July 2024 Archive - Mad Hedge Fund Trader

THE “SILVER” LINING

(AMD), (NVDA), (INTC), (AMZN), (MSFT), (GOOG), (GOOGL)

Why did Advanced Micro Devices (AMD) acquire Silo AI? Because they needed a place to store all their extra cash! Just kidding.

You might be thinking, "Why would AMD spend €613.7 million ($665 million) on a company named after a grain storage container?"

But trust me, this acquisition is no joke. It's a strategic move that could help AMD give Nvidia (NVDA) a run for its money in the AI chip market.

You see, AMD has been trailing behind Nvidia in the AI chip market, and they needed a secret weapon to level the playing field. That's where Silo AI comes in.

This little-known Finnish startup has been quietly making waves in the AI world, and AMD saw their potential to help them catch up to and even surpass Nvidia.

For those of you who've been living under a rock (or perhaps just enjoying a balanced portfolio), AMD just dropped €613.7 million - that's about $665 million for us Yanks - to snag Silo AI.

Let me break it down. AMD's already got a thoroughbred in its stable with the Instinct MI300X GPU. This beauty helped drive $2.3 billion in Q1 revenues for the data center segment. Not too bad, right?

In the world of AI, though, that's like bringing a knife to a gunfight when Nvidia's packing a bazooka. This is why the Silo AI acquisition is so critical to AMD.

Silo AI has been training large language models on AMD hardware like it's going out of style. They've even got some fancy EU language models with names like "Poro" and "Viking" that sound more like craft beers than AI.

But here's the real kicker - Silo's client list includes none other than Nvidia itself. Talk about sleeping with the enemy.

Now, let's not kid ourselves. AMD, with its $300 billion market cap, is still playing catch-up to Nvidia's jaw-dropping $3.3 trillion valuation. But with Silo AI in its corner, AMD's got a real chance at cementing its position as the undisputed silver medalist in the AI race.

And let's not forget about Intel (INTC) - their Gaudi 3 might be in the running, but it's looking more like a moped competing against AMD and Nvidia's superbikes.

What's even more interesting is that AMD's not just gunning for Nvidia's data center lunch money. They're going straight for the end-users, the customers who actually generate AI revenues for cloud giants like Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOG, GOOGL).

It's like AMD's saying, "Why fight over the hardware when we can own the whole AI enchilada?"

But, will this whole Silo AI deal really help AMD overtake Nvidia? Short answer: Nope. Long answer: Not in this lifetime, pal. But that's not the point.

AMD's playing 4D chess while everyone else is playing checkers. For the first time, we might see AMD report revenues that don't come from pushing silicon. Imagine that - a chip company making money from... *drum roll*... software.

Speaking of money, let's talk numbers. AMD's got enough cash to make this all-cash acquisition without breaking a sweat. Their last quarter's levered free cash flow could cover this deal with change left over for a fancy dinner. It's pocket change for the potential upside.

However, it's important to note that AMD's revenues are more volatile than a day trader's blood pressure. We saw an 11% sequential drop from Q4 2023 to Q1 2024.

Why? Because Nvidia's supply constraints eased up, and demand flowed back to Team Green. Expect this seesaw to continue, my friends.

So, am I telling you to buy AMD? You bet your last Bitcoin I am. But listen closely - this isn't for the get-rich-quick crowd.

We're talking years, maybe even a decade, for this play to fully unfold. Every time AMD fills Nvidia's supply gaps, expect the stock to pop.

Every soft quarter? That's your chance to load up like it's Black Friday at Best Buy.

So, keep your eyes peeled for Nvidia's Q2 earnings call next month and AMD's Q2 results at the end of this month. Don't expect fireworks unless AMD shows strong sequential growth.

Remember, in the world of AI chips, today's underdog could be tomorrow's top dog. AMD might not be the fastest car on the track yet, but with Silo AI under the hood, they've got a few new tricks up their sleeve.

And in this market, sometimes being the clever underdog is just as profitable as being the reigning champ.

July 17, 2024

Tech Letter

Mad Hedge Technology Letter
July 17, 2024
Fiat Lux

Featured Trade:

(BUYER BEWARE)
(TIKTOK)

Buyer Beware

Tech Letter

Sometimes the best way to become successful at investing in technology stocks is to avoid the black swan or the big disaster.

I hate to say it but investment risk has never been higher.

One question that keeps getting rehashed that I thought I might take time to address is the rise of the TikTok influencer-adviser.

According to a brief Google search, TikTok, known in China as Douyin, is a video-sharing social networking service owned by Chinese company ByteDance.

The social media platform is used to make a variety of short-form videos, from genres like dance, comedy, and education, that have a duration from three seconds to one minute.

Unfortunately, for serious retail investors lately, content has migrated into high-stakes themes like financial education and financial advising giving rise to content that is produced by video creators to get a piece of the financial industry.

Naturally, this has brought down the quality of the financial content on the internet to historic lows simply because most of the content is marginal at best.

These promulgators often preach about their status as “trading gurus” and often leverage the hype of digital currencies to claim they are fully invested in “crypto assets” and urge anyone reading to become one of their new “cult followers.”

They are also usually paid to market a “bulletproof” financial app or certain crypto asset to avid followers without properly disclosing that they are being paid for the advertisement.

This behavior is being encouraged by the TikTok algorithms who order this type of misleading content at the top of searches simply because it gets more hits being a click-bait type of content.

The more outlandish the videos become, gloating about get-rich-quick schemes and 1,000% daily returns, the higher up in the search queries they usually populate when filtered through TikTok algorithms.

These accounts are known as financial “influencers” and post 100s of such videos every month featuring fraudulent success or minimizing the difficulty of profiting through trading and a mix or mash of everything in between.

Even some proclaim to have unlocked the holy grail of trading and “guarantee” 100% returns or your money back.

Another speaking point they like to touch on is how video watchers can “also” afford wealthy lifestyles without having to work, at least in the traditional way.

To dumb down the travails of investing and trading to something easier than pouring a glass of water is a lie.

Many of these novice investors are duped into paying for exorbitant services that are nothing more than promotional buzz offering hyped-up marketing language as specific trading advice.

Unfortunately, US regulators have turned a blind eye to what is happening on this nefarious Chinese platform, and imitators are spawned daily and are certainly incentivized to do so.

While I must admit that regulating this type of behavior on TikTok is incredibly messy, to leave this unchecked will result in massive fraud for the little guy that I try to help.

The justification for ignoring these TikTok “influencers” is because there is even worse cybercrime taking place out there and the content these influencers are peddling is straddling the gray areas of the law.

But it’s not enough, and readers need to understand the heightened risks of diving feet-first into these TikTok polar vortexes where you just get whipped around unknowingly.

Pre-emptively protect your portfolio by avoiding these TikTok trading gurus is the order of the day.

As we enter the back half of 2024, the collapse of crypto broker FTX was a reminder of the large risks associated with investing in an unknown alternative asset class.

The TikTok crypto marketers were largely being sponsored by crypto exchange FTX.

They were peddling FTX’s own digital currency that was made out of thin air.

Anyone trading in this FTX in-house digital coin known as FTT lost most of their money as the CEO of FTX Sam Bankman-Fried was extradited back to the United States and found guilty in court.

FTX’s FTT coin went from $40 at the beginning of 2022 to 80 cents on December 30, 2022, highlighting the dangers of listening to fake crypto “trading gurus” on TikTok pushing FTT coin like there is no tomorrow.

Stay vigilant and happy trading and remember, there is no free lunch in trading.

It’s hard work earning your crust of bread.

July 17, 2024

Jacque's Post

(AUSTRALIA HAS BECOME A “FOOD SUPERPOWER”)

July 17, 2024

Hello everyone,

Australia has quietly become a “food superpower” over the past decade, as local farmers have increased their output by more than 90%, according to billionaire paper, packaging, and recycling magnate Anthony Pratt.

The Australian food production industry now represents 6% of Australia’s gross domestic product (GDP).

Over the past 10 years, 1200 food factories have been built across the nation and food exports have more than doubled from $29 billion to $59 billion.

Beef exports to China over the period have grown 200%.

More than one in four Australian manufacturing jobs are in food and beverage manufacturing – and food is by far the largest manufacturing sector in our economy.

Australia has secured 11 new free-trade agreements (FTA) in recent years, including the landmark Australia-India FTA that came into effect in December 2022.

It now has 18 FTAs in place, which has helped diversify the nation’s food exports at a critical time.

Australian barley exports to ASEAN countries have tripled in the past three years and Australian lobster exports to ASEAN have quadrupled.

$300 million worth of premium wine is now also being sold to ASEAN countries for triple the price Australia would get in the American market.

Cash-free charging trial for EV drivers

One of Australia’s largest electric car-charging networks will test drive cashless technology to remove another barrier to adopting the transport technology.

Evie Networks announced plans to introduce “Auto charge” technology to more than 80% of its network on Wednesday, to be tested by a select group of users before a widespread roll-out in August.

The technology comes in addition to other industry efforts to reduce drivers’ reliance on apps at charging stations, including RFID cards that work across networks.

Evie Networks public charging head Bernhard Conoplia said the company invested in the technology after drivers expressed concerns about the complexity of charging vehicles at public facilities.

Thirty percent of Australian drivers have expressed a lack of confidence about mastering EV charging-related technology, which is why Evie Networks has prioritized activating the Auto charge feature.

The feature, which must be set up in the company’s app, is compatible with electric vehicles from brands including Tesla, BYD, MG, Volvo, and Polestar, and automatically recognizes the vehicle when users plug in a charging cable.

The feature eliminates the need to use the Evie Networks app to identify the location of the charger or an RFID (radio frequency identification) credit card to tap on a reader.

The technology would be made available to all users at 83% of its 255 charging locations in early August.

Electric cars made up eight percent of new vehicles sold in Australia during June, according to the Federal Chamber of Automotive Industries, and represented more than 50,000 vehicle sales in the first six months of the year.

Australian real estate stocks you should be watching as the Fed cuts and bond yields fall

UBS says Australian real estate stocks could benefit from expected US interest rate cuts, despite local rate cuts not anticipated until 2025.

UBS says names like Stockland, Scentre Group, and Goodman Group are attractive amid a falling yield environment.

UBS analysts said that Stockland is currently trading at a price-to-earnings ratio of 13 and is expected to deliver a 3-year EPS compound average growth rate of 7%.

TOP PERFORMING ASX 200 REITS

Ticker Company Name Last 1 Week

Cheers,

Jacquie

July 17, 2024

Diary, Newsletter, Summary

Global Market Comments
July 17, 2024
Fiat Lux

Featured Trade:

(AUGUST 5 VILNIUS LITHUANIA STRATEGY LUNCHEON)
(COULD YOU QUALIFY TO BECOME A U.S. CITIZEN?)

Could You Qualify to Become a U.S. Citizen?

Diary, Newsletter

The recent Fourth of July celebration brings back memories of my late wife’s campaign to become an American citizen 30 years ago. Kyoko originally came from Japan.

Part of the process required a verbal quiz about U.S. history and government. Our family spent a year energetically prepping her, with nightly grillings over dinner about the most obscure details of our independent form of government. She took cram courses and read a dozen prep books.

By the time the test day came, she was a veritable constitutional law scholar, and any one of us could have qualified for a seat on the Supreme Court.

I drove her up to the Federal Building in Santa Rosa, California, with the greatest trepidation. As the interviewing officer entered, the tension in the room was so thick, you could cut it with a knife.

There were only three questions:

1) What colors are in the American flag? (Answer: red, white, and blue).

2) Who was the first general of the U.S. Army? (Answer: George Washington).

(3 What are the three branches of government? (Answer: legislative, executive, and judicial).

I was stunned.

All that worked, and she got a test that a child could pass. Two months later we were in an auditorium on San Francisco’s posh Nob Hill with 1,500 others to be sworn in by a federal judge. By tradition, the ceremony is led by the oldest English applicant.

In 2008, the Bush administration revamped the test to make it a little harder in an attempt to keep immigrants out.

Here are some sample questions:

1) Who wrote the Articles of Confederation? (Answer: Alexander Hamilton).

2) How many seats are in the House of Representatives? (Answer: 435 voting, six nonvoting).

3) How many amendments are there to the Constitution? (Answer: 27).

Whoa!

I’m not sure I could pass this test. Just as my SAT scores are probably too low to get into a decent university today, I’m not sure that I could meet the standard to become a citizen either. But over 1 million immigrants did last year.

Happy Independence Day to all.

The Swearing in Ceremony in 1997

July 17, 2024- Quote of the Day

Diary, Newsletter, Quote of the Day

"If there were no way to short stocks, the probability of stock market bubbles would be much greater," said hedge fund manager Bill Ackman of Pershing Square.

July 16, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
July 16, 2024
Fiat Lux

Featured Trade:

(SMALL GIANTS RISING)

(GMAB), (OPHLY), (VRTX), (INCY), (BIIB), (AHKSY), (ALNY), (ARGX), (BGNE), (MRNA), (NBIX), (BNTX), (IPSEY), (CTLT), (NVO), (LLY), (JNJ), (GILD), (ABBV), (MRK), (SNY), (BMY), (GSK)

Small Giants Rising

Biotech Letter

Remember when David took down Goliath? Well, history's repeating itself in the biotech arena, and this time, David's got deep pockets and a Ph.D.

Since April, I've been watching a trend on the so-called "next-generation" players in biotech and healthcare world. It reminds me of the massive changes I witnessed in Asian markets back in the '70s.

Over the past months, companies like Genmab (GMAB), Ono Pharmaceutical (OPHLY), Vertex (VRTX), Incyte (INCY), Biogen (BIIB), and Asahi Kasei (AHKSY) have been making waves that would impress even the most seasoned surfer. And these next-gen dealmakers aren't just dipping their toes in the M&A pool - they're doing cannonballs.

With cash reserves that would make Scrooge McDuck blush, these companies are overturning industry norms, already joining the prestigious $100 billion market cap club. At this celebration, the champagne flows freely.

So, what’s the play here?

With IPOs cooling down like day-old coffee, companies eyeing public debuts are now ripe targets for acquisition, more tempting than a juicy peach.

This fresh class of biotechs, unphased by the FTC's scrutiny that acts like kryptonite to pharma giants, are acting more like rocket fuel for these agile consolidators.

They slide through regulatory gaps faster than a greased pig at a county fair, grabbing six out of ten biopharma M&A deals in the second quarter alone. They’re not just taking a slice of the pie—they’re rewriting the recipe.

And if we're talking about firepower? These newcomers boast an average of $3.8 billion in pro forma adjusted cash, which isn't just walking-around money — that's "buy a small country" money.

But don't think for a second that this cash is just sitting pretty in their coffers. These upstarts are putting their money where their mouth is.

Take Incyte, for instance. They flexed their financial muscle with a $2 billion buyback in May 2024, sending a clear message to the market: "We're here to play, and we're playing to win."

And that's just the tip of the iceberg. The industry as a whole is lounging on a cool $1.5 trillion. That's enough liquidity to stretch the imagination — perhaps even to purchase a small planet. Mars, anyone? Elon might give us a discount.

But this financial might isn't just about buying power – it's about survival. As I said before, Big Pharma is teetering on a patent cliff that threatens to erode their revenue streams. To stay competitive, they're scrambling to replenish their pipelines, acquiring promising assets and gobbling up innovative technologies with the voracity of Pac-Man on steroids. And it's not just the usual suspects making moves.

This sense of urgency has created a fertile ground for an emerging cohort of aggressive dealmakers. Companies like Alnylam (ALNY), argenx (ARGX), BeiGene (BGNE), Moderna (MRNA), Neurocrine Biosciences (NBIX), BioNTech (BNTX), and Ipsen (IPSEY) are biting off more than the market expected them to chew, and they're coming to the table hungry.

And these companies aren't just nibbling around the edges. They're making bold moves, acquiring cutting-edge biotech firms with promising pipelines. We're talking oncology, epilepsy, kidney diseases, cardiovascular plays – it's like someone turned a medical textbook into a shopping catalog.

In fact, even the big boys are flexing their muscles.

Novo Holdings (NVO) dropped a jaw-dropping $16.5 billion on Catalent (CTLT). That's not even for a drug - it's for manufacturing. Talk about betting on the picks and shovels in this biotech gold rush.

Eli Lilly (LLY) just plunked down $3.2 billion on Morphic Therapeutic (MORF), betting big on inflammation, immunity, and oncology.

Johnson & Johnson's (JNJ) been on a shopping spree, too, snagging Numab's Yellow Jersey for $1.25 billion and Proteologix for $850 million. Both plays in inflammation and immunity - clearly, they've found their sweet spot.

Biogen's not twiddling its thumbs either, striking a deal with HI-Bio worth up to $1.8 billion.

Not to be outdone, Gilead (GILD) shook hands with CymaBay Therapeutics to the tune of $4.3 billion. Even AbbVie (ABBV), playing it cooler, still dropped a cool $250 million on Celsius.

Meanwhile, Merck's (MRK) set its sights on EyeBio for up to $3 billion, focusing on ophthalmology.

Sanofi (SNY), Bristol Myers Squibb (BMY), GSK (GSK) - they're all in, placing their chips on everything from rare diseases to generics to asthma. Clearly, the Big Pharma giants are also trying to keep up with this shift.

As the biotech field evolves, watching these underdogs will be like watching history in the making — where today's Davids become tomorrow's Goliaths. I suggest you keep a close eye on the names above. Adding them to your portfolio would mean you’re not just watching the giants rise — you’ll be a part of the story.