Here’s what you need to know today

• What do Google, Nvidia, Calvin Klein and biotech company Illumina have in common? They are the American companies specifically targeted by China in response to America’s 10% tariffs. Google and its Android operating system (used by Chinese phone makers like Xiaomi, Lenovo and Vivo) will be a particular focus of Chinese regulators. (NY Times | Financial Times)
  
  

• That was only the start of a bad 24 hours for Google. Parent company Alphabet saw shares fall 7% after reporting lower-than-expected revenue for the quarter. This is a reminder of the expectations game built into earnings season. Alphabet actually reported strong results - revenue up 12% and earnings per share up 31% - it is just that investors expected more. (Quartz)
  
  

• Israeli Prime Minister Benjamin Netanyahu was in the US to visit President Trump, with Trump unveiling a plan for the US to take over the Gaza Strip and assume responsibility for developing the territory after Palestinians are resettled elsewhere. Forced displacement of Gaza’s population would likely be a violation of international law. (AFR)
  
  

• Australia’s largest healthcare company, CSL, was down 2% after Robert Kennedy Jr. took his next step towards becoming America’s Secretary of Health and Human Services. The appointment of RFK Jr, a noted vaccine skeptic, is seen as bad news for CSL’s influenza vaccine division, which makes up 15% of the company’s earnings. (Capital Brief)
  
  

• Mastercard has announced plans to remove the 16-digit card number from credit and debit cards by 2030. In its place, the company plans to use tokenisation and biometric authentication to confirm identity. (ABC News)
  
  

• Australia’s Future Fund, the national sovereign wealth fund, announced returns of 12.2% for the 2024 calendar year, lifting its assets under management to $237.9 billion. (AFR)
  
  

• The Australian government has banned Chinese-owned AI chatbot DeepSeek from government devices. This decision didn’t comes as a surprise, with other Chinese-owned apps like TikTok already banned. (ABC News)
  
  

• Spotify reported its first-ever annual profit, posting €1.14 billion profit for 2024. Total monthly active users rose to 675 million while premium subscribers rose to 263 million. Spotify shares were up 13% on the news. (Capital Brief)
  
  

• Amazon reported that it delivered 9 billion items either the same day or next day globally, giving it a logistics advantage that competitors will struggle to replicate. (Quartz)

What the…?

Did the US really provide terrorist group Hamas with $50 million worth of condoms? That was the claim made by White House Press Secretary Karoline Leavitt and repeated by President Trump this week.

Short answer, no it did not. Although that hasn’t stopped the story spreading like wildfire on social media. (CNN)

15% of survey respondents want more crypto content!

This is the data point that has divided the Equity Mates office. Some thought it was too low, others thought it was too high - the only thing we could all agree on was it was surprising.

The insights from the Community Survey help us plan our content for 2025 and beyond. So, if you agree with the 15% or disagree, please have your say and help us continue to improve. (Survey Link)

Survey closes Sunday 9 February - so now is the time to have your say!

Investing is a lifelong journey

Here’s what you can learn today.

Thinking like a value investor

This is an excerpt from our conversation with Tobias Carlisle titled Expert: Tobias Carlisle – Finding deep value in today’s market conditions (Apple | Spotify | YouTube)

Question: How do you assess management quality in a quantitative way?

Tobias: Share buybacks are a very powerful signal. Companies that do material buybacks relative to their size tell you several things: they're generating free cash flow, they have the resources to do the buyback, they believe the stock is undervalued relative to what they can spend on it, and management is doing the right thing. When you get too cheap, the market is telling companies to liquidate, and responsive managements should listen to that signal. The record of CEOs doing acquisitions is pretty bad, so my preference would be that the least objectionable use of capital is typically buying back stock.

Question: For investors looking to get into value investing, what approach would you recommend?

Tobias: There are lots of different styles of value - people who are more towards the Buffett end and people who are even pricier than that. They're still value investors, just doing a different calculation of value. But basically, the idea is that you've got some fundamental justification for what you're doing. You think the business can grow rapidly for a long period of time, and you can buy it at a price now that gives you a good enough risk-adjusted return over the next five or ten years. That's value investing. My style focuses more on quantitative metrics, but there are many approaches that can work.

Remember, every Equity Mates episode is now released on YouTube for you to watch in full. Check out our episode with Tobias here:

Today’s sponsor is Magellan

Starting points matter – Understanding the three components of shareholder returns.

Portfolio Manager, Emma Fisher discusses why starting points matter and how they influence investment strategies. Emma breaks down the key factors that drive shareholder returns, sharing insight on future returns, the potential impact of interest rate cuts, and investing in businesses with lower expectations. 

Airlie provides an opportunity to access an experienced investment team with a proven track record of prudent, common-sense investing. 

Airlie’s funds are actively managed, concentrated funds that seek to invest in quality Australian listed companies that aim to deliver attractive long-term capital growth and regular income to its investors. 

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