October 2023 Archive - Mad Hedge Fund Trader

A Good Tech Stock For the Long Term

Uber is an interesting tech stock that readers need to look at for the long haul.

Even though in today’s tech market, there are many exogenous events creating uncertainty, any big dip in Uber should be looked at as a cheaper price to buy into the stock.

From 2021 to 2022, Uber’s gross revenue went from $17 billion per year to $32 billion per year and that has really set the tone for the company.

The upward trajectory in revenue has cemented Uber as a stable company and has allowed it to shed the label of a speculative company.

Showing revenue stability has gone a long way in 2023.

The performance of the stock has superseded anybody’s wildest dreams.

Uber is solidly on its way to surpass its 2021 peak of $60 per share from the $44 per share today.

That’s not to say they won’t have some down periods along the way.

After an abysmal year for investors in 2022, when rising interest rates completely shut down interest in growth tech stocks, this year has brought some renewed optimism.

The transportation-as-a-service business is experiencing strong momentum right now following impressive financial results.

In the second quarter of 2023, Uber's revenue of $9.2 billion was 14% higher than in the year-ago period.

The business was finally able to register its first-ever operating profit, as this metric came in at $326 million for the quarter. And perhaps even more impressive, Uber produced a record $1.1 billion of free cash flow.

The bulls are optimistic as a result of these positive financial metrics, as the company appears to have reached a tipping point where profits will reoccur in the future.

CEO Dara Khosrowshahi has successfully found ways to cut costs.

Uber spent $8.9 billion in the most recent quarter on all of its costs and expenses which wasn’t a penny more than the same time last year.

Yet the sales base is much higher right now. That's an early sign that the business is scaling up in an efficient manner

Uber is a captivating investment because of just how essential it has become to the daily lives of millions of people.

It's hard to imagine what life was like before Uber existed, as its services are so entrenched around the world.

This superior customer value proposition gives me confidence that Uber isn't going away anytime soon and that maybe its importance will only expand over time.

In Q2, Uber had 137 million monthly active platform consumers (MAPCs), up 12% year over year, who spent $33.6 billion in gross booking value on the app and took 2.3 billion trips.

Plus, there were 6 million drivers and couriers who worked for the app in the three-month period. That goes to show you just how big this platform really is.

Uber also benefits from having an economic moat, which helps it fend off rivals like Lyft. As more riders join the platform, it becomes increasingly valuable to drivers.

Granted, we are in a tough trading time with almost daily reminders that the world is a volatile place. This does not help tech stocks grow and investors sometimes flee to fixed income.

If Uber does deliver investors a big dip, it would be a great chance to hop into some shares.

October 13, 2023 - Quote of the Day

Tech Letter

“Imagination is the limit. Go out there and create some magic.” - Said Elon Musk

October 13, 2023

Jacque's Post

(A WARMING CLIMATE IS BAD NEWS FOR THE CACAO TREE)

October 13, 2023

Hello everyone,

Does your morning routine involve a cup of coffee?

Well, be prepared. The warming climate will impact the price of those coffee beans you purchase. And ponder this - a dwindling production of chocolate may well be part of your future.

El Nino and climate change are bad news for coffee crops, which are highly sensitive to weather changes. Hotter temperatures and shifts in rainfall patterns can also damage cocoa pod development and promote the spread of pests and diseases.

The latest El Nino Southern Oscillation outlook does not look good. El Nino is expected to last from January to March 2024, with a 71% chance that it will intensify from November to January.

The knock-on effect of this is that greatly intensified and frequent El Nino could well reduce the amount of arable land for cocoa cultivation. The climate factor not only poses a threat to food security but also endangers the livelihoods of farmers. West African countries are particularly at risk from extreme weather changes.

Jonathan Haines, who is the research director at Gro Intelligence, points out that El Nino conditions “are often historically associated with drier conditions in West Africa where three-quarters of the world’s cocoa is produced.”

Africa accounts for 75% of global cocoa production, while the Americas, which includes Brazil and Ecuador, account for only 20%. Asia-Pacific produces the remaining 5% with Indonesia and Papua New Guinea being the largest producers in the region.

Cocoa comes from the seed of the cacao tree and is an essential ingredient for chocolates. But cocoa butter, which is a by-product of cocoa processing, is also widely used in the pharmaceutical industry for skincare products and cosmetics.

The financial damage of climate change will be costly for this soft commodity, since top cocoa producers like Ivory Coast, Ghana, and Indonesia, are vulnerable to extreme weather conditions. As profits from cocoa make up 70% to 100% of Ghanaian cocoa producers’ income, any decline in yields will have a substantial impact on their livelihoods. Climate change is also wreaking havoc in Indonesia where it is reducing productivity by 50%, leading to an estimated loss of $666 per hectare, affecting up to one million hectares.

Cocoa prices have already jumped significantly to “high premiums” according to the International Cocoa Organisation.

At the end of August, ICCO’s latest data showed that cocoa futures settled at $3,730 per tonne in London, and $3,633 per tonne in New York. That amounts to a 78% rise from $2,095 per tonne in London a year ago and a nearly 50% year-on-year rise from $2,427 per tonne in New York.

Prices of cocoa are at their highest in 50 years, according to a Reuters report.

Agricultural adaptation and mitigation efforts are some ways that farmers can tackle specific climate threats, but they are costly.

Private sector capital and non-profit initiatives can help alleviate the financial burden on cocoa farmers learning to adapt to climate change. The Rainforest Alliance, a non-governmental organisation, started the Restore project in Cote d’Ivoire and Ghana. The project has set aside $7 million to help 15,000 farmers manage 50,000 hectares of farmland and aims to expand tree cover in cocoa production landscapes across the two countries.

This year rain has helped ease the impact of drought to some extent in West African countries. The cacao tree thrives in humid rainforest-like conditions, relying on heavy rainfall close to the equator. But the threat of rising temperatures over the next three decades means a loss of moisture in the ground which scientists tell us will not be made up by rain. A temperature rise of just 2.1C over the next 30 years caused by global warming could spell an end for the chocolate industry worldwide, according to the US National Oceanic and Atmospheric Administration. In the face of climate change and changing weather patterns, ongoing adaptation efforts will be needed in agricultural land management if we are to maintain consistent production of soft commodities.

A world without chocolate and coffee – ugh!

Wishing you all a wonderful weekend.

Cheers,

Jacquie

October 13, 2023

Diary, Newsletter, Summary

Global Market Comments
October 13, 2023
Fiat Lux

Featured Trade:

(THE JOHN THOMAS BIOGRAPHY IS OUT)
(THE EIGHT WORST TRADES IN HISTORY),
(TESTIMONIAL)

Tech Alert - (NFLX) October 12, 2023 - STOP LOSS - SELL

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

October 12, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
October 12, 2023
Fiat Lux

Featured Trade:

(BARKING UP THE RIGHT STOCK)
(ZTS), (MRK)

Barking Up The Right Stock

Biotech Letter

When I search for investment opportunities, it's rare for an old article to capture my attention. Yet, an article from The Wall Street Journal in January titled "Americans Can't Stop Pampering Their Pets - Companies Want In" has lingered in my thoughts. While the sentiment of treating pets as family isn't new, the financial implications of this trend are profound.

The global animal healthcare market, a sector once overlooked, has now burgeoned into a significant investment avenue. Recent data reveals the global animal healthcare market size was worth $40.21 billion in 2022.

Astoundingly, it's projected to soar to $84.98 billion by 2030, growing at a CAGR of 9.81%. This growth isn't just a fluke; it's propelled by rising animal health expenditure, increasing prevalence of diseases in animals, concerns over zoonoses, and strategic initiatives by industry giants.

A case in point: In January 2023, Merck (MRK) inaugurated a state-of-the-art manufacturing facility in Boxmeer, Netherlands, specifically for companion animal vaccines, responding to surging global demand.

But what's driving this demand? The answer lies in our plates and our living rooms.

On one hand, there's a rising global appetite for animal protein. While plant-based diets are gaining traction, the majority still lean towards animal-derived sources like eggs, meat, and milk. On the other hand, the human-animal bond has never been stronger, especially with pets. This bond translates to a willingness to spend on their well-being, ensuring they receive the best care possible.

Enter companies like Zoetis Inc. (ZTS). As the world's premier provider of animal medicines, vaccines, and diagnostic products, Zoetis stands at the forefront of this booming market.

With an impressive portfolio boasting over 300 product lines, including 15 blockbuster drugs, Zoetis has strategically positioned itself in two pivotal markets: companion animals (our beloved cats and dogs) and livestock (primarily cattle). Their dominance isn't just regional; they lead in North America, Latin America, and Asia.

To provide a snapshot of their market prowess, Zoetis recently highlighted that pet expenditure remains unaffected even in economic downturns, where household budgets shrink by 20%.

This resilience proves the anti-cyclical nature of the animal health sector, especially the companion animal segment. Concurrently, the livestock market is set to flourish, driven by a global population surge.

By 2050, with 2 billion more mouths to feed, the demand for healthcare products for livestock will inevitably skyrocket.

Notably, Zoetis isn't just riding the wave; they're steering it. Their growth strategy is clear: sustain a 3-point premium over market growth in the long term. This ambition is backed by a robust product portfolio, continuous innovation, and a keen understanding of market dynamics. Their focus isn't just on current market leaders like parasiticides but also on potential future heavyweights in areas like atopic dermatitis, cardiovascular diseases, chronic kidney diseases, and oncology.

So, what does this mean for investors?

Zoetis' financial trajectory is promising. Their revenue forecast for this year stands between $8.575 billion and $8.725 billion, marking a 6% to 8% rise.

Their earnings per share is also set to climb, with projections between $5.03 and $5.14, up from $4.49 in 2022.

Moreover, their consistent dividend hikes, with a recent 15% increase to $0.38, signal a company that's not only growing but also rewarding its shareholders.

Overall, with its blend of resilience and growth, the animal healthcare market presents a compelling investment opportunity. Zoetis, with their strategic vision, robust product portfolio, and financial strength, is poised to lead this sector. For investors eyeing long-term growth coupled with stability, adding this company to your portfolio is undoubtedly a prudent move. I recommend you buy the dip.

October 12, 2023

Diary, Newsletter, Summary

Global Market Comments
October 12, 2023
Fiat Lux

Featured Trade:

(MONDAY, OCTOBER 30 SARASOTA, FLORIDA GENERAL JAMES MATTIS STRATEGY LUNCHEON)
(WHY TECHNICAL ANALYSIS DIS A DISASTER)
(SPY), (QQQ), (IWM), (VIX),
(TESTIMONIAL)

SOLD OUT - Monday, October 30 Sarasota, Florida General James Mattis Strategy Luncheon

Diary, Lunch, Luncheon, Newsletter

SOLD OUT

Come join me for lunch at the Mad Hedge Fund Trader’s Global Strategy Luncheon, which I will be conducting in Sarasota, Florida on Monday, October 30, 2023. The cost of the luncheon will be $329.

My guest will be General James Mattis, a 48-year Marine Corps veteran, one of our country’s most distinguished soldiers, and America’s most recent Secretary of Defense.

This time things will be a little different. General Mattis and I will be fielding questions about the current state of the world. We will be joined by General Mattis’s former Chief of Staff, Lieutenant General Robert Ruark.

We should make quite an interesting threesome. General Mattis will also be providing some fascinating personal insights during his time in the White House.

An excellent meal will be followed by a wide-ranging discussion and an extended question-and-answer period.

This is a rare opportunity for you to have one-on-one contact with the top brass. Making things interesting is that I will have just returned from the front lines of the War in Ukraine, hopefully with all limbs still attached. There should be a lot to talk about.

I’ll be arriving on time and leaving late in case anyone wants to have a one-on-one discussion, or just sit around and chew the fat about the financial markets.

The lunch will be held at an exclusive Sarasota hotel. The precise location will be emailed with your purchase confirmation. Mad Hedge guests will be assigned their own dedicated table in a ballroom with 200 other participants.

I have been allocated only ten tickets for this event so if you have the slightest interest in attending, please purchase your ticket immediately. They are likely to sell out fast.

I look forward to meeting you, and thank you for supporting my research.

~~To purchase tickets for this luncheon, please click on the BUY NOW! button above or click here.~~

October 11, 2023

Jacque's Post

(PLANT EXTINCTIONS COULD THREATEN THE CREATION OF MEDICINES)

October 11, 2023

Hello everyone,

Welcome to a future world with far less plant variety.

Dr Brown is one of the researchers who works at the Royal Botanic Gardens, Kew, who, along with others, has recently published a new report called State of the World’s Plants and Fungi.

The report has warned that we could potentially lose up to half of future medicines because of plant extinctions.

Nearly half of all plants that flower are at risk, amounting to more than 100,000 while it is believed around 77% of all those as yet undescribed by science are at risk.

Some are going extinct between the time of their discovery and when they are catalogued – which takes around 16 years on average.

The main cause of the extinctions is habitat loss, such as deforestation or the construction of dams which flood areas upstream.

We must remember that nine out of ten of our medicines come from plants, so we are potentially losing up to half of our future medicines.

Professor Alexandre Antonelli, director of science at Kew, said: “We know more about the surface of Mars than we know about fungi on this planet.”

Scientists state that at the current rate of scientific description it would take 750-1000 years to catalogue all fungal species.

Scientists have described 10,200 new fungal species and more than 8,600 species of plants since the pandemic in 2020, as lockdowns gave them more time to work through the backlog of found but unclassified samples.

Plants and fungi provide the cornerstone of all ecosystems of human life, supporting our livelihoods and providing us with food, medicine, clothing, and raw materials. So, protection of areas with important plant diversity should be of utmost significance.

With only around 10% of the world’s fungal biodiversity so far described, we could be missing out on species with game changing functions – like ones with enzymes that can break down plastic or cure diseases.

Scientists hope the research will encourage policy makers to take plants and fungi into account when choosing areas to protect as part of an international goal to protect 30% of the planet by 2030 and not just focus on animals.

From destruction of habitat to futuristic transport creation.

Imagine this – a 1,200-mile underwater train line in the deep blue sea, with a view of marine life as you travel at high speeds to your destination.

This is exactly what the UAE (United Arab Emirates) have planned. It was first discussed in 2018 as a hypothetical idea, but now it’s quickly becoming a reality, and it will cost a lot of cash.

The UAE is widely known for their technology, construction, and infrastructure in the Middle East.

With this futuristic mode of transport, exchange of goods and oil exports are feasible as well as movement of people. By joining the Indian city of Mumbai with Fujairah through ultra-speed floating trains, the projects aim to boost bilateral trade. There will be export of oil to India from Fujairah port and import of excess water from Narmada River, north of Mumbai.

The total length of the rail network will be less than 2,000km but the underwater part of the construction could pose unique challenges. Feasibility studies are still being done.

Happy mid-week.

Cheers

Jacquie

Prayers for all those affected by conflict in The Middle East and Ukraine.