The Wrap: $FIDO - Stake Global

How to profit with non-existent profit margins, $FIDO is proving to be one hell of a buy and breaking down QE.

5 trading all time highs

      • Zillow Group (Z) +22.4% in the last week
      • Square (SQ) +15.6%
      • Fiverr (FVRR) +14.5%
      • Goldman Sachs (GS) +3.3%
      • Caravana (CVNA) +2.8%

$FIDO

One of your best investments may leave muddy footprints through the house and sleep at the foot of your bed. The value of pets is becoming increasingly studied and quantified in recent times.

Their benefit is mostly physical and psychological. An Australian study found that pet owners reported 15% fewer doctor visits than non-pet counterparts. Based on similar findings it was estimated that pets saved the US healthcare system US$11.7b in 2015.

The causes are obvious; a companion during loneliness, a daily workout partner and general sparks of joy. It was found pet owners had lower blood pressure and recovered from heart surgery quicker, owners had decreased incidences of loneliness and depression and increased self esteem within children.

Even if it’s not so obviously quantified, the cost of dog food is paying itself over many many times over.

Costco Model

Studied in MBA programs world wide, the way Costco does business proves the power of scale. Despite generating US$152b in revenue and US$3b in profit in 2020, the bulk goods retailer struggles to break even on a lot of products it sells. In the ever volatile petrol market, Costco still manages to sell gas at a 20% discount to competitors. One of many staple products that will provide a consistent source of demand. 

So, how do they make their money? Almost one third of the American population is a subscribing member: 99 milion people pay US$60 a year. With a 91% renewal rate, the recurring revenue allows them to offer products at a discount to essentially all other retailers. But even still, they are barely breaking even on brand names products.

The money making secret? Kirkland Signature. Costco’s homebrand label appears on around 20% of products from golf balls to water. With their scale, Costco has taken control of the supply chain for a lot of their products. For example, in 2014 they changed the shape of their cashew jars to square instead of round in an effort to increase shipping capacity. Removing the middlemen and producing at a reduced cost, the supermarket can now capitalise on brand loyalty and sell for a more regular profit margin back to their customers.

Top 5 Gainers

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Top 5 Fallers

  • Bluebird Bio (BLUE) -40.6% in the last week
  • Amicus Therapeutics (FOLD) -37.4%
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  • Palantir (PLTR) -22.8%
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Trade Teaser

Using +, -, /, x; arrange four 9s to make 100.

What We’re Reading | Quantitative Easing Explained

You may feel it’s a little too late to ask what this whole “QE” thing is about. While many will answer simply with “it’s causing stock prices to rise” or “watch out for hyperinflation”, few will actually understand the concept below just the headlines.

This 3 part blog series does a great job of explaining “money printing” to the uninitiated while offering greater depth to the curious. On top of the basics, the author goes into the natural questions that will arise in parts 2 and 3: where is the inflation and where has all the money gone?