Apple HomePod Finally Gets an Official Ship Date: Here’s When You Can Pre-Order It

After a brief delay, Apple’s HomePod is hitting store shelves next month.

Apple on Tuesday announced that it will release its HomePod wireless smart speaker on February 9. The company will begin taking pre-orders on the device on Friday, January 26. When HomePod hits store shelves, it’ll cost customers $349. It’ll be available in two colors: white and space gray.

The tech giant unveiled its HomePod last year. While it comes with support for its virtual personal assistant Siri, putting it in direct competition with devices like Amazon’s Echo and Google’s Home, Apple has touted its sound quality. In a statement on Tuesday, in fact, it was the device’s “stunning audio quality” and “incredible music listening experience” that took top billing.

Apple’s HomePod comes with support for Apple Music, the company’s streaming music service. It also can be used in stereo with another HomePod and if users want to put HomePods throughout the home to listen to audio in different rooms, they can.

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On the smart home side, Apple’s HomePod can be used to control everything from thermostats to lights through Apple’s HomeKit service.

Apple’s virtual personal assistant Siri stands at the center of the HomePod experience. Siri can be asked to do everything from playing music to setting reminders. It’s also by asking Siri that users can control the smart home gadgets around the house.

To boost the HomePod’s features, Apple has released a software development kit called SiriKit. The feature allows developers to integrate their apps with Siri, so they can be controlled via the HomePod.

Apple had hoped to release the HomePod in December, but announced in November that it would need more time. Apple didn’t say why it was forced to delay the device, but a report last week said that the company needed more time to ensure the HomePod’s software worked with the hardware.

The HomePod will be available in the United States at Apple’s stores and Best Buy. It’ll also be available in the U.K. and Australia on February 9. Other European countries will get HomePod in the spring.

KKR-backed cyber firm Optiv expands into Europe with deals in mind

FRANKFURT (Reuters) – Optiv Security, an acquisitive Denver-based company backed by private equity firm KKR, is expanding into Europe where it will offer its cyber security management and consultancy services, executives said on Tuesday.

Optiv also is looking to roll-up independent security firms to gain geographic and technical scale, starting in Britain and then across Europe, they said. Rivals include national telecom operators and global computer and management consulting firms.

The company, which is majority owned by KKR, the world’s No.2 private equity firm, has hired Simon Church as European general manager and executive vice president.

Church, a veteran deal maker, executed a smaller-scale roll-up of European managed security services from 2009 to 2015 as director and later CEO of Integralis, which was acquired by Japan’s NTT Com Security. He aims to replicate that at Optiv.

“There is no really pan-European player in the way Integralis was in the pure-play security provider market, along with two or three other worthy competitors at that time,” Church told Reuters in a phone interview.

He more recently worked at security venture capital investor C5 Capital and as CEO of Vodafone Enterprise Security Services.

Optiv, which had a turnover of around $2.25 billion last year, draws up strategies for knitting together thousands of potential security products and then offers them as managed services for clients who can’t afford to maintain in-house security teams of their own.

Optiv executives said they were looking to offer similar consulting and managed security services to European-centered firms and offer more services on the ground to existing U.S. clients in Europe.

Frost & Sullivan predicts that managed security service revenue in Europe, the Middle East and Africa will nearly double to $8.3 billion between 2016 and 2021.

Europe’s managed security market is stratified among mature technology providers and newer entrants focused on cloud and mobile services and data breach remediation, experts say. Staff are in short supply, stoking demand for managed services.

Organizations also are racing to comply with Europe’s General Data Protection Regulation, which takes effect in May, which sets stiff penalties for data breach failings.

Optiv aims to grow through a mix of organic, internally generated sales growth, outside security acquisitions and so-called “acquihires” in order to pick up top talent, Church said.

Acquisitions can run up to tens of millions of dollars each, or be far larger if strategic deals come into play, Evans said.

Optiv is itself the result of a 2015 merger of Accuvant and FishNet Security, both roughly around $700 million revenue companies at the time. The company expanded further into Canada in November.

It has 1,800 employees and counts nearly two-thirds of Fortune 1000 companies among its customers, Chief Marketing Officer Peter Evans said by phone.

Outside of North America, Western Europe is the largest market for corporate security, larger than all other regions combined, Gartner estimates. It forecasts total spending to grow to around US$32.6 billion by 2021, up 27 percent from 2017.

(1 British pound = $1.3989)

Reporting by Eric Auchard; Editing by Douglas Busvine and Susan Fenton

Enterprise IoT threatens to undermine cloud and IT security

The internet of things, or IoT, is pervasive these days in your personal life. However, this technology is just getting into the Global 2000 companies. Yet most of the Global 2000 companies are unaware of the risks that they are bringing to IT and cloud security with their IoT adoption.

How did this happen? Well, for example, as thermostats and sensor fail in buildings’ HVAC systems, they are often replaced with smart devices, which can process information at the device. These new IoT sensor devices often are computers unto themselves; many have their own operating systems and maintain internal data storage. IT is largely unaware that they exist in the company, and they are often placed on the company’s networks without IT’s knowledge.

Besides the devices that IT is unaware of, there are devices that it does know about but are just as risky. Upgrades to printers, copiers, Wi-Fi hubs, factory robots, etc. all come with systems that are light-years more sophisticated in intelligence and capabilities than what came before, but they also have the potential of being turned against you—including attacking the cloud-based systems where your data now resides.

Worse, many of these IoT devices are easily hacked, and so can easily become agents for the hackers lying in wait to grab network data and passwords, andeven breach cloud-based systems that may not have security systems that take into account access from within the company firewall.

And don’t let price be a proxy for secrity level: I’m finding that the more specialized and expensive that the devices are, the more they are likely to have crappy security.

This is going to be a huge issue in 2018 and 2019; many companies will need to get burned before they take corrective action.

The corrective action for this is obvious: If the IoT device—no matter what it is—cannot provide the same level of security as your public cloud provider or have security systems enabled that you trust, it should not be used.

Most IoT companies are improving their security, even supporting security management by some public clouds. However, such secure IoT devices are very slow to appear, so most companies deploy what is available in the market: IoT devices without the proper security systems bundled in.

Sadly, I suspect that IoT security will be mostly a game of Whack-a-Mole over the next several years, as these things pop up on the corporate network regularly.

That’s really too bad. We finally just got cloud security right, and now we’re screwing it up with new thermostats and copiers that make all that good security worthless.

Dinner With Lam Research

It was one of those normally mundane end of year seasonal events.

But what I heard blew my mind and will substantially shape my trading and investment strategy for 2018.

By now you already know that I used some of my stock market winnings this year to buy a vintage Steinway concert grand piano (click here for“The Inflation Hedge You’ve Never Heard Of.”)

Well, you can’t own a Steinway without a recital, and ours was held last weekend.

After listening to an assortment of children display their skills with Pachelbel, Ode to Joy, and The Entertainer, we adjourned for a celebratory buffet dinner.

Making small talk with the other parents, I asked one particularly articulate gentleman what he did for a living. He too had enjoyed an excellent year, and also used his profits to buy a Steinway, although his was a cheaper upright model.

It turned out that he was the chief technology officer at Lam Research (LRCX).

Had I heard of it?

Not only did I know the company intimately, I had recommended it to my clients and caught the better part of the nearly 400% move since the beginning of 2016. Furthermore, I was expecting another double in the share price in the years ahead.

Was I right to be so bullish?

The man then launched into a detailed review of the company’s prospects for the next three years.

The blockbuster development that no one outside the industry sees coming is China’s massive expansion of its semiconductor production.

More than a dozen gigantic fabrication plants are planned, the scale of which is unprecedented in history. Some of these fabs are ten times larger than those built previously.

This is creating exponential growth opportunities for the tiny handful of companies that produce the highly specialized machines essential to the manufacture of cutting edge semiconductors, including Applied Materials (AMAT), ASML (ASML), Tokyo Electron (OTCPK:TOELY), KLA-Tencor, and LAM Research (LRCX).

Everyone in the industry has boggled minds over the demand they are seeing for their products.

The reality is that artificial intelligence is rapidly working its way into all consumer and industrial products far faster than anyone realizes, creating astronomical demand for the chips needed to implement it.

Bitcoin mining is also creating enormous new demand for chips that no one remotely imagined possible even two years ago.

As a result, the industry has been caught flat footed with severe capacity shortages. They are all racing to add capacity as fast as they can. Profit margins are exploding.

(LRCX) announced Q3 revenues of $2.48 billion, a staggering increase of 51.84% over the previous year, and a gross margin of 46.4%. The operating margin was 28%, generating net income of $591 million.

That gives the shares a very reasonable price earnings multiple of 16.95X, a 10% discount to the 18X multiple for the S&P 500. That is an incredible deal for one of the fastest growing companies in America.

Samsung of South Korea was far and away it largest customer, accounting for 38% of total sales.

On November 14 the company announced an eye-popping $2 billion share repurchase program that is certain to drive the price higher.

If there is one dark cloud on the horizon, it is the loss of the research & development tax credit embedded deep in the proposed Republican tax bill.

This will have a noticeable and negative impact on (LRCX)’s bottom line. Still, my friend thought that the company could offset this loss with faster sales growth and margin expansion.

However, many other technology companies in Silicon Valley won’t be able to bridge that gap. It is a hugely anti-technology move for the government to take.

My fellow Steinway owner thought that LAM Research could easily see sales double in three years as long as there is no recession, which I believe is at least two years off. As for the share price, he couldn’t comment, but remained hopeful, as he was a large owner himself.

Of course, the trick is how to buy a stock that has just risen by 400% in two years. So you could start scaling in here, and build a larger position over time.

You only get opportunities like this a couple of times a decade, and it’s better to be too aggressive than too cautious.

To learn more about LAM Research, click here to visit their website.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

GLD: Expectations For 2018

As I stated back in early December 2017 in my previous update on the SPDR Gold Trust ETF (GLD):

The next FOMC meeting is scheduled for December 12-13, and it’s a done deal that the Federal Reserve will raise the Fed Funds rate by another 25 basis points. If there is one thing the bears have working in their favor at the moment, it’s the fact that GLD has declined (sometimes aggressively) leading up to all recent Fed meetings in which a rate hike was expected…the next 10 days still definitely favors those negative on gold. But this is the last hope for the bears of getting a rout to materialize in gold between now and the end of the year. If they can’t get something going here very soon, then they will have their backs up against the wall, as the returns in GLD over the next month following these rate hikes have typically been very strong.

Sure enough, GLD has followed this projected path as it declined right up to the Fed meeting and has swiftly reversed course since then. It’s surged higher over the last several weeks and has closed in positive territory for 11 days in a row. Although it’s certainly due for a pullback.

(Source: StockCharts.com)

As I pointed out just before the start of Q4 2017, most investors were anticipating a major decline in gold during the last quarter of this past year. Not only was this a clear contrarian signal, but the reasonings put forth for a substantial drop were illogical (especially when looking at historical Q4 trading of gold during bull markets).

Gold actually spent most of the quarter in a very tight trading range and was basically flat for the majority of the time. All the bears could muster was just that brief ~2.5% sell-off right before the Fed meeting, but that loss has since been more than fully recouped and shorts have scrambled for cover. That vicious decline that so many expected simply never materialized. Likely because it was based on flawed analysis.

Chart
GLD data by YCharts

There is a big difference between how gold performs in Q4 when it’s in a bull market vs. a bear market. This is the performance of the metal during its 2002-2010 bull run. The shorts are lucky that gold didn’t bury them like it has in previous bull years.

(Source: SomaBull)

Many keep saying this isn’t a bull market. Investors keep listening to these calls and losing out on some big returns, especially in the gold stocks.

Gold And The S&P 500 Rising In Tandem

GLD has risen 24.31% since it bottomed in late 2015, while the S&P 500 is up 32.71% during that time (if you include dividends, the return is a little stronger). Both have been moving higher over the last few years and the SPX has only taken a firm lead in the last few months. If you would have asked investors, economists, and talking heads back at the start of 2016 where gold would be trading if the S&P went up by 32% over the next 2 years, the vast majority would have given an extremely bearish response. Yet here we are:

Chart
GLD data by YCharts

While general equities and gold typically trade inverse to each other, it’s not a perfect correlation and there was always a scenario where they could rise in tandem (which I discussed in previous articles). In this environment, where rates are still ultra low and the Fed is giving inflation plenty of room to run, there isn’t much to stop either gold or the stock market from moving higher. Throw in current economic policies/tax cuts of the Trump Administration, and this is the perfect breeding ground for an inflation spike.

We have the yield on the 3-year now above 2%, which is the highest since 2009. This is most definitely something to pay attention to as it’s clearly not signaling tame future inflation data and/or a Fed on hold anytime soon. Markets are always forward-looking.

(Source: StockCharts.com)

We have the Producer Price Index now at multi-year highs on a percent change basis (both Total and Core PPI). The PPI has increased 3.1% YoY, a level not seen since 2011. Core prices are at a 12-month rate of change not seen since 2012.

(Source: BLS)

The stock market is reacting to the positive catalysts hitting the economy in combination with the still low interest rate environment. Gold is reacting to rising inflationary pressures and investors are taking advantage of its ultra cheap valuation. Eventually, the stock market will hit a wall and gold will keep moving higher, but it’s unclear when that break will occur.

The stock and bond market are certainly due for a correction. A 60:40 portfolio of US stocks and bonds hasn’t had a 10% decline since 2009. You have to go back to the 1930s to have a longer run, and we are basically near that mark right now. If bonds roll over and rates spike along with inflation, expect at least a 10% drawdown for a portfolio with this weighting.

(Source: Bloomberg)

I’m not calling for a top in the stock market; I would actually prefer to see it continue to gain even further ground. Clearly, it’s not having a negative impact on gold so I wouldn’t be worried about the precious metals sector in that scenario. Surging equities will eventually reach a tipping point where investors start to assess the rising rate environment due to inflationary pressures and adjust accordingly. I’m not sure we are there yet, as rates have only begun to normalize and are still quite low.

This environment could stay intact for a while longer even though I expect further rate increases. I’m ignoring the flattening yield curve and recession warnings as I think that’s too early of a call. We continue down a path that will be highly positive for gold, yet eventually, very negative for stocks.

Commodities Cheap Compared To The S&P

Gold is only starting to get its form back, while the S&P has been increasing for years. By comparison, gold is a far more compelling opportunity in terms of 2-5-10 year return potential compared to the stock market. Other commodities like silver looked primed for a re-rating as well.

DoubleLine’s CEO Jeffrey Gundlach is one of the few major fund managers to be bullish on gold. In a webcast last month, he stated:

“If you ever thought about buying commodities… maybe you should buy them now.”

This is the graph he used to show how cheap commodities are compared to the S&P 500. The S&P GSCI Total Return Index is trading at historical lows when compared to the $SPX. As Gundlach states: “We’re right at that level where in the past you would have wanted commodities instead of stocks.”

Over the last 50 years, commodity prices have only been this cheap relative to the S&P on two other occasions – at the beginning of the 1970s (just when the U.S. went off the gold standard) and during the height of the Dot.com bubble. Commodities far outperformed the S&P over the next 5-10 years in each of those two instances. Gundlach isn’t suggesting just to buy gold, as he believes investing “in commodities broadly rather than gold alone.”

(Source: DoubleLine)

The only issue with the S&P GSCI is that oil makes up about half of the index, and that sector has long-term structural issues to contend with. It’s unclear if we will actually see this index rise to its previous peaks, as those tops were fueled (no pun intended) by an oil crisis. Having said that, even if you remove oil from the equation, other commodities like gold, silver, wheat, corn, etc. are historically cheap and seem to offer much better future returns than stocks. I expect these commodities to do extraordinarily well as strong demand cycles always reemerge.

GLD And The HUI – The Current Technical Picture

The MA (100) on the weekly chart of GLD has acted as very strong support/resistance for years now. The 100-week has been on the rise since 2016, and GLD has found support every time it has declined to this level. Gold breached the MA (100) last month, but it has vaulted back above since then and appears poised for a major surge.

When I look at this chart, I see a few things: One, it shows the ebb and flow of the gold sector from a longer-term perspective (which is the most important way to observe a market). Two, it shows that bullish momentum continues to build. Markets like this don’t turn on a dime, it takes time to gain steam after a change in trend has occurred. The MA (100) is now accelerating to the upside as GLD increases in strength.

(Source: Schwab)

180 had acted as key support for the HUI throughout 2017, as the index managed to bounce every time it touched this level. Last month, though, the HUI was unable to rebound when 180 was hit and instead kept declining. At that point, the concern was that the index would continue to fall to 160 or possibly even lower. However, I warned subscribers of The Gold Edge that a break below 180 could be a bear trap and “any swift reversal back above 180 over the next few days shouldn’t be ignored.”

We did get a reversal and now the HUI is approaching 200. It’s not out of harm’s way yet but this chart is much more bullish. Despite the uncertain short-term outlook, there is no question about the long-term direction of this index, it’s going much higher.

(Source: StockCharts.com)

I do want to point out that the HUI is forming a perfect rounded bottom and there is some nice symmetry in terms of an inverse head and shoulders pattern. The right shoulder is basically complete, and if 200 can be taken out again, then the stage is set for a surge in gold stocks over the next several years.

(Source: StockCharts.com)

Expectations For 2018

2016 was a fantastic year for this sector and a great one for me personally as an investor. 2017 was more of a stock picker’s market in the precious metals space, but there were still strong gains to be had if you were in the right gold miners. To follow up stellar returns in the first year of the bull market with solid gains last year, proves that the downtrend is well behind us and a new long-term uptrend has emerged. I expect in 2018 that this bull will assert itself more aggressively, and by the time it’s all said and done, there should be no question about whether the precious metals are in a bull market or not.

If the sector doesn’t break out in the next few weeks, at most this drags on for another 2 months or so. My gut tells me a surge above major resistance happens sooner rather than later, but I’m prepared for anything and everything in this sector.

There will be big winners – and likely some big losers – this year given this is the gold mining sector and prospects can change fast, but I expect a more uniform appreciation in gold (and silver) miners in 2018 compared to last year. It will be similar to the run in 2016 but yet still different in some facets. I’m expecting a more stable price appreciation environment and not as jarring of corrections. I don’t believe there will be any 50% drawdowns.

This is about making sure one is positioned properly and has a clear and exact game plan to work off of so no profits in this phase of the bull market are missed out on. The goal is full participation during the run.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Why 2018 Is the Beginning of the End for Smartphones

What if I were to tell you that this is the beginning of the end of smartphones? That might seem bold, given the recent launch ?of Apple’s latest and greatest iPhones. But there’s already evidence of the next wave of computers, which we’ll wear and command using our voices. The transition from smartphones to smart wearablesearbuds that have biometric sensors and speakers; rings and bracelets that can sense our motion; glasses that record and display information–will forever change how we experience the world.

These smart wearables offer more than clever hardware. They promise a new kind of digital reality. Facebook, Google, Microsoft, Baidu, Alibaba, Snap, Tencent, and Apple have all announced sizable investments in augmented reality–­a digital overlay atop the physical world. AR has already shown up on our mobile devices, in the form of Pokémon Go and Snapchat filters. But AR gets even more interesting once it starts drawing on our personal data.

One of the most important trends emerging from this technology is one-to-one marketing: delivering the best possible information, within exactly the right context, to each consumer, regardless of the device she’s using at that moment. It’s been talked about for years, but with a flood of investment and increased computing power, major technology companies are finally zeroing in on creating a unique, personal experience for everyone. By combining locations and the objects within our view, along with our calendars, our contacts, and even our biometric data, the coming wave of AR will be designed specifically for each of us.

Once we have unfettered access to AR, we will no longer experience products in a store or on ?a webpage designed to elicit specific behaviors. Banana Republic’s fitting rooms have lighting and neutral paint that flatter consumers as they try on clothes, but the fitting room of the future is anywhere there’s a reflection. AR will let you try on clothes even in the office bathroom or in front of subway windows.

This means that companies will need to consider what story they’re telling about their products under an infinite number of circumstances, because each person will experience AR individually. Health care and medical startups, hoping to deploy AR apps and glasses to train doctors, nurses, and technicians, will need to bear in mind that hospitals aren’t all built ?using the same floor plan, and that staffers aren’t all the same height. Those staffers won’t be able to be trained in procedures in true AR unless those factors are accounted for. Companies that make and sell tools such as construction machinery or kitchen equipment will find that AR offers consumers ?a great way to try their products–if these companies keep that level of customization in mind.

The tech companies working on AR are also moving aggressively into conversational interfaces. Whether we’re talking to Amazon, Siri, Microsoft, or Google, we are training the system, with what we share with it, to better understand what we want. Already, the software powering the Amazon Echo has left the confines of our homes: We can use it to order Domino’s pizza while driving in our Hyundais. Soon, using connected earbuds and AR glasses, we will talk to Stubb’s about barbecue sauce while at the grocery store. As voice interfaces mature, consumers will expect to ask companies questions about their products–meaning that every consumer will become part of your company’s story, and in real time.

All of which is to say that, in the not-too-distant future, we’ll be making the physical and digital realms interchangeable. Think smartphones are addictive? You haven’t seen anything yet.

Money Managers' Meaningful 2018 Stock Picks

Today is the best year of the day so far for stocks – and the stock market is not even open! But, since it’s the only day so far, we thought we’d scan the web to see if we might find any potentially meaningful stock investment ideas. Since stock stories number in the gazillions, let’s clarify what we mean by “meaningful:”

Numerous stock market stories, including – actually especially – those quoting big-name money managers, don’t mention any stocks.

This story fresh out from Money gathers the thoughts of a very distinguished panel, including Rob Arnott (Research Affiliates), Sarah Ketterer (Causeway Capital), Jim Paulsen (Leuthold Group), Liz Ann Sonders (Charles Schwab), and Floyd Tyler (Preserver Partners), and contains some interesting analysis – but there is no mention of any individual securities for those who care about those details. Another example of the no-stocks-named genre can be found in the U.K.’s Telegraph, which interviews several British money managers on broad investing themes as the new year commences.

There are lots of potential reasons for this. The interviewees could be concerned about lead time – perhaps the interview was conducted long before its planned publication, and the managers didn’t want to name names that seemed good to them, say, two weeks ago, but which might not hold up in the new year’s rapidly changing markets.

Going on record is another factor – many big firms particularly don’t allow their managers to name names that can adversely reflect on their firms if the stock doesn’t do well. Other firms may take the view that their stock ideas are for paying clients only, and others may be concerned with regulatory compliance. Whatever the reason, famous money managers are quieter today than in years past.

Our search found the most stock mentions coming from publications based in India. This article from Luxura Leader, for example, names five stock picks from JP Morgan analysts thought most likely to outperform in 2018 as a result of trends in artificial intelligence. However, some further checking indicated that the client note containing these stock picks was referenced in other publications as much as one month earlier, so although the ideas are meant to have a yearlong shelf life, the ideas are less than fresh.

Then again, even fresh analyst ideas have their foes. Seeking Alpha contributor Jeff Miller had this to say in his own just-out analysis of markets in the new year:

Analyst stock ratings. Citigroup (NYSE:C) was fined my FINRA for sending false stock ratings to retail customers. Buy instead of Sell, for example. And vice-versa. The fine was $11.5 million. Wow! For the record, in my “Great Stocks” program I use analyst ratings as a contrary indicator, buying Apple (AAPL) when it was hated and selling when CNBC could not find a negative analyst to feature.”

So was our search for fresh, out-of-the gate yet meaningful stock investing ideas fruitless? It was not – thanks to a Reuters story we found that names names which were themselves presented by genuine names in the investment management business.

Reuters reporter David Randall sought the opinion three small-cap money managers that achieved market-beating performance in 2017, a year in which many managers brought in absolute performance but fewer stood out in relative performance; (of course, every year has relative outperformers – the point is that in a year as strong as 2017 absolute performance alone doesn’t make the cut).

Those managers included Kenneth Korngiebel (Wasatch Micro Cap); John Slavik (Loomis Sayles Small/Midcap Growth); and Stephen DeNichilo (Federated Kaufmann Small Cap).

Their picks? Well, not quite yet.

Managers with a record of performance is meaningful; naming names rather than just themes – that too is meaningful. But talking your book doesn’t strike us as meaningful. The book may be great and the stocks may ultimately do well, but there is an inherent bias towards believing in what you already own. We’re more impressed therefore with new acquisitions or adding to existing positions. Only two of the above-named managers did that in the Reuters story, and that is therefore what we will quote:

Korngiebel is adding to stocks like Japanese outsourcing company UT Group Co Ltd, whose shares are up 243 percent for the year to date, and which he expects to grow its revenue by more than 30 percent in the year ahead. He is also adding to his position in U.S.-based Tabula Rasa Healthcare Inc, which helps doctors screen for potential drug interactions. Shares of the company are up 97 percent in 2017.

The percentage of the population who take five or more medication is going up and adverse drug events are expensive and can lead to loss of life. What we see here is opportunity to take advantage of an under-covered company that is unique and meets a large need,” he said.

And again:

Stephen DeNichilo, a portfolio manager of the $872 million Federated Kaufmann Small Cap fund, the 9th best small-cap fund this year….has a larger position overall in biotech companies, which have greater growth potential, he said. He has been adding to his position in Nektar Therapeutics, which is developing in abuse-proof opioid medication, and gene-therapy drug maker Spark Therapeutics Inc.

He also added a position in retailer Floor & Decor Holdings Inc shortly after its initial public offering in April as a play on consumer spending on home renovation.

You can evaluate yourself whether these ideas have merit, but they do seem meaningful, and worth watching in the new year.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

China's WeChat denies storing user chats

HONG KONG (Reuters) – Tencent Holdings’ WeChat, China’s most popular messenger app, on Tuesday denied storing users’ chat histories, after a top businessman was quoted in media reports as saying he believed Tencent was monitoring everyone’s account.

“WeChat does not store any users’ chat history. That is only stored in users’ mobiles, computers and other terminals,” WeChat said in a post on the social media platform.

“WeChat will not use any content from user chats for big data analysis. Because of WeChat’s technical model that does not store or analyze user chats, the rumor that ‘we are watching your WeChat everyday’ is pure misunderstanding.”

Li Shufu, chairman of Geely Holdings, owner of the Volvo car brand, was quoted in Chinese media on Monday as saying Tencent Chairman Ma Huateng “must be watching all our WeChats every day”.

Like all Chinese social media platforms, WeChat is required to censor public posts deemed “illegal” by the Communist Party. WeChat’s privacy policy says it may need to retain and disclose users’ information “in response to a request by a government authority, law enforcement agency or similar body”.

WeChat did not immediately respond to a request for further comment.

According to a report by Amnesty International, Tencent ranked at the bottom of 11 tech firms running the world’s most popular messenger apps for how they use encryption to protect user privacy.

China’s cyber watchdog in September announced a new rule making chat group administrators and companies accountable for breaches of content rules.

In the same month it handed down maximum penalties to tech firms including Tencent, Baidu Inc and Weibo Corp for failing to properly censor online content, and asked them to increase content auditing measures.

Reporting by Sijia Jiang; Editing by Stephen Coates

It's No Guessing Game: Why You Need to Scale Predictably to Grow Your Business

How do early-stage companies position themselves for growth? Before scaling, founders think about the following five things according to Donna Levin, social entrepreneur and Co-Founder of Care.com. Care.com is the world’s leading online site for helping families find and manage family care with over 20 million members across 16 countries. During Levin’s time at Care.com, she built and lead high performing teams, and scaled the company through five rounds of funding to IPO. Levin is currently an Entrepreneur-in-Residence at the Martin Trust Center for MIT Entrepreneurship and a lecturer at the MIT Sloan School of Management.

Levin recently shared her insight into what founders need to do before bringing their companies to scale

1. Figure out what scaling means for your business.

If you ask a few different people to define what it means to bring a business to scale, you may get a few different answers. Levin, has a pretty simple answer. “Scale is really just accelerating growth with confidence,” says Levin. “You’re growing, [you have] operations, you’re starting to think about what you automate, you definitely want to have a plan that supports revenue, [and] you try to stay ahead.”

For Levin, founders need to figure out what scaling actually means for them personally, and for their business. “It’s different for every industry, so you really want to understand what are the expectations of that industry.”

Levin also reminds founders, “when we talk about scale, it’s about predictable scale. You can’t say you’re going to scale on a strategy that’s based on PR; [it’s] too unpredictable [because] you don’t really control it. People want you to have predictable measures and metrics when you scale.

I want to know if I give you $100, you’re going to spend that $100 in an efficient manner, and…you can tell me, ‘Here’s how I’m going to spend the $100, I’m probably going to end up getting $50 back, but that’s a good thing because these [customers] will have a high lifetime value.’ “

2. Determine how you’ll find your next set of customers.

As you scale your business, you need to approach customer acquisition differently than when you first launched. “When you start off, your early adopters, those people who are your true believers early on, they could have heard about you from your friends or word-of-mouth,” explains Levin. “As you start to scale and grow your business, either you need to figure out what’s that next market where people really care [as] much about what you’re doing, or you’re going to have to spend more money to tell them about the service that you provide.”

Levin further illustrates this point with the concept of painkillers vs. vitamins. According to Levin, some businesses are painkillers: when people need painkillers, they go out and find something to soothe their pain.

Vitamins, on the other hand, are things people may not always take when they should, even though they know vitamins are good for them. “If you have a painkiller business, people are actively looking for [your] solution. If you have a vitamin business, you have to [sell] people what it is that you do.”

3. Know your team and your co-founders.

“Is your team really ready to scale with you? Do you have the right people that you need on your team? What are your strengths and weaknesses, and who do you need to complement those strengths and weaknesses?”

According to Levin, these are all questions founders should ask themselves before they get ready to scale. “Conduct regular check-ins with your co-founders,” says Levin. “Culture eats strategy for breakfast. You can have the best-laid plans, but if your team members are not motivated and happy, they will destroy your business, and unfortunately, it will be your fault.”

Founders should also check in with themselves before scaling their business. “One of the things that you need to realize when it is your venture: you sorta are the center of the universe, and you really need to get yourself together, because everything else going on with you tends to impact what’s going on with your business.”

Levin stresses the need for founders to “get their house in order” before scaling, particularly in terms of their personal finances. “It’s okay to build raises for yourself and your team and a livable wage into your model. If you’re starving, you can’t grow your business.”

4. Decide if you’ll “Nail It” or “Scale It.”

“Some of us start a venture because we want to do this for the rest of our life. Some of us start a venture because we are so fed up about something and we want to go fix it, and then we want to move on to the next problem. And some of us start a venture because we think, ‘I can do this for a few years, and I think I’m going to sell to a big company and make a ton of money,’ ” says Levin. “Whatever your reasons, be real with yourself about what they are.”

Different motivations often require different types of leaders, and Levin believes it’s important for founders to know where they stand on the spectrum. “Nail It leaders tend to be people who love creating things, and they can deal with the chaos of wearing lots of different hats and testing lots of different things. 

Scale It leaders get really good at optimization. They are into the numbers, and they know the difference of what a minor movement will do. Figure out which leader you are (and it’s possible to be both), but just know the role you’re playing.”

5. Keep operations lean.

As you scale operations, Levin’s advice is to keep things as simple and as lean as possible to provide the greatest opportunity for scalability. “When you’re trying to figure a bunch of things out, some of the projects can be your pet projects: things that you love or your investors might love, but nobody actually uses.” Levin says there’s no place for money pits as you scale your company. “Use the resources someplace else.”

This article originally appeared on the Project Entrepreneur website and has been condensed for clarity.