Fund manager Geoffrey Abbott is extremely committed. Or maybe he needs to be committed.
Every day for the past seven weeks, Mr. Abbott has read an average of 39 letters that CEOs write to shareholders in their companies’ annual reports. His goal is to peruse the annual report from each of the 3,000 largest companies in the U.S. This past week, Mr. Abbott, who runs a small New York investment partnership called GCA Capital, plowed through the I’s and moved into the J’s. That puts him him on track to finish with Zumiez, Zynerba Pharmaceuticals and Zynga by the end of May, when Mr. Abbott will turn 30.
Thus, in a financial world driven largely by mathematical formulas and computers trading thousands of times a second, a young investor is searching for investments in the most old-fashioned way possible: by reading.
Warren Buffett doesn’t think Mr. Abbott is crazy. The chairman of Berkshire Hathaway himself spent much of the early 1950s reading every single entry in the thousands of pages of Moody’s manuals, the corporate encyclopedia of that era. He still spends most of his time reading — including the letters to shareholders in companies’ annual reports.
Not many investors seem willing to do that sort of digging anymore. Timothy Loughran, a finance professor at the University of Notre Dame who studies corporate disclosure, has analyzed computer records for the Securities and Exchange Commission’s filings website. He says only 29 people a day download the average annual report when it comes out. Even General Electric’s annual report was downloaded from GE’s website only 800 times in 2013, according to the company.
Facebook Inc. [stckqut]FB[/stckqut] is emulating the playbook of Alphabet Inc., with a new class of stock that keeps the company in the control of its founder so he can continue to make big bets of the type that are paying off on Wall Street.
Like Alphabet’s Google [stckqut]GOOGL[/stckqut] business before it, Facebook is becoming an Internet advertising juggernaut while warning investors that spending is going to increase going forward. Much like Google’s acquisition bets on the likes of YouTube and Android, Facebook is seeing returns on Instagram and has started rolling out virtual-reality products from Oculus VR, though Zuckerberg stressed several times that VR is years from paying off.Facebook said it created a new class of nonvoting stock so that Zuckerberg can retain his current control of the company while donating 99% of his and his wife’s holdings in Facebook to charity during their lifetime.
Facebook [stckqut]FB[/stckqut] has reported its first quarter 2016 earnings with $5.38 billion in revenue and earnings per share of $0.52. Much of the revenue ($5.2 billion) came from advertising — a 57 percent annual increase — of which 82 percent was through mobile. The social networking company now counts more than 1.65 billion monthly active users.
The company’s financial results beat Wall Street analysts’ expectations, which estimated $5.26 billion in revenue and an EPS of $0.40. In the same period a year ago, Facebook missed expectations with revenue of $3.54 billion and an EPS of $0.42.
Facebook’s revenue may have fallen from last quarter, but it’s still up 40 percent from the previous quarter last year. The average revenue per user (ARPU) for the quarter was $3.32, down from last quarter’s $3.73, but it was an increase from the $2.50 a year ago.
Facebook has rolled out quite a few options for businesses, and the company has been named the “undisputed leader in mobile advertising” by mobile analytics company AppsFlyer. According to mobile analytics company Kenshoo, the social networking company’s ad platform holds great appeal for brands. It found that social ad spending increased 8 percent quarter over quarter, improving 86 percent annually thanks to the introduction of Facebook Dynamic Product Ads as well as more inventory on Instagram (including longer videos for advertisers) and other properties.
And the company isn’t done offering more advertising opportunities. It will soon make inventory available within its popular messaging service and also in livestreamed video, seemingly the most recent hotbed of competition as Facebook challenges Twitter’s Periscope for dominance.
In a statement, chief executive Mark Zuckerberg said, “We had a great start to the year. We’re focused on our 10 year roadmap to give everyone in the world the power to share anything they want with anyone.”
This 10-year plan Zuckerberg references is the one he unveiled at this month’s F8 developer conference, which showcased how his company is looking beyond the social network and how it will continue to connect people in more ways.