What are you buying today?

[nwoodman]

Added more FFH,

[Spekulatius]

Why TLT and not traditional protection such as GLD?

 

Yeah, that’s my question too. For me gold looks like a better bet, especially in a scenario where interest rates are artificially held back and inflation runs hot, like some have alluded to may happen. So, I keep buying small chunks of IAU in one account where I have the most cash (and IRA account). I sort of regard it as a cash alternative knowing too well that it can develop downside volatility in a choppy market.

[Jurgis]

Why TLT and not traditional protection such as GLD?

 

Yeah, that’s my question too. For me gold looks like a better bet, especially in a scenario where interest rates are artificially held back and inflation runs hot, like some have alluded to may happen. So, I keep buying small chunks of IAU in one account where I have the most cash (and IRA account). I sort of regard it as a cash alternative knowing too well that it can develop downside volatility in a choppy market.

 

Guys, he's buying TLT for deflation/falling rates scenario, not for inflation/rising rates...  ::)

He actually explicitly said:

 

It appears that the massive debt overhang (absent MMT) will cause interest rates to fall (contrary to popular wisdom)

[Spekulatius]

Why TLT and not traditional protection such as GLD?

 

Yeah, that’s my question too. For me gold looks like a better bet, especially in a scenario where interest rates are artificially held back and inflation runs hot, like some have alluded to may happen. So, I keep buying small chunks of IAU in one account where I have the most cash (and IRA account). I sort of regard it as a cash alternative knowing too well that it can develop downside volatility in a choppy market.

 

Guys, he's buying TLT for deflation/falling rates scenario, not for inflation/rising rates...  ::)

He actually explicitly said:

 

It appears that the massive debt overhang (absent MMT) will cause interest rates to fall (contrary to popular wisdom)

 

I am aware of this, but gold could do well in a deflation as well, if there is concern about the financial system. It will however certainly do well better in a situation that I alluded to, where we have inflation and artificially suppressed interest rates.

[Cigarbutt]

I believe...

I don't see how that allows the long end of the Treasury yield curve to continue to rise over the coming year and beyond.  In fact, I think we may see zero long-term yields before we see 3-4%.

wabuffo

Yes, there's the financial repression risk linked to YCC, especially given the USD exposure for a stranger, so gold may make sense in that scenario.

After WW2, when there was yield curve control, financial repression and when Treasury/Fed was one, real rates were negative. However real rates were falsely negative then as the seeds of real progress on productivity, real growth and fiscal discipline had been planted.

Now negative real rates are for real.

There was confusion above about the goal of a long position in long term US risk-free bonds (TLT). Duration exposure is not the whole story. In summary, gold looks great if the Hulk Hogan picture applies (photo taken after a period of quarantine). Long exposure to TLT may end up a better option if the recovery takes longer. (disclosure: i think the second picture will revert back to the first one, eventually)

Pictures taken from a dated academic macroeconomics textbook.

Of course, i may be wrong and we may just muddle through, somehow.

[havingheart]

If the inflation/reflation story is to be believed, my elementary understanding is that the short end of the yield curve needs to be moving up in tandem with the long end, but as it is right now the short end is heading lower while long end is heading higher. TLT is not a bad idea at all.

 

FWIW - I'm a tourist so I have no idea what I'm talking about.

[LC]

Purchased some Berkshire.

[sarganaga]

Altria (MO)

 

CK Hutchinson (CKHUY)

[CorpRaider]

BK, I really like that new impossible whopper.  ;D

[shamelesscloner]

LAC - Lithium Americas Corp

[ValueArb]

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.

[spartansaver]

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.

 

What did you pay for each?

[valueinvestor]

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 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.

[Broeb22]

LOTZ. I kind of threw up before buying a post-SPAC company but I do like their business model and think it can generate real cash within the next couple years.

[ValueArb]

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.

 

What did you pay for each?

 

SPCE Jan 2021 $7.50 Puts @ 47 cents

NKLA Jan 2021 $7.50 Puts @ $1.37

 

[LC]

bought some akamai and qualys.

[ValueArb]

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 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.

[spartansaver]

What did you pay for each?

 

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.

[ValueArb]

What did you pay for each?

 

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.

[Spekulatius]

Added a bit of MRK. Stock has done nothing recently despite pretty decent results. Same with BMY (I own a little bought during the CELG merger selloff). Those are the two Pharma stocks I follow closely, and they are cheaper than they have been for years, despite decent top line growth.

 

I probably add more BMY too.

[LC]

bought some akamai and qualys.

averaged down on Qualys. Small position but isn't it great seeing a stock drop 15% the day after you buy?  ::) ::) ::)

[longlake95]

I own a small opening position on Qualys. Haven't had a chance to dig into the results, but I understand they announced that Courtot is taking a leave for health reason. Let's hope he is ok long-term.

[LC]

The health reason is not COVID related (not sure if that is better or worse) but yes, let's hope he recovers.

[DooDiligence]

Bought a full position of FMS on Monday. I'm trying to make up for selling Davita way too soon. Did what passes for DD with me (as usual) by reading various analyst reports, including Morningstar, and the following links. Looks cheap based on historical bitch metrics.

 

www.fiercebiotech.com/special-report/fresenius-medical-care-acquires-nxstage-medical-top-10-medtech-deals-2019

 

www.fresenius.com/history

 

---

 

One potential problem is overpayment for acquisitions. Looking at their history, they seem to have done well with their selections without becoming an egregious serial acquirer.

 

There's a possible short term hit to revenues & earnings due to loss of patients from covid, and there may be controversy over their acceptance of government covid assistance.

 

https://khn.org/news/business-is-booming-for-dialysis-giant-fresenius-it-took-a-137m-bailout-anyway/

 

---

 

Finally, my Mom is a patient of Fresenius. She used to be the hangar queen at a local hospital, and hasn't had a single stay since starting dialysis.

FMS_????_34.05_2021-02.pdf

[drzola]

Back in MRK today for inlaws account as I sold mine in 2016 duh.

Probbaly should have just bought more Brkb for their pharmacy basket building up I suppose.