BLPA’s Rearview Mirror: Bipolar Financial Markets and Facebook

BLPA’s Rearview Mirror

November 3, 2014

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Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

Source:  @NikeBearBrown; Creative Commons
Source: @NikeBearBrown; Creative Commons

This roller coaster continues. Courtesy of Friday’s Bank of Japan announcement of quantitative easing, the markets went on a tear for Halloween, hitting new highs. Markets in the U.S. and Europe rallied on the news. If October were a person, I would diagnose it with bipolar disorder. Over the decades, October has had multiple market crashes and ensuing recessions and depressions. One month ago, in September we were literally experiencing new highs, in October we were close to new lows for the year, and now a new high. Whiplash.

If seasonal patterns hold, we should see a strong November and then move into a December Santa Claus rally. If I had to do it again, I would apply my quantitative skills to the financial markets for at least part of my career. Stock picks are partially attributable to company fundamentals and partly to the financial market forces. One can know nothing about a company, and still make educated guesses at revenue and sales forecasts, if one knows historical patterns. The other portion of my career I would spend in Big Data, in this brave new world of advertising and marketing where algorithms are king. But I digress.

Facebook (FB: Nasdaq) reported a great quarter, coming in at $3.2b up from $2.0b in revenues and just about doubling profit to $1.1b, as they finally got the knack of mobile advertising. However Mark Z ruined the party by promising to spend with abandon in all sorts of areas. Electronic Arts (EA: NYSE) is playing the product wave of the Playstation 4 and the Xbox One. GAAP revenue came in at $990m vs. $695m, and earnings turned positive to $183m. However, the Playstation was not enough to save Sony, (SNE: ADS) which is suffering from the write off of their foray into mobile phones. Talk about losing the magic. Sony was one company that had UX (user experience) down pat. And then lost it totally.

On the biotech front, Amgen (AMGN: Nasdaq) and Gilead Sciences (GILD: Nasdaq) had good quarters. On the healthcare side, McKesson (MCK: NYSE) and Express Scripts (ESRX: Nasdaq) are riding the Affordable Care Act.

IPOs[2]

Click on Company Name for the S-1 filing and the Company Symbol for the stock chart. The Company descriptions is from the S-1 filing. Both companies are based in Southern California.

No tech IPO’s this week. Rather, breast implants and country western boots. Quite a spread.

Retail

Boot Barn Holdings, Inc. (BOOT: Nasdaq) sold 5m shares at $16 per share, raising $80m at a valuation of $399m. The stock closed the week at $17.75 per share.

  • We are the largest and fastest-growing lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. With 158 stores in 24 states as of September 27, 2014, we have over twice as many stores as our nearest direct competitor that sells primarily western and work wear, and believe we have the potential to grow our store base to at least 400 domestic locations.

Medical

Sientra, Inc. (SIEN: Nasdaq) sold 5m shares at $15 per share, raising $75m at a valuation of $212m. The stock closed the week at $17.80 per share.

  • We are a medical aesthetics company committed to making a difference in patients’ lives by enhancing their body image, growing their self-esteem and restoring their confidence.
  • Our primary products are silicone gel breast implants for use in breast augmentation and breast reconstruction procedures, which we offer in over 120 variations of shapes, sizes and textures. Our breast implants are primarily used in elective procedures which are generally performed on a cash-pay basis. Many of our breast implants incorporate one or more differentiated technologies.

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Source:  Pug Love on Pinterest; Creative Commons
Source: Pug Love on Pinterest; Creative Commons

This weekend, we saw a foreshadowing of winter. Temperatures are dipping below freezing and the leaves are brown and falling with abandon. My California bred rescue pug Abby, is totally enthralled by the falling and blowing leaves. She paws at the window, wanting to go out and attack, run after, and capture the leaves. I wonder whether she will do the same with snow and near zero temperatures.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

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Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

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Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

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We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

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This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat

[2]Renaissance Capital