Update - January 19, 2021
Buybacks… Big Crypto Gains… and a Good Question
There is a lot of good news to cover this week.
The first piece involves a company that’s not in our portfolio… but has a story worth sharing.
When Bank of America (BAC) reported its latest earnings this morning, it announced something the headline writers aren’t all that keen to tell you about.
When the big banks were forced to cut their buybacks early last year, the media seemed to celebrate the halt of what it deems an unfair practice. It doesn’t like companies buying back their own shares just to reward shareholders.
As you know, I disagree.
If there’s an enemy in the buyback discussion, it’s the death of interest rates and a monetary system that all but begs companies to increase debt and lower share counts.
But that’s not my point today. No, my point today is to gladly report that Bank of America has restarted its buyback program… just as I said it would.
The company just announced a whopping $2.9 billion buyback.
The news bolsters our MAP thesis and is a strong reminder of why we specifically allocate a portion of the portfolio to companies that reward shareholders with robust buyback programs.
Profit Proof
Proving the merit of the idea is a company that is in our portfolio… Logitech (LOGI).
We entered the play, you may recall, because the company was one of the few that stood by its buyback program through the worst of the COVID crash.
The move has rewarded us handsomely.
The company opened its books today as well. The news was great.
Sales over the quarter jumped 85% from the same time last year – clocking $1.67 billion in revenue over the last three months.
Even better… the company once again boosted its full-year projections.
Three months ago, Logitech made investors happy when it said sales would be up 35% to 40% this year. Now it says things are even better… that we should expect the top line to grow by as much as 60%.
Very nice.
We’re up more than 50% on the play.
Great Timing
What’s incredible is another Modern Asset Portfolio play is quickly giving Logitech a run for its money.
We got into Afterpay (ASX:APT) in December and are already up by more than 45%.
The latest run comes from something you’ll likely hear about from me a lot over the next year… an IPO. A big American-based competitor of Afterpay made its public debut last week.
Affirm (AFRM) and its $27 billion market cap is bringing fresh attention to the rather undiscovered “buy now, pay later” industry.
The surge in stories related to the space proves we got in at the right time.
And if you’re wondering whether you should own shares of the American company instead of the Australian Afterpay… stick with the Down Under stock.
As I outlined in the issue, the international exposure is key, especially as the dollar continues to lose strength.
Cryptomania!
Speaking of a weakening dollar… 2021 continues to be the year of crypto.
Once again, our portfolio proves the notion.
Our stake in Monero (XMR) is now up by 65% and showing strong momentum as altcoins start to see the buying pressure that Bitcoin saw earlier in the year.
It’s a great sign, especially for crypto traders.
It means our theory is spot-on… that with all the money printing… borrowing… and spending… investors are looking to put their money in alternatives.
It created a huge boom for Bitcoin last year.
Bitcoin broke records, doubling… then tripling… on its way to hitting $40,000 early this year.
But here’s the thing. That’s nothing compared with what Bitcoin’s smaller brethren did…
Some altcoins soared 3,593%… 5,518%… and even as much as 9,503% last year.
They make our Monero gains – a purposefully conservative pick – look tame.
But as I’ve been talking more and more about the gains in crypto, readers have been writing to me asking for my top picks.
Bitcoin? Ethereum? Litecoin? Something no one’s ever heard of?
I’ve spent the last few months researching the market and uncovered something quite promising. I’ve learned my Liberty Indicator – the backbone of Alpha Money Flow – tends to turn positive right before a big move higher by these small coins.
The potential is incredible.
Reader Question…
Finally, a reader sent me a good question about our newest position, 10x Genomics (TXG).
We got in on January 5… and are already up by 25%.
But an astute reader noticed insiders are selling shares. She wants to know whether that’s a concern.
It’s not.
I dug into the sales, and almost all of them are preceded by the exercising of large options positions.
In other words, these insiders are incentivized through options. If the stock hits key benchmarks, these folks get paid. If not, they don’t get paid.
But the options must be sold in order to cash out.
That’s what we’re seeing. It’s quite common.
In this case, shares are clearly hitting key benchmarks and insiders are being rewarded handsomely.
The downside is added dilution, but that can be cleaned up with buybacks down the road.
For now, I see nothing to be concerned about.
These insiders are getting paid for doing their jobs.
For shareholders… clearly it’s been good news.
Congratulations on the gains!