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Name: Kuppy’s Event-Driven Monitor
Audience: Professional investors & HNW individuals
Model: Paid (4-week free trial with FULL access to archives)
Author(s): Harris Kupperman and the KEDM Analyst Team
Topics: Primarily corporate events and special situations, along with weekly market commentary
Overview: Each edition of KEDM has 3 sections:
A few highlights below…
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Tech Blow Up
KEDM Volume 17 from January 23, 2021
“I remain of the opinion that the avalanche of unlocks and new issuance (31 secondaries this week, up from a surprisingly large 24 last week) will eventually bury the Ponzi Sector. I know I repeat the same message each week, but one day I’ll be right and when I am, it will be lights out for a VERY long time as these companies all light capital on fire and will need to partake of repeated equity offerings at the same time that insiders are dumping.”
KEDM Volume 23 from March 6, 2021
“After months of warnings in previous KEDMs, the bottom finally fell out of the Ponzi Sector this week. Despite a late day NASDAQ save on Friday, most of the Ponzis were still down on the day and down dramatically on the week. My hunch is that the top is in for SPACs and to a lesser extent most Ponzis. We probably have a bit of a bounce, failing rally and then lights out. I know these things have 100-200 IV and the siren song of Theta will pull you in, but this is different from prior washouts where writing puts were a gimme. I really think it’s done this time, so be careful.”
KEDM Volume 58 from December 4, 2021
“We’ve been harping on ARKK for ages. We were early (as usual). Now we’re going to start talking about all the Hedge Fund Hotel names. Fortunately, there’s an index of these (cause there’s always an index for everything…) It’s all fun and games when your buddies are getting inflows and buying the same names on margin. What happens when it all goes in reverse? What happens when the valuations are stretched beyond all logic? … For the record, we have the upmost respect for Tiger and what they’ve consistently accomplished over decades. The problem now, is that most investors agree with us. Tiger’s book is mostly high-multiple growth and that sector is suddenly having an identity crisis—compounded by copious leverage amongst PMs. 2H/2021 was when Cathie got wrecked. Will 2022 will be when high-multiple HF Hotel tech gets wrecked??
Energy and Inflation
KEDM Volume 38 from July 3, 2021
“As you know, we’re inflation bulls here and nothing says inflation like restricted supply and stimmies boosting demand. While you can look at almost the entire periodic table and find “plays,” we’re going to talk about oil (WTI) for a second. Look at the futures options. Call spreads are crazy cheap as compared with outright calls. We think that oil will be what will finally force the Fed to slow down the printing presses, but first, oil needs to panic them…”
KEDM issue 49 from September 25, 2021
“Inflation continues to rage and eventually the Fed will be forced into action (bonds are already saying as much… pull up the 10 and 30 yr charts). Will this pop the risk asset bubble? Probably. Ponzi sector? Most definitely. But our energy themes are driven by failed social and governmental policies. We feel safe in the warm glow of a secular bull in wokeness and government stupidity.
Speaking of woke, it probably worth skimming the Engine No. 1 framework on how to create an energy crisis. In a few years, when their energy crisis creates great suffering for the poor (us hedgies never suffer), we hope the peasants remember to grease up the guillotine for these guys. We quote:
“Up until now the thrust of most ESG strategies has been to find the answer to a simple question: are the companies we’re investing in good, or are they bad? By doing this we could exclude sinners—or at least reduce their weight in our portfolios—and enjoy a warm glow of moral satisfaction.”
KEDM issue 64 from January 22, 2022
“On a final note, we’re wildly bullish oil and in particular offshore oil services. With Brent over $80, offshore is well in the money. More importantly, recent discoveries show that future oil supply growth will likely come from offshore in a major way. However, what really gets us going is an understanding of just how cheap these assets are. How bankruptcies have eliminated debt. How consolidation has improved pricing. How supply cannot come back online as shipyards have not been building this equipment for years and many of them are focused on building container vessels anyway.”
KEDM issue 70 from March 5, 2022
“Turning to the markets, the new market scapegoat for all things bad is Russia. While Russia certainly creates uncertainty and disruption, it is simply a convenient symptom rather than the cause. How many times have we banged on about the Great Rotation from Ponzi into “real”? How many times have we discussed the real culprit, i.e. ESG and the Capex-caused dearth of supply? We have literally lost count.
KEDM issue 46 from August 28, 2021
“Everyone has heard the uranium pitch. It’s been repeated for years. It never played out because the supply deficit was negligible and there was plenty of above- ground supply. The past few years have been a game-changer as CCJ shuttered MacArthur River, Rabbit Lake and reduced production at Cigar Lake. Meanwhile, over in Kazakhstan, they slowed production growth and actually experienced a production decline in 2020. Meanwhile, a bunch of other mines either slowed or stopped production as producing at a loss is not sustainable. While this all got our attention, there was simply too much supply above-ground for this to matter. However, the story may have forever changed as Uranium Participation became Sprott Physical Uranium Trust (U-U CN) two weeks ago. SPUT has an ATM in place, and it has been rather “active” in terms of blasting out shares. During its first 9 days in existence, it has sprayed the street with over 8.3 million shares, taking in roughly USD $75 million. These proceeds are being used to acquire physical uranium and they’ve now bought roughly 2.1 million pounds with those proceeds. To put this into perspective, this is over 200,000 lbs. a day of net buying or roughly a 45 million run-rate annually or roughly a third of total annual supply. These purchases are price-agnostic (hence the Event-Driven angle).”
KEDM issue 56 November 14, 2021
“…JPY has all the makings of a great setup here—especially as OTM IV is so low. Is this tied to the RMB?? Sure, why not. But that’s only half the story… We all know why Japan wants a weaker FX, we know all the tricks they’ve tried, one day it will work, and it can only work at a time when other major FX like CNH and DXY are appreciating. They don’t make these more text-book than this. Let’s zoom in a bit. They just tested the bottom of that range and it reversed fast. Risk 1 to make lots??”
The Idea Farm Team
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