Mad Hedge Technology Letter
May 9, 2025
Fiat Lux
Featured Trade:
(THE FIGHT FOR AI SUPREMACY)
(GOOGL), (AAPL)
We are getting to the part of the cycle where tech could potentially be cannibalizing each other.
The fact is that the overall pie is not growing fast enough, and competition is.
Search is a massive market, and participants are all vying for ad dollars.
Once what was thought of as a duopoly is no longer that and Facebook and Google will need to fight that much harder to command the growth rates they were accustomed to.
The US consumer is gradually becoming weaker and allocating a bigger part of their budget to essentials.
An Apple testimony by one of its executives has now revealed that search operations on Google via Apple's Safari browser decreased for the first time in April 2025, attributing this decline to users increasingly opting for AI-powered tools instead of traditional search engines.
Google’s parent stock Alphabet, was crushed in trading.
This time of development is really damaging for Google, and it puts doubt on their ability to negotiate higher ad rates moving forward.
The executive blamed AI platforms like OpenAI, Perplexity, and Anthropic as alternatives that are becoming more appealing to consumers, signaling a future where AI could play a central role in search functionalities on Apple devices.
The implications of Cue's testimony are profound, especially considering that Apple reportedly receives over $20 billion annually from Google to maintain its status as the default search engine on iPhones and iPads. This lucrative arrangement lies at the heart of the antitrust case brought by the U.S. Department of Justice against Google, raising questions about the competitive landscape of the search engine market.
The market believes that AI will disrupt Google's dominance in search. The decline in stock prices reflects investor anxiety about whether AI could significantly erode Google's market share, which currently stands at approximately 90% of the global search engine market, including a commanding 94% on mobile devices and 79% on desktops.
As the landscape of search technology evolves, the competition between traditional search engines like Google and emerging AI platforms will likely intensify.
As the antitrust case against Google unfolds, the stakes are high not only for the company but also for the broader tech ecosystem. The outcome could have lasting implications for how search engines operate and how consumers access information in the digital age.
Technology is barreling straight into a hairy situation in which the winner will take all in the AI race.
There won’t be enough profits to share around, and the company with the best product will win with consumers.
Search is just one place where AI is being fought.
I do believe we will see the fall of big tech companies, and the ones who are one-trick ponies will run the risk of becoming irrelevant quickly.
Is it fair?
No, but the market will tell us how good each tech companies does AI.
This is bad news for both Apple and Google, and it is not news that these two are lagging far behind in the AI arms race.
However, I do believe this is a good short-term buy-the-dip moment for Google for a trade.
With us moving deeper into 2025, investors are chomping at the bit to hear the commentary about AI developments.
There will be some big disappointments, are those companies unable to recover will be a sell the rallies type of stock.
“Any product that needs a manual to work is broken.” – Said CEO of Twitter Elon Musk
(AMERICAN TRADE POLICY HANDS AUSTRALIAN BEEF A TOP SLOT)
May 9, 2025
Hello everyone
The Fed left rates unchanged, as expected, citing inflation concerns and continued uncertainty across the economic landscape.
Australia scores big thanks to Trump
President Trump has just gifted Australia near monopoly status in China’s almost $5 billion premium beef market.
Chinese officials have effectively blocked American beef from entering the country, leaving Australia with the top of the market almost to itself. America sold $2.4 billion (US$1.6 billion) to China in 2024.
America’s missteps with China have put Australia in a very fortunate position, where they should benefit handsomely.
Beef is Australia’s biggest agricultural export to China, worth more than the wine and lobster trade combined. Australian farmers sold $2.2 billion worth of beef to China in 2024, making it Australia’s second biggest beef market after America (which bought $4.4 billion worth of Australian beef to the chagrin of the Trump administration).
With billions of premium beef sales potentially up for grabs, a herd of Australian beef exporters will fly into Shanghai within a fortnight for SIAL China, an important trade event for the food and beverage industry in the world’s second biggest economy.
Since securing a second term as Prime Minister of Australia last weekend, Anthony Albanese has been enjoying praise from Beijing, and Chinese media highlighting the prospects of future trade ties between Australia and China.
Australian wine exporters, along with exporters of cotton, timber, wheat, and lobsters, are also experiencing a role reversal, as these former victims of Beijing’s trade restrictions now find themselves benefiting from Chinese trade imposts on America and Canada.
Favourable bilateral politics – and a desire to find non-American supplies – also helped Australian gas giant Woodside recently snare a 15-year-long supply agreement with a Chinese state-owned giant.
Beijing’s first strike on the US herd came in March, as Chinese officials refused to renew trading licenses for American beef companies. Even if it lands at the port, they are turning it away.
In April, Mr Xi responded to Mr Trump’s 145 per cent tariffs on China with a 125 per cent tariff imposed on American imports. Even if American beef could get into China, those tariffs would decimate the trade.
Kevin Wang, A Beijing based sales manager of high-end beef importer Tenderplus, said “People are looking for Australian partners to import beef. Some have already flown to Australia to talk with trade partners.”
Menus have already been reprinted at premium restaurants around China. Even the most patriotically American places are looking increasingly Australian.
Americans digesting tariffs on Australian beef.
The Shanghai and Beijing branches of New York institution Wolfgang’s Steakhouse are now selling Australian porterhouse, striploin, rib eye, and filet mignon as its supplies of American beef are two weeks away from extinction.
In the centre of Beijing, we find Morton’s, which is owned by Houston billionaire Tilman Fertitta. Here, the restaurant has swapped its house red from an American drop to a Clare Valley Shiraz, a very good match with its Australian porterhouse from Rangers Valley in NSW’s northern tablelands.
China’s biggest sources of beef are Brazil and Argentina, but they sell at the cheaper end of the market.
Restrictions on other high-end sellers in Japan and Canada effectively shut them out of China’s market.
The results of Beijing’s “safeguards” investigation, due in the second half of the year, could see it increase tariffs on foreign suppliers. High-volume, low-cost sellers look to be most at risk, but it could shrink the size of China’s market considerably – including the premium end.
Australian Shadow Trade Minister, Kevin Hogan, looks beyond trade negotiations and considers the macro landscape.
Watch this space.
Move over MicroStrategy, Strive is offering a new product
A new NASDAQ listed firm – Strive - has just announced its merger with Asset Entities, creating the first publicly traded Bitcoin treasury company.
The firm will oversee $2 billion of assets.
The agreement will allow the merged company to carry out aggressive purchases of Bitcoin through new financial products, like BlackRock and Greyscale.
Strive Enterprises was co-founded in 2022 by Vivek Ramaswamy and Anson Frericks. The new firm will be led by Strive CEO Matt Cole, who previously managed a $70 billion fixed income portfolio.
Several strategies will be available under Cole’s leadership.
One strategy will be a Bitcoin for equity tax-free exchange, which will be structured under Section 351 of the IRS tax code.
Strive Enterprises will own 94.2% of the newly combined public company, while shareholders of Asset Entities will receive a 5.8% share.
It appears Strive is executing a similar playbook to Strategy and Metaplanet in terms of centralizing ownership, utilizing equity and debt financing to accumulate Bitcoin, and treating it as a treasury reserve asset.
Although it could also dilute its equity, it is taking risks to maximize long-term value by aggressively deploying capital in BTC. However, Strive’s section 351 tax-free exchange of Bitcoins for equity is different from both Metaplanet and Strategy. If successful, Strive could persuade Bitcoin holders to trade their Bitcoin for equity without having to pay a tax.
This article is only an item of interest, not a recommendation to buy any products marketed by Strive.
Cheers
Jacquie
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
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
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
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
Mad Hedge Biotech and Healthcare Letter
May 8, 2025
Fiat Lux
Featured Trade:
(A DOUBLE HELIX OF OPPORTUNITY)
(CRSP), (NTLA)
I never fully appreciated the potential of gene therapy until last fall when my college friend Eric called with surprising news. His 14-year-old daughter Sophie, who'd struggled with sickle cell disease her whole life, had undergone treatment with Casgevy, a CRISPR-based gene therapy developed by CRISPR Therapeutics (CRSP) and Vertex (VRTX). Six months later, she hasn't needed a single blood transfusion or hospitalization—a transformative outcome for a girl accustomed to spending more weeks in hospital rooms than classrooms.
"The doctors keep using phrases like 'functionally cured,'" Eric told me. "I just know she's planning her first summer camp experience. That's miracle enough for me."
Eric's story prompted me to dive deeper into gene-editing therapies and the companies working on them. What struck me the most is that despite groundbreaking science, market volatility has created a disconnect between technological progress and stock valuations.
Gene therapy stocks like CRISPR Therapeutics and Intellia Therapeutics (NTLA) had a rocky first quarter of 2025, with shares dropping 2.82% and 24.19%, respectively. The broader market mirrored this instability, with the S&P 500 down nearly 3%. Yet, beneath these headline fluctuations lies an intriguing opportunity for patient long-term investors.
CRISPR is particularly interesting. It's sitting pretty with $1.9 billion in cash and equivalents as of the end of 2024. That's enough runway to keep the scientists doing what they do best for years without financial pressure.
More importantly, they're expecting their flagship product Casgevy to be accretive from late 2025, meaning actual revenue is on the horizon – not just the promise of future miracles.
Casgevy's approval for sickle cell disease and beta-thalassemia underscores CRISPR Therapeutics' tangible progress. With a cost of $2.2 million per patient, the price seems steep until compared against lifetime management costs of these conditions. Additionally, their pipeline extends beyond blood disorders into cardiovascular treatments like CTX-310 and CTX-320. These therapies aim to permanently eliminate the need for daily medications—a seismic shift in a market projected to grow from $156 billion in 2025 to nearly $215 billion by 2034.
CRISPR Therapeutics' strategic advantage is further enhanced by their U.S.-based manufacturing facility, strategically positioned to mitigate risks from reshoring trends and global supply chain disruptions.
On the other hand, Intellia faces a tighter financial outlook. With $861.73 million in cash and equivalents, they project operations funding through the first half of 2027. However, this timeline feels restrictive, especially since their first products aren't anticipated until at least 2027.
Although their financial runway is limited, Intellia's therapeutic breakthroughs still command attention. Their treatments NTLA-2002 for hereditary angioedema and Nex-z for transthyretin amyloidosis have shown extraordinary results. I remember a conversation with a trial participant who shared, "I went from planning my life around my disease to barely remembering I have it." Such transformative experiences underline the real-world potential of Intellia's science.
However, Intellia must dramatically reduce its annual cash burn from $592 million to around $345 million to ensure survival until commercialization. This aggressive belt-tightening could jeopardize their momentum.
Both companies currently trade at attractive valuations given their prospects. CRISPR Therapeutics holds a price-to-book ratio below the sector median, with cash comprising 57% of its market cap. Intellia's cash reserves represent an astounding 94% of its market cap, suggesting significant market undervaluation of its intellectual property and promising pipeline.
For investors able to tolerate short-term volatility, this disconnect offers a potentially lucrative entry point, particularly with CRISPR Therapeutics’ imminent commercial revenue.
As I told Eric, the market currently undervalues these revolutionary companies despite proven science. Eventually, stock prices will reflect this reality. I'm cautiously building positions during these dips, anticipating the long-term transformative impact of these therapies.
Just ask Sophie, who’s packing for summer camp instead of preparing for another hospital stay.
