May 2025 Archive - Mad Hedge Fund Trader

How to Read the Mad Hedge Daily Position Sheet

We have recently had a large influx of new subscribers.

Therefore, I am offering a refresher course on how to use the Mad Hedge Daily Position Sheet, which is included with your subscription. But first, let me dive back into the deep and dark primordial history of the Mad Hedge Fund Trader to learn its origins.

Because I missed the thrill and adrenaline of the financial markets, I started to launch a new hedge fund back in 2007. I had just spent six years in the oil & gas industry developing the new fracking technology, and it was just too slow and sedentary for me.

Weeks were spent landing drilling rights in some of the most remote, dry, and desolate parts of the US, and some of the people you had to deal with you didn’t necessarily want to introduce to your mother.

So I took the software and spreadsheets developed by the hedge fund I ran and eventually sold during the 1990s, modernized them, and added sophisticated new algorithms. Then I started raising money for a brand new hedge fund from high net worth individuals and institutions.

Then the 2008 financial crisis hit. Everyone to a man pulled out of my proposed fund, some losing their entire fortunes in the ensuing crash. One even gave me his place in line to buy the new Tesla Model S in 2009, which ended up becoming chassis number 125 off the assembly line in Fremont.

My new hedge fund would have to wait.

Then I wondered whether individual retail investors would have any interest in my services. My goal was to make available sophisticated trading strategies to individuals usually only available to the wealthy with $5 million minimum investments in large hedge funds.

I took the updated software I created for my new hedge fund and offered it as the Mad Hedge Fund Trader in February 2008. It turned out that the public interest was overwhelming, and the rest is history.

The Diary of a Mad Hedge Fund Trader proved so exhilarating that I never did get around to launching that new hedge fund. It turns out there is far more satisfaction in turning a $50,000 into $500,000 than converting a millionaire into a billionaire.

I promise to tell the rest of the story in a future letter.

In order to access the Mad Hedge Daily Position Sheet, do the following:

1) Log into your account at www.madhedgefundtrader.com by clicking on “Member Login” in the upper right corner.

2) Type in your email address and password in the white boxes in the lower left corner.

3) A page with “Welcome Back” appears. Hover your cursor over the blue “My Account” text in the upper right corner. A dropdown menu appears listing all of the Mad Hedge Services you have purchased.

4) Click on GLOBAL TRADING DISPATCH.

5) Eight blue and red boxes will appear. Click on the Current Positions blue box.

6) In the lower left corner, you will find a piece of blue hypertext link labeled “Download in Excel (XLSX) Updated for (today’s date). Click on this.

7) The new spreadsheet will appear in your “Downloads” folder. And here you have it to play with as you want.

Well, that was easy! You can now analyze your own positions, run your own market scenarios, adopt different assumptions, and so on. It’s yours to keep. Until tomorrow, when you get a new one.

Now that you’re in, there’s a lot here to digest. You are now officially a pro! At least a semi-pro.

First of all, make sure you have the correct Date in cell C2. We usually post an updated spreadsheet 30 minutes after the New York Stock Exchange closes at 4:00 PM EST (or 6:00 AM Sydney time the next day), but sometimes there are delays caused by chasing down errors.

If you are like me, the next cell you will want to jump to is the Month-to-Date Performance in cell F15. This determines whether you’ll be taking your wife or girlfriend out to an expensive dinner that night or spend the night tossing and turning in bed. Usually, it’s the former, but occasionally it’s the latter.

It’s an easy leap there to Year-to-Date Performance in cell F17 and Performance since the December 8, 2010 Inception in Cell F9.

Next, you will want to check my Asset Class Breakdown that starts in cell A11 to make sure you haven’t missed anything. Life happens, the Internet goes down, or emails can end up in SPAM folders, so it’s best to cross-check my trading book with yours. These are divided into Risk On and Risk Off positions. Risk On means that my global team’s exhaustive research has informed me that the underlying stock will rise. Risk Off means it will fall.

In an ideal world, Risk On and Risk Off balance each other out, generating a net risk of zero percent. This doesn’t actually happen very often (only in neutral market conditions, which are rare).

In reality, I am very heavy Risk On positions at market bottoms and very heavy Risk Off positions at market tops. And when the risk/reward is terrible, I will have no positions at all, as was the case at the end of June 2024. That is what you want. Always let the other guy unnecessarily stick their neck out.

Cell B32 will show the Total Net Position of all your longs and shorts. Cell B34 shows you the Total Aggregate Position, or the number of positions you have added up. That way, you know exactly how much free cash you have to spend on new positions.

To the right of the Asset Class Breakdown, you will see a multicolored pie chart showing the weightings of each individual position.

Next, we go to Current Positions in cell C39. Here is where you find the details of each individual position. Since I believe that the low-hanging fruit in the financial market is still in options spreads, where the risk-reward is overwhelmingly in your favor, these positions are presented in long and short pairs.

Column A – Date Opened
Column B – Date Closed
Column C – ticker symbol, maturity month, and option strike price
Column D – Asset Class
Column E – long or short
Column F – Underlying stop loss price (where you bail on a losing position)
Column G – Notional Cost
Column H – Current Market Price
Column I – Profit & Loss for the individual position
Column J – Profit & Loss for the spread pair of positions
Column K – Risk Weighting Metrics
Column L – Leverage
Column M – Portfolio Net Exposure
Column N – I keep open for future custom Algorithmic Analysis
Column O – I keep open for future custom Algorithmic Analysis
Column P – Number of options contracts per position. Negative numbers are short positions

In Cell C79, you will find a listing of all trades executed in 2025 along with their individual profit & loss. From Cell C150, you find a listing of all trades executed in 2024. We actually have records going back to 2010, but nobody cares about that except the SEC.

Well, that’s about it. If any of you have questions about the above explanation, please email me at support@madhedgefundtrader.com.

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

May 22, 2025

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 22, 2025
Fiat Lux

Featured Trade:

(SHAKEN, NOT STIRRED)

(GMAB), (JNJ), (TSLA), (SGEN), (MOR), (BGNE)

Shaken, Not Stirred

Biotech Letter

Did you know the antibody behind Johnson & Johnson’s (JNJ) blockbuster cancer drug Darzalex was actually developed by a small Danish biotech most investors have never heard of?

That biotech is Genmab (GMAB), and they’re like the secret agent of the biotech world — operating in the shadows while their technology powers some of the biggest cancer breakthroughs on the market.

And while everyone’s busy preaching the gospel of the likes of Tesla (TSLA) in 2019, this Scandinavian operator was on its way to making chemotherapy look like bloodletting with leeches.

Genmab’s story is fascinating to watch. They started by licensing their antibody technologies to pharmaceutical giants, but now they’re commercializing their own drugs while still collecting those sweet, sweet royalty checks.

Their proprietary platforms – DuoBody, HexaBody, and UniBody – sound like superhero teams, and in the oncology world, they kind of are.

These technologies create sophisticated antibodies that target cancer cells with surgical precision. The numbers tell the story: Genmab is projected to generate a whopping $4.2 billion in revenues by 2026.

When we examine what’s actually driving this valuation, we find several compelling factors working together.

Current commercial products like Tivdak for cervical cancer and Epkinly/Tepkinly for B-cell lymphomas are already approved and generating revenue.

Meanwhile, the company still collects substantial royalties from blockbusters like Darzalex (multiple myeloma) and Kesimpta (multiple sclerosis) that were developed using their technology.

This dual-stream approach provides both stability and growth potential that’s rare in the biotech world.

Looking deeper into their pipeline reveals even more potential value. Their late-stage candidates target markets worth billions: Epcoritamab label expansions aim at a roughly $3 billion market, Rina-S for ovarian cancer could tap into a $2 billion opportunity, and Acsunilimab for non-small cell lung cancer addresses a market worth approximately $1 billion.

With $3.2 billion in cash and virtually no debt, Genmab has the financial firepower to advance this pipeline without diluting shareholders into oblivion – a refreshing change from many biotechs that treat their stock like an ATM.

Here’s where it gets interesting. Despite generating $1.1 billion in positive cash flow over the trailing twelve months, Genmab’s stock is down about 59% from its 2023 highs.

The market seems to be undervaluing its potential. The forward P/S ratio sits at 2.9 — below the sector average of 3.1 — even though Genmab’s growth profile runs circles around peers like Seagen (SGEN), MorphoSys (MOR), and BeiGene (BGNE). It’s as if the market brought binoculars to a biotech safari… and then forgot to look through them.

So what’s on deck for the rest of 2025? Quite a lot. – it’s packed with potential catalysts that could serve as powerful reminders to the market of what it’s been overlooking.

Recent approvals in Japan and the EU for Tivdak and Epcoritamab are opening new markets. Meanwhile, upcoming Phase 2 data for Acsunilimab and Rina-S could spark renewed investor interest — and price momentum.

This isn’t just another calendar year. It’s a potential inflection point.

Of course, as with everything else, we can never discount the risks. Clinical trials are always a roll of the dice. And as a foreign issue headquartered in Denmark, there’s additional complexity for US investors to consider.

But even accounting for all these potential issues, Genmab still appears undervalued based on its current revenue streams alone – the pipeline is essentially getting priced in for free, like those extra fries that sometimes fall into your takeout bag.

For those willing to look beyond the latest headlines, Genmab offers something far more elemental: the molecular precision of modern oncology paired with the financial discipline of a royalty-rich balance sheet.

Sure, it’s not loud. It’s also not flashy. But it’s ruthlessly effective.

And if biotech had a James Bond, it’d be Genmab: sleek, clinical, and quietly dismantling cancer with a license to bill.

Or maybe it’s Agent Q — after all, someone has to invent the tech behind the mission. Either way, the mission is getting accomplished.

May 22, 2025

Diary, Newsletter, Summary

Global Market Comments
May 22, 2025
Fiat Lux

Featured Trade:

(PLEASE SIGN UP FOR MY FREE TEXT ALERT SERVICE NOW!)

May 22, 2025 – Quote of the Day

Diary, Newsletter, Quote of the Day

“Advertising the cocaine for technology companies,” said Financial adviser Julie Beal.

OpenAI to Anchor Mammoth Abu Dhabi Data Center in Landmark US-UAE AI Pact

Mad Hedge AI

Abu Dhabi, UAE & Washington D.C. – In a move poised to reshape the global artificial intelligence landscape, OpenAI, the pioneering research and deployment company behind ChatGPT, is slated to become a key anchor tenant in a colossal 5-gigawatt (GW) data center campus in Abu Dhabi. This ambitious undertaking, part of a landmark US-UAE strategic partnership to accelerate AI development, underscores the increasing geopolitical significance of computing infrastructure and the UAE’s determined push to become a leading global AI hub.

The sprawling 10-square-mile campus, spearheaded by the prominent UAE technology group G42, is envisioned to be one of the largest of its kind worldwide. It forms a cornerstone of OpenAI’s own “Stargate” initiative, a multi-billion dollar project aimed at developing a global network of high-capacity AI data centers, and is a flagship project under the recently announced “US-UAE AI Acceleration Partnership.”

While OpenAI’s final participation is reportedly being finalized, with an official announcement anticipated in the near future, the implications of its involvement are already sending ripples through the tech world. The project signals a new era of international collaboration in AI, bringing together American technological prowess with the UAE’s ambitious investment strategy and strategic geographical positioning. Major US tech giants including Microsoft, Nvidia, Oracle, and Cisco are also reported to be involved or supportive of the broader initiative, highlighting the project’s strategic importance.

The sheer scale of the Abu Dhabi data center is staggering. A 5GW capacity is enough to power a significant city and will provide the immense computational resources required for training and deploying increasingly complex AI models. The first phase of the project will see the development of a 1GW facility, with ground reportedly already broken. This facility is expected to provide US hyperscalers with a regional platform to offer low-latency AI and cloud computing services to nearly half of the global population within a 2,000-mile radius of the UAE.

Strategic Imperatives: AI Dominance and Economic Diversification

For the United States, this collaboration serves multiple strategic interests. It extends American technological influence in a critical region, fosters closer ties with a key Gulf partner, and aims to ensure US leadership in the global AI race. The US Commerce Department has emphasized that the partnership includes “strong security guarantees to prevent diversion of US technology,” a crucial element given the sensitive nature of advanced AI capabilities. American companies are expected to operate the data centers and offer US-managed cloud services throughout the region.

“Today’s agreement launches a historic Middle Eastern partnership on AI between our two nations,” stated US Secretary of Commerce Howard Lutnick in a recent announcement regarding the US-UAE AI Acceleration Partnership. “It promotes major investment in advanced semiconductors and data centers across the US and the UAE. By extending the world’s leading American tech stack to an important strategic partner in the region, this agreement is a major milestone in achieving the vision for US AI dominance.”

For the UAE, the data center is a critical enabler of its National AI Strategy 2031, which aims for AI to contribute up to 20% of its non-oil GDP. The nation has been aggressively investing in diversifying its economy beyond hydrocarbons, with technology and AI at the forefront of this vision. The project is anticipated to be a significant structural growth catalyst for Abu Dhabi, attracting substantial foreign direct investment, creating thousands of high-skilled jobs in fields like AI research, data science, and engineering, and stimulating the broader knowledge-based economy.

His Highness Sheikh Tahnoon bin Zayed Al Nahyan, Chairman of the Artificial Intelligence and Advanced Technology Council (AIATC) in Abu Dhabi, remarked, “This agreement is a testament to the ongoing collaboration between our countries in artificial intelligence. It is an expression of the UAE’s commitment to pioneering innovation and fostering global collaboration in artificial intelligence, strengthening the UAE’s position as a hub for cutting-edge research and sustainable development, delivering transformative benefits for humanity.”

G42 Leading the Charge, Backed by Global Tech Titans

Abu Dhabi-based G42, an AI and cloud computing company chaired by Sheikh Tahnoon, is at the helm of developing this massive infrastructure. G42 has been rapidly expanding its capabilities and international partnerships. Notably, Microsoft invested $1.5 billion in G42 earlier this year, with Microsoft President Brad Smith also joining G42’s board. This deepened relationship is seen as a precursor to large-scale AI infrastructure projects, with Microsoft’s Azure cloud services likely to play a significant role in the new data center.

The involvement of Nvidia, the leading designer of AI chips, is also critical, given the immense demand for its GPUs to power AI workloads. While specific details of chip orders for this facility are not yet public, the scale of the data center suggests a significant requirement for advanced AI hardware. Oracle, another key player in OpenAI’s Stargate initiative, is also expected to contribute its expertise in database management and cloud infrastructure.

MGX, an Abu Dhabi-based technology investment firm also chaired by Sheikh Tahnoon, is another Emirati entity playing a role in the broader AI investment landscape. MGX has reportedly invested in OpenAI and is involved in the Stargate initiative, indicating a multi-faceted Emirati commitment to fostering OpenAI’s growth and securing access to its cutting-edge technology.

The “Stargate” Vision Goes Global

The Abu Dhabi data center is a significant manifestation of OpenAI CEO Sam Altman’s ambitious “Stargate” project. Initially conceived as a series of interconnected supercomputing facilities primarily in the US, Stargate aims to secure the vast computational power OpenAI needs for its future AI models, which are expected to be far more powerful and data-intensive than current iterations. The Abu Dhabi campus, with its planned 5GW capacity, appears to be even more ambitious in scale than the initially discussed US Stargate facilities, the first of which is planned for 1.2GW.

OpenAI has also reportedly floated the idea of “Stargate for Countries,” seeking partnerships with nations willing to co-invest in and host these critical AI infrastructures. The UAE, with its strategic vision, capital resources, and commitment to becoming an AI leader, appears to be an ideal early partner in this global endeavor.

Navigating Geopolitical Currents and Ethical Considerations

The decision to establish such a critical piece of AI infrastructure in the UAE comes at a time of heightened geopolitical competition surrounding advanced technology. The US has been keen to ensure its allies are aligned on technology standards and security, particularly concerning China’s technological ambitions. Reports suggest that G42 has been actively divesting from Chinese technology and strengthening its US ties, a move seen as crucial for facilitating such large-scale collaborations with American tech leaders like OpenAI and Microsoft.

The US-UAE AI Acceleration Partnership explicitly addresses security concerns, with commitments to enhanced Know-Your-Customer (KYC) protocols to regulate access to compute resources. These resources are reportedly reserved for US hyperscalers and approved cloud service providers, ensuring a controlled environment for the deployment of sensitive AI technologies.

Beyond geopolitics, the immense power of the AI models that this data center will support raises significant ethical considerations. Issues of data privacy, algorithmic bias, potential misuse of AI, and the societal impact of increasingly capable AI systems will require careful governance and ongoing international dialogue. The establishment of a dedicated science park alongside the data center campus, focused on driving advancements in AI innovation, may also provide a platform for research into AI safety and ethics.

Powering the Future: Environmental Responsibility

A data center of this magnitude will have substantial energy requirements. The project plans to address this by leveraging a mix of power sources, including nuclear, solar, and natural gas, with an aim to minimize carbon emissions. The UAE has been investing heavily in clean energy, including solar power and the Barakah Nuclear Energy Plant, which will be crucial for sustainably powering such energy-intensive digital infrastructure.

Timeline and Economic Ripple Effects

While a definitive completion timeline for the entire 5GW campus has not been publicly disclosed, the commencement of work on the initial 1GW phase signals a fast-tracked approach. The economic ripple effects are expected to be substantial, extending beyond direct job creation. The project will likely spur growth in ancillary industries, attract a global talent pool to the UAE, and further cement Abu Dhabi’s reputation as a dynamic and future-forward city. The influx of businesses and skilled professionals is also anticipated to positively impact the real estate market and other service sectors.

The UAE’s substantial investment in its digital future, exemplified by its AED 13 billion (US$3.54 billion) digital infrastructure allocation under the Abu Dhabi Government Digital Strategy 2025-2027, aligns with the development of such world-class facilities.

A New Nexus for AI Innovation

The collaboration between OpenAI, G42, and the US and UAE governments to build this vast data center in Abu Dhabi is more than just an infrastructure project; it’s a statement of intent. It signals a strategic alignment to push the boundaries of artificial intelligence, foster a global ecosystem for AI innovation, and address the monumental computational demands that lie ahead.

As AI continues its rapid evolution, access to powerful, secure, and strategically located computing infrastructure will be a defining factor in global technological leadership. With this ambitious project, Abu Dhabi is positioning itself not just as a user of AI, but as a critical enabler and a central node in the world’s burgeoning AI network, with OpenAI at the heart of its computational power. The world will be watching closely as this monumental digital oasis rises from the sands, promising to fuel the next generation of artificial intelligence.

Trade Alert – (TLT) May 21, 2025 – STOP LOSS – SELL

Trade 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

Trade Alert – (SPY) May 21, 2025 – TAKE PROFITS – SELL

Trade 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

May 21, 2025

Tech Letter

Mad Hedge Technology Letter
May 21, 2025
Fiat Lux

Featured Trade:

(AI AT WARP SPEED AND ACCELERATING)
($COMPQ)

AI At Warp Speed And Accelerating

Tech Letter

The writing is on the wall for the Big Four — Deloitte, PwC, EY, and KPMG.

AI is coming for them hard, and there is not much they can do but adapt.

One trend that many in the business world are coming to terms with is that AI will have an unbalanced effect on those who are exposed to it.

Some professions will stand the test of time, but one that is glaringly overplaying its hand is accounting and consultancy.

The Big 4 have had a near monopoly of this type of activity for decades, and that is about to die a tragic end.

The American economy is changing at such a fast pace that CEOs are getting fired at a record pace, because they are unable to keep up with the management and strategic decisions that make or break these corporations.

The stakes are even higher at tech companies that are in the middle of chaos, and one little tweak in an algorithm or software code can implode their company in seconds.

How is that for pressure?

This all points to technology becoming a winner-takes-all phenomenon, and this concept is accelerating at a rate that not many can comprehend.

What does this mean?

Corporate profits for the winners and bankruptcy for the losers.

The Big 4 face a stark future of lower revenue and higher competition, eaten alive by the forces that are AI.

Then throw into the equation that American corporations face a scary business climate offshore.

The Big Four, who advise companies on how to navigate change, will now need to advise these same companies to avoid the Big Four because they provide little incremental value.

Who will scoop up the consultancy business?

Tech companies from the Nasdaq index ($COMPQ).

It is almost guaranteed that AI-driven automation will bring major disruption to key service lines and drive “a huge reduction” in profits.

AI will run these within the next three to five years, eliminating about 80% of roles.

No more big paydays for workers from Big 4 accounting firms, and this is making waves inside those firms.

Businesses do not need human expertise anymore as AI develops — it’s a “set it and the AI will improve itself from the data” solution. There won’t be much reason to employ a human in audit or consultancy.

The Big Four have built their healthy revenue streams on junior-heavy pyramids, with an increasing degree of labor arbitrage, often in Asia.

Automation diminishes smaller firms’ previous disadvantages, like lacking an army of talent or advanced internal tools, while empowering employees to be more productive.

Big tech will be all over this trend while firing most of their staff, too.

Big tech leaders said their deep expertise was necessary for handling the increased ethical, security, and regulatory compliance challenges created by AI.

Buy the dip in the best of AI and watch as they take over accountancy, consultancy, business development, and many other industries and subsectors.

They will also get rid of most of their staff, and the remaining will enjoy much higher salaries than today.

I am bullish on AI companies and bearishon the volume of white collar jobs.