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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi Peter and Team,

SHOP shows in their previous Quarterly release that they have grown free cash flow (good stuff!) but when I look at cash balances, I see they have a reduction in cash and equivalents with a simultaneous increase in "Loans and merchant advances, net."

I am trying to decipher if SHOP is:
1. Actually adding cash (key indicator of health)
2. Vendor financing their customers heavily which ended very badly for the likes of GE.

Is the quality of SHOP's financials showing some cracks here? It seems like this vendor financing theme is taking off in the "tech" stocks.
Read Answer Asked by Marc on February 13, 2024
Q: Thanks to 5i, I've done extremely well with NVDA. After the launch of ChatGPT and seeing Elon Musk mention on X how hard it was to get his hands on NVDA's chips, I increased my exposure to semiconductors. Among the trades I made towards the end of last year was averaging down on UCTT, which was also a favorite of 5i. I already had a partial position and was fortunate to buy more near the bottom of 2023. Recently, however, you seem to have adopted a somewhat negative outlook on the company in your commentaries. I'm relieved to see this stock back above water in my portfolio, now with a decent gain. Is there a specific reason or news for the stock's recent catch-up, and should I continue to hold it, or is it still considered overvalued, suggesting I should take my profits and move on? Thanks, as always.
Read Answer Asked by Michael on February 13, 2024
Q: Good Day,

Big wins on a lot of your recent answers to my previous questions, thanks.

Obviously there's a tonne of hype on the Semiconductor market/AI/Data Center space right now, and after picking up SMCI, VRT, etc, I came across CDNS and by proxy, SNPS as well.

It appears they have the market corners on the design software side of this market. Logically, however, this wouldn't appear to be a space that grows in the number of customers in it very readily.

Is this similar to ASMLs type of monopoly (albeit a duopoly), with growth coming from advantageous pricing conditions and the relative difficulty of a new player popping up?

Do you see these companies gaining significant share price appreciation over time? Which company is better and why? I really liked a recent question that asked where they were relative to a baseball game. For each could you relate their lifecycle to what inning in a game they are, as well as an out of 10 for risk and growth potential.

The prices of these have climbed for sure, but definitely don't seem to have exploded like the rest of the segment. Are there any other companies with this same type of competitive advantage in the semiconductor/AI space?

Thanks!
Read Answer Asked by James on February 12, 2024
Q: Nvidia has grown to 8% in my portfolio thanks to your analisis and opinion. I have no problem letting it run a bit more if justified. My concern is their competition will eventually catch up and they lose their edge. I'm also wondering about their valuation and that they might be forming a bubble. Your analisis and opinion would be appreciated. Thanks to 5i and team.
Read Answer Asked by Gilles on February 12, 2024
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