Soundbites
Soundbites briefly explore what’s on Sionna managers’ minds.
Might the Tech Lash Lead to a Tech Bust
March 2019
We recently read “Unicorns, Cheshire Cats and the New Dilemmas of Entrepreneurial Finance?”, authored by Martin Kenny and John Zysman of the Berkeley Roundtable on the International Economy, with great relish. In the paper, the researchers actively challenge the belief that the continued growth and dominance of winner-take-all business models are inevitable.
Classic Contrarian Value Opportunity, or a Disruption Trap?
November 2018
In the search for excess returns, investors chase disruptors that they believe will transform the way businesses operate. High-quality investment opportunities are being discarded in their wake, which is great news for contrarian investors like Sionna. We aren’t blind to disruption in the economy and industry. But, we also recognize when things go too far, too fast. Kim Shannon recently delved into this topic and revealed a current stock we believe the market has dramatically overlooked. This stock is inexpensive on a price-to-earnings basis and is trading almost 50 percent below its all-time high. Curious?
The Sionna Hype Cycle of Investment Products
February 2018
Over the years, we have watched the annual Gartner Hype Cycle forecasts with interest. For those that are not familiar with it, the Gartner Hype Cycle outlines extreme peaks and troughs that can occur with new technology trends. It demonstrates how hype can build and eventually collapse under the weight of over-inflated expectations, until finally the collective wisdom settles into a more balanced reality about the growth of a new product or concept. As the hype for the new and novel seemed to gather steam this fall, we developed our own “cheeky” version – the Sionna Hype Cycle of Investment Products – in tribute to Gartner’s innovation.
Artificial Intelligence and Stock Picking – the Future is NOT Here
December 2017
There is quite a bit of enthusiasm surrounding Artificial Intelligence (AI) and its potential to replace traditional stock picking. But, enthusiasm and hype of a new concept is common in market history. Humans love forecasting extremes – bland forecasts are boring and not worth talking about. Historically, market players fall prey to hype and assume adoption and acceptance of a new initiative will occur much more rapidly than it actually does.
Looking for Eldorado
June 2017
Throughout history, humans have sought the mythical city of gold, Eldorado. Explorer, Sir Walter Raleigh essentially spent his life searching for it, but never succeeded. Eldorado represents something much sought after, but something that may not even exist. For centuries, humans have also been searching for a perfect investment vehicle. There is a long history of fads and fashionable new strategies that, at the time, offered a seemingly simple, dependable solution. Often these fads have led to overuse (manias) and then disillusionment.
A Contrarian Value Opportunity Revealed
March 2017
As a value manager, we know that value picks don’t always perform right away; the best returns tend to be seen over the long term. The contrarian value opportunities are in stocks that are either overlooked, underfollowed or in some kind of trouble.
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