Lots to discuss this week, mostly because several Real Money Portfolio companies reported earnings… and because I added money to two positions this week, and brought a new company into the portfolio. Enjoy!
Shopify (SHOP) had reasonable earnings when they came out, but “reasonable” isn’t enough for a high-growth momentum stock that’s trading at almost 20X sales… and the company failed to offer “upside” guidance for the first time, so there was no future growth upgrade to shock investors into buying. At the same time, they filed a shelf registration to offer more shares (though they may not sell them immediately, or at all — that’s what a “shelf” means, they have the offering on the shelf if they need to use it), and that was enough to drive the stock down sharply, on top of the drop that the shares saw over the past week as pretty much all the high-growth tech stocks got softer in the wake of the Facebook fright.
So the shares are down close to 20% from their highs now… though the fact that this kind of big move has happened several times before means that the volatility quotient stop loss at TradeStops (VQ%) allows for those typical moves — SHOP’s VX% stop loss is about 35%, which puts it down around $112.
What’s most important, I think, when dealing with Shopify, is whether or not you see progress in the strategy and think management will be able to keep the growth going — they are building what they consider to be the best “operating system for retail,” primarily online but also in-store, and they are essentially running at break-even while they invest heavily in expansion. That’s why the comparisons to Amazon keep coming in, because they have a founder CEO with a large personal stake and a clear vision for making retail easier and more accessible to more entrepreneurs, and that’s why Shopify has earned a pretty unique valuation.
Right now, if you do a screen for stocks that have a gross margin above 50%, year over year revenue growth of at least 50%, 3-year average revenue growth of at least 50%, and a market cap of more than $500 million, you end up with 34 stocks… and two of them are Shopify (both the Canadian and the US listings show up). Most of the rest are either biotech or marijuana companies, though little “identity cloud” provider Okta (OKTA) is on the list as well, as is The Trade Desk (TTD)… companies just rarely grow this fast, and they tend to get this kind of premium valuation. Interestingly, one of the other stocks on that list is Teladoc (TDOC), which I’ve been checking in on every now and then after it was teased by Jason Stutman back in May — and they just released strong earnings that are starting to show some signs of revenue growth outpacing expense growth, much like Shopify. I missed that surge from $50-70 for TDOC, but I’ve added a small introductory position to the portfolio this week after earnings — they’re getting some nice scale, my anecdotal research leads me to see a lot more friends using their services (with good experiences), and I think it’s worth watching to see if we get a little pullback after this earnings beat.
So do we run away? That’s what many chart technicians would tell us to do, with a “double top” formation in the chart (the shares got to the low $170s twice and failed to hold both times), but I’m not so sure. After reading through the conference call transcript again, and thinking about the size of the opportunity as they begin to offer their services overseas (translating into new languages, setting up payments in Japan and other countries, developing shipping services and capital services), I think they’ve likely got a long runway of potential growth… and that investors will be willing to pay a rich price for that growth. So I added slightly, but there is clearly some risk and I am still keeping a close eye on that stop loss level around $112… because, of course, it’s quite possible that I’m wrong about the future.
Momentum giveth, and momentum taketh away… but the underlying company is still very strong, has huge intellectual capacity with their massive hiring surges, strong executive vision and founder ownership, great scale as they continue to increase the number of merchants and the number of large merchants on their platform, and, well, a very uncertain future — I don’t know whether this will grow and diversify and become a massive services company in the online retail space, or will grow up to merge with another firm or take on whole new markets, or if they’ll succumb to competition and fail to earn their rich valuation. But I think the odds are in their favor and I like the management and the focus.
So that’s an addition of a bit more Shopify (SHOP) to the Real Money Portfolio, and a new stock for me in Teladoc (TDOC) that comes in as a very wimpy sliver of the portfolio (about a third of one percent). I’d like to add to that TDOC position if the company continues to make progress, but it will likely be very volatile so hopefully we’ll see a market overreaction that makes the price more compelling at some point. I expect to be writing more about this one in the weeks to come, so stay tuned.
In general, my favorite investment right now is still “cash” — cash gives great optionality for the days when this momentum-driven bull market finally takes a breather and something causes people to panic out of stocks. I don’t know when that will come, so building up some cash still makes sense to me… but I’m always willing to buy at least a little bit of stocks that are underpriced, or have the potential to grow into much larger businesses over time. Watching those stocks for a pullback instead of buying small stakes is fine, too, but I never watch something so closely as when I own it — even just a few shares.
In other transaction news, I decided to ramp down a bit on some of my more speculative option positions to cover these purchases of TDOC and SHOP — with sentiment so strongly against the Chinese growth stocks, I closed out of a couple of my option positions on JD.com (JD) and Momo (MOMO) — one for a small loss, the other for a smaller gain (though I also took profits on both those positions earlier in the year, so overall my China options speculations have still been quite profitable… with the exception of my Alibaba (BABA) June 2019 options, which are still underwater and still in the portfolio). This is really just “capitulation” on my part as I give up on these speculative trades, I don’t have any great insight into which direction the China panic is going to go next.
Square (SQ) reported earnings that investors had to spend a little time analyzing before deciding whether they were good or bad — they had excellent revenue growth of 60%, beat the earnings estimates slightly, but they offered forward guidance that was not as optimistic as the analysts had been (guiding to 8-10 cents in third quarter earnings, not the 12 cents analysts were estimating). Now that a day has passed and analysts have had time to think it over, we’ve seen some upgrades and the stock climbed again and then fell again — so we’re all still a little confused. I think the optimism inherent in the company’s faster revenue growth forecasts is worth more than the lower earnings forecasts that are caused, we’re told, by the need to reinvest in the business to keep the growth going.
Square has had a heady year, the shares saw a huge surge from their slight connection to bitcoin last fall before coming back down a little, but have now doubled since January. The valuation is clearly pretty extreme, and the market cap extraordinary for what is still a relatively small business (revenue of $2.4 billion), particularly one in a competitive sector (payments and credit card processing), but surging top-line growth is almost always in favor on Wall Street.
Analysts are not actually all that high on the stock, most of them rate it a hold and the average price target is only around $71-72, which is right where it trades now. Even the recent upgrades have only lifted the price targets of those optimistic analysts to $75 or so, at least until an $82 target popped up late yesterday from RBC… sometimes analysts take a while to catch up with the reality on the ground, and sometimes investors get ahead of themselves in bidding a stock up too fast — which of those is closer to the truth this time around, we won’t know for a while.
My position in Square (SQ) is already levered thanks to a LEAP call option position, so I’m not adding any more. I like their first mover advantage in these next-generation checkout terminals and cash-management services for retailers, but this is a high risk position, to be sure.
Apple (AAPL), a little technology company that you might have heard of, had great earnings as the iPhone X continues to sell well, despite the doubts of analysts… and despite the rising competition in China from Huawei and others.
It wasn’t a shocking quarter, but Apple did a little better than expected on the bottom line, and said optimistic things about next quarter, and that was enough to drive the shares up by a few percent. And, of course, a couple days later Apple finally hit that “$1 Trillion” market cap that the financial media likes to natter on about. It doesn’t really matter, of course, but it’s a curiosity… and financial television loves nothing more than covering round numbers and horse races. Coverage of Apple isn’t likely to slow down anytime soon as we’re a month or so from getting breathless about the next round of iPhones to be introduced, and I don’t have any unique insights into their prospects… but man, do they generate a lot of cash from their incredible iPhone sales.
The company is still very strong and very reasonably valued on an earnings basis, particularly in comparison with companies like Facebook, Alphabet and Amazon (all of which I also own), but it’s no longer an absurdly cheap stock and doesn’t really belong in that hyper-growth category. Apple is a cash-generating machine that’s proving to be much more sustainable than some have given them credit for, but it’s not embarrassingly cheap like it was a half dozen years ago — mostly because they’re no longer nearly as cash-rich as they used to be. They do still have $250 billion in cash and investments, which is a lot, but they also have $150 billion in debt thanks to the money they borrowed in recent years to do buybacks before the recent tax changes… and since Tim Cook doesn’t seem nearly as obsessed with maintaining cash reserves as Steve Jobs was, they’re likely to keep those buybacks going (which could shrink the market cap back below a trillion dollars if they buy back shares fast enough).
What’s clearly getting investors a little bit excited again is this discovery of a meaningful new revenue stream for Apple — for many years it was presumed that Apple had to keep developing new blockbuster product categories to keep growing, from the iPod to the iPhone to the iPad, and those big introductions clearly were huge for them… but this latest huge revenue stream is growing almost as fast, and it kind of snuck up on investors over the past six months or so: Services. That’s all the paid storage, Apple’s share of App store sales, Apple Music, and that sort of thing, which means it’s high margin… and it’s growing so fast that Services this past quarter grew to be almost as large as the iPad and the Mac divisions put together. It will probably surpass them next quarter.
So what do we do? Apple is fine. It’s still a risk, to some degree, since the company is still very levered to this ability to keep the iPhone upgrade cycle going with users buying the latest version every couple years… but they’ve been doing it so well, for so long, with an incredible ability to keep raising prices to protect their profit margins, that we should probably not worry so much.
Speaking of mega-cap stocks, Berkshire Hathaway (BRK-B) made a deal to fund the continuing rebuilding of Seritage Growth Properties (SRG) into something more than just a REIT that used to be part of Sears Holdings (SHLD) — I’m not so crazy about this one, not because it’s a terrible deal (it doesn’t look great to me, since Seritage is already pretty heavily indebted and I don’t know what the real asset value of their properties, mostly Sears stores and former Sears stores, actually would be on the open market), but because it’s a sweetheart deal for Buffett personally, and that doesn’t look so good. Buffett is personally a substantial shareholder in Seritage and has been for years, with the rationale being that he invests personally in companies that don’t have overlap with Berkshire or are too small for Berkshire (Berkshire also bought shares of STORE Capital a while back, so he is willing to buy smallish REITs both for himself and for Berkshire). But now, with Berkshire effectively backstopping Seritage, he benefits personally.
I know that’s not why he did it — he doesn’t need the money, it’s not a huge deal for him even with his large Seritage stockholding, and he probably believes in management and thinks they can transition to become an effective property developer and owner without Sears. And the return is not so bad, 7% for a term loan. But it still doesn’t look so good to me, it leaves a little bad taste in my mouth — sort of like the deal Berkshire did to backstop the somewhat sleazy-feeling Canadian mortgage lender Home Capital Group last year. Not enough to make me question Buffett’s judgement in a meaningful way, but enough to remind me that he is not infallible, and sometimes he invests in things I would avoid.
Berkshire reports this weekend, and this latest little investment obviously won’t move the needle at all — it’s only $2 billion, so even if Seritage goes bankrupt tomorrow and Berkshire gets nothing back on that loan it wouldn’t have much impact. Of more import is what happened with Berkshire’s large subsidiaries, and with their large public investments — with the largest of those, coincidentally enough, being Apple (AAPL). Assuming that Warren didn’t buy more Apple shares in the second quarter (we won’t know that until either Friday or or the SEC portfolio reporting deadline of August 15, whenever they decide to disclose those holdings in more detail — probably Friday, I would guess), Berkshire Hathaway owns about $50 billion worth of Apple shares — that’s about 5% of the outstanding shares of Apple… and about 10% of Berkshire’s market capitalization (and almost 14% of Berkshire’s book value). With Buffett clearly willing to buy more Apple shares, and with Apple itself willing to spend at least tens of billions of dollars to keep buying back shares (Apple pays a decent dividend, but more importantly it has bought back close to $100 billion worth of shares over the past two years), it’s going to take a lot of selling pressure to move the needle down for that stock — but with a big stake in Apple personally, plus exposure to it as the largest component in any S&P indexed funds I hold, plus Berkshire’s large stake, I don’t feel like I need to own any more Apple than I already do.
And as long as we’re talking Berkshire, how about Boston Omaha (BOMN), the stock that for a while last year got connected (mostly unfairly) to Berkshire… they don’t report for a little while yet, the expectation is that they’ll release their next quarter late next week (August 10), but there has been some news. The company has now diversified its ownership structure a little bit so it’s no longer a fully “controlled” company under NASDAQ rules… but with their recent share offering that mostly means the voting control has just shifted from one CEO to the co-CEOs, each of whom should now control close to 30% of the vote through their respective ownership vehicles (Magnolia for the Boston half of the partnership, Boulderado for the Omaha half). Boulderado re-upped with a big part of the secondary offering that was completed last quarter, taking up half of that offering at $23 a share and getting to that 30% stake, and Boston Omaha is now just completely larded up with cash.
So this is still a “bet the jockeys” name — and they’re still focused on trying to build their core businesses, which so far are still billboard ownership and surety bonds, into national businesses. Neither division is currently large enough to cover the operating expenses of the corporation, but the goal is still to “size them up” and boost revenue, probably mainly through acquisitions but also, in the case of the surety business, by trying to build a national lower-cost system for this kind of bonding. I have no idea whether it will end up working, but it is an interesting opportunity.
And they have plenty of cash to make some bigger moves now, with close to $175 million in cash after the offerings… though that number will drop a little, since they also just bought 15% of auto lender CB&T at the end of May for $19 million. There does not seem to be any urgency to grow fast, but I continue to like that the two founders are talking the right talk and, as importantly, that they own a huge stake in the business… with part of it bought at a considerable premium to the current share price.
The fairest way to assess Boston Omaha will be by looking at their price/book value, most likely… but it’s too early for that number to mean very much, since the portfolio is mostly cash. The only thing that has boosted book value per share so far is the fact that they’ve sold shares at a steep premium to book value, and therefore that incoming cash has raised the book value per share considerably. Now the book value per share should be in the $14 range, following the offering that’s not yet in the books (it finished in May, so will be in the next quarter released), so we’re still essentially paying a premium over cash to get these two guys to manage a business for us, and to get exposure to the limited investments they’ve already made. I’m willing to do that, given their strategy and the progress they’ve made so far, but I’m not willing to make it a huge bet just yet… so I’ll continue adding when the price/book gets relatively more appealing, as it is this week. I bought a whisper more of BOMN at about $20, and have limit orders in place to kick in if the shares drop further… though I’m not in any kind of hurry, and even if all those orders hit it will still be a small position. This is not likely to become a growth stock all of a sudden, but I think they have good potential to build something impressive. Patience is A-OK.
And the “Berkshire of Canada?” Fairfax Financial Holdings (FFH.TO, FRFHF) reported today, with a weaker quarter than last time out — mostly just because investment returns were substantially worse than they had in the first quarter, though that’s a number that goes wildly up and down each quarter. Overall, with the addition of Allied World the business has grown substantially larger — and they’ve also grown organically, with premiums written up by about 44% including Allied World, and about 10% if you exclude that acquisition and some other smaller transactions.
The two things to generally keep an eye on, if you assume that investment performance will be lumpy and unpredictable, are underwriting performance and book value per share. The profit eventually compounds into an increase in book value over time, and underwriting performance is what drives most of that because each profitable dollar from the underwriting operations rolls into the portfolio. They had a consolidated combined ratio of 96.1% in the quarter, which was lower than a year ago but still reasonable, and the book value per share increased a little bit to $454. I adjust that book value upward to account for their consolidated subsidiaries that are not written up to full value — Fairfax reports that discount, which is $810 million before tax, so if you add that in the adjusted book value would be $483.
I think the long-term potential of Prem Watsa’s investing, combined with several core insurance subsidiaries that are doing well and generating extra cash, is worth paying a little for — so one easy shorthand is to say that Fairfax is worth buying up to 1.2X book value for long-term investors, with the caveat that the investment performance has been lumpy and, from 2010-2016 or so, just plain terrible as Watsa over-hedged and bet on deflation, so you need a bit of confidence in management and you need patience. If that’s rational to you, that would mean you could justify paying up to about $580 per share. Fairfax is right around $560 right now, so it’s not trading at a shocking discount but I’d say it’s still “buyable.”
Fairfax India (FIH-U.TO, FFXDF) had a rough quarter, mostly because their largest listed equity holding in India had a rough quarter and that loss of value runs through the income statement as a loss (even though they didn’t sell) and lands on the balance sheet. I expect things to do well for Fairfax India in the long run, but IIFL, their large financial services holding, doubled in 2017 along with some other Indian growth names so it’s not terribly shocking that it gave some back this year… and they also lost a bit because of the weakening Rupee as some emerging market investments fled to safety in the dollar.
I expect Fairfax India to build a lot of value over time, but that assumes that India continues its strong growth — and it’s going to be volatile, both because India sentiment rises and falls and because the fund holds only a few investments at the moment. I think the most important thing they own right now is controlling interest (54%) in the Bangalore Airport, which is going to grow dramatically over the next decade as they add a terminal and a runway and develop their real estate around the airport, but that’s not a quick hit of an investment so I’m resolved to be quite patient with Fairfax India.
The book value per share, which you can kind of think of as the net asset value, since it’s really an investment fund, dropped to $13.26 per share. I think it’s buyable up to about $16 — its reasonable to pay a bit of a premium to get access to private companies in India, and a strongly connected on-the-ground Indian investment team, but you don’t want to go crazy… if India sentiment shifts dramatically (if Modi isn’t reelected, for example), this could easily drop sharply and fall well below reported book value.
And continuing the “baby Berkshire” theme, Markel (MKL) reported what seemed to me a pretty tepid quarter, and has surged again this week despite a weak performance in their core metric, which is “trailing 5-year book value per share growth.”
That brought the stock’s price/book value up to 1.8 for the first time since the financial crisis — from the mid-90s to 2007 Markel often traded for more than 2X book value, thanks to the allure of comparisons to Berkshire Hathaway and to the fact that their book of insurance business, in niche sectors, appeared sustainable and unusually profitable… and that their investment team put up returns that were (and still are) impressive compared to their more risk-averse insurance sector competitors.
At that time, though, it was also a much smaller company, with a market cap rising from well under a billion dollars to about $5 billion at the peak before the financial crisis. The stock has certainly rewarded the patient investor who sat through that rough post-crisis period, it took seven or eight years for the stock price to recover to those highs, but after they did recover and purchase Alterra a few years back, the stock has been off to the races thanks to both good performance and a return to a much higher price/book valuation.
As has been the case a couple times in recent years, I am sorely tempted to take profits on Markel — it’s really hard for me to justify 1.8X book value for this company, not when the book value is essentially flat over the past year… especially because the reinsurance business is a fairly large percentage of the business now, and reinsurance companies shouldn’t earn as high a valuation as primary insurers (since they’re not as profitable or consistent, as a rule).
But as I look across the industry, Markel isn’t alone — WR Berkley (WRB) is also around 1.7X book, and dozens of solid insurers are in the 1.7-2x book range. So I will return to my default position on Markel: It’s overvalued, but it’s still an excellent company that’s doing things right and should be able to compound book value over time even though this has been a relatively weak year on that front… so I’ll hold. If I were more nimble, my plan would be to sell here at $1,200 and buy back in on a 10-20% pullback over the next 6-12 months… but, of course, I don’t know if that will happen, and Markel might stay relatively overvalued for years without pulling back, particularly if a slow and steady rise in interest rates provides some more investment returns (insurers take a hit from interest rates that pop up quickly because they have to immediately write down their bond portfolio, as we saw from Markel this past quarter, but over time they benefit from rising rates because the vast majority of their portfolio is in bonds that will begin to pay higher coupons).
And really, despite my angst about Markel trading at what seems an unsustainably high valuation, I am left with what should be my mantra: Anytime I can avoid taking action in my portfolio, I’m going to be better off. Action is the enemy of returns.
Kennedy-Wilson (KW), the “real estate value investor,” released its second quarter, with no big surprises — the headline earnings look like a massive blowout, but that’s just because analysts can’t predict when KW will do a deal or sell a property, and they had two large projects that created big realized income in the quarter (selling a portfolio of apartment buildings in Washington State, and contributing some properties into a Dublin portfolio). They also bought back a lot of stock, and made investments in new buildings — the general strategy runs on two tracks: they spend money to buy land or projects in areas where they think rents will go up, like Salt Lake City, and they sell developments in areas where prices have skyrocketed, like Washington, so in that respect it’s like they’re a traditional value investment manager for real estate… but they also have a large operating portfolio of “stabilized” buildings that they tend to hold for a long time, generating steady income. On top of those two strategies, they also manage outside money so they collect fees on that — often doing projects that are half KW money, half money they’re managing for other people.
It’s a great business when people like real estate, and it pays a REIT-like dividend of just under 4%, so it sometimes gets treated like a REIT — but they pay taxes, so the business is more flexible and can use more leverage when they see opportunity. I still like it here, after the solid earnings report helped the shares bump up a bit more, though it’s a little more appealing on dips so it might be worth waiting for the next time people freak out about interest rates or real estate — odds are pretty good that it will be below $20 again at some point as the market fluctuates to different panics, though the real estate and “value” plays have done well recently as some money has run away from the growth and momentum names in technology and sought refuge from the “tariff” fears that are hitting some industrial stocks.
And speaking of “value,” poor David Einhorn is having another terrible quarter — lots more headlines about how his investors are running away, and how Greenlight Capital has again completely failed to generate returns for the umpteenth year in a row. He’s still a smart guy, and he’s a good analyst, but stubbornness in value discipline has not been any investor’s friend over the past five years.
I put Greenlight Capital Re (GLRE) back on the watchlist recently because it seems like his fortunes should turn around at some point — and in the meantime, they’ve had to become a better insurance company because the investment performance of their portfolio wasn’t doing anything for them. I still haven’t bought, though, since it doesn’t make much sense to step in front of a car that’s in the process of crashing — and this week’s news that Greenlight is now also going to add some convertible debt to their balance sheet, which is a sign of how desperate they must be for capital, is not positive for me on the back of what has been an 18% loss for Einhorn’s portfolio this year.
So Greenlight Re, shockingly enough after this awful year, is still not all that cheap — the stock has fallen by 55% over the past five years, since their most recent highs… but the book value per share has also fallen by 41%, so the shares have mostly just reflected that. They have given up the small premium to book value they often carried, up to 1.2X book or a little more during better times, and now trade at a discount to book (about 0.8X book as of Thursday, though the stock was still falling)… but it’s not a huge or shocking discount. Plenty of insurance companies have traded at much higher discounts to book value in the past.
Sometimes these things can cascade downward, with hedge fund investors pulling capital and forcing Einhorn to sell assets he doesn’t want to sell, which makes returns even worse, which makes more investors pull capital… and if the portfolio gets worse, insurance regulators start to look to see if the portfolio will be enough to sustain their insurance obligations, so they have to raise capital on that side (like with this week’s $100 million convertible note offering).
If they survive this cycle and live to invest another day, it may work out well even at these prices — but there’s not a lot of reason to bet on it just yet, not when there might be a real washout in GLRE shares to come. Greenlight’s portfolio lost 18.6% in the first half of 2018, with both the short and the long positions contributing to that decline, and it wouldn’t be surprising if portfolio weakness continues as Einhorn is under pressure to recover those losses — and pressure leads investors to take bigger risks, even if they know better.
Greenlight’s Tesla (TSLA) short is a good example of how much things can go against you — he has been short Tesla and other momentum names off and on for years, to the detriment of his portfolio, and just this week we saw Tesla come back into investors good graces yet again, surging higher on a good earnings report… and Einhorn is not only still short Tesla, he even had to return his Tesla Model S because he was having some problems with it. Makes you wonder whether Elon Musk snuck a little virus into the latest update for Einhorn’s car, eh? (I’m KIDDING).
Shorting high-profile growth names is really, really hard to do — Tesla has been ridiculously overvalued for five years now, so believing that you’ve identified the point when the trend will turn, while other people have been consistently shorting Tesla for years and losing their shirts, requires a lot of hubris. I’ve been “intellectually short” Tesla for years, since I don’t understand how a car company can carry this kind of valuation, but I have never been crazy enough to actually place that bet. Einhorn still has plenty of that hubris, it appears, but it doesn’t appear to be doing him any good — being a short seller is hard, shorting momentum stocks is extra hard, and publicly discussing your shorts makes you a target and makes your work harder still, so to some extent I admire him… but I’m glad I’m not as stubborn as he is. Heck, even one of his most recently presented short positions, Assured Guaranty (AGO), a municipal bond insurer, had a good quarterly report this week and is now up about 10% from when Einhorn pitched it as a short at the Ira Sohn Conference back in April. So far, there’s not much sign of light — even GM, one of Einhorn’s larger long positions, is down 10% following last week’s earnings report. I’ll keep watching, but it kind of feels mean to keep watching this one.
Kweichow Moutai (600519.CN), the Chinese distiller that I bought a few months ago, reported earnings this week and did fantastically well — profits up 40% from a year ago, better even than the 37% the company had expected. In a normal market, that accelerating growth would be reason for excitement — but the China markets are not focused on company specifics now, they’re focused on the trade/tariff war with the US and the possible implications for an economic slowdown in China… or, particularly when it comes to outside investors in China, of the possible impact if China again tries to devalue the Yuan. So Kweichow is dropping at the moment, though I continue to like the potential for it to really leverage that strong brand value they own as the top luxury baiju brand in China. We’ll see — I’ll respect my stop loss on that one, which is around US$80, but we’re still a long way from that point.
And that’s about all I’ve got for you as we close out this week — I’ll be riding the Pan Mass Challenge this weekend (you can still sponsor me if you like — thanks again to the hundreds of you who have already done so!), so things will be a little slow early next week as I recover, but I’ll be back to fill your ears with chatter before you know it. Have a great weekend!