Gonzalo's  Instablog

 In my first post, I stated that I was convinced at Apple’s capabilities for continue growing without Steve Jobs presence. This thought has not changed and somehow the market agrees (↑37% Steve Jobs leave -to- date) In my opinion, the company has reached the commitment and maturity needed to grow by its own, as if Steve Jobs ideas were in each Apple worker. It is understandable that not every investor shares the same feeling, and this difference, is what leads to pay special attention to Apple new releases. This article will focus on what the company has in mind to surprise customers and investors. After releasing extremely successful products, like the iPod and iPhone, the challenge is going to be very tough. 

   &nbs... To start with, two months ago, the iPhone 3.0 OS software was released in a developers meeting, where the demonstrations were far beyond expectations. Immediately, rumours about a new iPhone were in every Apple fans web page, as people imagination tried to guess how is going to be. Some say that the company is preparing an iPhone Nano, others are anticipating a thinner, 4 inches screen, 32 GB storage instead of the current 16GB, 256 MB of RAM, FM radio, 3.2 megapixel camera and a digital compass. The last feature is having special attention as rumours of a Japanese supplier (Asahi Kasei) are dumping every forum. Regarding the iPhone Nano, some company executives explained that the idea wasn’t feasible as they are willing to take advantage of the entertainment capabilities (and the App Store), the iPhone has. Nobody really knows what Apple has in mind, but as expectation grows, the company will have to do more to surprise customer, and therefore the market. 

   &nbs... The other product many tech specialist have been talking of, is a netbook from Apple. Although Tim Cook has made explicit (in several earnings calls) that he doesn’t see an opportunity in netbooks and that Apple isn’t going to compete in that market. This rumour started after Reuters confirmed that Apple has ordered 10-inch touchscreen for the third quarter of this current year. As a result of these news, last week some web pages reported that Apple is working on a media pad which will be positioned between the iPhone and the MacBook. The idea is to make this tablet available for watching HD movies, as a game device and as an ebook reader. BusinessWeek describes it as “smaller than an Amazon Kindle electronic reader, but its touchscreen is bigger than the Kindle’s”. The main goal is, as they achieved with the iPod and iPhone, define a new category of mobile device. Much has been said in every Apple news page, but as happens with the next iPhone release, expectations are too high for the big degree of uncertainty.

    Finally, and just to mention it, Apple fans are expecting the release of Snow Leopard after Worldwide Developers Conference 2009 (WWDC) in June. Some people agree it will be the operating system for all the new media devices from Apple.

Disclosure: No positions

 Two years went by since the first signs of this crisis started to appear, with no clue about what the world was going to face and deal. But us many optimistic people like to highlight: every crisis is an opportunity, and specially this one, is a big one. With almost every newspaper, tv channel and blog talking about what’s happening, plenty of topics are discussed and new investment ideas begin to appear. One of the most repetitive topics deals with USA’s future once the crisis is over and how is the world going to manage if this country is not able to keep the leadership. Many people imagine a long term where nowadays emerging markets (specially China, India and Brazil)  overthrow USA and Europe’s supremacy. For example, as concerns on dollar strength begin to appear, some speciallist argue that China needs to take the leader roll, and prepare its currency for replacing the international currency. I’m not so confident about the currency change since I believe it would be a devastating moral impact to investors, although I have no doubt that in the near future China will become the most important economy. In this entry, I’m going to make emphasis in China and meat exports to that country, revealing how investing in any place of the production chain could be a valuable investment for the future.

    To start with, it is important to imagine and have a clear picture of the dimensions of China’s growth and vastness in every economic and social aspect. For avoiding making it too long to read I will enhance on three indicators I consider the most significant. On the one hand, I want to focus on the projected China’s economic and population growth:

    As we can see in the projections, China will continue to grow at a high and sustained pace (year GDP growth of 10%) and its population will start growing at a higher rate than it did in this decade. What is important about this data is that as population continues growing the country will continue to need huge supply of food from other countries. If population reaches 2025 estimates (260 million more) the country will need to increase its food demand 21%1. The economic growth shown in the graph will help China’s wealth for obtaining the food they need, by producing more efficiently and increasing imports from other countries. For making this information relevant and related to the meat market, is important to enhance that China’s population way of living are starting to change. First of all, because they have higher incomes (a new middle class is starting to appear), which allows them to afford more expensive things, as meat. Second, they are aware that meat is one of the best foods for making their children grow stronger and healthier. Third, many of them are starting to like eating meat.

        With this data it stands to reason that in the near future, there will be an important expansion in the meat market, lead mainly by China, which will benefit the smartest countries. Related to this, one of the countries which is trying to increase its market share is United States. Forecasts from the U.S Meat Export Federation shows that in 2010 there will be a jump in beef exports to China, reaching 60,000 metric tons per year.

      I believe it is clear why I am optimistic in investing somewhere in the meat market. I doubt wether it is the right time to make the decision or not, although it depends where are you planning to invest. Since the possibilities vary from investing in a farm with the purpose of breeding the cattle to buying some shares from an ETF that tracks livestock (AIGL, COW). It all depends in the risks the investor is willing to take. Taking the first option requires living in a country where you can breed good quality cattle, having a year without any climate effect (flood or drought) among other external factor that increase business risk. The second option will give smaller returns but, at least, allows everyone to take a share in this growing market. As I mentioned before, the opportunity exists in every part of the supply chain: The producers, who breed the cattle till they sell it, the firms responsible of carrying the cattle to another country (China could ask for livestock instead of processed meat), buying shares from big cattle producers (Tyson Foods - TSN, Sanderson Farms - SAFM), or from ETFs related to the business. It all depends on the investor.



Disclosure: No positions