brick-and-mortar stores, however, NIKE has increasingly focused on digital sales through its direct-to-consumer strategy. Considering the end of some social distancing mandates and store closures due to Covid-19, in addition to government stimulus payments, analysts have remained confident in NIKE’s performance for the near future. The return to normal shopping habits as Covid-19 increasingly comes under control in the US is a positive sign for NIKE’s top line.
Despite relatively confident projections, NIKE has largely followed a downward trend in stock prices since Wednesday of this week, likely attributable to overall market trends. On another note, NIKE’s CEO, John Donahoe, recently spoke with Yahoo! Finance about the importance of mental health, detailing NIKE’s steps to cultivate a culture conducive to discussing and supporting employee mental health. Such steps include providing access to counselors, wellness memberships, paid parental and family leave, and childcare subsidies.
Elizabeth Orecchia
Ticker: HLT
Name: Hilton
Shares Outstanding = 277.45M
Market Cap = $34.52B
Stock Price History
May 7, 2021 $123.44
May 10, 2021 $121.58
May 11, 2021 $121.83
May 12, 2021 $118.29
May 13, 2021 $120.16
May 14, 2021 $123.61
May 17, 2021 $121.71
May 18, 2021 $120.79
May 19, 2021 $120.57
Hilton Worldwide Holdings Inc. was founded in 1919 and is headquartered in McLean, Virginia. It owns, leases, manages, develops and franchises hotels and resorts. It operates through two segments: Management and Franchise, and Ownership. The Virginia-based company engages in the hotel management and licensing of its brands. As of December 31, 2020, it had approximately 6,478 properties operating under the Hilton label, with more than one million rooms in 119 countries and territories.
Number of hotel rooms = 1,019,287
Market capitalization of the company at 52-week high stock price = 35,768,854,000
Market capitalization of the company at 52-week low stock price = 17,332,301,500
Market capitalization of the company at 52-week high stock price / Number of hotel rooms = 35,092
Market capitalization of the company at 52-week low stock price / Number of hotel rooms = 17,004
Kat Paradise
Ticker: NTRS
Name: The Northern Trust Corporation
Number of Shares Outstanding: 208.11M
Market Capitalization: $24.20B
Stock Price History:
May 7, 2021 $119.20
May 10, 2021 $120.18
May 11, 2021 $118.40
May 12, 2021 $116.35
May 13, 2021 $118.82
May 14, 2021 $116.35
May 17, 2021 $120.62
May 18, 2021 $117.38
May 19, 2021 $117.34
May 20, 2021 $118.47
The Northern Trust Corporation is a preeminent global financial institution that provides asset servicing, investment management and wealth management services for institutions along with
high-net worth individuals and families. In recent news, Northern Trust hired Arthur Hill as Senior Vice President, Head of Product Management for Asset Servicing. Based in Chicago, Hill will lead product strategy and development, overseeing a global team of Asset Servicing product leads. Hill joins Northern Trust from French multinational consulting group Capgemini, where he was a senior director for its global insurance and financial services group. He has more than 25 years of experience in the financial services and insurance industry, with a history of spearheading sophisticated transformation and technology programs with a global reach. Northern Trust’s asset servicing business provides highly specialized and innovative solutions for some of the most sophisticated institutional investors across the globe, including pension funds, corporates, insurance companies, central banks and sovereign wealth funds, as well as global investment managers and fiduciary managers. Its client base and asset class capabilities span traditional funds, hedge funds, fund of funds, tax-transparent funds, exchange traded funds, private equity, real estate and infrastructure.
Max Pumilia
Ticker: LOW
Name: Lowe’s Companies Inc
Number of Shares Outstanding: 717M
Market Capitalization: $137.9B
Stock Price History
May 10, 2021 $211.31
May 11, 2021 $205.34
May 12, 2021 $195.54
May 13, 2021 $200.34
May 14, 2021 $198.12
May 17, 2021 $194.13
May 18, 2021 $192.75
May 19, 2021 $190.72
May 20, 2021 $193.41
Lowe’s Companies, Inc. is an American retailer specializing in home improvement products. With almost 2,200 locations and more than 300,000 employees across the U.S. and Canada, Lowe’s has firmly established itself as the second-largest retailer in its industry, trailing only Home Depot. In 2020, Lowe’s posted its most successful year ever, servicing approximately 20 million customers weekly and generating $90 billion in annual sales. These sales, a product of the consumer’s increased interest in home improvement through the COVID-19 pandemic, represent an almost 24% increase in revenue year over year. Comparatively, between 2016 and 2019, revenue saw under 3% annualized growth. Valuations have reflected the operational success of this period: stock prices have grown more than 50% since the start of 2020 and more than tripled since the low point of the pandemic.
On Wednesday morning (5/19), Lowe’s announced its Q1 earnings. While the report exceeded investor expectations with YoY revenue growth of almost 26%, they fell significantly short of Home Depot’s numbers. On Tuesday, Home Depot reported over 30% revenue growth compared to Q1 2020. Hence, in spite of exceeding earlier projections, Lowe’s earnings proved disappointing. This sentiment combined with broader market conditions to drop valuation over the course of the past week.
Taurus Samuels
Ticker: TGT
Name: Target Corporation
Number of Shares Outstanding: 497.57M (as of May 20, 2021)
Market Capitalization: $103.B (as of May 20, 2021)
Stock Price History:
May 07, 2021 $214.01
May 10, 2021 $213.34
May 11, 2021 $208.56
May 12, 2021 $202.30
May 13, 2021 $207.93
May 14, 2021 $210.48
May 17, 2021 $209.34
May 18, 2021 $206.43
Dividend Paid ($0.68)
May 19, 2021 $219.01
May 20, 2021 $221.66
Target Corporation is a retailer based in Minneapolis, Minnesota, founded in 1902. As of January 30, 2021, it has over 1,500 stores across the United States. It offers an array of products to its customers, such as various merchandise, everyday essential items, clothing and food. In many of its locations, it has also partnered with other companies, such as CVS Pharmacy, Inc., to provide its customers with access to a pharmacy when shopping at their stores.
Target Corporation had its Q1 earnings call on the morning of May 19, 2021. It reported an adjusted earnings per share of $3.69, growing 525% from the previous year. Its total revenue was reported at $24.4B, also growing 23.4%, with sales growth growing 23.3% and other revenue growing 30.4%. Although 2020 was an inflated year for TGT, with sales surging, even when Q1 of 2021 is compared to the 2019 Q1, its numbers are still very impressive. Target’s sales were up 37.26% when compared to 2019, and its operating income was up 111.45% as well.
Target also reported that its increased sales were led by the Apparel category, which saw 60% of growth. Although 60% growth is huge, the growth itself is not at all surprising. The stimulus checks have fueled many consumers’ wants to get back out and shop in person. This, the vaccine rollout, and the news of many states opening back up in the summer, have collectively been a huge reason why apparel was the category that saw the biggest growth, because many consumers are wanting to buy new clothes to go out in this summer.
Togetherism™ is Blue Room™’s nonprofit arm.
THE POWER OF THE QUESTION
This week in the Blue Room weekly global meeting we had a chance to ask each other questions to further our understanding of one another. Nina Sohn has always been a fan of NPR’s StoryCorps which served as a platform for these questions. They bring us together, help us understand each other’s challenges and what we hold sacred. It is also a profound way to record feelings and save sentiments from family members.
•Can you tell me about the important people in your life?
•What have been some of the happiest moments in your life? The saddest?
•Who has been the biggest influence on your life? What lessons did that person or those people teach you?
•Can you tell me about a moment when a person’s kindness made a difference in your life?
•What are the most important lessons you’ve learned in life?
•What is your earliest memory?
•What is your favorite memory of me?
•Are there any funny stories your family tells about you that come to mind?
•Are there any funny stories or memories or characters from your life that you want to tell me about?
•What are you proudest of?
•When in life have you felt most alone?
•If you could hold on to memories from your life forever, which would they be?
•How has your life been different than what you’d imagined?
•How would you like to be remembered?
•Do you have any regrets?
•What does your future hold?
•What are your hopes for what the future holds for me?
•What are your hopes for my children?
•If this was to be our very last conversation, is there anything you’d want to say to me?
•For generations listening to this years from now, is there any wisdom you’d want to pass on to them? What would you want them to know?
•Is there anything that you’ve never told me but want to tell me now?
•Are there things about me that you’ve always wanted to know but have never asked?
•If you could talk to a younger version of yourself, what would you say?
10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.