🔒 Boardroom Talk: Closer look at Spotify reminds Alec of our portfolio’s star Amazon in December 2014

In 2014 when we started the BizNews Share Portfolio, popular opinion was ignored and the model portfolio acquired a chunk of shares in Jeff Bezos’s juggernaut called Amazon. Intuition was informed by my own experience with Internet businesses – and an inkling that embryonic “cloud computing”, which I’d heard about in Davos, could be the next big thing.

That decision on Amazon more than any other, turned the BizNews portfolio into a super generator of wealth for those in our tribe who used it as a guide for their own investments. After a slow start – the share price promptly dropped 10% in the month that followed – Amazon steamrollered all before it, adding massive value for shareholders.   

Another stock in our portfolio, global podcasting leader Spotify, looks similar. Having spent most my career focused on broadcasting and the internet, I’ve become familiar with how business works here. To me, Spotify founder Daniel Ek is a genius in the Steve Jobs mould. Plus the company’s latest quarterly results showed its exponential growth continues.

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Yet as the share price graph above shows, Spotify shares trade at under half the level of where its shares listed in April 2018. So, I had an even closer look at its latest quarterly results and read the earnings call transcript. Maybe the real measure of progress is not Wall Street’s panic over a lower profit margin (50bp down to 24.7%). But the continued growth in the Lifetime Value of paying users. This reminds me of Amazon circa December 2014. A lot.

More for you to read today: 

Paul O’Sullivan: Cyril knew about allegedly corrupt Police Chief Masemola before appointing him.
The key question from this cracking interview with forensic investigator Paul O’Sullivan is whether Cyril Ramaphosa’s appointment of SA’s “very high risk” Police Commissioner was the result of neglect, incompetence or wilful deceit. Despite being provided by O’Sullivan with hard evidence that Fannie Masemola spends much more than he earns, overlaid by concerns that he’d spent six years as deputy to a corrupt former boss, SA’s president still appointed him Police Chief. His endorsement was included in Ramaphosa’s Nation Address where spoke of his confidence that Masemola was “more than up to this task and responsibility”. In this powerful interview O’Sullivan explains his detailed investigation ahead of the appointment revealed six of eight candidates were unsuitable, Masemola among them having been described as “very high risk”. He says a Sunday World report over the weekend that reveals Masemola’s corrupt practices should spur Ramaphosa into action as “this has the potential to be much more damaging to him than Phala Phala.” O’Sullivan spoke to Alec Hogg of BizNews.