Friday 31 May 2024

Is Tesla Finally a Value Play or The Fallen Star?

Contributed by: The Big Fat Whale

The buzz has been around Nvidia in recent times, this has led to Tesla taking a back seat. So with the lack of interest, is Tesla finally going to be a value play or a fallen star? Could there be more downside given the developments in the electronic vehicles landscape?

We have touched on Tesla twice in late 2020 and early 2021, the first article was when it was just included in the S&P500 and for the second article, their continued ascent led us to be sceptical. 

Tesla shares almost doubled after our first article- we are kind of embarrassed- before coming back to reality. Tesla shares have now fallen back to the 570 million dollar valuation when the first article was published.

Nonetheless, we were impressed with the 15 billion dollar profits for 2023 which was way above our expectations.

It is great to revisit this controversial stock that has fallen from its euphoric peak for now.


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Saturday 25 May 2024

Is S&P500 ETF (SPY) the best bet for your retirement?-40% Tax

Contributed By: The Big Fat Whale

It is Warren Buffett’s advice that for most people, the best place to build your retirement nest egg is through indexing. This means buying into an S&P 500 ETF such as SPY. We try to explore whether is this the best course of action for your retirement.

On the whole, the S&P 500 have been racking in returns of close to 10% historically. That is a decent return for a passive investment strategy. However, it does come with equity volatility, which means you must be able to stomach drops of 50% during this journey of wealth accumulation.

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Monday 29 April 2024

Is Silver going to be a Great Investment- $50 Target?

Contributed By: The Big Fat Whale

In this article, we are covering the merits of investing in Silver. Will it be a great investment going forward? And will it
revisit its peak of $50 established in April 2011?

We touched on Silver as one of the first few articles on this website in March 2021. After the article, it has been range bound between $18-$25. In recent times the price action looks great for a potential breakthrough of their key resistance at $30,

Hence, we decided to revisit our thesis and see if everything still firmed up nicely.


Technical Analysis of Silver

Silver Price Chart

Source: TradingView

The peak of Silver at close to $50 was established during the Hunt Brothers' short squeeze in 1980 and 2011. The price of silver is still far off the peak and Gold has already broken its all-time high- trading at around $2400 now.

Silver Price Chart 2020-2024

Source: TradingView

Zooming in on the charts, this is the fourth time that SIlver has tested the $30 mark since 2020. We could see volume has been higher over the past year as compared to the other periods. This could be a sign of accumulation.

So realistically, if there is a convincing break above $30, Silver at $50 as a target over the medium term would not be far-fetched.

We will be looking at the fundamental aspects to see if it could support such a move.

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Wednesday 10 April 2024

Buffett’s Paramount Stock Holding Languishing- Despite 3 Offers

Contributed By: The Big Fat Whale

Despite 3 offers for Paramount Holdings, the stock has been languishing. This is one of the holdings of Buffett’s Berkshire Hathaway.

We have touched on Paramount in our previous write-up, where we think that it is worth being on your shortlist due to its valuation. Truth be told, there are now 3 offers tabled for Paramount after our article. We would like to think that is where great minds think alike.

3 Offers for Paramount Holdings

First and foremost, at the current price of 11 dollars, it has a market capitalisation of 7 billion dollars.

It has total debt of close to 15 billion dollars with 2.5 billion dollars in cash.

Skydance Offer

Skydance is led by David Ellison who is the son of Larry Ellison.

Their initial involvement was by trying to acquire National Amusement which owns 77% voting class stock.

This latest offer seems to be taken most seriously as they are currently in an exclusive discussion. Based on the grapevine, it could very well be a merger with an eventual cash infusion by Skydance to bolster the financials to deal with the debt situation ( Paramount debt was recently downgraded to junk status by S&P) based on a Reuters newsflow.

The deal seems more complex with Paramount raising funds to the tune of 3 billion dollars to facilitate this whole transaction. This sounds more like equity fundraising which could lead to a dilution of existing shareholders. Paramount would be the party to initiate the first move by taking over Skydance.

For this deal, the stock is to be continually listed and things would be back to normal with the majority of their assets intact.

There would likely not be a windfall for shareholders through a buyout offer with this deal.

Skydance will try to nurse Paramount’s business back to its glory days. They could be the right partner as they have been collaborating with Paramount from 2009 to 2021.

We can see why this is the preferred deal as Paramount assets are currently depressed. To sell off the assets in such a situation would be less optimal.

Moreover, their debt woes would also affect their negotiation chips.

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Friday 15 March 2024

Are Singapore REITs a Buy Now?- With Fed Potential Pivot

Contributed By: The Big Fat Whale

Many investment bloggers have touched on this topic given that the Singapore REITs have fallen by almost 30% from their mid-2021 peak. Is it a buy now?  Given the recent Fed guidance of a potential pivot to lower interest rates.

Frankly, the Fed has been flip-flopping but the all-important inflation numbers are at an almost ideal level of around 3%. It is still short of the 2% target but things seem to be under control.

REITs have been the bellwether for lots of retail investors given the perception of it being a safer instrument than true blue stocks. The attraction is that mandatorily, they have to pay out 90% of their income to shareholders as dividends.

Moreover, given that they are tangibly backed by shopping malls and industrial and commercial buildings, it added the assurance that their investment is not riding on some fads and whatnot.


SREITs Current Climate

They were doing well during the low interest rate environment which lasted since 2008 (Great Financial Crisis) and were stable in price fluctuations. The recent price drop would not be something that investors are used to. It is back to their Covid 19 lows or for some REITs, they set record lows.

With the Covid situation, it is understandable why REIT prices plunged as everyone is in locked-down mode, which will affect the rental situation in shopping malls and office buildings.

S-Reits Price Chart

Source: Yahoo Finance

This time around, it is due to the rapid escalation of interest rates. In April 2022, the Fed rate was still hovering close to zero per cent and is now at the 5.5% rate. With the potential pivot hinted at by the Federal Reserve in  November 2023, it saw a renewed interest in REITs- the REITs index appreciated 15%. Prices have since retraced close to their all-time low due to the market perception of the credibility of the pivot.

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