In the first quarter of 2019, billionaire Bill Ackman’s Pershing Square achieved a 36.9% increase of NAV per share, as reported in its quarterly investor letter. A copy of the letter you can trackdown here. Aside from its performance, an NYC-based hedge fund discussed its holdings, among which was Starbucks Corporation (NASDAQ:SBUX). Summarized, the fund said it has faith in the company’s further growth and profitability.
“Starbucks (“SBUX”)
SBUX’s fiscal second quarter results lend further support to our belief in the company’s wide competitive moat and its long-term, high-single-digit revenue growth outlook. Starbucks’ store base grew 7% this quarter to more than 30,000 stores globally. We expect the company to continue to grow its unit count at a similar rate for the foreseeable future led by underpenetrated markets including China.
Same-store sales grew 3% globally, including 4% growth in the U.S. for the third consecutive quarter, and slightly positive transaction growth in the U.S. for the second quarter in a row. U.S. same-store sales should continue to improve due to the rollout of the Nitro cold beverage platform from just over half of company-operated stores to all by the end of September, new innovations such as the Cloud Macchiato, and continued efforts to engage less frequent customers, including a more accessible loyalty program.
China same-store sales growth of 3% was impressive in light of the intense competitive environment and the rapid expansion of the Starbucks store base, which should be supported in the near-term by the launch of mobile order and pay, and the continued rollout of delivery. Management issued more detailed guidance concerning its overhead cost reduction program, which when combined with higher-than-expected Americas’ segment margins in the quarter, reinforces our view that management’s long-term operating profit margin target will prove to be conservative.
SBUX shares have appreciated 21% year-to-date. The stock currently trades at 26 times forward earnings, in-line with recent historical averages, a level from which we believe prospective returns remain compelling, underpinned by mid-teens EPS growth and robust cash returns to shareholders over the next several years.
Starbucks Corporation is a world popular American coffeehouse chain, which runs more than 30,000 location over the world. This $91.18 billion market cap company was founded back in 1971, in Seattle, Washington. Since the beginning of the year, its shares have gained 17.04%, and on May 29th, it had a closing price of $75.28. The stock is trading at a price-to-earnings ratio of 32.52.
In its last financial report for the fiscal second quarter ended March 31st, 2019, Starbucks Corporation disclosed consolidated net revenues of $6.3 billion and GAAP earnings per share of $0.53, up by 5% and 13% over the prior year, respectively.
At the end of the first quarter of 2019, the biggest position in Starbucks Corporation of the hedge funds followed by Insider Monkey was reported by legendary Jim Simons’ Renaissance Technologies. The stake was worth $823.24 million, on the account of 11.07 million shares outstanding. This was followed by Pershing Square’s $742.96 million worth a position, on the account of 9.99 million shares. Other smart money investors with sizeable positions included Andy Brown’s Cedar Rock Capital, John Overdeck And David Siegel’s Two Sigma Advisors, and Peter Rathjens, Bruce Clarke And John Campbell’s Arrowstreet Capital.
Disclosure: None.
This article is originally published at Insider Monkey.
When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.
Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.
At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.
Do the math. According to Musk, this technology could be worth $250 trillion by 2040.
Put another way, that’s roughly equal to:
175 Teslas
107 Amazons
140 Metas
84 Googles
65 Microsofts
And 55 Nvidias
And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.
It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.
Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.
How could anything be worth that much?
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In fact, Verge argues this company’s supercheap AI technology should concern rivals.
Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.
Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.
When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.
Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…
But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.
And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…
This prediction might not be bold at all:
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