Xpeng AeroHT, an affiliate of Xpeng, aims to deliver its flying car to customers in 2026.
In 2023, Xpeng AeroHT introduced the Land Aircraft Carrier – a large truck with a flying two-seater passenger electric drone inside.The flying car can detach from the truck, and people can then get into the drone and fly it.
Brian Gu, co-president of Xpeng is confident about its uptake.He argued that this vehicle is not for use in urban centres, but mainly for the outskirts in scenic areas.He went on to say that “we will work with municipalities to create flying parks and flying zones that allow people to enjoy flying without the hassle of getting all the complicated approvals.”
Xpeng stated that the flying car is currently going through a certification process with the Chinese aviation regulator.
It’s been made clear that passengers will not require a special license to fly the drone for initial use.
The company is using leisure and sports-related use cases for the initial use of that flying device.Of course, if you move closer to an urban area then you do need special licenses.Securing approval gets complicated then.
Robotics and flying cars are part of Xpeng’s long-term goal.
Most people don’t use the term “flying car”, rather the acronym, eVTOL is used, which stands for:
electric
vertical
Take
Off and
Landing
Interestingly, more than 400 companies and innovators have registered eVTOL designs and they have attracted billions of dollars in funding over the last decade. Amongst the investors are famous people including LinkedIn co-founder, Reid Hoffman, and musician, WILL.I.AM, andF1 champion, Nico Rosberg.
Companies investing in this space include Uber, Airbus, Toyota, and American Airlines among others.
If forecasts are correct the eVTOL market will grow from $ 1.2 billion in 2023 to $22.4 billion in 2030.That equals an annual average growth rate of 52%.
To reach that target, companies need to work with regulators – the Civil Aviation Administration of China, the US Federal Aviation Administration, and the European Union Safety Agency have laid out various certifications these vehicles will need to meet before taking to the skies.
Type certification- refers to the model design.
Production- Regulators will also want oversight on the production of the vehicles.
Operational Authorization - Pilots may need a special license to operate them.
Air Traffic Infrastructure – how do we fit these vehicles into the skies?
Infrastructure is also paramount – eVTOLS will need a place to take off and land and recharge.
Microscale airports have been proposed.
The final barrier to this industry taking off is public acceptance.eVTOLS won’t truly take off until people feel comfortable stepping into one.
There was probably no more broken promise in the investment world over the last several years than that energy master limited partnerships (MLPs) would hold up even if the price of oil fell.
These guys were toll takers, it was said, and profited from the volume of crude pumped through their pipelines. The price of oil was somebody else’s problem.
In any case, double-digit yields would provide more than ample support in any kind of sell-off.
It didn’t quite work out like that.
Once the price of Texas tea (USO) began its plunge in 2014 from $107 to negative $37 at the pandemic low, any investment tarred with an oil connection got slaughtered.
It was the classic flash fire in the movie theater.
Bids for MLP’s vaporized.
Making matters worse is that many retail investors bought highly leveraged MLPs on margin, turning 10% yields into 20% ones. When the sushi hit the fan, it didn’t take long for those positions to go to zero.
Most of the leveraged plays went bankrupt or were unwound in a variety of creative ways with enormous losses.
I always find it a useful exercise to sift through the wreckage of past investment disasters. Not only are there valuable lessons to be learned, but sometimes great trades emerge.
I have been doing that lately in the energy sector, a hedge fund favorite these days, and guess what?
MLPs are back. And no, I’m not talking about the Maui Land and Pineapple Company (MLP) (yes, there is such a thing!).
But these are not your father’s MLPs.
Let me start with my investment thesis.
It is always better to invest in an asset class that has its crash behind it (energy) than ahead of it (the US dollar).
And let’s face it, the final bottom for oil this year at $68 is in.
We may bounce around a bottom for a while as recession fears prevail. But eventually, I expect a global synchronized economic recovery to take it sustainably higher, $100 a barrel or better.
And while I have never been a fan of OPEC, they are showing rare discipline in honoring the production quotas negotiated in November.
That eliminates much of the downside from MLPs and makes it one of the more attractive risk/reward trades out there.
Except that this time it’s different.
Thanks to hyper-accelerating technology (yes, there’s that term again), new wells employ a fraction of the labor of the old ones and are therefore more profitable.
That means they can function, and even prosper, with a much lower oil price.
The surviving MLPs are now a much better quality investment.
Balance sheet quality has improved as a result of deleveraging in the last 14-18 months, and the worst of the rating downgrade cycle is likely behind us.
Importantly, some $50 billion‒$60 billion of growth opportunities for MLPs are expected during FY2024-2025.
That makes the industry one of the great secular growth stories out there today.
As an old fracker myself, I can tell you that the potential of the revolutionary new technology has barely been scratched.
Thanks to technology that is improving by the day, Saudi Arabia’s worth of energy reserves remains to be exploited, potentially turning the US into an energy-exporting powerhouse as the world’s largest producer at 13 million barrels a day.
Industry experts expect MLP distributions to grow by 3%‒5% annually over the coming years. Few other industries can beat this.
That means avoiding upstream Exploration and Production companies; where there is still a ton of risk, and placing your bets on midstream companies that operate pipelines. And by midstream, I don’t just mean pipelines but also processing facilities for natural gas liquids and storage and terminal facilities.
You especially want to look at companies with high barriers to entry and attractive assets in high-growth and low-cost production regions. I’m all about big moats (see (NVDA)).
Companies with a sustainable cost advantage, operated by experienced management with proven geological are further pluses.
MLPs also stack up nicely as a diversifier for your overall portfolio.
Over longer time periods, MLPs have generated similar returns to equities, with similar to slightly higher levels of volatility.
Historically they have traded at lower yields than high-yield bonds, but currently, they are yielding 150 basis points more.
And now for the warning labels.
This is not a new story.
As you can see from the charts below, MLPs have been rallying hard since oil bottomed at the pandemic low in April 2020.
And if my oil forecast is wrong and we plumb new generational lows once again, investment in this sector will suffer.
Still, with yields in the 7%-10% range, a certain amount of pain is worth it.
Still interested?
Take a look at the Alerian MLP ETF (AMLP) (7.36%) and the Global X MLP Energy Infrastructure ETF (MLPX) (4.91%), Western Midstream Partners (WES) (9.20%), and Energy Transfer LP (ET) (7.96%).
https://www.madhedgefundtrader.com/wp-content/uploads/2017/02/Pipelines-e1487795183955.jpg266400The Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngThe Mad Hedge Fund Trader2024-05-22 09:02:042024-05-22 12:36:59The Rebirth of the Master Limited Partnership
Well, well, well, look who's decided to crash the obesity-drug party. Roche (RHHBY), the Swiss pharmaceutical giant, has just unveiled some pretty impressive early-stage results for its weight-loss drug, CT-388. And let me tell you, this could be the start of something big.
Now, I know what you're thinking: "Another weight-loss drug? Yawn." But trust me, this is no ordinary contender.
In a small trial, patients who received CT-388 saw an average placebo-adjusted weight loss of 18.8% after just 24 weeks. That's right, 18.8%.
While it's hard to compare trials, experts are saying these numbers might even give Eli Lilly's (LLY) Zepbound, the current king of the market, a run for its money.
Let's take a step back and look at the bigger picture. The obesity drug market has been on fire lately, with everyone going gaga over these miracle pills.
Lilly and Novo Nordisk (NVO) have been dominating the scene with their drugs, Zepbound and Wegovy, but that hasn't stopped a whole host of other companies from trying to get a piece of the pie.
Merck (MRK), Sanofi (SNY), Abbott Labs (ABT), and Eisai have all tried their hand at weight-loss drugs and ultimately thrown in the towel.
More recently, Pfizer's (PFE) daily oral pill, danuglipron, has faced hurdles due to side effects. Amgen's (AMGN) drug, MariTide, is in Phase 2 studies and showing promise. And let's not forget Viking Therapeutics' (VKTX) VK2735, which has earned the nickname "twincretin" for its dual targeting of GLP-1 and GIP receptors.
So, what makes Roche's CT-388 so special?
Well, for starters, it's a GLP-1/GIP receptor agonist, which is similar to Lilly's Zepbound. In the Phase 1 trial, all participants achieved more than 5% weight loss, with 85% losing more than 10%, 70% shedding more than 15%, and a whopping 45% dropping more than 20% of their body weight. That's some serious weight loss.
Of course, there were some side effects, mainly mild to moderate gastrointestinal issues, but hey, that's the price you pay for looking fabulous, right? Roche is also testing CT-388 in patients with Type 2 diabetes, so stay tuned for updates on that front.
Now, I know you're all dying to know how CT-388 stacks up against the competition.
Notably, the drug's data looks strong compared to earlier studies of Zepbound. In fact, CT-388's efficacy results appeared "numerically higher" than Zepbound's.
But let's not get ahead of ourselves. Lilly still has a multi-year lead on Roche, so CT-388 isn't an immediate threat. However, it does suggest that the future of this rapidly growing market is up for grabs.
Now, let's talk about Roche. It’s the world's seventh-largest pharma company by market cap, sitting at around $205 billion. They pulled in $65 billion in revenue in 2023, second only to Johnson & Johnson (JNJ).
But here's the kicker—they've been struggling with growth, and their share price has taken a hit, down more than 25% over the past three years.
Contrast that with Eli Lilly and Novo Nordisk. Lilly's share price shot up 290% in three years, and Novo's climbed 226%.
Even though their revenues were less than half of Roche's in 2023, their market caps are sky-high. Why? Because of their blockbuster GLP-1 agonist drugs, Zepbound and Wegovy, which have shown jaw-dropping weight-loss results.
But could CT-388 be the underdog story Roche needs?
With the obesity market estimated to reach a staggering $100 billion by 2030, and over 1 billion people worldwide suffering from obesity, the potential is enormous.
Of course, there's still a long way to go for CT-388. Cross-trial comparisons can be tricky, and Roche's Phase 1 trial was much smaller than Lilly's pivotal study of Zepbound.
Plus, we don't have all the juicy details on patient characteristics, dose titration, and long-term weight loss just yet.
But here's the thing: Roche has scale and infrastructure on its side. It could potentially outmuscle smaller players like Viking and Boehringer Ingelheim.
And if CT-388 can match or even surpass the performance of current and future GLP-1 agonists? Well, let's just say those peak revenue forecasts might be in for a surprise.
So, is Roche the dark horse you should bet on in the obesity-drug race? If you're looking to get in on the action without paying the premium commanded by Lilly and Novo, or taking on the higher risk of smaller players, Roche might just be the ticket.
With promising mid-single-digit revenue growth on the horizon and a strong position in other areas like oncology and autoimmune disorders, Roche could be a smart play for anyone keen on the obesity drug market.
As for me? Well, you know I love an underdog story. And CT-388 might just be the Cinderella story of the year. I suggest you buy the dip.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-05-21 12:00:422024-05-21 12:21:44The Fat's In The Fire
Those were really great trade that just expired, the longs in gold (GLD) and silver (SLV) and the short in Microsoft (MSFT). I made some good money. Thankyou. Enjoy the weekend.
For those of you fortunate enough to get into the January 17, 2025 $42-$45 vertical bull call debit spread LEAPS when I first recommended them ten months ago on July 25, 2023, you are now at 71% of your maximum potential profit. That means the LEAPS you bought for $1.40 last year is now worth $2.60, a gain of 85.71%.
If you are an active trader, you may want to take profits on the massive 20% rise in silver over the past 10 days. Metal producers are unable to rush supplies to the market fast enough to cover their shorts in the futures market, creating a massive short squeeze. These are conditions that most silver investors only dream about.
Long may it continue.
If you are cash-heavy, you may want to run this position eight more months into the January 17, 2025 option expiration and capture the full 114% profit over a total of 18 months. As long as silver prices stay over $45, this will be a big win.
For those new to the service, please find the full text of the July 25, 2023 trade alert below.
Mad Hedge AI
Trade Alert - (WPM) – BUY
BUY the Wheaton Precious Metals (WPM) January 2025 $42-$45 out-of-the-money vertical Bull Call spread LEAPS at $1.40 or best
Opening Trade
7-25-2023
expiration date: January 17, 2025
Number of Contracts = 1 contract
It's easy to see why AI picked this trade.
Look at the chart below and you see a perfect inverse head and shoulders in place. There is also a golden cross setting up in a month or so, with the 50-day moving average charging towards to 200-Day.
AI knows that human buyers love these things.
The entire interest rate-sensitive sector has been walloped over the last three months over fears that the Fed will keep interest rates higher for longer. That is now in the price of the gold miners.
This position is a bet that our nation’s central bank will embark on a path of interest rate CUTS sometime in the next 18 months. And the shares of Barrack Gold (GOLD) only have to return to where they were in March for the position to hit max profit.
While the chance of winning a real lottery is something like a million to one, this one is more like 10:1 in your favor. And the payoff is a double in little more than a year. That is the probability that (WPM) shares will rise over the next 18 months.
The logic behind this LEAPS is fairly simple.
After keeping interest rates too low for too long, then raising them too far too fast, what does the Fed do next? It then lowers interest rates too far too fast. In other words, a mistake-prone Jay Powell will keep on making mistakes. That’s what you get with a Fed chair who only has a degree in political science.
The rate of interest rate rises has been the most rapid in history and is possibly going to trigger a modest recession by the end of 2023. When the recession hits, demand for money will dry up and interest rates will collapse. Yields on ten-year US Treasury bonds that bottomed at 0.32% in 2020 and reached a peak of 4.46% in October will easily fall back down to 2.50% by the time this LEAPS matures.
And guess which asset class is one of the most sensitive to falling interest rates? That would be precious metals, especially gold. A drop in interest rates of this magnitude should allow the price of Barrick Gold to double. That’s where we were in March of 2021 when (GOLD) traded at $30.
Another factor driving down interest rates is the fact that the US government budget deficit is shrinking at the fast rate in history, down from $3 trillion to $1.5 trillion in the past year. A shrinking supply of bonds brings higher bond prices and lower interest rates.
I am therefore buying the Wheaton Precious Metals (WPM) January 2025 $42-$45 out-of-the-money vertical Bull Call spread LEAPS at $1.40 or best.
Don’t pay more than $1.80 or you’ll be chasing on a risk/reward basis.
During bull markets in precious metals, silver historically rises 2.5 faster than gold.
Wheaton Precious Metals Corp is a Canadian multinational precious metals streaming company. It produces over 26 million ounces and sells over 29 million ounces of silver mined by other companies (including Barrick Gold and Goldcorp) as a by-product of their main operations.
The silver (WPM) has agreed to purchase is in Mexico (40%), Portugal (20%), USA (10%), Chile (9%), Peru (9%), Argentina (7%), Sweden (4%), Greece and Canada (about 1%). (WPM) doesn't own or operate the mines but the contracts it has with their owners give it full access to any silver (gold at the Minto Mine) mined there. For more about Wheaton Precious Metals (WPM), please visit their website by clicking here.
Please note that these options are illiquid, and it may take some work to get in or out. Executing these trades is more an art than a science.
Let’s say the Wheaton Precious Metals (WPM) January 2025 $42-$45 out-of-the-money vertical Bull Call spread LEAPS are showing a bid/offer spread of $1.00-$2.00, which is typical. Enter an order for one contract at $1.20, another for $1.30, another for $1.40, and so on. Eventually, you will enter a price that gets filled immediately. That is the real price. Then enter an order for your full position at that real price.
A lot of people ask me about the appropriate size. Remember, if the (WPM) does NOT rise by 4.12% in 18 months, the value of your investment goes to zero. The way to play this is to buy LEAPS in ten different names. If one out of ten increases ten times, you break even. If two of ten work, you double your money, and if only three of ten work, you triple your money.
You never should have a position that is so big that you can’t sleep at night, or worse, need to call John Thomas asking if you should sell at a market bottom.
There is another way to cash in. Let’s say we get half of your 4.12% in the next six months, which from these low levels is entirely possible. Then you could earn half of the maximum potential profit in months. You can decide whether to keep the threefold return or go for the full ten bagger. It’s a nice problem to have.
Notice that the day-to-day volatility of LEAPS prices is miniscule since the time value is so great. This means that the day-to-day moves in your P&L will be small. It also means you can buy your position over the course of a month just entering new orders every day. I know this can be tedious but getting screwed by overpaying for a position is even more tedious.
Look at the math below and you will see that a 4.12% rise in (GOLD) shares will generate a 114% profit with this position, such is the wonder of LEAPS.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
This is a bet that the (WPM) will not fall below $45 by the January 17, 2025 option expiration in 18 months.
Here are the specific trades you need to execute this position:
Buy 1 January 2025 (WPM) $42 calls at………….………$9.00
Sell short 1 January 2025 (WPM) $45 calls at…….……$7.60
Net Cost:………………………….………..…........……….….....$1.40
Potential Profit: $3.00 - $1.40 = $1.60
(1 X 100 X $1.60) = $160 or 114% in 18 months.
https://www.madhedgefundtrader.com/wp-content/uploads/2024/05/pure-silver-r.png536718april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-05-21 09:02:502024-05-21 10:33:10Update on the WPM January 17, 2025 $42-$45 LEAPS
“Gold is my cash. Over the long term it is not the best investment. But when you are having a monetary crisis it should be part of every portfolio,” said hedge fund legend, Ray Dalio of Bridgewater Associates.
https://www.madhedgefundtrader.com/wp-content/uploads/2024/05/money-burning.png464400april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-05-21 09:00:412024-05-21 10:32:38May 21, 2024 - Quote of the Day
In a world increasingly shaped by artificial intelligence (AI), Morgan Stanley has emerged as a guiding light for investors seeking to capitalize on this transformative technology. The investment bank's comprehensive analysis of the AI landscape has identified a diverse portfolio of global stocks poised to reap the rewards of the AI boom. This meticulously curated selection spans multiple industries and geographies, offering investors a multi-faceted approach to navigating this burgeoning market.
Decoding Morgan Stanley's AI Investment Thesis
At the heart of Morgan Stanley's AI investment strategy lies a deep understanding of the technology's far-reaching impact on various sectors. The bank's research team has meticulously dissected the AI ecosystem, identifying key trends, growth drivers, and potential disruptors. This rigorous analysis has led to the identification of companies that are not merely adopting AI, but are actively shaping its trajectory through innovation and strategic positioning.
Morgan Stanley's approach is not confined to a single industry or region. The bank's global outlook recognizes that AI's transformative power is not limited by geographical boundaries. As a result, their stock picks encompass a diverse array of companies worldwide, each contributing to the AI revolution in unique ways. This diversified approach mitigates risk while maximizing exposure to the various facets of the AI boom.
The Pillars of Morgan Stanley's AI Portfolio
Data Infrastructure Powerhouses: Recognizing that data is the lifeblood of AI, Morgan Stanley has identified companies that are building and operating the robust infrastructure required to store, process, and analyze vast amounts of information. These companies are laying the foundation for AI-powered applications across industries, from healthcare to finance.
Semiconductor Giants: The computational demands of AI are immense, and semiconductor companies are at the forefront of developing specialized chips and processors that power AI algorithms. Morgan Stanley's portfolio includes leading semiconductor manufacturers that are enabling the next generation of AI-driven innovations.
Software Innovators: AI's true potential is unlocked through sophisticated software algorithms that can learn, reason, and make decisions. Morgan Stanley has identified software companies developing cutting-edge AI platforms and tools, empowering businesses to harness the power of AI for enhanced efficiency and decision-making.
AI-Driven Applications: Beyond the core infrastructure and tools, Morgan Stanley's picks also include companies that are applying AI to specific industries and use cases. This includes healthcare companies leveraging AI for diagnostics and drug discovery, financial institutions using AI for risk assessment and fraud detection, and retailers deploying AI for personalized customer experiences.
Spotlight on Key Picks
While Morgan Stanley's AI portfolio is diverse, several companies have emerged as particularly compelling investment opportunities:
Nvidia: A global leader in AI computing, Nvidia's graphics processing units (GPUs) are the workhorses behind many AI applications. The company's strong focus on AI research and development, coupled with its dominant market position, makes it a cornerstone of Morgan Stanley's AI strategy.
Microsoft: With its Azure cloud platform and investments in AI research, Microsoft is well-positioned to capitalize on the growing demand for cloud-based AI solutions. The company's recent integration of OpenAI's ChatGPT into its products further solidifies its commitment to AI innovation.
Amazon: As the world's leading cloud provider, Amazon Web Services (AWS) offers a comprehensive suite of AI services, making it a preferred choice for businesses looking to leverage AI in the cloud. Amazon's vast data resources and commitment to AI research also contribute to its strong position in the AI market.
Alphabet: The parent company of Google, Alphabet is a major player in the AI landscape. Google's AI research arm, DeepMind, is responsible for groundbreaking advancements in AI, and the company's various products and services are increasingly infused with AI capabilities.
Navigating the AI Landscape with Confidence
Morgan Stanley's carefully curated AI portfolio is more than just a collection of stocks; it's a strategic roadmap for investors seeking to navigate the complexities of the AI boom. By diversifying across industries, geographies, and AI sub-sectors, the bank's approach offers a balanced and comprehensive exposure to this transformative technology.
However, investing in AI has its challenges. The rapid pace of technological change, the evolving regulatory landscape, and the ethical considerations surrounding AI all present potential risks. Morgan Stanley's research team is acutely aware of these challenges and continuously monitors the AI landscape to identify emerging trends and mitigate potential risks.
Conclusion
As the AI revolution unfolds, Morgan Stanley's strategic playbook provides investors with a valuable tool to navigate this uncharted territory. By combining in-depth research, a global perspective, and a diversified approach, the bank has identified a portfolio of stocks that are poised to ride the wave of the AI boom. While challenges remain, the potential rewards of investing in AI are immense, and Morgan Stanley is well-positioned to guide investors toward a successful AI investment journey.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Douglas Davenporthttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDouglas Davenport2024-05-20 17:14:162024-05-20 17:28:31Morgan Stanley's Strategic Playbook: Navigating the AI Boom with Global Stocks
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