Market scorecard
US markets closed slightly higher yesterday after data revealed that US job openings dropped to a three-year low of 8.1 million in April. The S&P 500 climbed for the third day in a row, pushing its annual gain to 11.5%, while the Nasdaq Composite is now up 14.1% for the year. We are not complaining.
In company news, CrowdStrike is up 6.8% after-hours as the cloud security giant reported revenue and earnings that beat the street's expectations. Elsewhere, Novelis, an aluminum recycling company backed by Hindalco, has postponed its US listing due to "unfavourable" market conditions.
At the close, the JSE All-share was off 1.17%, but the S&P 500 rose 0.15%, and the Nasdaq was 0.17% higher.
Our 10c worth
One thing, from Paul
Vestact clients own concentrated portfolios of 15 big-cap stocks. If your account in New York is big enough, you will own them all. See the full list here, on our beautiful website.
This strategy works well if the companies we pick do better than our benchmark, the market-cap-weighted S&P 500 index. At the end of 2023, our 10-year compound annual return was 16.2% versus 9.9% for the index.
We favour huge companies that are market leaders, like Apple, Microsoft, Amazon, Google and Meta Platforms. They are all worth well over $1 trillion. You won't find us steering you towards a large holding in something small and flighty. Our least-valuable holding is CrowdStrike, with a market cap of $71 billion. Next is Stryker at $130 billion.
So far, so good. Owning Nvidia has set us up to crush the index this year. It's up 137%, year-to-date.
Byron's beats
Most businesses out there are scrambling to find out how AI can enhance their productivity. If they don't get ahead of the curve they will most likely be left behind.
Despite employing lots of creatives, who were on strike for most of last year, Hollywood needs to keep up with the times. Tony Vincquerra, the chairman of Sony Pictures Entertainment has been the most vocal about the use of AI to cut costs in the industry. He even suggested that the next Spider-Verse film could have an AI animation style.
That is quite a controversial statement considering that many workers were picketing for months last year, and are only now rebuilding their shattered finances. Perhaps they should have seen this coming? Personally, I don't think that the feelings of organised labour should prevent progress in the industry. Bring on AI filmmaking, I am sure the graphics are going to be epic, like the one below made by Microsoft Copilot.
Michael's musings
Occidental Petroleum and Berkshire Hathaway Energy (BHE) have entered into a joint venture to produce lithium. The idea is to use Occidental's lithium extraction technology and BHE's geothermal energy plants - a great fit.
Part of the reason for the tie-up is because Berkshire owns 28% of Occidental, making it their sixth largest holding. This partnership between two sister companies is a pretty cool coming-together moment.
The part that blew my mind is that BHE will use the lithium extracting process to create electricity. The geothermal plants can process 50 000 gallons of lithium-rich brine per minute, to produce 345 megawatts of clean energy. The high-quality lithium produced can then be used to manufacture batteries. How's that for great alignment and synergy?
This deal further establishes Berkshire Hathaway as a leading renewable energy company.
Bright's banter
Skydance Media is planning to offer $23 per share to buy voting shares in Paramount Global, excluding the Redstone family who hold most of it.
Skydance, led by David Ellison (the son of Oracle's Larry Ellison), aims to merge with Paramount by also buying out Redstone's holding company and investing billions.
National Amusements, the Redstone's company, is reviewing the proposal. Meanwhile, Paramount's shares rose 6.9% to $22.11 at Monday's close.
Linkfest, lap it up
A well-designed building is both pretty and functional. Wind flow obviated the need for an HVAC system, saving millions - Architects created a gorgeous structure in Oslo.
Ray Dalio was the victim of an online scam. The billionaire wasn't out of pocket, but hackers stole his identity and tricked others - Instagram investing scam.
Signing off
Asian markets are mixed again this morning. Benchmarks dropped in India, Japan, mainland China, and South Korea, while Hong Kong and South Korea saw gains. The Indian market had a volatile start as investors evaluated the ability of Prime Minister Narendra Modi's party to form a coalition government after falling short of a majority.
Locally, RCL Foods rose by 5% after announcing plans to spin off Rainbow Chicken, which will IPO on the JSE's main board on June 26th. Shareholders will get one Rainbow Chicken share for every RCL Foods share they hold. Meanwhile, Momentum Metropolitan reported a 20% increase in new business over the last nine months, with assets under management growing 14% to R265 billion.
US equity futures are edging higher in the pre-market session. The Rand is trading at around R18.68 to the US Dollar.
Have a good Wednesday.