😬 Zoom's expensive call

Video call centers | Europe's lost billions |

Hi Reader, here's what you need to know for July 20th in 2:59 minutes.

👟 So you’re a hip young thing with a rad taste in the latest merch. Then you’ll think our Investing in Collectibles event on Thursday is seriously on fleek, and you’ll come out clued up on how to invest in the latest sneakers, streetwear, and more. Get your free ticket

Today's big stories

  1. Zoom announced its first major acquisition: the $15 billion purchase of cloud software provider Five9
  2. Our analyst runs through a strategy that brings you the combined benefits of both passive and active investing – Read Now
  3. Global levels of sustainable investment hit a record $35 trillion last year

Dialing In

Dialing In

What’s Going On Here?

Zoom Video Communications on Monday announced its biggest get-together yet: the ubiquitous teleconferencing provider is buying cloud computing firm Five9 for a cool $15 billion.

What Does This Mean?

Zoom shot to prominence during the pandemic as work-from-homers, far-off friends, and locked-down lovers all turned to its slick video-calling service. And Zoom’s revenue shot up too, more than quadrupling last year compared to 2019.

But with people now able to meet more in person, some investors are worried Zoom’s growth could, like the online quiz, become a thing of the past. That might be why Zoom’s first major takeover target is a cloud software provider that helps other companies run their online customer support operations – the sort of business that’s booming regardless of pandemic restrictions. The global “contact center” industry is worth $24 billion and counting – and joining forces should help both Zoom and Five9 better compete with large rivals like Amazon, Cisco, and RingCentral.

Why Should I Care?

For markets: An expensive call.
Zoom’s stunning 2020 saw its share price soar fivefold – and the company’s taking full advantage of this to fund its purchase of Five9. The “all-stock” deal will hand Five9’s current investors shares of Zoom instead in a swap that values the cloud company around 13% above what it was worth before the deal was announced. That may not sound like much – but it equates to more than 200x Five9’s forecast earnings this year.

Zooming out: Game on.
The Zoom news wasn’t the only merger deal announced on Monday. Italian fashion house Ermenegildo Zegna is listing shares in the US via a “reverse takeover” – while Chinese tech giant Tencent, the world’s biggest video game publisher, is continuing its foreign spending spree by buying UK game developer Sumo for $1.3 billion. That’s an achievement-unlocking 44% premium to the latter’s share price last week.

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2. Analyst Take

The “Best Of Both Worlds” Investment Strategy

What’s Going On Here?

With major US stock indexes near record highs, you may need to be more selective if you want to make money in the second half of 2021.

Luckily, there’s a technique that could help with that: the core-satellite approach.

This refers to a core of low-cost ETFs giving you diversified exposure to stock and bond markets, combined with a satellite of shorter-term trading ideas that stand to outperform.

Embracing the best of both worlds should give your portfolio enough structure to protect you from dangerous levels of risk – while simultaneously setting you up for some big gains.

So that’s today’s Insight: how to build a balanced, no-fuss portfolio that’ll see you through thick and thin.

Read or listen to the Insight here

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Greenbacked

Greenbacked

What’s Going On Here?

As people wake up to the need for better stewardship of our planet, financial and otherwise, the dollars are pouring into sustainable investment – but the euros are a different matter.

What Does This Mean?

A report out this week from the Global Sustainable Investment Alliance reveals that the amount of money sustainably or responsibly invested across the world’s biggest financial markets hit $35 trillion in 2020. That figure isn’t just 50% higher than in 2016 – it also means that over a third of all professionally managed investments in North America, Japan, Australasia, and Europe are now targeting social or environmental goals.

Financial data giant Bloomberg reckons that global levels of sustainable investment could rise to $53 trillion by 2025 (tweet this). But some places are pulling their weight more than others: while sustainably invested assets increased 42% in the US between 2018 and 2020, they actually fell 13% in Europe.

Why Should I Care?

The bigger picture: Details matter.
European sustainable investment may have shrunk by $2 trillion over the last couple of years, but that isn’t down to wilting investor enthusiasm. On the contrary, red-hot demand for green investment has led to an ever-expanding range of products – and in the process created fertile ground for misrepresentation. Anti-“greenwashing” rules introduced by the European Union have therefore tightened up the definition of “sustainable” investment – and many funds have been reclassified as a result.

For markets: Going against the grain.
Individual companies can be guilty of greenwashing too. That was the charge leveled against plant-based milk brand Oatly last week by an activist investor betting on its newly public stock price sinking. Short-seller Spruce Point Capital Management claims that Oatly overstated both its financials and its sustainability credentials in the build-up to its stock market launch in May – and the company’s shares have fallen 10% since the accusations emerged.

You might also like: Is Oatly’s stock a buy?

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💬 Quote of the day

“Success is following the pattern of life one enjoys most.”

– Al Capp (an American cartoonist)
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🌏 Commodities make the world go round

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🌍 Why It Might Be A Good Time To Buy Emerging Market Stocks: 5pm UK time, July 20th
💥 How To Profit From The Commodities Boom: 1pm UK time, July 21st
👟 How To Invest In Sneakers And Streetwear: 1pm UK time, July 22nd
🌿 How To Invest In The Future Of Cannabis: 6pm UK time, July 23rd
📈 How To Protect Yourself From Rising Prices: 6pm UK time, July 26th
👑 How To Invest Like The Ultra-Wealthy: 5pm UK time, July 28th
🌎 How To Profit From Emerging Markets: 6pm UK time, July 28th
🏙 Investing In A Sustainable Metropolis: 11am UK time, July 29th
♻️ How To Turn Your Portfolio Green: 6pm UK time, July 29th
💰 How To Make Money From Money: 3pm UK time, August 4th
🤔 Are You An Investor Or A Trader?: 12pm UK time, August 25th

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