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Ronchong

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Everything posted by Ronchong

  1. Not going to step out of my expertise and comment on monkeypox. Regardless, I find it interesting how much fear can drive return. SIGA is up 150% over the last 3 months no matter the severity
  2. Well, the title was also a play on wallstreetbet members so your interpretation was not exactly wrong! It spreads through aerosel, indirect and direct contact too but you are right that it does not transmit easily from human to human as very close contact is needed. Word on the street is that there is a different variant of monkeypox that is a lot more contagious given the case count in Europe. Either that or there was a mass orgy somewhere I was not invited to!
  3. What does the board think of monkeypox and the implications on the market? Fear mongering or lockdown 2.0? The symptoms does not seem to be as severe but still it seems contagious enough to be a cause for concern. Lastly, the statistics coming out of Europe does not look good. Confirmed cases have essentially doubled in the last 3 days albeit from a small base.
  4. Has anyone looked into NewLake Capital Partners? Came public recently with a similar model to IIPR. Could be worth looking if the trajectory is similar to IIPR Oh and Gordon Dugan is the board chairman.
  5. Incentives matter too. If the management of a company is being assessed and rewarded based on revenue growth, net profit growth, the management will be more likely to undertake acquisition using shares. If the metrics that are used to evaluate performance and EBITDA/EPS, I think you will be more likely to see a debt/cash deal
  6. Completely agree! But Wood is no chump either in the competition for the prize. I've just seen a video of her where she uses the treasury yield as a discount rate for equity. Seriously? There's no risk premium anymore? Either she's selling to idiots or thinks we're all idiots. What's even more amazing is that the video was monitored by someone from her compliance team. I do not have a morning wood for Cathie wood but I recall this is also how Buffett thinks about DCF/value as well. Got to dig out that interview/letter. Buffett discounts by the treasury yield and adjusts for the equity risk premium through his margin of safety. E.g. riskier stocks would have to trade at 50% below his calculated value but he doesn't discount the risk at the DCF stage. Not quite sure what advantages this has as opposed to discounting for the risk at the DCF stage.
  7. I get the original SPAC trade because that was a market where there was pretty much no opportunities. But the SPAC risk/reward have changed these few days,.I would say that you are lucky to even get a 15% announcement pop these days. No SPAC I know of got above $11.5 on the announcement so you are risking 5% for max 15% gain. That doesn't seem like a good trade to me. If the market ever get cheap enough, you can be pretty certain that SPACs would get sold off below their NAV. All this while, you have to liquidate your SPACs at a discount to switch over to whatever you want. Why lose 5% when you can lose none?
  8. @shamelesscloner I recall Greg mentioning that it was high 8s/low 9s in the other thread. I got out of most of my SPACs since the risk/reward is no longer attractive. The whole idea of investing in SPACs is so that (i) You can have a quasi cash instrument with upside optionality to park your cash when there is nothing cheap to invest in (ii) You have the ability to switch it out at a small gain/close to no loss and pick up quality businesses on the cheap when the market reverse. Why is anyone investing in SPACs now when your view is that there would be bargains down the road?
  9. On AVAN, I think you would find that Citadel owns a sizable position in most of the SPACs. This is due to their role as a market maker and not them investing out of merits. On VYGG, I put them taking Reddit public at 1%. There is a huge conflict of interest there.
  10. Its playing out like how you envisioned it to be! The pre-announcement SPACs start to trade at their expected value post-announcement. It's very hard to buy into promising pre-announcement SPACs under $11 now, even the unknown ones starts from $10.5. Chamath's IPOD is one of the most ridiculous SPAC that is currently on the market right now, trading close to 80% above cash value! This seems like a much profitable play than waiting for the SPAC's announcement. 1. Buy into promising SPACs at IPO 2. Wait for Robinhood gang to pile in 3. ??? 4. Profit I meant at unit launch! Sorry for the confusion, edited my post to make it clearer
  11. Its playing out like how you envisioned it to be! The pre-announcement SPACs start to trade at their expected value post-announcement. It's very hard to buy into promising pre-announcement SPACs under $11 now, even the unknown ones starts from $10.5. Chamath's IPOD is one of the most ridiculous SPAC that is currently on the market right now, trading close to 80% above cash value! There could be another play here whereby one buys into the next IPOX, IPOY, IPOZ, AJAX, DGNR at unit launch and wait for the speculative robinhoog gang to recognise the "value" of the team and drive the price up. Much better IRR! 1. Buy into promising SPACs at IPO 2. Wait for Robinhood gang to pile in 3. ??? 4. Profit
  12. Faster than I expected. The third spac ETF to be launched https://www.wsj.com/articles/third-spac-etf-launch-taps-into-blank-check-company-boom-11611225000?st=tqancnjk828lams&reflink=article_email_share
  13. 57% in a day, the party continues. I was speculating on the SOFI merger but went with IPOF instead thinking IPOE would be too small, damn. I think Chamath still hasnt close on his IPOD yet and there's a decent change either IPOD/F would close in the next few months given his tweets.
  14. I probably should, when I find out how to change the topic. I'm pretty much using SPACs as a form of cash alternative as well, I have about 50-60% of my portfolio spread over a basket of SPACs. Including SPACs, I'm about 100% invested, this leaves me around 20-30% of margin conservatively, backed against my SPACs, to add to my other positions if the market goes down. Thiel's SPAC is a sign of the beginning of the end, 60% above cash value for a company that may end up going the IPO route is madness. I think you have laid out the end game of the SPACs extremely well. Let me start, a couple of the SPACs near NAV that I have on my list are: XPOA CCAC FUSE AVAN
  15. Got it, didn't know that the science/biotech is another hot sector so I presume the play here is just on the targeted sector? Now, I don't disagree with your thesis since I'm in the same play as you but I have been thinking about the opportunity cost of SPACs lately. The new SPAC ETF that came out has a AUM of 2B against a total SPAC trust size of approx. 88B so it makes sense that the new SPAC range of 10.5 - 10.6 is also about 1 - 2% higher than the old range of 10.3 - 10.4. Now, I doubt that the market is going to stop at 2 SPAC ETFs seeing how things are going right now so the 10.5 -10.6 range is going to become 10.7 - 10.8 and then 10.8 - 10.9, so on and so fro as more and more SPAC ETFs come online. While this creates an opportunity to front-run the upcoming ETFs but the days of the asymmetrical risk/reward appears to be ending soon. At some point of time, it would no longer make sense to hold recent IPO SPACs at $11 or more. The Social Capital SPACs are in another class of their own but they present another play on it's own. There is this post by gfc in the "what are you buying" thread and the thesis is roughly similar. The plan here would to be to buy into SPACs with best-in-class management and wait for the RH crowd to become "aware" of the SPAC. Case in point. One unit of AJAX could be bought below 10 when it first IPO-ed and yesterday it just closed at 12.50 without any news. This way, u get to clip your 10 - 20% without even having to wait for the deal announcements!
  16. Yeap, it seems like they are mostly concentrated on pre-deal spacs from their holdings, different from what SPAK is doing. It could be a worthy look for someone who doesn't have time but for the rest of us, it's just ruining the play. I'm afraid 10.3-10.4 is gone too. Seems like 10.6 - 10.7 is going to be the new range. Got really lucky with JIH. They announced a deal immediately the working day after I bought it and went up 7%. IRR of 173823728281817% I like both SOAC and CCAC, both have targets in the hot sustainability sector. SOAC target to close by Q1 and CCAC has been searching for a long while tho both have came up quite the past 2-3 days. Just curious Greg, what do you like about LSAQ and FLAC?
  17. https://www.etfstrategy.com/tuttle-launches-actively-managed-spac-etf-98547/ New ETF on SPACs. Suspect this ETF is the reason behind the increase in volatility in SPACs lately. More and more SPACs are starting to trade at 10% - 20% above cash value. Ridiculous!
  18. I think it's impt how you frame your foray into SPACs. These are NOT investments that you hold for the long term. My answers to you below is not going to amaze anyone. As value-oriented investor (myself included), I think alot of us have a disdain for things like this, whereby we don't feel good when the money made is not through our own analytical skills. You need to recognise that these are limited risk speculative bets that lets you ride on the wave on the market mania and should have no shame about picking money off the floor. 1. Depends on how you define good. SPACs are mostly about narratives. There are a lot of companies/promoters that know how to spin a story. 2. I agree, it is getting harder and harder to invest in a promising SPAC near cash value. 3/4. Non-issue if you are going to hold it for the short term, you have the $10 downside protection pre-announcement. I mean look at GSX, Nikola. These are clear frauds but nothing is stopping the market from assigning them a valuation in the B's. In short, you are speculating on hypes with downside protection. Doesn't make you feel good but pays the bill.
  19. 4. Go with reputable people in a favoured industry. It's not exclusive. If you get in early, you can actually get these units close to cash value.
  20. Yes, Greg is right about the history of how that provision came about, SRAC surprised me too but I sold out of it too early. They have a CEO where he has limited access to the technology of the company yet the market couldn't give a damn. I'm sorry I don't have insights into any of the SPACs listed as my strategy is a little from Greg. I think we can all agree that hot industries like EV, renewables are pretty much uninvestable on a valuation basis so I use SPACs (HCAC, QELL, THCB, NOAC) as a limited-risk exposure to ride the wave on these sectors. They are a little more expensive (I try to buy them below 110% of the cash value) but they offer you a better chance of earning multiples. You got to do what you have to do when you don't have 8 digits like Greg.
  21. I think EV sales would eventually follow the way of ICE where different brands dominate in different countries because of different culture. Volkswagen, Renault, Peugeot in the EU; Toyota, Honda, KIA, Hyundai in APAC; Chevrolet, Ford in the US so it may not be that accurate to base the success of a company based on the EV sales in one country. The autonomous robot taxi fleet promised by EVs is also great and all but I just can't see how that can help to justify the valuation now given to the EVs. Eventually, as everyone switch to EVs and deploy their car to work in Uber/Lyft, the law of demand and supply is going to kick in and make the fees of each trip just marginally above the cost of trip.
  22. I guess one way to get around the opportunity cost, is to buy these $10 spacs on margin. Using cash raised against your existing equity investments by putting the latter on margin perhaps. Are there any risks with doing this? I guess the key question would be: if there is a major market crash, will the price of these spacs drop significantly below $10? (thereby possibly creating a margin call forcing you to sell at a loss). In theory they should not because they are redeemable at $10 in all cases = risk free immediate arbitrage opportunity. But I don't know for sure. It really depends on what your portfolio strategy is. If you are someone that would never utilise margin unless on SPACs, then yes. However, if you are user of margin, the above does not really solve your opportunity cost problem. In this case, part of your pool of capital (principal + margin) just gets diverted to SPACs instead of things that you would buy normally.
  23. Yes, Greg is right. The beauty of SPACs is not just in the reward but in the risk/reward. In a market where almost every junk stock is going up, SPACs offer you similar mania return but without any of the downside. If you really want me to point something bad about SPACs, I would say it's the opportunity cost, which is a real cost in normal market condition but I don't think you are losing much in opportunities these days.
  24. Yeap, this is the problem. The market trades at such dizzy valuation that there's not much opportunities to deploy your capital. I have been looking into the lesser touched small/micro/nano caps lately and even there, companies have doubled and tripled from their pre-covid high.
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