This week on Equity Mates

Hey there Equity Mate,

There’s always plenty happening in the world of business and finance. Here’s a few stories that caught our eye this week:

• Woolworths may be heading towards a 4 day work week

• The RBA held the cash rate at 4.35%, but their commentary suggested another move up may be on the cards

• In the surprising news of the week, Disney+ has turned a profit. However, the entertainment giant still faces plenty of headwinds and the stock was down 8%.

• More bad news for Boeing, as its Starliner space vehicle was forced to push back its first manned flight, as it prepares to launch astronauts to the International Space Station.

To keep up to date with everything happening, make sure you’re subscribed to the podcasts.

Equity Mates Investing (Spotify | Apple | YouTube)

• Monday - Snapchat and Spotfiy are back, Bonza isn’t & Pimp my Portfolio returns

• Tuesday - Buy or Sell: Adam Keily with Scott Phillips - Qantas, Pilbara, Cochlear & more

• Thursday - Apple’s record buyback, Berkshire’s record cash balance & crypto’s record price

• Friday - Bonus: Meshel Laurie - The world's first AI news show

Get Started Investing (Spotify | Apple | YouTube)

• Tuesday - $100 Challenge: Money savings tips from the experts

Your questions, answered

Chuluu asked via email:
“What is the biggest money mistake you see people making when they first come to you for advice?”

We put Chuluu’s question to Dylan Pargiter-Green, advisor and director of Bold Wealth.

Book a free call with Dylan and the team.

The biggest money mistake is not doing anything at all. When clients come to see us, its often because they’ve recently experienced or are about to experience a catalyst or change; Inheritance, pending retirement, separation or a recent gift are all common examples.

We find that when clients are uncertain of their financial position or they experience change, there is decision paralysis that sets in and they often are unable to take stock of their new position and so do nothing. This is also commonly associated with some level of fear or uncertainty around finance and investment. Clients will then often hold their funds, being unsure about what they should do, missing out on market exposure over this time.

There are many examples of smaller mistakes as well, some include:

• Trying to run your own individual stock portfolio with a small investment balance - you are very unlikely to beat the market or the professionals.

• Being overly conservative with investments despite a long investment time horizon

• Holding assets in the wrong structure and paying more tax than necessary

• Being under insured - your income is your largest asset throughout your life!

• Not spending enough throughout their working lives and in retirement through fear of running out.

If you have a question you’d like answered, hit us up at [email protected] 

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What we’ve been reading

The ultimate buyback plan — Berkshire Hathaway

One of the highlights of last weekend’s Berkshire Hathaway annual general meeting were questions about their cash balance. The company, led by history’s greatest investor Warren Buffett, has $188 billion in cash waiting to be deployed.

The reason Buffett gave at the meeting was the same reason he’s been giving for the past few years - there aren’t any opportunities that are both big enough and interesting enough for him to invest in.

This Reddit post suggests another reason. Perhaps it is the ultimate example of estate planning. Buffett currently personally owns $138 billion in Berkshire Hathaway shares. He has been very public that he plans to donate most of his wealth upon his death and he has suggested that the wealth he passes on to his family should be invested in S&P 500 index funds. Meaning his estate will need to sell his shares.

Selling $138 billion of Berkshire shares (about 16% of the company) would take years and still apply huge downward pressure to the share price, hurting all remaining Berkshire investors.

This post suggests that is where Berkshire’s cash balance may come into play. It could enable the ultimate buyback, where the company buys back Buffett’s $138 billion in shares and destroys them. This way the estate is able to sell, the company finds a use for its cash and all remaining shareholders benefit (as they own significantly more of the remaining company).

Obviously this hasn’t come from Buffett and is nothing more than an interesting idea. But it does present an elegant solution to a huge estate planning issue for the 94-year-old Warren Buffett.

McDonald's and other food giants are struggling in the inflation economy

As we move through earnings season in the US (as companies share how they’ve gone from January to March) we’re seeing some consistent trends come through. One is that there is still plenty of inflationary pressures throughout the economy.

On Monday’s Equity Mates Investing podcast episode, we shared a handful of companies that discussed different types of inflationary pressure:

• UPS called out rising gas prices and the brought back fuel surcharges for deliveries

• PepsiCo reported that inflation is still in their supply chain

• Chipotle reporting a wage increase and higher tech costs

• Ford reported higher-than expected costs in their EV division

• J.B. Hunt (trucking company): "We continue to face inflationary cost pressures despite also facing deflationary pricing pressure."

This article builds on that picture with a particular focus on fast food companies. McDonalds, Wendy, Chipotle, Wingstop, Yum Brands (owner of KFC, Taco Bell and Pizza Hut) are all profiled in this article as they all collectively struggle with rising costs and customer resistance to raised prices.

Long story short, we’re still a long way from being out of the woods on inflation.

This post contains sponsored content 

Uncovered: Sparc Technologies (ASX: SPN)

Uncovered is our exploration of smaller Australian companies that don’t receive as much media attention or analyst coverage. We believe every company has an interesting story to tell and we want to help tell it.

Today we’re sharing the story of Sparc Technologies, a company that is working to develop new 3 new technologies that they believe can help decarbonise the world:

• A graphene-based additive that can slow steel corrosion

• Creating clean hydrogen using photocatalysis

• Sodium-ion batteries to overcome the challenges of lithium-ion batteries

In this article we take a look at these 3 business units and where the company is at in the development journey for each of them. All 3 have the potential to serve massive industries - large-scale infrastructure, energy generation and energy storage respectively - so we consider what next for Sparc Technologies.