The Cutting Room Floor
April 2021
We are starting a monthly distribution to share ideas on a more regular, and a less formal basis than our quarterly letters. Our goal is to share some of the work we have at our fingertips - the pieces of research that come up in our investment process and end up on the cutting room floor while we write our letters. We hope the content here will pique your interest. The quarterly letter will remain the forum for a fulsome discussion of our portfolio and positions.
This first installment includes charts we have found meaningful, links to topics of interest, and data that we follow with commentary on where we are finding opportunity.
Enjoy,
The Bishop Rock Team
Charts
Future of Payments: If PayPal is the future of payments, why did the company lose e-commerce wallet-share during the pandemic? More in our next quarterly letter.
Source: Company filings.
Inflation: Vaccines are driving demand for travel immediately. Reopening will drive a lasting supply/demand imbalance for travel, not commodities.
Source: Bank of America card data.
Coming Up: Despite a high prevalence of COVID variants, Israel achieved herd immunity when ~50% of the population had received at least one dose of a vaccine. At current vaccination rates, the US will achieve this level on May 4, 2021.
Source: Our World in Data.
Reading
The best 2-page summary of the $1.9 trillion stimulus plan. Stimulus Summary
The SEC is looking into companies "talking down" earnings estimates intra-quarter, a driver of alpha for quarter-to-quarter investment strategies. Reg FD
Half of Shopify is large companies - why are they there? Shopify
Canada now has a carbon tax, which will impact US companies. Carbon tax
A history of Facebook's AI and misinformation. MIT Technology Review
Going to space uses 5x more carbon than flying across the Atlantic. Space
Buy-Now-Pay-Later has been a growth story during the pandemic as financial start-ups collected high interchange fees from merchants. Banks are getting into the game at half the price with broader acceptance. CBA
Data & Commentary
This section features some of the public data we look at on a daily basis for our investment process. We have included commentary and highlighted certain items in the column next to the data - so please keep scrolling down.
Disclosures
The information contained herein reflects the opinions and projections of Bishop Rock Capital, L.P. and its affiliates (collectively “Bishop Rock”) as of the date of publication, which are subject to change without notice at any time subsequent to the date of issue. Bishop Rock does not represent that any opinion or projection will be realized. No guarantee is made as to the ability of Bishop Rock to consummate any specific investments, realize any particular investment strategy or objectives and accomplish any specific target investment results. All information provided is for informational purposes only and not in a fiduciary capacity, and should not be deemed investment advice, an opinion regarding the appropriateness or suitability of any investment or strategy or a recommendation to purchase or sell any specific security. The recipient of this document should make its own independent decision regarding whether to enter into any transaction, and the recipient is solely responsible for its investment decisions. Under no circumstances will Bishop Rock or any of its officers, representatives, associates or agents be liable for any loss or damage, whether direct, incidental or consequential, caused by reliance on or use of this document.
Bishop Rock may have an economic interest in the price movement of the securities discussed in this letter, but Bishop Rock’s interest is subject to change without notice. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any data presented. This document contains forward-looking statements (which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue,” or “believe” or the negatives thereof or other variations thereon or comparable terminology) that represent Bishop Rock’s opinions, beliefs, estimates or strategies regarding the future, which may not be realized.
Any positions reflected in this letter do not represent all of the positions held, purchased, or sold, and in the aggregate, the information may represent a small percentage of activity. In addition, any list of positions herein is not intended, for competitive reasons, to be comprehensive nor reflective of the portfolio on any particular date. The information presented is intended to provide insight into some noteworthy events, in the sole opinion of Bishop Rock.
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