ValueArb

Bumble IPO today. Offering went out above the range and stock price finished up 76% on day. CNBC says its a $7B market cap, my math is $13B. So either 14 times sales or 24 times sales, coming off a loss for the year.

Thanks SD, thats exactly the stuff i wanna hear about. I just ask myself, lets say in healthcare, how much of the R&D-expenses really filling the pipeline for new products. Or how to anlayse and value R&D-costs better. And thanks for the link ratiman! Good post. FYI: Percentage of global research and development spending in 2018, by industry: In 2018 the average Computer/Electronics company spent 22% on R&D. In 2018, Apple spent 6% on R&D, and historically spent less than 5% and as little as 2%.

Since most of TSMC manufacturing equipment is actually made in Europe, why don't American semiconductor manufacturers like, you know, buy some? Why do Intel et all need handouts to avoid the terrible risk of only have 10nm production capabilities in the US leading to a Xmas shortage of game consoles?

Even the largest growth stocks (FAANMG) are not "absurdly overpriced". Some of them are actually somewhat cheap. FB. GOOGL. I could make a buy case for most of FAANMG. Real estate? Depends on location(s). A lot of US RE is comparable to or way cheaper than Europe or Canada or Australia (AFAIK). When Facebook went public I remember talking to a friend and doing some fundamental analysis to convince them it wasn't overpriced, that in actuality it looked underpriced. Based on that, I then went on to buy zero shares and keep most of my account in cash because I wasn't investing at the time so I could remain focused on building my business that failed....

Its been so long I can't remember all the details, but one key feature I seem to remember is the ability to specify a Automatic searches, say for "SPAC + merger", to get emails every day when a new filing is related with those keywords. Thats the main thing I'm looking for, but I know that there are a lot of things I don't know about using tools like this, so if there is anything you use in your work flow that you love please educate me.

SPCE Jan 2021 $7.50 Puts @ 47 cents NKLA Jan 2021 $7.50 Puts @ $1.37 Since you asked for pushback. Not much upside in the NKLA put. Your max win is 5.5x your outlay. What are the odds that NKLA share price declines 75% or more in order for you to get your money back? What are the odds it's a 0 and you get 5.5x your money by Jan 2021? I'd put both of those at somewhat low. Not sure I'd be confident it's a positive expected value. I can wrap my head around SPCE put as it at least becomes becomes very valuable in a true insurance scenario. Thanks for pointing that out, this is something I should be thinking about.

I have no reason to disagree with you on the business, or not believe that completely right but it can turn out that even though you're right, your returns will still be subpar. Just because it's not a real business, does not mean it can't be a real investment. There's plenty of businesses that were not real (e.g. selling vaporware), but managed to turn it into a great business/return because they had a vision that was counter to the world's belief such as Apple's acquisition of NeXT computers in a certain extent. Nikola I'm not too worried about, but Virgin has Chamath and Richard Branson, both who are great marketers and if we can learn from Tesla, where I really do not think it's a real business in a sense that it does not generate sustainable profit, it may be best to find other shorts. As they may stumble upon gold because they have been heavily investing, hiring the best of the best, and constantly innovating, and some are investing not for profit but to push ESG forward and voting with their dollar. The stock market is not a reflection of the economy and specifically businesses in some cases, and one should operate as such. If you're looking for shorts, I would look for something in currency or any business/industry that's outdated but have no way of turning it around. Additionally, to spartansaver point - how much did you pay is a factor for these puts. Thanks, these are good comments. As per SPCE I count myself fairly knowledgable about rocketry and the space business, which is why I put their odds of success as nearly infinitesimal.. They are far behind other competitors, and unlike when SpaceX vaulted into their dominant position SPCE isn't competing against lazy old space companies, they have to beat an array of well funded companies with already built and in some cases proven technologies. For example Rocket Engines: SpaceX has Merlin and Raptor. Merlin has been used commercially close to thousand times. Raptor is already flying the next generation prototype and is the most advanced rocket engine in the world. Blue Origin has the BE-4, which hasn't flown yet but has been heavily tested for last four years and will be launching a ULA rocket next year. The SPCE hybrid engine can't be scaled up to go to orbit, they have been working on it for a decade and its only now ready for their tiny space plane. Building something competitive with Raptor or BE-4 is a decade long project. Cost: SpaceX first dramatically cut launch costs by being the first launch company to mass manufacture their engines. Old space engines are bespoke, build by hand, and cost $10M to $150M each, Merlins are less than a half million each because of assembly line manufacturing efficiencies. The Falcon 9 design was key to that, since it used 9 first stage engines it not only created the backlog for hundreds of engines a year to make mass manufacturing work, it also opened the door to re-use by making it possible to land a first stage with a single engine (since rocket engines can't throttle deeply enough and first stages are basically super light tin cans once fuel is expended, you can only use a tiny fraction of launch thrust to land). SpaceX has pretty much proven the value of first stage re-use and is poised to take the next step to total re-use with Starship. Launch costs to LEO were roughly $10,000 per pound before SpaceX, SpaceX charges as little as $1,000/lb, thats a 10 to 1 cost reduction in a decade. Starship should lower costs close to $100/lb in the next 5 years while at same time offering by far biggest payload bay and payload mass capacity in history (Saturn V was close in payload mass, but in-orbit refueling will enable Starship to send over 4 times more mass to the Moon or Mars than even Saturn V). So for SPCE to compete in launch it has to come in to a market thats already been massively disrupted and is on the verge of a two magnitude cost reduction, with an innovation that can substantially improve capabilities over both tried and true SpaceX Falcon 9, but also the impending Starship platform. Or they can develop a hypersonic commercial rocket plane, which is probably a significantly harder project. I put their chances at infinitesimal, no matter how good they are at marketing. But your point is still valid, there is a risk they pivot to an entirely new market (Helicopters, software, financial engineering?) and develop a profitable business that can justify a much higher valuation than book value. The biggest risk I saw in my analysis, was SPCE doing another round at $50 and increasing their book value to $10+, and giving them a half decade plus of runway before the market figures them out. Based on my purchase price I will make a 4x return at $5, or a 20x+ return at next years book value. I don't need to succeed very often to make money, and I do expect this position to finish with a 100% loss a majority of the time. Thats why I'm keeping these plays below 10% in my portfolio. If the market collapse they'll likely provide some positive insurance, if it doesn't I'm hoping my other returns will more than cover these losses a few times over.

What did you pay for each? SPCE Jan 2021 $7.50 Puts @ 47 cents NKLA Jan 2021 $7.50 Puts @ $1.37

Here's my latest. If you agree with them, thats fine, but please dont' tell me as I don't want positive reinforcement. If you disagree with any, I'd greatly appreciate your comments and thoughts. I plan to cap all my puts at more more than 10% of my portfolio. SPCE: Virgin Galactic 2022 7.50 Puts My Thesis: I believe it's space plane is a toy only capable of high altitude flights, at 1/10th the velocity necessary to make orbit. Hybrid engines are simplistic and extremely limited in capabilities and only suited for this kind of rocket plane tourism. Space tourism at quarter million a pop won't support a $9B market cap. Expanding into hypersonic travel via rocket planes would require far more complex liquid fueled engines which historically have taken years of development to be usable, and which they haven't demonstrated any technology for. And even if they were to procure the worlds most advanced and safest liquid rocket engines in the appropriate size for a commercial hypersonic rocket liner, they still have to solve a huge range of design and safety issues and it would extremely unlikely it would be commercially viable. Trading at $53, they have no revenues, a little over $3 in equity that is mostly cash, and should burn that almost in half by my expiration date. Also looking at 2023 puts but haven't pull trigger. NKLA: Nikola 2022 $7.50 Puts Besides the strong whiff of fraud, the lack of revenues, current equity of $2.78 in a $23 stock, I don't believe Hydrogen will ever be a useful "fuel". It's really a store of energy like a battery, and very hard to compress and fit a high power potential in a small space. It will lose to batteries.

I'm getting back into serious investing, and just found out Morningstar killed 10kWizard about 5 years ago (yes I've been out of the game a long while). What are people using for their SEC filings searches now besides plain old Sec.gov?

Try this link, it should work: https://app.tikr.com/register?ref=o94y6y Koyfin is also worth a look (I use both): https://app.koyfin.com/home Thank you for making the recommendations.

I love Tesla and think it has a bright future. I also think this market bubble is going to pop and its going to hit the companies trading at 26x sales while growing less than 20% a year the hardest, so I purchased some 2022 Tesla $200 and $400 puts. Thats kind of like a sell, isn't it?

I thought it was generally assumed that a lot of Medallions profits was from market-making and arbitrage? Like Buffets early years when he could use merger-arbitrage to juice returns.

Sorry if this has been discussed to death elsewhere but didn't see a specific thread for it, and it's a concern that keeps bubbling up in the back of my mind. Coronavirus costs would hit Berkshire in many ways, some obvious (lower spending at DQ, lower travel spending for airlines, etc, etc) and some not super obvious. The concern I have is around Ajit Jain's insurance portfolio, and the shutdown of almost all professional and amateur sports leagues. Given how quickly and easily they've acquiesced to shutdowns* it seems clear they have significant levels of insurance coverage, and that makes me wonder how big Berkshire's exposure is there. Obviously in Ajit and Warren I trust, but still makes me nervous. Anyone have any thoughts, information on this or any other coronavirus exposure that could be significant to Berkshire? *excepting the UFC, perhaps proving Warren's point that you only find out who's been swimming naked when the tide goes out.

Easily understandable. This situation is just like Huawei. We all know that BYD is an agent of the Chinese government and it will surreptitiously insert a whole host of sensors and cameras into the hopper of the garbage trucks to read all of the sensitive information off of our garbage. This information will be transmitted back to the Chinese government who will undertake nefarious acts with this ill-gotten intelligence. At least the US government is on top of this one! SJ Now they are stealing our garbage? I knew it!

I have been nibbling at oil trusts. Not sure it's a good idea as some of them are pretty speculative, not just because of the likelihood of lower oil prices but because they are required to dissolve within the next few years, so they might lose the opportunity to profit from any rebound in oil pricing.

I disagree that it has to do with the relatives. It looks like he wants to punish Russia for not going along with the cut. The biggest discount is for NW Europe - Russia's market. The question is if MBS can actually do it. It didn't work very well the first time he tried it. NA producers have proven to be very resilient. Who would have thought back in 2015 when he tried to pull this sort of crap that it was going to be the Saudis that are going to back off and not crappy producers from Oklahoma? I certainly didn't. So I don't think that we can have a protracted period of 20 and 30 dollar oil. As you say the whole system just doesn't work at that level. So the system re balances itself either through an OPEC+ cut, or bankruptcies in NA or both. My guess is that it's gonna be OPEC+ cuts because it seems that they have less of a stomach for those kind of prices than NA producers. But I think at the end of all of it you're gonna have hydrocarbons coming out from exactly the same basins that are coming out of today. Doesn't lower prices mostly just hurt (or delay) additional investment in the fields? Exploration and development are typically the expensive parts, when prices drop existing fields are mostly still going to pump and process similar amounts of oil, gas and shale. I think this is just Mr. Market running around in a tizzy begging us to buy his half of the business. The Saudi's can't run their country, let alone a war, on $20 oil without massive spending cuts. Putin needs higher oil prices to prop up his regime. In interests of full disclosure, I have zero track record in predicting the future, but I can't see lower prices lasting long. Months sure, but not years.

How long can OPEC and Russia survive lower oil prices? What percentage of corporate debt do US Shale operations comprise? Do you really think total comp for public employees corresponds to their free market value, i.e. that any took less income in exchange for those lucrative pensions? What percentage of homes were purchased for 1M with 5% down? 1/100th of 1%? If millennials don't want to live 40 minutes away from the city who is buying all those homes? Lastly, how can an investor to win the guess the Macro-economics game? Hint: The answer is in the movie War Games.