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Hatch Weekly: Loved the Big Short? Invest like Burry.

Big Short dude invests in GameStop

Yes, you’ve seen The Big Short, and yes, you loved it. Sure, Michael Burry was a bit of a freak, but he knew what he was doing when it came to investing (and drumming too). Word on the street is that GameStop (GME) could be Game Over. Hedge fund operator Burry, who might we add, made hundreds of millions of dollars by betting against subprime mortgages, begs to differ.

Burry knows best?

As more people buy video games through digital channels, fewer are buying games on physical discs from GameStop. Burry’s Hedge Fund, Scion, owns 3 million shares, or about 3% of GameStop’s shares, isn’t fazed by the troubles the retailer has faced over the past few years. Burry believes that GameStop’s balance sheet is looking pretty good, and he claims he’s in it for the long game. While Burry understands that GameStop is at its lowest point, he’s confident that the company will bounce back with the launch of PlayStation 5 and Xbox Scarlett. Both Sony (SNE) and Microsoft (MSFT) will keep a physical disk drive in its next-gen consoles. After Burry told Barrons he was backing GameStop; shares shot up as much as 20%. That’s clout.

Get on with disrupting yourself

Analysts feel GameStop has at least a decade to reinvent itself and the company isn’t wasting any time. Recent layoffs and a new CEO indicates that they are serious about rebooting the company to face into the future.

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You don’t have to give up meat to invest in veganism

The investment world is sitting up and paying attention to the global rise in veganism, looking beyond Beyond Beef (BYND) to figure out how to capitalise on this growing movement. People around the world are interested in consuming more plant-based alternatives. Smells a lot like an opportunity, and less like Methane!

There’s big money in ethics

According to Euromonitor, the global vegan and vegetarian market is worth over $50 billion. Compared to the worldwide meat market that’s worth trillions, veganism is just a slice of this massive meat market pie, but this could also mean there’s plenty of room for growth. In 2019 alone, sales of vegan meat alternatives reached a delicious $19.5 billion. But wait, there’s more. US management consulting firm AT Kearney predicts that sales of plant-based meat alternatives will grow annually by 20% to 30% over the next few years. The vast majority of people consuming meat alternatives is not strictly vegan, they’re just woke and want to reduce their meat intake. How now brown cow?

Where’s the (not-)beef?

The vegan trend goes well beyond food – the vegan cosmetics market was worth a solid $13.5 billion in 2018 and is forecast to grow to $20.8 billion in 2025. Corporates are catching on. Almost every big company has either launched new vegan products to get a head start in the market. Even companies like Tesla (TSLA) are making changes by removing the animal leather from a few of its models. While there aren’t any vegan ETFs - yet, if you’re keen on the greens, you might consider:

  • Beyond Meat (BYND)

  • Ingredion (INGR)

  • Bunge (BG)

  • Archer Daniels Midland (ADM)

  • Hain Celestial Group (HAIN)

Cosmetics shares might beautify your portfolio

Newsflash: beauty is big, not just on High Street, but on the share markets too. You can thank the internet for that. Thanks to the world wide web, the information around beauty and wellness has been democratised and is accessible to consumers everywhere, leading to big business. Beauty vloggers rejoice! You’re making a mark on the markets.

Who’s killing it on the beauty battlefield?

Established brands have been playing the acquisition game to stay relevant. In 2016, L'Oreal acquired IT Cosmetics for $1.2 billion, and in the same year, Estee Lauder (EL) picked up Too Faced for $1.45 billion. In 2018, Clorox (CLX) acquired Nutranext for $700 million. Coty (COTY) is looking at purchasing Kylie Jenner’s exclusive make-up brand, cleverly called Kylie.

The ULTAmate beauty store

Brick and mortar retailers like Ulta Beauty (ULTA) are keeping up by offering in-store services and exclusive offerings like Kylie Jenner's Lip Kits. Ulta sells over 20,000 beauty products from hair care to cosmetics at its nearly 1,200 stores. In its first-quarter this year, Ulta reported a 17% increase in earnings to $3.08 per share, beating Wall Street’s estimates. Revenue rose 13% to $1.74 billion to meet estimates. Ulta Beauty will announce its Q2 results on August 29th.

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