Origin of this post
This article is a work by “Chairman,” a long-time supporter of this blog and my books. I am deeply grateful to “Chairman” for valuing this work and taking the time to write down his insights and perspectives to share with the blog’s readers.
Out of respect for “Chairman,” the following text will be published verbatim for the benefit of our readers.
During the Lunar New Year holiday, my reader “Chairman” was inspired by several of my posts about AST SpaceMobile, Shopify, Arista, and Broadcom, as well as the content of my book. He sacrificed his holiday to complete this masterpiece: “What stock selection criteria can do High-efficiency filtration in promising industries, even amidst competition from established industry giants, and provide ordinary investors with a high probability of tenfold returns?”
“Chairman’s” Original Text
Foreword
Brother Andy, long time no see! Hope you’re well. Wishing you a happy holiday.
I originally planned to write a personal investment perspective inspired by your blog before the new year, but I hesitated due to my observations not being fully developed. However, after you posted the article “AST SpaceMobile turning every phone into a satellite phone” on February 16th (readers can click on “AST SpaceMobile turning every phone into a satellite phone” to read the article you mentioned that was published on my blog), I became more certain of my views.
Counter-Positioning
In conclusion: To increase the probability of tenfold gains, counter-positioning is a good entry point.
Reasons:
Nature of the Problem:
What stock selection criteria can effectively filter stocks in promising industries, even in the face of competition from existing industry giants, to provide ordinary investors with a high probability of winning tenfold stocks?
Relevant Factors:
Besides the elements and industries provided by Brother Ziyang’s scattered articles or three books, Dr. Hamilton of Yale University’s Economics Department… Hamilton Helmer, in his book 7 Powers: The Foundations of Business Strategy, outlines a “market power (or competitive advantage) process” that suggests a company’s initial stage should involve “reverse positioning” or “monopolistic resources,” which is a good starting point. In short, what I’m trying to say is that innovation (or invention) is indeed important.
However, in an era of highly dynamic competition and cooperation in industries, conversely, investors seeking disruptive innovations in products, business models, brands, and processes—strategies that put incumbents in a difficult position—can be a good way to filter and select ten-bagger stocks. When you mentioned the article “Why is it difficult for investors to discover Shopify potential early? (2023/2/14)” (readers can click on “Why is it difficult for investors to discover Shopify potential early?” to read the post mentioned by the chairman and published on my blog), as you stated in the article, the three-step process for successful investment does indeed have necessary conditions.
I repeatedly read the first step (gathering as much relevant information and facts as possible: slightly researching Shopify’s products, discovering that it provides a unique ecosystem service different from other competitors) and didn’t have a deep understanding of it back then, but now it resonates with me greatly, and I’m surprised to find that I often fall into the second layer of thinking outsourced to the blind spots of financial media.
Returning to AST SpaceMobile, this also fits the counter-positioning pattern. Thanks to the development of AI, investors can more easily summarize massive amounts of information; however, the key is how to judge it. A quick summary by ASTS is as follows:
| Strategic dimensions | AST SpaceMobile (Newcomer) | SpaceX Starlink (incumbent) |
| Disruptive business models | “B2B wholesale model”: Profit sharing with global telecommunications providers (MNOs). ASTS does not grab telecom customers, but becomes a “5G feature option” for telecom operators. | “B2C vertical integration model”: Although there is T-Mobile cooperation, its core DNA is “bypassing the middleman”, which may ultimately threaten the traffic position of global carriers. |
| The dilemma of the incumbent | “Embrace allies”: There is no need to consider the damage to existing customers, because 3 billion carrier users are its ready-made market. | “Competitive conflict”: If Starlink wants to imitate ASTS and cooperate with all telecom operators in the world, it must give up its “exclusivity” and “terminal control”, which will harm its current high-profit home/business subscription system. |
| Collateral damage | Extremely low: The success of ASTS will increase the ARPU of the carrier, which is an “incremental subsidy” for the existing ecosystem. | Extremely high: If Starlink is fully expanded, it will be a “stock substitution” for traditional ground-based telecom operators and optical fiber service providers, which will trigger a collective defense of global telecommunications supervision. |
| Market Powers | AST SpaceMobile | SpaceX (Starlink) | Conclusion |
| Reverse positioning | ⭐⭐⭐⭐⭐ | ⭐ | ASTS makes telecom operators allies, not enemies. |
| Patent assets | ⭐⭐⭐⭐⭐ | ⭐⭐⭐ | ASTS has exclusive technology in “large array antennas”. |
| Turning costs | ⭐⭐⭐⭐ | ⭐⭐⭐ | ASTS is embedded in the carrier architecture and is extremely sticky. |
| Economies of scale | ⭐⭐ | ⭐⭐⭐⭐⭐ | SpaceX has a rocket advantage with the lowest launch cost. |
| Network effects | ⭐⭐⭐⭐ | ⭐⭐⭐ | ASTS has a stronger network effect in the telecom ecosystem. |
In short, I personally believe that ATS possesses the potential to become a ten-bagger after screening. As for what market power (competitive advantages) ATS SpaceMobile should gradually acquire as the company develops, and whether the CEO’s capital allocation is appropriate, that’s another story. Currently, it is indeed overvalued.
Note
Thank you again for your selfless sharing of many insightful articles and criticisms of investor blind spots. My personal opinions are largely based on “Why Shopify is so killing?” (2022/10/21), “Why is it difficult for investors to discover Shopify potential early?“(2023/2/14), “How Arista, the nemesis of Cisco’s monopoly, makes money?” (2024/7/28), and Table 3-1 on page 114 of “Investors Beautiful Heaven” (especially recent holdings, e.g., Broadcom: see “The reasons behind Broadcom share price consistantly outperformance” and “Significant changes in Broadcom’s business approach“).
Related articles
- “AST SpaceMobile turning every phone into a satellite phone“
- “Smartphones that support satellite calls“
- “The world’s most well-known oligopoly companies“
- “How does Starlink, which monopolizes low-orbit satellites, make money?“
- “Low-orbit satellites (LOS) progress, relevant companies“
- “Shopify surpassed Amazon in some important e-commerce metrics“
- “Why Shopify is so killing?“
- “Shopify, the only rival admitted by the founder of Amazon, how does it make money?“
- “Why is it difficult for investors to discover Shopify potential early?“
- “How Arista, the nemesis of Cisco’s monopoly, makes money?“
- “Cisco, ex-biggest company, the representative of dot-com bubble“
- “The reasons behind Broadcom share price consistantly outperformance“
- “Significant changes in Broadcom’s business approach“
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