Category Archives: Entrepreneurship

The Four Horsemen theory of investing

In early 1995, when I first started investing and I was working at Cisco, the company was called one of the four horsemen of the Internet.

The four were Microsoft, Intel, Cisco and DELL (+1 Oracle). Nothing could stop them at that time. (DIMCO)

Meet the new 'four horsemen' of tech: Sorry, Microsoft, Dell, Cisco and  Intel - GeekWire
Four horsemen of 1990’s

The four horsemen of 2000’s were ignored because they were in China (BATS) – Baidu, Alibaba, Tencent and Sina (+1 –

The State of Chinese Social Media in 2016: What You Need to Know Five  Trends in China's Fast-Moving Social Landscape – Chinese Tourist

For the next decade the four horsemen (+1) were FAANG (Facebook. Apple, Amazon, Netflix, Google)

Why you need to own the Four Horsemen of Tech
Four horsemen of 2010s

The four horsemen (+1) of Covid without doubt have been: Tesla, Zoom, Peloton, Docusign and Shopify.

The new horsemen (+1) of 2020 – 2030 are being formed right now. There are a few candidates.

Nvidia (AI and Chips)

Tesla (Electric cars)

Shopify (eCommerce)

Peloton (Connected fitness)

SEA Limited (Singapore)

Mercado Libre (Argentina)

Are there others you can think of? Message me on Twitter – @mukund

100 Baggers: Book review and Summary

100 Baggers: Stocks That Return 100-to-1 and How To Find Them: Mayer,  Christopher W: 9781621291657: Books
100 Baggers: a Book on Investments by Chris Mayer

100 Baggers is a book on finding and keeping stocks that increase 100X their value after purchase. The book was published in 2015 and has 220+ pages. the book details 365 companies that have returned 100X their value.

Book notes and summary

“Every human problem is an investment opportunity if you can anticipate the solution”. Except for thieves, who would buy locks?

Phelps figured out a few things about investing. He conducted a fascinating study on stocks that returned $100 for every $1 invested. Yes, 100 to 1. Phelps found hundreds of such stocks, bunches available in any single year, that you could have bought and enjoyed a 100-to-1 return on—if you had just held on. His basic conclusion can be summed up in the phrase “buy right and hold on.” Investors need to distinguish between activity and results.

What investors should do is focus on the business, not on market prices.

“Bear market smoke gets in one’s eyes,” and it blinds us to buying opportunities if we are too intent on market timing. The greatest fortunes come from gritting your teeth and holding on.

“There is a Wall Street saying that a situation is better than a statistic,” Phelps said. Relying only on published growth trends, profit margins and price-earnings ratios is not as important as understanding how a company could create value in the years ahead.

Don’t sell just because the price moved up or down, or because you need to realize a capital gain to offset a loss. You should sell rarely, and only when it is clear you made an error. One can argue every sale is a confession of error, and the shorter the time you’ve held the stock, the greater the error in buying it.

There are lots of ways to make money in markets, just as there are many ways to make a good pizza. Nonetheless, there is something to be said for a good pizza that almost anyone can make with the right ingredients.

We’re looking for insights and wisdom, not hard laws, and proofs. Investors have been conditioned to measure stock price performance based on quarterly or annual earnings but not on business performance.

# of years a company is in the S&P 500

The Biggest Hurdle to Making 100 Times Your Money

The biggest hurdle to making 100 times your money in a stock—or even just tripling it—may be the ability to stomach the ups and downs and hold on.

Analysis of 100 Baggers:

• The most powerful stock moves tended to be during extended periods of growing earnings accompanied by an expansion of the P/E ratio.

• These periods of P/E expansion often seem to coincide with periods of accelerating earnings growth.

• Some of the most attractive opportunities occur in beaten down, forgotten stocks, which perhaps after years of losses are returning to profitability.

• During such periods of rapid share price appreciation, stock prices can reach lofty P/E ratios. This shouldn’t necessarily deter one from continuing to hold the stock.

The key to 100-baggers

Many 100-baggers enjoyed high ROEs, 15 percent or better in most years. It’s important to have a company that can reinvest its profits at a high rate (20 percent or better). ROE is a good starting point and decent proxy. I wouldn’t be a slave to it or any number, but the concept is important.

Owner Operators: Skin in the Game

Keep the list of names relatively short. And focus on the best ideas. When you hit that 100-bagger, you want it to matter.

100-baggers distilled: essential principles

  1. You Have to Look for Them: “When looking for the biggest game, be not tempted to shoot at anything small.” You only have so much time and so many resources to devote to stock research. Focus your efforts on the big game: The elephants. The 100-baggers.
  2. Growth, Growth and More Growth: You want to focus on growth in sales and earnings per share.
  3. Lower Multiples Preferred: Great stocks have a ready fan club, and many will spend most of their time near their 52-week highs, as you’d expect. It is rare to get a great business at dirt-cheap prices. If you spend your time trolling stocks with price–earnings ratios of five or trading at deep discounts to book value or the like, you’re hunting in the wrong fields— at least as far as 100-baggers go. You may get lucky there, of course, but the targets are richer in less austere settings.
  4. Economic Moats Are a Necessity: A 100-bagger requires a high return on capital for a long time. A moat, by definition, is what allows a company to get that return.
  5. Smaller Companies Preferred: Start with acorns, wind up with oak trees. The median sales figure of the 365 names in the study was about $170 million.
  6. Owner-Operators Preferred: Having a great owner-operator also adds to your conviction. I find it easier to hold onto a stock through the rough patches knowing I have a talented owner-operator with skin in the game at the helm.
  7. You Need Time: Use the Coffee-Can Approach as a Crutch: Once you do all this work to find a stock that could become a 100-bagger, you need to give it time. Even the fastest 100-baggers in our study needed about five years to get there. A more likely journey will take 20–25 years.
  8. You Need a Really Good Filter: Don’t fret so much with guesses as to where the stock market might go. Keep looking for great ideas. If history is any guide, they are always out there.
  9. Luck Helps: Just as in life, so in the pursuit of 100-baggers. Good luck helps.
  10. You Should Be a Reluctant Seller: If the job has been correctly done when a common stock is purchased, the time to sell it is—almost never. Sell if: You’ve made a mistake—that is, “the factual background of the particular company is less favorable than originally believed.”  The stock no longer meets your investment criteria. You want to switch into something better—although an investor should be careful here and only switch if “very sure of his ground.”

What is an Investing EDGE?

The Importance of Finding Your Trading "Edge"

An investing edge is a technique, observation or approach that creates a cash advantage over other market players.

Said another way – what do you know better than others?

E.g. You are a developer and know companies that provide software / frameworks for developer before others do. E.g. OKTA, Splunk. Amazon AWS, etc.

What are the characteristics of an edge?

The edge has to be repeatable.

You need to be able to use the same process (your knowledge of developer stack for e.g.) to find new investments consistently. Using your process you may only get 1 investment a year or 1 a month or 1 a day (wow), but it has to be a process that keeps repeating using a set of rules you adopt consistently.

The edge has to result in better than 50-50 odds

Let me give you an example to prove this point. Lets say you and I chose a stock ABC. You know nothing about ABC and I don’t either. The odds of the stock going up or down are – 50% – a coin toss. That’s gambling. When you gamble, the house always wins in the end (regardless of the market).

Now lets say ABC is a developer focused technology company. You know more about whether it will do well or not than I do. You now have an edge.

For me it is still a coin toss. For you, however, the odds are in your favor since you know more.

It has to be validated before and be proven (Back testing)

Back testing is a fancy insider term for “prove to me that your hypothesis will work with data from previous time periods.

Back to our example, if you have an edge, as a software developer, what questions (metrics) will you ask to find the companies you would have invested in the last 10 years?

Doordash (NYSE:DASH): The most Comprehensive IPO review

DoorDash IPO filing shows huge growth and lots of risk - CNET
Doordash (NYSE:DASH) filed for an initial public offering.

Doordash, the food delivery company, founded in 2013, by  Andy Fang, Evan Moore, Stanley Tang, Tony Xu, filed for an initial public offering.

The company is expected list on the NYSE and is being underwritten by Goldman Sachs and J P Morgan.

The company is expected to seek a valuation of about $25 Billion and it is still not clear how much it plans to raise (the placeholder value is $100M, but the final amount depends on the interest from large investors). Ed: I expect it to raise about $800M – $1B.

The company’s most recent price of shares were $45.9 (Series H, June 2020), when it was valued at $16B, raising $400M. This means the price at IPO will likely be $80 – $100.

The company has grown quickly and has recorded $1.9B (+237% growth) in revenue in 2020 (9 months, ending Sep), losing $149M in the process. During this period the Gross Order Value (Amount of food purchased & sold through the system was $8.1B – giving it a rough take rate (commissions) of 11%.

That compares to $587M in revenue for all of 2019 with a loss of $533M.


Ed: I think this stock will head lower after the IPO if it prices at $80 – $100, unless Uber and Lyft start to trend upwards. This is based primarily on the valuation expected.

The questions around delivery and consumer growth need to be answered only by 2021 and until then I think this business will grow very quickly.

Given that the key story for DASH is that the pandemic has kicked its business into orbit, the key questions will be:

  1. Can the the growth in consumers and consumption be sustained?
  2. Are there good competitive moats vs. Uber, Just Eat (Grub Hub) and Instacart?
  3. Are the take rates sustainable in the future?
  4. What is the autonomous delivery story?
  5. What about the poor economics of delivery businesses outside the major metros?

You should buy this IPO only if you believe the future of restaurants depends at least on 25%-30% of their business coming from delivery (compared to < 12% currently), as opposed to people going back to dining in after 2021 (Post Covid).


The market for “local” business delivery – starting with restaurants (which is where Doordash initially operates) is large. There are over 660K restaurants and over 38K grocery stores in the US alone. Of those 390K are customers of Doordash (Monthly active). Doordash is active in Australia (3 cities), Canada (80 cities) and United States (4000 cities).

Doordash claims to be a “merchant first” business. There are 3 participants in the business.

  1. Merchants: These are local businesses that want to deliver products to consumers, without the overhead of delivery or the cost of owning a fleet of trucks. 390K active merchants use Doordash.
  2. Consumers: Businesses (before Covid) who need catering for their office and homeowners who like food delivered at home from their local restaurant are the main buyers. 18 Million consumers use Doordash.
  3. Delivery personnel (Dashers): These are the on-demand workers who deliver the food (similar to Uber or Lyft and get paid in tips and delivery fees for their work. There are 1 Million Dashers on the platform.
Expected Online penetration of Delivery (Credit: Uber acquisition of Postmates presentation)

Customer Segments


1 People cannot cook due to lack of time.

2. Professionals who can’t go out during lunch because time is the constraint.

3. Students who don’t have a kitchen facility.

4. People who don’t know how to cook.


1 Food joints that have no delivery service.

2 Restaurants with poor seating arrangements.

3 New restaurants that need a huge customer base.

4 Eateries looking for advertising and marketing.


1 People looking for part time or full-time work.

2 People looking for good income via salary and tips.

Product and Value Proposition

There are 3 apps Doordash provides: a) for merchants, b) for consumers and c) for Dashers.

Merchant Value Proposition

  1. Demand aggregation: Provide them orders from customers who want local delivery.
  2. Merchant services: White label logistics service (Doordash drive) allowing merchants to generate demand by themselves & Doordash Work for catering orders

Consumer Value Proposition

  1. Convenience: Stay at home and order food
  2. Wide selection: Food and groceries from 1000s of local food places
  3. Value: flat delivery fee or monthly subscription

Dasher Value Proposition

1. Flexible opportunity to earn

Business Model

Doordash makes money by

a) charging businesses a percentage of their sales. That commission ranges from 10% to over 30% in some cases. Consumers pay a delivery charge and tips to the dashers. As of Sep 2020, over 5 M consumers pay a monthly subscription fee ($9.99) to Doordash for unlimited local food deliveries.

b) advertisement: Any restaurant that wishes to advertise themselves on the DoorDash app has to pay in order to be ranked in one of the top places. This is done to increase the visibility of the restaurants and earn more customers

c) delivery fee: the delivery fee is another source of income for Doordash. The amount is decided during the payment process depending on the distance from the pickup to the delivery point. Usually, the delivery fee ranges from $5 to $8.


Doordash charges consumers $5 – $8 as a delivery fee. Consumers can subscribe to a $9.99 Doordash pass which gives them unlimited orders per month.

Doordash charges 20% – 30% commissions from merchants.

The advertisements fee is between $50 – $100 per month on average.

Doordash pays Dashers per delivery ($10 – $25).


There are many questions about the viability of the model from multiple players, (see footnotes), but Doordash seems to have executed the Covid plan well. They have grown over 200% YoY and are

GOV (Gross Order Value)$2.8B$8B$16.4B
Revenue$291M$885M$1.91B (9 mo)
Take rate % of GOV10.39%11.05%11.64%
Profit (Loss)($204M)($667M)($147M)
Doordash quick financials


Growth for Doordash will come from more merchants (expanding beyond restaurants to other local services), followed by more consumers buying more often (increasing transactions and GOV).

  1. More merchants
  2. More merchant services
  3. More consumers
  4. More consumer engagement
  5. International expansion (beyond .AU and .CA)


They raised a small round from YCombinator ($120K) in 2013, followed by $2.4 M round from Khosla Ventures. Since that point they have raised over $2 B from over 50 investors. The biggest investors are Softbank (25%+) and Sequoia Capital (20+%), followed by GIC Singapore (9.5%).

RoundDate$ raisedValuationLead
Pre SeedMar 11, 2013120K$2.5MY Combinator
SeedSep 30, 2013$2.4M$17.5MKhosla
Series AMay 22, 2014$17.3M$73.5MSequoia
Series BMar 26, 2015$40M$173MKleiner Perkins
Series CMar 22, 2016$127M$600MSequoia
Series DMar 1, 2018$535M$1.4BSoftbank
Series EAug 16, 2018$250M$4.1BCoatue
Series FFeb 21, 2019$400M$7.1BDragoneer
Series GMay 24, 2019$600M$13BDarsana
Series GNov 13, 2019$100M$13BT Rowe Price
Series HJun 18, 2020$400M$16BDurable
Doordash Funding rounds since 2013

Comparable Valuations

CompanyValuation2020 Rev (E)2020 Growth (E)2020 EPS
$UBER$86B $12 B-15%-$3.4
$ABNB$30B (E)$3.7B-12%?
$GRUB$6.6 (A)$1.4B25%-$1.2
$DASH$25B (E)$2.5B212%?
Given the range of valuation I expect $DASH to trade lower after IPO

(A) Acquired, (E) Estimate

Uber, Lyft and GrubHub stock performance


The local food delivery space has multiple competitors including Uber Eats, Grubhub (acquired by Just Eat for $7.3B), doing $1.2B in 2019 revenue, Postmates (acquired by Uber for $2.7B), doing $107M in Q1 2020. In addition, Instacart, which does grocery delivery is expected to file for an IPO in 2021.

Doordash has over 50% marketshare in the US (for restaurants), followed by 26% for Uber eats and 16% for Grubhub.

The biggest competition is consumers walking up to a restaurant (dining in), followed by restaurant owned delivery (e.g. Dominos).

Finally, as Doordash expands its addressable market need, it might run into competitors such as Instacart as well. Lyft (in the US) has still not made its plans known for delivery.


Doordash has made 4 acquisitions to date, including Caviar (competitor) and is likely going to keep acquiring companies in Canada and Australia to expand their footprint.

DateCompany acquired
Aug 21, 2019Scotty Labs
Aug 1, 2019Caviar
Apr 1, 2019Ivi5
Sep 14, 2017Rickshaw
Doordash acquisitions


The company was founded in 2013 by the 3 founders as Palo Alto Delivery.

Tony Xu owns 5.2% of the company, while co-founders Andy Fang and Stanley Tang each own 4.7%. The fourth co founder no longer is with the company (Evan Moore).

On January 12th 2013, Palo Alto Delivery was born.


  6. DoorDash average order size was $37.28, only 20 percent spent more than $50
  7. DoorDash average delivery time was 37 minutes in 2019
  8. The company employs over 7000 people

Five IPOs worth watching before Dec 2020

7 Upcoming IPOs to Watch: Asana, Palantir, GoodRx | InvestorPlace

There are 5 companies planning to go IPO that I am tracking closely

1. AirBnB

If there is one company in the travel space that has benefited post Covid it is AirBnB. The company is looking to raise $3B, with an expected valuation at $25B – $30B. It generated $4.8 B in revenue last year with about $400M in losses. It has apparently been growing since May and is close to profitability.

2. Affirm

The company provides short term loans (BNPL – buy now pay later) to consumers for *mostly* online purchases. Metrics are unavailable, but valuation could be in the $2B – $5B range. Another Covid winner, with revenues quadrupled post March.

3. Doordash

The food delivery company filed its S1 last week revealing a 226% increase in revenue during the first 9 months of the year (another winner thanks to Covid).

The company posted $885 million in revenue for 2019, up from $291 million in 2018. For the nine months ended Sept. 30, 2020, DoorDash generated $1.9 billion in revenue, up from $587 million for the same period in 2019.

Meanwhile, the company reported net losses of $667 million for the year 2019 and $149 million for the nine-month period ended Sept. 30, 2020, compared to net losses of $504 million and $203 million, respectively, reported for the same time in 2018 and the same nine-month period in 2019.

The company said, it holds approximately 50 percent of the market share based on total sales, followed by Uber Eats at 26 percent


The Tom Siebel founded Enterprise AI company has filed to raise $100 M. It provides AI and data science technology and services. For 12 months ending Jul 2012, the company booked $162 M in revenue and is not profitable.

5. Roblox

A leading online game developer, was founded in 2004. They provide a gaming environment safe for children. They are expected to post $225 M in revenue in 2020, up over 112% from 2019. It raised $150 M in funding (Feb 2020) valuing it at about $4B.

An IPO Party Coming Soon
Doordash, Wish, AirBnB, Affirm, and Roblox file for IPO


1. Wish

The deep discounter (eCommerce marketplace) company / app, has raised over $1.6B over the last decade, with most recent valuation at $11B. It has over 70 Million active users in 100 countries. Wish was estimated to drive $1.9 B in revenue in 2019, a 109% growth over 2018.

ANT Financial Update: Suspended IPO

I wrote about ANT financial a few weeks ago. It was a much anticipated IPO and would have been the largest ever. Until the Chinese primer decided that was not going to be the case. The WSJ says, ANT has indefinitely postponed its IPO.

Credit: WSJ

Chinese President Xi Jinping personally made the decision to halt the initial public offering of Ant Group, which would have been the world’s biggest, after controlling shareholder Jack Ma infuriated government leaders, according to Chinese officials with knowledge of the matter.

The rebuke was the culmination of years of tense relations between China’s most celebrated entrepreneur and a government uneasy about his influence and the rapid growth of the digital-payments behemoth he controlled.

Mr. Xi, for his part, has displayed a diminishing tolerance for big private businesses that have amassed capital and influence—and are perceived to have challenged both his rule and the stability craved by factions in the country’s newly assertive Communist Party.

In a speech on Oct. 24, days before the financial-technology giant was set to go public, Mr. Ma cited Mr. Xi’s words in what top government officials saw as an effort to burnish his own image and tarnish that of regulators, these people said.

At the event in Shanghai, Mr. Ma, the country’s richest man, quoted Mr. Xi saying, “Success does not have to come from me.” As a result, the tech executive said, he wanted to help solve China’s financial problems through innovation. Mr. Ma bluntly criticized the government’s increasingly tight financial regulation for holding back technology development, part of a long-running battle between Ant and its overseers.

Mr. Xi, who read government reports about the speech, and other senior leaders were furious, according to the officials familiar with the decision-making. Mr. Xi ordered Chinese regulators to investigate and all but shut down Ant’s initial public offering, the officials said, setting in motion a series of events that led to the deal’s suspension on Nov. 3. Investors around the world already had committed to paying more than $34 billion for Ant’s shares. It isn’t clear whether it was Mr. Xi or another government official who first suggested the shutdown.

Chinese regulators have long wanted to rein in Ant, according to the Chinese officials with knowledge of the decision-making. The company owns a mobile payments and lifestyle app, called Alipay, that has disrupted China’s financial system. Alipay is used by roughly 70% of China’s population, has made loans to more than 20 million small businesses and close to half a billion individuals, operates the country’s largest mutual fund and sells scores of other financial products.

Ant largely focused on serving people and companies that traditional banks long ignored, and it has emerged as an important cog in Chinese finance. It has long been spared from the tough regulations and capital requirements that commercial banks have been subject to.

Regulators earlier met with strong resistance to efforts to rein in Ant from the company’s financial backers, reflecting the support Mr. Ma has had from individuals in China’s top political and business echelons, according to a person familiar with the matter. Ant’s shareholders include Boyu Capital, a private-equity fund whose partners include Alvin Jiang, the grandson of former Chinese leader Jiang Zemin. China’s national pension fund, China Development Bank and China International Capital Corp. , the country’s top investment bank, all have large unrealized profits on their investments in Ant.

Mr. Xi sought to tighten financial regulations overall after the 2015 stock-market crash in China that tested the party’s firm hold on the economy. He also came to appreciate the benefits of having firms like Mr. Ma’s, whose payment app and lending operations changed the way the Chinese spend money, provided a reliable source of funding for small businesses, and made Alibaba Group Holding Ltd. BABA -0.50% , the e-commerce giant which Mr. Ma co-founded and used to run, the pride of China.

Tech Titan
Shares in Alibaba Group have surged in the years since the e-commerce giant went public, cementing its place as one of the world’s most valuable companies. Alibaba currently owns a third of Ant Group.

Ant’s roots trace back to 2004, when Alipay was started as an escrow service to facilitate payment transactions on Taobao, Alibaba’s online marketplace. Mr. Ma split off Alipay from Alibaba in 2011, a move that sparked an outcry from some of Alibaba’s big foreign investors and later resulted in a settlement with them.

Mr. Ma controls 50.5% of Ant’s voting rights, but he hasn’t ever held an executive or managerial position in the six-year-old company.

In 2008, when he was Alibaba’s CEO, Mr. Ma had lamented at a public forum that traditional banks in China were ignoring businesses that badly needed funding. “If the banks don’t change, we will change the banks,” he said, explaining that he envisioned “a more comprehensive lending system that served the needs of small businesses.”

In 2013, as Alibaba’s chairman, he again took aim at traditional Chinese lenders, saying at a public forum in Shanghai that the country didn’t lack banks or innovative institutions, but a financial institution that could power China’s economic growth in the next decade. “The financial industry needs disrupters” and outsiders to bring about changes, he said.

Around that time, Alipay created an online money-market mutual fund designed to help individuals earn investment returns on spare electronic cash sitting in their Alipay wallets. It was an instant success. Some people moved money out of their bank accounts into the new fund to earn higher returns, drawing complaints from some lenders that Alipay was siphoning their deposits.

In 2014, Alipay, along with Alibaba’s other financial businesses, were folded into Ant Financial Services Group, the company now known as Ant Group.

For years, Mr. Ma largely managed to navigate Mr. Xi’s two seemingly contradictory goals: encouraging financial innovation and open markets to drive growth while keeping a rein on market forces to maintain control.

Ant’s big money-market fund became the world’s largest of its kind, with more than $250 billion under management by 2017. China’s securities regulator became concerned about the systemic risk the fund could create, and pressured it to shrink and lower its returns. Ant changed its strategy, letting rival money managers sell similar funds on Alipay to investors needing places to park their money, and its main fund shrank.

In 2017, China’s leadership revamped the country’s fragmented regulatory regime, which had often involved various regulators acting in isolation. It named Liu He, Mr. Xi’s top economic czar, head of a superregulator of sorts called the Financial Stability and Development Committee. One of its goals was to better coordinate actions by China’s various regulatory agencies.

Ant raised three rounds of private capital. By mid-2018, it was the world’s most valuable startup, worth $150 billion, based on the prices private investors had paid.

This year, deteriorating relations between the U.S. and China gave Mr. Ma an opportunity to win points with the ruling party. With Washington threatening to delist Chinese companies from U.S. stock markets, Beijing was eager to build up its own exchanges. Its securities regulators saw having a company such as Ant listed in both Shanghai and Hong Kong as a big endorsement of China’s markets.

Ant changed its name in the summer, dropping the words “Financial Services.” Shortly after, it announced plans to go public, right around the first anniversary of China’s Nasdaq-style Science & Technology Innovation Board, better known as the STAR Market. After Ant filed listing documents in Hong Kong and Shanghai, the stock exchanges and Chinese securities regulators moved quickly to green-light its IPO.

But trouble was brewing with banking regulators, who were growing concerned about the risk banks were taking on by lending to Ant’s customers online. Since the summer, a spate of government regulations, guidelines and notices were rolled out to contain potential risks from the growth of digital finance and microlending.

The world’s biggest stock sale proved extremely popular with large and small investors. Privately, however, some Ant employees were worried about potential regulatory changes that could hurt the company’s growth prospects, according to people familiar with the matter.

On Oct. 24, Mr. Ma took the stage at a financial forum in Shanghai attended by top regulators, politicians and bankers. He said Ant’s IPO was “a miracle,” being such a large deal taking place away from New York. Attendees included China’s Vice President Wang Qishan, central bank governor Yi Gang and some senior state-bank executives.

During his 21-minute speech, he criticized Beijing’s campaign to control financial risks. “There is no systemic risk in China’s financial system,” he said. “Chinese finance has no system.”

He also took aim at the regulators, saying they “have only focused on risks and overlooked development.” He accused big Chinese banks of harboring a “pawnshop mentality.” That, Mr. Ma said, has “hurt a lot of entrepreneurs.”

His remarks went viral on Chinese social media, where some users applauded Mr. Ma for daring to speak out. In Beijing, though, senior officials were angry, and officials long calling for tighter financial regulation spoke up.

After Mr. Xi decided that Ant’s IPO needed to be halted, financial regulators led by Mr. Liu, the leader’s economic czar, convened on Oct. 31 and mapped out an action plan to take Mr. Ma to task, according to the government officials familiar with the decision-making.

At a meeting of the Financial Stability and Development Committee headed by Mr. Liu, the group decided to “put all kinds of financial activities under regulation and treating the same businesses in the same way,” according to a government statement.

The decision was aimed squarely at Ant, the government officials said, and cleared the way for the pro-stability members of the group to dust off draft regulations they had been working on for a long time.

Among them was one regulating online microlending. With Mr. Xi’s blessing, the central bank and the banking regulator made the draft rule even tougher than previously conceived, according to the Chinese officials familiar with the decision-making. The new rule had a requirement that didn’t exist in previous drafts: Firms such as Ant would need to fund at least 30% of each loan it makes in conjunction with banks.

Ant’s Alipay platform has facilitated loans to numerous individuals in China. Its activities have recently drawn scrutiny from financial regulators, in part because banks fund many of the loans.
The draft rules were published on Nov. 2, the same day Mr. Ma and a couple of his executives at Ant were summoned to a rare joint meeting with the central bank and the regulatory agencies overseeing banking, insurance and securities.

The next day, the Shanghai Stock Exchange suspended the Ant IPO, citing the meeting and changes in the regulatory environment. The China Securities Regulatory Commission, which previously signed off on the listings, now says it was a “responsible move” to protect investors and markets, as the regulation, once implemented, would severely limit Ant’s business scope and profitability.

Ant could try again to go public. Market participants believe it will reorganize its business units, rethink its business model and inform investors of additional risks. All this likely will mean that Ant’s lofty valuation will be cut when it tries to list again, and the company may not be able to raise as much money as it aimed for this round, analysts say.

Q3 2020 Earnings analysis: Which eCommerce Stock should I buy and at what price?

If you are following eCommerce companies (not Retail Commerce such as Home Depot, Walmart, etc.) there are 11 publicly listed companies that I am following. Of those 8 have reported earnings as of Nov 12th. reports on Nov 16th, SEA limited reports on Nov 17th and Chewy on Dec 14th.

Click for larger view of EPS, Revenue, Estimates, Market Cap and Growth

Q3 2020 Earnings estimates and analysis

Companies tracked (ranked by market capitalization)

SEA LimitedSE
Mercado LibreMELI
Etsy Inc.ETSY
Jumia TechnologiesJMIA
Top eCommerce publicly traded companies

The top 5 takeaways from Q3 2020 earnings that I gathered

5 Top E-Commerce Stocks to Buy in July | The Motley Fool

Covid has accelerated all eCommerce companies, but some are gaining more share than others.

Revenue growth for ETSY has been the highest so far at 128%, followed by Shopify at 96%. Alibaba has been growing slower, but that’s to be expected because of their large revenue base.

Earnings are growing faster for all

Surprisingly, except 2 companies (Chewy and Wayfair) all others turned a profit and the fastest earnings growth was seen from Pinduoduo (PDD) Etsy (ETSY) and Shopify (SHOP).

Valuations are deservedly rich thanks to EPS and Revenue Growth

The companies with the richest valuations are Pinduoduo (PDD), Mercado Libre (MELI) and Shopify (SHOP). ETSY is relatively cheap at 76 PE.

Stocks I would be adding to my portfolio are ETSY and consider JMIA / FTCH

ETSY’s valuation and growth are terrific. I am going to hold MELI and SHOP, but add to my ETSY holding. I would also keep Jumia (JMIA) and Farfetch (FTCH) in my watch list.

Stocks I would likely not add are Alibaba, Wayfair and Chewy

I think they are good companies, but have limited upside for a 6-12 month horizon given their growth relative to other eCommerce companies.

B Riley (NASDAQ: RILY) – analysis and stock recommendation

B Riley (NASDAQ: RILY) is a full financial services firm based in Los Angeles. The company through several subsidiaries helps companies & high net worth individuals, invest, raise money, acquire and sell companies.

I would buy between $27 and $29, hold for 3-6 months on EPS growth long term.

RILY B. Riley Financial, Inc. daily Stock Chart

There are five operating segments: (i) Capital Markets, (ii) Auction and Liquidation, (iii) Valuation and Appraisal, (iv) Principal Investments – United Online and magicJack, and (v) Brands.

Capital Markets segment provides a full array of investment banking, corporate finance, consulting, financial advisory, research, securities lending, wealth management and sales and trading services to corporate, institutional and high net worth clients. 

Auction and Liquidation segment utilizes our significant industry experience, a scalable network of independent contractors and industry-specific advisors to tailor our services to the specific needs of a multitude of clients, logistical challenges and distressed circumstances. 

Valuation and Appraisal segment provides Valuation and Appraisal services to financial institutions, lenders, private equity firms and other providers of capital. 

Principal Investments – United Online and magicJack segment consists of businesses which have been acquired primarily for attractive investment return characteristics.

Brands segment consists of our brand investment portfolio that is focused on generating revenue through the licensing of trademarks.

The stock went public on Oct 2019.

They focus principally on five target industries in the investment banking operations: consumer goods, consumer services, defense, industrials and technology.

Fundamentals: Key metrics

Market Cap: $876Million


EPS Growth 2019: 41%

Institutional Ownership: 48%

Sales growth Q/Q: 25%

EPS growth Q/Q: 43.9%

52 Week L $12.94 & 52 Week Hi $31.00

Current price: $30.0

Technical Key Metrics:

Support: $27, Resistance: $31

Moving Averages: EMA (50) – $19.91, and EMA (20) – $23.51

eBook review – Introduction to Stock Technical Analysis

I am trying to learn as much as I can about technical analysis and came across a good introductory book on Stock market technical analysis.

First step guide to technical analysis

I would highly recommend you reading this book if you are interested in technical analysis of stock price & volume action. I would give his eBook a 4/5.

Fundamental Analysis

Fundamental analysis focuses on the intrinsic value of the market. If market price is below the intrinsic value, then the market is undervalued and should be bought or vice versa.

The intrinsic value of the business enterprises is estimated as the present value of the assets of these enterprises and the ‑ow of future dividends to be paid by these enterprises to shareholders. The fundamental analysis is good for selection of securities to be invested and not good for catching the timing of buying and selling.

Technical Analysis

Technical analysis concentrates on the study of market supply and demand. Technical analysis focuses on the movement of the prices and the trade volume and tries to forecast the future movement of the prices. Technical analysis concentrates on the change of the prices, and therefore you would know the timing of buying and selling, but not on the intrinsic value, and therefore you would not know whether you were properly investing.


Among the various methods of technical analyses, this booklet is following three methods, i.e., Candlestick Charts, Trendlines, and Moving Averages.

Candlestick charts are one of the price recording methods developed in Japan but widely used globally, which indicate the current market situation at all times, though the charts pick up only the fi­gures of the open, the close, the high, and the low.

Trendlines and Moving Averages are the methods used to understand the major tendency of price change, namely, the trend. These methods of analysis are widely known as Trend Analysis. Trend analysis has been used from older times but has become popular only in the last half a century.

Candlestick charts

First, draw the vertical line from the highest price to the lowest during a day.

Then, draw the rectangle shape from the open price to the close price over the above vertical line. And if the close price is higher than the open price, this rectangle shape is shown in white and if the open is higher, it is shown in black.

Candlestick example

This white line is called “the sunny line” and black line “the shadow line”.

The length of the real body tells us the strength of the momentum of both seller and buyer. When the buyers are stronger, they keep buying and the white real body becomes longer, and when the sellers are stronger, they keep selling and the black becomes longer.

The unusual long big real body is appearing occasionally once a month or two months, when the movement becomes 2 to 3% of the price (the usual average movement is around 1%.).

The long real body and the short shadow simply tell us that most of the investors have followed the strong movement of the price and show their momentum.

When both the real body and the shadow are short, it tells us that the momentum of selling and buying is almost equal or investors see the market on the sidelines with no clear direction, or nobody is interested in the current market and leave it as it is.


The word “Trend” means the direction of the price movement when you use this word as technical term for the market. In upward phase it is called “uptrend”. The continuous change to a certain direction is called “long-term trend”. The rapid and big change is called “strong trend”.

You must ­find out a broader perspective on a direction of the trend by having got rid of the trifle and unnecessary movements. One method to gain such a perspective is to draw a straight line which could suggest a certain trend and thus is called” Trendline”.

Trendlines – uptrend and downtrend

There are two trend lines. One is the uptrend line analyzing the uptrend and another is the downtrend line analyzing the downtrend. The uptrend line is sometimes called support line and the downtrend line is called resistance line.

The uptrend line is the extended line drawn from low milestone price to then the next low milestone price when the market is considered in the uptrend.

The downtrend line is the extended line drawn from high milestone price to the next high milestone price when the market is considered in the downtrend.

And when the actual stock price crosses under the uptrend line or crosses over the downtrend line, either case is considered the signal of the reversal point of the trend price.



 Line 1 drawn from A to B and extended

Line 2 drawn from C to D and extended

Line 3 drawn from D to E and extended

All lines are upward line. You can see the change of the pitch from Line 2 to Line 3 getting faster.

The point where the actual stock price crossed under Line 3 was the turning point of the reversal of uptrend which clearly shows that the 8 -year long rising market came to an end.


This average recorded the highest of US$13,930 on October 2007 and then came the 2008 fi­nancial crisis triggered by the bankruptcy of Lehman Brothers, and fell to US$7,062 on February 2009.


Line 1 drawn from A to B and extended

Line 2 drawn from B to C and extended was added because the pitch of falling became much faster.

The turning point of the stock price was the price just over the Line 2 and after that the price was rising tremendously. Especially, the time when the price crossed over Line 1, the market became more con­fident on the uptrend.

Trend continuity

The continuing uptrend means that the low price of turning point becomes higher than the low price of the previous turning point and simultaneously, the high price of turning point becomes higher than the high price of the previous turning point. This means that the both the low price and the high price of each turning point are rising.

Moving Averages

One of the methods to extract a trend after eliminating the trifle and meaningless change of the market is called “smoothing out” the unevenness of prices. You can eliminate such small changes by calculating an average of a certain period of the price data. The term moving is used because only the latest prices of speci­fied time span are used in the calculation. This means that the period of price data to be averaged moves forward with each new trading day. And when you draw a line by connecting these averages, this line is, thus, called “Moving Average”. This “Moving Average” is sometimes abbreviated to MA.

While the trendline is basically drawn outside the change of the prices, the moving average is drawn over the change of the prices. The moving average is automatically drawn from the change of price and reflect automatically and successively the movement of the change of the prices without being influenced by drawers’ consideration. The moving average shows the trend of the change of the prices and is regarded as one of the trendlines in a broad sense.


Vice versa, see no.4; if the moving average is falling from top left to bottom right, it means the downward trend.

See no.5; if the price crosses down through the falling moving average, this means the acceleration of paces of falling. See no.6; if the price crosses up through the moving average line, this means the slowing down of paces of falling.

After that, if the moving average line turns to upward-sloping, this means entering the upward trend.


Lufax IPO: The China play #2 in the US

Since I mentioned Ant Financial a week ago, I thought I would take a look at another company in the FinTech space from China that is going public in the US – Lufax. They are looking to raise over $2 Billion with an expected valuation of over $50B. It was last valued at $38B a year ago.


Lufax Holding is one of the largest fintech companies in China in terms of AUM. It mainly provides consumer finance and wealth management for individuals, and financial solutions for institutions and governments. Its fully-owned subsidiary, Lufax platform, is one of the largest online wealth management platforms in China.

It is looking to raise over $2.4 Billion and should list before Nov 2020.

Lufax Holding, now mainly comprises 4 business
segments, Lufax platform, Ping An Pu Hui (Pu Hui), and the 2 financial asset exchanges, Qianhai (QEX) and Chongqing Financial Assets Exchange (CQFAX).

In their S1 filing there are a few interesting elements worth noticing.


China has the second largest financial system globally, both by retail credit lending volume in 2019 and by the total amount of investable assets as of December 31, 2019. The estimated demand for small business financing in China was RMB89.7 trillion (US$12.7 trillion) in 2019, of which RMB46.6 trillion (US$6.6 trillion) was unmet.

The current outstanding balance of consumer loans in China is estimated to be RMB12.7 trillion (US$1.8 trillion) as of December 31, 2019. As of the same date, China’s personal investable assets reached RMB192 trillion (US$27 trillion), making it the second largest personal wealth management market globally, and only RMB49 trillion (US$7 trillion) or 26% has been placed in wealth management products.


Lufax Financials

They did about $6.7 Billion in revenue and $1.8B in profit for 2019, growing at -5% (Covid related) in Q2 2020.

Lufax platform is the largest P2P platform in terms of both outstanding balance and transaction volume of P2P loans in China.

Lufax platform had a total of 32.36m registered users, up 27% YoY while the number of active investor users rose by 17% YoY to 7.69m.

Pu Hui focuses on individual consumer financing and SME financing. It has 3 major businesses: Ping An Zhi Tong Loan, Ping An Guarantee, and the P2P business, which was injected into Pu Hui from Lufax platform in 1H15.

Pu Hui granted new loans of CNY257bn, up 130% YoY. The ending balance of loans under management at end-September 2017 rose
by 141% YoY or 20% QoQ to CNY269bn. Pu Hui is now pushing ahead
with an offline store innovation and online approval system upgrade to
better underpin its outlet expansion in lower-tier cities, and optimize cost efficiency and user experience.

QEX and CQFAX mainly provide institutional financial asset trading
services. QEX focuses more on cross-border business, while CQFAX
focuses more on local government financing business and asset-fund
matching among institutions.