MidSouth Week in Review:
April 05, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Apr. 8, 2019 | RedChip Companies


The S & P began the 2Q with a weekly gain of 2%, and ended today with its 7th consecutive up day.  Lyft declined to $68 on Monday, after surging to $88 on its Friday opening day IPO, before recovering to $74.45 today.  Tesla declined 10% on Thursday after announcing their 1Q deliveries declined 31% from its 4Q numbers.  Money losing pot stock, Tilray, made a 7-month low at $59, down from its $300 Sept. high.  Bitcoin had an unexpected 25% surge to $5,000+ this week on no news.  The crypto coin was selling for $3,200 in December.  Initial jobless claims fell to a 50-year low.  Because of a recent decline in interest rates, mortgage app volumes increased 28% for the week ending 3-29 vs. 2018, which included a 10% increase for home purchases and a 58% dollar value increase in refi’s.  1Q auto sales decreased 2% because of a recent sharp rise in new vehicle prices and because of more attractive used car options as a record number of lightly used cars return from lease service.  Lastly, Amazon founder Jeff Bezos signed a divorce agreement with his wife, leaving her 25% of his Amazon holdings ($36 billion), making her the world’s fourth richest person.  I think I love her. - Buzz

 

 

BuzzBits

 

April – marks the end of the “Best Six Months” for the Dow and the S & P.  April is the Dow’s best month in pre-election years (+4.0%), second best for the S & P (+3.5%) and best for NASDAQ (+3.5%) – Jones Trading

 

The Perfect NCAA Bracket – Odds are 1 in 9.2 quintillion or 1 in 9,200,000,000,000,000,000 of correctly picking the winner of all 63 games.  For the perfect picker, a generous Warren Buffett has offered to pay any of his 389,000 Berkshire Hathaway employees, $1 million a year for life.  This year, 40 million wagered $4.6 billion on 149 million brackets.  Only 8,000 of 17.2 million completed brackets correctly guessed the 2019 Final Four matchups or only one in 2,150 entrants – Wall Street Journal; SI.com ….. There are 43 quintillion possible Rubik’s Cube combinations.  The fastest solved is 3.47 seconds – Wall Street Journal

 

Walgreens – declined 13% on Tuesday after reporting a 23% 2Q decrease in operating income and an 8.3% decrease in earnings.  Why?  I used to be a regular customer of Walgreens but no longer buy any of my drugs there.  I now use the GoodRx.com app for all my drug purchases and have probably reduced my annual drug costs from about $1,500 annually to around $300.  For instance I can pick up a 90-day supply of Atorvastatin at Kroger for $12 or for $24 at Publix, using their free membership vs. $127.10 at Walgreens or 90 Allopurinol tabs for as low as $6 which previously cost me around $75.  Eventually a lot of outlets will use drugs as a loss leader item to get you into the door. I am sure many others will begin using app’s such as www.GoodRx.com and www.Blink.com to reduce their drug costs, which will cut further into Walgreens’ profit margins – Buzz …... Amazon could make a “more meaningful move” into U.S. pharmacies in the next six to twelve months.  Amazon is looking at tele-and self-service pharmacies – Cleveland Research

 

Manhattan Real Estate – sales fell 3%, for the  6th straight quarterly drop, the longest losing streak in 30 years.  The biggest group decliners were the 4+ BR group that declined 22% in price to $5.35 million in spite of hedge fund manager Ken Griffin’s $238 million condo purchase in the quarter.  The price drop stems from an oversupply of high-end apartments, a lack of foreign buyers and the SALT taxes.  A new “mansion tax” recently approved will lay out another tax on the sale of expensive homes, adding further pressure – Robert Frank, CNBC ….. Rapper 50 Cent finally sold his 21 bedroom, 50,000 sq. ft. Connecticut mansion, previously owned by boxer Mike Tyson, for $2.9 million, down from his original 2007, $14.5 million listing price.  The estate was costing the rapper, who filed chapter 11 bankruptcy in 2015, $70k a month to carry, including taxes and mortgage payments.  The property had also been listed for rent at $100k a month – USA TODAY

 

Generation Z’s – were born between the mid-1990’s and the late 2000’s.  One in four is Hispanic, 6% are Asian and 14% are Black.  68 million belong to the group which is larger than the millennials’ and second only to the baby boomers.  A Jr. Achievement/Citizens Bank survey found that 37% of teens aged 13 to 18 believe they will be dependent on their parents for more than a decade - FANews

 

“Whole Paycheck” – prices are 15% higher than those at a typical grocery store, driven by a 30% premium on proteins, like meat, according to Morgan Stanley.  Recently, Amazon owned Whole Foods announced they would begin lowering prices on hundreds of items on Wednesday.  To test the savings, the New York Times purchased a baker’s dozen of common purchases prior to Wednesday and then purchased the same items on Wednesday.  How much did they save?  A nickel!  The bill on both days was $53.98 but the Wednesday tax bill was 5 cents cheaper – New York Times

 

Chicago – The city had more murders in 2016 than both NYC and LA combined.  However during the 1Q of 2017, murders fell 21.8%, followed by a 30% decline in the 1Q of 2019 to 76.  Why the drop?  The city has added 960 new officers since 2016 and beefed up its use of technology.  This week the city elected their first gay black woman as Mayor  – Wall Street Journal

 

What keeps us happy and healthy? – Results from a 75-year Harvard study.  This video has had 26.5 million hits.  A must watch - Buzz

https://www.ted.com/talks/robert_waldinger_what_makes_a_good_life_lessons_from_the_longest_study_on_happiness

 

 

Dollar General

 

Dollar General was started in Scottsville, KY in 1939 with an investment of $10,000.  By 1955, the company had 36 stores that grossed around $2 million annually and was going by the name J.L. Turner and Son.  Once a month, the big department stores in Louisville and Nashville would advertise “Dollar Days” with high full-color newspaper ads and sell merchandise with $1 as the single price point.  Mr. Turner decided to take a store in Springfield, KY that was operating at a loss to try an experiment.  Figuring the word “Dollar” was a must he added “General Store” to the name and sold everything in the store for a “Dollar”.  The opening featured a big sign with its slogan “Every Day is Dollar Day”.  On the big day, people crowded around the front of the building by the hundreds.  The store became a big success.  The second Dollar General store was in Memphis and within 10 months the two stores were grossing $1.1 million.  By 1957, the company featured 29 Dollar General stores with sales doubling to $5 million.  In 1968 the company changed their name to Dollar General Corp. and went public on the New York Stock Exchange.  In 1989, the company moved to Nashville.  Today the company has a $30.7 billion valuation on $25.6 billion in sales and 15,370 stores in 44 states.  Founder, J.L. Turner’s son Cal and grandson Cal, Jr. both attended Vanderbilt and later became CEO’s of the company. - Vanderbilt Magazine

 

 

buzz@msifund.com




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