Mad Hedge Bitcoin Letter
September 8, 2022
Fiat Lux
Featured Trade:
(CRYPTO ARENA WAS THE PEAK)
(BTC)
Granted that crypto advertisement has no direct correlation with the price of Bitcoin, the amount of crypto advertisements is indicative of the ongoing health of the crypto industry.
In broad terms, when crypto prices are rising, the ad budgets of crypto companies swell.
The reverse is true in a down market.
It’s no surprise that November 2021 marked the high-water mark for crypto advertising spend as crypto.com signed a breakthrough deal for the naming rights to the home arena of the Los Angeles Lakers and ice hockey team LA Kings and called the venue Crypto.com Arena.
My sources told me the deal was a 20-year contract worth $700 million.
The price of Bitcoin has tumbled since then and the first shoe to drop were the numerous job cuts of reputable crypto companies like Coinbase.
The number of crypto exchanges that went bankrupt also has frightened investors as it highlights the unsecured and uninsured nature of digital investments on these platforms.
Individual accounts usually don’t receive their funds back if the exchange they use goes bankrupt, because these accounts aren’t insured.
As the textbook crypto investor has been busy getting impoverished, crypto companies have pulled back investment, wage, and advertisement spend signaling that the industry is in a “crypto winter.”
No industry is at its peak during a bout of extreme scarcity mentality.
This violent pullback of investment has hurt the image of the crypto industry while strengthening the case that fiat money still has validity.
I say that even as the President of Russia Vladimir Putin said yesterday that the U.S. Dollar and European-based Euro have “lost their credibility as a basis of international settlement.”
That’s not necessarily true.
Yet, this does signal that things are about to get wild in the currency markets and the sad fact that interest in digital currencies has, at least for the moment, been put on the back burner as we duck and weave from crisis to crisis.
Unfortunately, the incremental investor still isn’t willing to jump into crypto headfirst and the price of Bitcoin reflects this sentiment.
Just last week, we then got news of the same Crypto.com reportedly pulling out of a five-year sponsorship deal with the UEFA Champions League.
This UEFA Champions League competition is the most prestigious non-World Cup soccer tournament in the world and dominates global eyeballs.
The deal would have been worth just over $100 million annually.
Valued at just over $100 million per year, the contract had been under discussion but never signed, according to my sources.
The move follows the exchange's official approval as an official FIFA World Cup sponsor in March and several other audacious marketing plays in the world of sport.
Several other sports marketing opportunities have also been permanently shelved underscoring how lean times are in the world of digital currencies.
The price of Bitcoin has participated in the price action to the downside while missing out on much of the upside.
There simply is a lack of trust in this speculative asset class as hyperinflationary times have forced people to migrate into hard assets like food, energy, and housing.
Mad Hedge Biotech and Healthcare Letter
September 8, 2022
Fiat Lux
Featured Trade:
(WON’T GO DOWN WITHOUT A FIGHT)
(CVS), (SGFY), (AMZN), (HUM), (UNH)
“Luck is a dividend of sweat. The more you sweat, the luckier you get.” — Said Ray Kroc, founder of McDonald's Corp.
Bigger is better. At least, that’s what CVS Health (CVS) seems to believe.
Recently, the big news in healthcare is CVS’ move to acquire Signify Health (SGFY) for $8 billion, pushing it even nearer to its goal of becoming an integrated healthcare provider.
The deal, anticipated to close by the first quarter of 2023, is an all-cash deal with CVS paying $30.50 per share.
While this deal isn’t exactly something new, Signify has been known to be a great innovator in the fast-moving space.
The critical factor in how Signify is different from other companies lies in its strategy, which leans more on a technology- and data-focused model that caters to the gig economy. Under its scheme, clinicians are likened to Uber drivers in terms of independence.
Meanwhile, CVS’ move to swoop in and buy Signify actually threw a wrench in the plans of another company hoping to dominate in the healthcare space: Amazon (AMZN).
Just a few weeks before this announcement, Amazon’s entry into the healthcare industry felt unstoppable. The e-commerce giant started its journey with the $3.9 billion purchase of One Medical (ONEM), a doctor’s office chain, with the goal of continuing its expansion through a deal with Signify.
The encroachment of the retail giant seemed like a massive issue for existing players in the healthcare industry, particularly CVS, which was said to have lost out in the bidding war for ONEM.
Needless to say, this makes CVS’ success in buying Signify an even sweeter victory.
More importantly, this decisive move from CVS makes it apparent that it won’t go down without a fight. That is, Amazon’s march into the healthcare industry will not be completely unopposed.
Basically, Signify sends clinicians to patients’ homes to help them assess their conditions. However, the company does not offer home health services at all.
CVS’ decision to pursue this deal makes it clear that the company is veering toward primary care delivery. Signify’s services can integrate almost seamlessly with the CVS Health ecosystem, with clinicians being afforded the opportunity to simply direct patients to other CVS products and services.
However, not all plans are perfect.
One red flag in this deal involves the major clients of Signify: Humana (HUM) and UnitedHealth (UNH).
Given that CVS is a competitor, they may be put off by the new arrangement and decide to pull out of their existing contracts. This is an understandable concern since one of the main attractions in availing of Signify’s services is its status as an independent entity. This ensures that it operates without any bias and allows equal participation among all payers.
While Signify execs claim that all stakeholders are “very supportive” of this deal, the effects of the plan remain to be seen.
Either way, home-based healthcare is emerging as a new and lucrative trend in the industry. Hence, more and more companies are expected to make similar decisions.
Earlier this month, Walgreens Boots Alliance (WBA) executed a similar move when it acquired a majority share of CareCentrix. Even UNH shelled out a premium when it bought LHC Group, a home-health provider, for $5.4 billion this spring.
Whether it’s caused by an aging population battling mobility issues or healthier patients who realized the price of convenience during the pandemic, it’s undeniable that the demand for home-based healthcare is growing.
Obviously, companies like CVS are capitalizing on that trend.
So far, CVS’ strategy to develop a one-stop-shop for healthcare looks to be on track. The fact that it’s managing to build out a full-scale integrated model while practically doubling its stock price in the last three years makes it an excellent stock to own for the long haul.
If the company continues this trajectory and expansion into primary care, then CVS could quickly become one of the biggest healthcare stocks globally.
Global Market Comments
September 8, 2022
Fiat Lux
Featured Trade:
(THE MAD HEDGE TRADERS & INVESTORS SUMMIT IS ON FOR SEPTEMBER 13-15)
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To view the schedule and speakers, and to register NOW, click here.
Mad Hedge Technology Letter
September 7, 2022
Fiat Lux
Featured Trade:
(JUST A BLIP)
(ISO), (TSLA)
Brushing your teeth will be the least of tech’s worries as California’s power grid operator declared a stage 3 energy emergency alert.
Rotating power outage warnings were “highly likely” as a bone-crushing heat wave descended on the Golden State and the American West stressing the electricity grid to the extreme limit.
I’ve never tried brushing my teeth in the dark, but I imagine it’s not easy.
Toothpaste dripping all over my pajamas is not what I imagine when I think about living the California dream.
Luckily, I installed my luxury solar panel system on my roof that fully charges my 2 Teslas in the garage for free.
Tough obstacles call for smart solutions.
For others, DEFCON 5 is front and center.
California Independent System Operator (ISO) tweeted to customers advising them to “please reduce your energy use.”
Some 67,000 Californians were without power Monday evening.
Tech CEOs are taking notice as Silicon Valley, although blemished from its golden and most lucrative years, is still a massive hub of tech entrepreneurship, innovation, and investment.
There are about half a million tech jobs in the greater San Francisco Bay Area, and it doesn’t take a genius to understand they need the light on to work.
Talking to tech CEOs, they are perplexed.
Various CFOs and CTOs are having private conversations about buying backup power generators to kick in if power fails at the office.
There are also newer conversations about investing in office space outside the San Francisco tech region, and naturally, those locations gravitate towards cooler regions with better access to water sources.
Tech CEOs that now mandate 100% remote work can sit back and relax knowing that even if a few get taken out, most of the staff will be online from somewhere somehow and someway.
The staff at Mad Hedge Fund Trader are employed over 13 different time zones around the world and boast a similar setup to mine, which are roof solar panels powering a fleet of Teslas. Throw in a satellite signal for broadband internet.
I don’t believe energy prices will factor into the tech earnings this upcoming quarter as electricity prices in California soared to their highest since California's electric grid operator imposed rotating outages in August 2020.
The last time the ISO ordered utilities to shed power was for two days in August 2020 when outages affecting about 800,000 homes and businesses lasted anywhere from 15 minutes to about two-1/2 hours.
At worst, there might be a mini footnote writing down a small sum for electricity bills. Remember that these behemoths earn billions upon billions of annual revenues.
At the individual level, however, convincing the incremental tech worker to move to Silicon Valley has been tough, this just made it infinitely harder.
In the bigger scheme of things, naturally, this is just a blip in the process of going green and for tech taking a larger part of the economic opportunities.
By 2035, the State of California will ban the new sale of gas-powered vehicles giving way to a beautiful renaissance of EVs helmed by the CEO of Tesla Elon Musk.
It’s likely that half of California residents will be driving a Tesla by 2035 and these energy breakages only speed up the process of adoption.
These same tech CFOs are already talking about outfitting their offices with an array of the best solar panels that money can buy as well as recommending that employees choose a more efficient fuel-consuming automobile to drive.
Adapt or stagnate.
Global Market Comments
September 7, 2022
Fiat Lux
Featured Trade:
(A NEW THEORY OF TESLA, or WHY I’M RAISING MY TARGET TO 1,000)
(TSLA)