It is hard to miss the fact that the massively successful Game of Thrones is coming to an end.  If you are a fan you may be excited and also be wondering what will fill the void after the final episode.   You’ll have a view on which character will ultimately win and end up sitting on the Iron Throne, doubtless based on much discussion and analysis. 

A decision on investing in particular stocks and shares is also about anticipating who’ll be a winner.  As we watch GoT we think about the strengths and also the flaws of the key characters. In the same kind of way we can analyse and make decision on stocks and shares using three criteria: Quality, Value, and Momentum.

Here are stock picks for a some GoT favourites using the criteria:

Jon Snow

The King in the North. Jon has a lot of backing and support from the public. He has also proven he can withstand even the most unexpected of events, even if it’s just barely getting out alive. We can’t forget he is the rightful heir to the Iron Throne, however having a right to something is not the same as having it. There is a spark of innovation to be found, joining forces with the enemy of my enemy turned out to be an excellent move against the Night King’s army, but is it a cursed alliance joining forces with Daenerys?

Even with all of the blessings Jon has been given, such as coming back from the dead, he isn’t without his flaws. In terms of tactical genius, I don’t believe running out by yourself into a battlefield or sprinting to face the Night King is considered “intelligent”. While Jon has a personality that everyone loves, and has narrowly escaped death more than once, I don’t think he is the leader everyone wants him to be.

Paddy Power Betfair PLC

I can’t think of anyone that gambles more than Jon; He is so keen on taking risks he does it with his own life whenever he gets the chance. Just like Jon and Daenerys, Paddy Power and Betfair joined forces back in September 2015 and now operate as a single company. The combined force of both Paddy Power and Betfair brought them back from the jaws of death and infighting to focus on ruling. The similarities don’t end there.

Paddy Power Betfair is an excellent Quality stock, this means they have a strong balance sheet and cash to burn if they need it. While I wouldn’t consider Jon cash rich, he undoubtably has countless people he can call upon in his time of need. Likewise, Paddy Power Betfair have a lot of cash in the bank for a rainy day, making them resilient to changes in the industry or any new gambling regulations.

The value of a company is based on the current price per share today, versus how much money the company generates. The higher the value the cheaper it is to buy this company now compared to how much money they are bringing in. The idea being that the money being generated will grow into bigger profits (and returns) in the future. Paddy Power Betfair scores extremely well for Value, they bring in a lot of revenue compared to the price of the stock today, if they can convert this money into bigger profits that means better returns for investors. If you had invested in Jon before you knew about his true heritage you would be collecting the rewards today. Just like Jon investing in Paddy Power Betfair has the potential to be something more in the future, hopefully it doesn’t take a near death experience to discover that potential!

Finally, we have the Momentum of a company. Momentum looks at industry experts, like the big banks and financial institutions, and aggregates their views. Do the experts believe this company will outperform? If so, will they barely beat expectations or maybe completely exceed everyone’s wildest dreams? Paddy Power Betfair is very average in terms of their future Momentum, they are hitting or beating their targets, but we expect them to at this point. There is no wild unexpected innovation which is going to catch us off guard, the industry feels positive, but it isn’t expecting anything amazing.

Paddy Power Betfair has the potential to convert the money they make into bigger profits and bigger pay outs to shareholders; However, the industry experts don’t see that happening any time soon. Regardless what the short term holds, Paddy Power Betfair has the cash in the bank to weather any incoming storm.

Assessment

Quality Score: High

Value Score: High

Momentum Score: Low

Arya Stark

Arya Stark; if you know her name that is either very good for you or very bad. Arya is a force to reckoned with. No matter what – she keeps on going.

While Arya might not want the Iron Throne, she is capable of taking it. Taking being the key word, Arya could be a terrifying tyrant, but thankfully she is happy with her path in the world.

Arya has told both death and Ladyship “not today” – making her a powerful force that continues to influence the world around her.

Taylor Wimpey PLC

One of the largest house building companies in the UK, Taylor Wimpey is often used as a barometer for the Brexit impact. Like Arya, Taylor Wimpey is a force unlike anything else. Despite being a powerful player in the UK economy, Taylor Wimpey isn’t what you would call a household name.

Like Arya if you know the name it’s likely you are in the industry or have a vested interest. Unlike Arya who specialises in putting people to sleep permanently, Taylor Wimpey looks to maximise the housing market no matter it’s conditions.

Taylor Wimpey is no stranger to scandals or being a bit scrappy. Unlike Arya however, Taylor Wimpey has the cashflow to make its problems and challenges negligible. Regarding the Quality score Taylor Wimpey has a lot of purchasing power, but housing market regulation is prone to change, and Brexit has us all shaken, so they are keeping an eye on their war chest.

What about Value – the future potential based on what you pay today? Arya has incredible potential, but do you trust her to act on it? Taylor Wimpey also scores extremely well for Value; the company generates a lot of income compared to its current share price. If it can convert the incoming revenue into higher margins the results will be impressive.

Looking at the Momentum, the industry experts seem to agree. Not only is there a lot of potential upside in the future but it will happen sooner rather than later. Once the Brexit air clears it will be back to business as usual, and just like Arya, Taylor Wimpey will show up ready to fight.

Across the board a promising outlook, however starting from such a strong position means it’s tough to exceed expectations. Hopefully Taylor Wimpey has a few more tricks up it sleeves than Arya does.

Assessment

Quality Score: High

Value Score: High

Momentum Score: High

Night King

Terrifying, unyielding, and never-ending. There has never been a threat as serious and all-consuming as the Night King and his army of the undead.

There are a lot of unanswered questions with the Night King.  Sadly, I don’t think we’ll be getting any answers since he was fooled by the classic “whoops, dropped my knife” routine!

One of the Night King’s senior advisers really needs to sit down and explain the concept of “key person risk.” While it’s great to be immune to most dangers in the world, most doesn’t mean all dangers.

The Night King is far from being a tactical genius. An immortal army unlike anything we have ever seen (thank you to the Golden Company for showing us the other extreme) – and yet all of it, wasted.

Sports Direct International PLC

It’s not often you hear about Sports Direct unless it is in relation to a buyout or a scandal. Very much like the Night King, Sports Direct picks up dying companies and recruits them into the Sports Direct family.

Sports Direct have done a fantastic job over the years of beating the odds. The parallels between Sports Direct and the Night King don’t stop with the growth strategy. Sports Direct always finds a way to survive, and to give old companies on the verge of bankruptcy new life.

That said, buying up new assets and companies on the cheap is still an expensive process. As such Sports Direct don’t have the happiest of balance sheets. The Quality score is very low, cash in the bank is not the strategy here, you have to spend money to make money.

In terms of Value there is potential. Sports Direct’s current share price is lower than expected when compared to the income they generate. The Value is lower than expected, but not enough for this company to be labelled a deep value, long-term buy and hold.

How do the industry experts view this company? Sadly, it’s not a good outlook. With worse than expected accounts, even with the company being offered “at a discount” (medium Value) experts don’t have high hopes for the future.

That doesn’t mean the company is doomed. Sports Direct has proven they are experts at navigating the unknown. The ratings are more a reflection that there will be more hardships ahead.

Just like the Night King, Sports Direct hasn’t given us an incredible show yet. Hopefully unlike the Night King, Sports Direct will be part of our lives for many years.

Assessment

Quality Score: Low

Value Score: Medium

Momentum Score: Low

Daenerys Targaryen

The phrase old habits die hard sticks very well to Daenerys. She once had a loyal following that would do absolutely anything for her, however that fan club is slowly starting to die out.

With a massive army, a simple but powerful message, and all the wealth she needs Daenerys isn’t someone you want to cross swords with. She is the embodiment of power and her pet Dragons are her pride and joy, if only she could go one day without losing a dragon to poor decision making.

Daenerys isn’t the same person she once was, she is a changed woman and she is becoming more reckless as her claim to the throne is threatened.

Apple Inc

Apple was once the company that delighted and surprised us, it’s a brand we all know and recognise. Depending on what phone you have in your pocket your reaction will vary. Just as Daenerys has changed over time Apple has transformed itself too, and that doesn’t always make you very popular.

Like Daenerys, Apple has impressive backing. You wouldn’t want to mess with Daenerys’ army in the same way you wouldn’t want to take a swipe at Apple with their almost unlimited cash reserves (an eyewatering $285~ billion.) These strong cash reserves make Apple a very high scoring Quality stock, there isn’t a problem Apple couldn’t pay for without breaking a sweat.

The only problem with everyone believing in you and buying into your vision, it increases your share price, everyone wants to be part of your story. Just as Daenerys has attracted countless followers, everyone wants to own a slice of Apple. This pushes up the share price which lowers the Value score for a company. Often, you’ll hear Apple described as an “expensive stock” which means the price you pay today is high compared to how much revenue and income Apple is bringing in.

Lastly, we have the Momentum, the future gazing aspect when it comes to evaluating a stock. Many people believe Daenerys will sit on the Iron Throne (or what’s left of it) and the industry experts also say Apple will continue to grow.

The risk with being number one is it’s hard to keep surprising and pushing the boundaries, it’s tempting to fall back to old habits and to stop innovating. Apple shows a lot of promise, but arguably they have the most to lose also. With handset sales falling, how successful will they be at pivoting the business to focus on the app store?

Assessment

Quality Score: High

Value Score: Low

Momentum Score: High

Alister does not hold positions in any of the stocks mentioned.

ABOUT THE AUTHOR
Alister Sneddon is CTO of Genuine Impact, a next generation financial terminal for DIY investors. Investment ideas, institutional quality data, time saving analysis, gathered together in one place to help make informed investment decisions and save countless hours of research. Genuine Impact is trustworthy, institutional analysis made simple with complete transparency for investor.

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Let me take a stand. The very idea of consumerism is dying and the word ‘consumer’ is regarded by many as insulting.

We are approaching post-consumerism which will be driven by younger Millennials and Generation Z – the generation that’s growing up now. Post-consumers will take great offence by the very notion that they might be taking more than they give. They will choose to make eco-friendly buying decisions, to demand to know the supply chain provenance of their food and their clothes and will insist on buying goods from companies that refuse to engage in unsustainable practices. They will be sustainers rather than consumers, stakeholders rather than customers, tribes rather than crowds. Post-consumers will trust the word of influencers and friends while eschewing marketing and advertising. It’s a paradigm in which churn rate is a significantly more relevant statistic than cost per acquisition. 

In this new world companies will need a different approach to gaining loyalty from the customers and stakeholders of the future.

Your tribe

The brands of the future will be communities, and more specifically, tribes. Two of my favourite community-focused brands are GiffGaff and Monzo, who have built democratisation into their marketing strategies by involving their customers in major decisions.

GiffGaff has used its customers to write, direct and appear in its TV ads, and the company provides discounts and rewards in return for providing customer service support. In doing so, GiffGaff has essentially crowdsourced their business model, building one of the UK’s major mobile companies with only a handful of true employees. I remember hearing a talk from their CMO, who described her role as a ‘brand custodian’ as opposed to a ‘brand guardian’. Essentially, she’s saying the company doesn’t own its own brand, it’s just looking after it. They’ve built their brand from an ethos of their customers being the true owners.

Monzo, the challenger bank, has taken this a step further in many respects, by opening up a number of crowdfunding rounds specifically for their customers, allowing them to become part owners in the brand. They also involve their community in every major decision they make, such as changing their name and choosing what parts of their service they should charge fees on. As such, they have democratised their decision-making.

Brands like this are leading the way, but I predict this will become the norm after the death of the consumer.

Getting customers to invest

One in 10 of us has invested in small UK private companies through equity crowdfunding, and this number is growing. It’s also becoming more common for growth companies and medium enterprises to offer shares to their customers. Big tech companies are riding high on the stock exchange, offering their shares via public exchanges far sooner than many historical corporations could have dreamed of. Challenger stock brokers such as Freetrade are being supported by retailer investor insight platforms like Genuine Impact, allowing DIY investors to make informed and instant decisions about which investments they make. It’s easier than ever for customers to own a slice of their favourite brands, so they can be financially rewarded for their faith and loyalty.

If you’re a startup or growth company, the best way to get your customers to invest is through an equity crowdfunding campaign. If you have no idea where to start, there are a whole host of crowdfunding support partners and workshop programmes out there to take you through the process, which will also increase your chances of a successful campaign. Check out Virgin StartUp’s Crowdboost, Crowdcube and Grant Thornton’s Crowdfund Bootcamp or TribeFirst, where we offer a managed service to help companies raise.

If you’d rather just sell shares direct to your customers rather than run a public campaign, then you can either facilitate this through SeedLegals, or we recommend setting up your own fully licenced, FSA-compliant platform on Envestry.

365 investment

Obviously as a crowdfunding expert I am a huge proponent of equity crowdfunding. However, I do find it quite limiting for companies that wish to be always-open to investment from their customers. You could list your company on a small cap public exchange like AIM or NEX Exchange, but that means a lot of additional cost and admin that comes from being a public company. BrewDog solved this problem by running multiple concurrent campaigns across rewards and equity platforms; they built crowdfunding into their DNA. But that’s a lot of effort.

However, there is an easier way to allow your customers to invest at any stage. One of the reasons I’m a big fan of Envestry’s white label solution is that it allows a company to be ‘always on’ for investment, 365 days a year. No time limited campaigns, just an ability for any brand to be available for their tribe to invest whenever they feel the relationship has reached that stage.

Soft dividends vs financial returns

Somewhat counterintuitively, most equity crowdfunding investors aren’t actually expecting to see a return on their investment. They want to be rewarded in experiences and ‘stuff’. The Financial Times recently ran a feature on crowdfunders searching for the next Facebook or Apple, and they concluded that most investors expected to lose their money. If they win, they win big, however that’s not the primary incentive. Feeling part of something was more of a driver.

This can be evidenced with Crowdcube alumni Wool and the Gang, where investors were given the option of receiving store credit or their original investment returned. Most crowdfunding investors opted to receive the credit.

So, if you do decide to sell shares to your customers, take into consideration that perhaps the post-consumer will want to receive ‘soft dividends’ (exclusive stuff/ insider knowledge/ experiences) instead of just a financial return.

Feeling part of something

Reward your investors and best customers with exclusive merchandise or early access. Monzo built the fastest growing bank in history by simply giving their early adopters and investors a Golden Ticket that allowed them to jump the queue in getting a zero commission/ fees pre-payment card that they could use abroad. Then when they ran a crowdfunding round, they gave their investors a sense of status by providing them with an exclusive ‘investor’ debit card. Sometimes the gestures don’t even need to be grand or expensive. But ultimately a post-consumer wants to be able to tell their mates they were part of something. By giving them the tools to brag, you’re enabling a culture of word of mouth, authentic marketing, which is pretty much the only kind of marketing that will be trusted in a post-consumer age.

Finally, build trust with regular and transparent customer communication. Whether they’ve invested in your company or not, post-consumers will buy into a brand’s stories on social media or through the brand’s advocates, even more than they do right now. Let them share the highs and lows with you. Create a culture that encourages your customers to become investors in this post-consumer world.

ABOUT THE AUTHOR

John Auckland is a crowdfunding specialist and founder of TribeFirst, a global equity crowdfunding communications agency that has helped raise in excess of £17m for over 50 companies on major equity crowdfunding platforms, with a greater than 90% success rate. John is also Virgin StartUp’s crowdfunding trainer and consultant, helping them to run branded workshops, webinars and programmes on crowdfunding.

See: http://www.tribefirst.co.uk

Twitter: @Tribe1st