Mad Hedge Technology Alerts!
What a late Christmas gift!
It's three months late, but I am sure Mark (Zuckerberg) will take it.
The cost of data just spiked thanks to UK-based Cambridge Analytica, and the FANGs are popping bottles of Champagne.
The embedded regulatory premium increased one full magnitude on the news of the data leak, and regulation will certainly be brought forward.
This is fabulous news for the FANGs because they are the ones that benefit from new data regulation because it builds a bigger moat around their businesses.
Sensational claims over third-party data extraction is just the tip of the iceberg. We haven't wrapped our heads around the full extent of Pandora's Box either because the hijacking of data has gone on unabated for years.
Remember, Facebook (FB) is just a "distribution platform."
Years of grabbing market share and dominating business was well worth it because tech regulation will kill off future competition as the lubrication of free-flowing data will be scrutinized adding to costs.
Mark Zuckerberg will pay lip service, noting he didn't know perpetrators would use data in an unscrupulous way, and the world will move on. He might even have to testify in front of various governments and put in some face time. Case closed.
Meanwhile the market doesn't blink an eye, but whispers of tech regulation tears the market to shreds.
The ugly truth is Facebook does not care what users post on its distribution data platform as long as users post, gifting free data on themselves. Herd-like advertisers have no choice but to comply and pony up for potential clicks driving business.
The real news is in the ramifications to the FANGs, Big Data and data regulation.
Tech companies and corporate America make executive decisions based on data, and without it operations are run less efficiently and with less precision.
Big data cuts across every single big trend in tech. The unearthing of bad actors only highlights the desire for big data and the widespread monetizing opportunities of data extraction.
The volume of data is integral to the accuracy of the applications. Minimal degree of error yields higher quality A.I. technology, translating into better performance.
The data economy produces zettabytes of data now, up from exabytes, and before that, up from gigabytes.
The technological development expected by 2020 is mind-numbing. Autonomous cars will generate 4 terabytes of data per day per car. There will be 50 billion connected smart devices in operation.
Smartphones will consume more than 1 exabyte of data each day. Oh, did I mention the 43 million robots in the workplace and all the data they will produce?
The White House has missed the boat on regulation, hence the wrist slapping.
Which FANGs are most susceptible to regulation?
The FANGs that are closely aligned with the proliferation of data - Facebook and Google (GOOGL).
These two FANGs are in the firing line and disastrous headlines exacerbate an already tense situation in the short term. They will be fine long term.
Facebook and Google don't charge their customers to circumvent the antitrust dilemma. The result is charging through a back-door method of building up user data for the means of hyper-targeting advertisements.
In general, the aftermath may lead to payment of user data - but not yet, not even close.
Until harvesting data is illegal, FANGs should be bought on the dip after the brouhaha settles down and the stock finds solid support levels.
This is hands down the best entry point into Facebook in 2018.
Big data for implementing business decisions will never go away, but the rules on how to responsibly handle it will. This is where the government is likely to step in and put its stamp on the situation. How these rules are fleshed out is a moot point because either way, Facebook will avoid any direct hits.
Any data costs related to building hyper-targeted user profiles easily will be passed on to advertisers boosting earnings. The beauty of a duopoly is that Facebook can charge more, and advertisers have no choice but to stump up the extra ad cash. Facebook would even be able to pass off the higher ad prices as a function of improved ad tech, which it is the absolute best of breed in the world.
Facebook should want more regulation.
Regulation also is necessary to steward the user-ship of 2.2 billion users. The plan for Facebook is raising revenue per user after digesting the low-hanging fruit. Facebook is perfectly placed to execute, and advertisers will grumble about additional price hikes.
The reality is that American big tech is coddled because of the American fight for technological supremacy against China. It supersedes any data harvesting blip.
The White House needs the FANGs to be powerful enough to counter the emerging threat on the other side of the Pacific. The Chinese BATs (Baidu, Alibaba and Tencent) are right on the heels of the FANGs in a full-out arms race.
Disabling the FANGs would sway the power pendulum overwhelmingly in favor of the Middle Kingdom. Washington cannot destroy the FANGs because it would give Chairman Xi the green light to dominate future technology and, in turn, the future of mankind. Trump would never let that happen, and he likes his social media too much.
Buy Facebook after the smoke clears and the dust settles.
__________________________________________________________________________________________________
Quote of the Day
"I've expressed how upset I am that the Russians tried to use our tools to sow distrust. What they did is wrong and we are not going to stand for it." - Facebook CEO Mark Zuckerberg
Mad Hedge Technology Letter
March 20, 2018
Fiat Lux
Featured Trade:
(THE BATTLE FOR CONTROL OF CRISPR TECHNOLOGY IS OVER AND YOU WON!)
(EDIT), (NTLA), (CRSP), (XLV),
It was the battle of the Titans: Harvard versus the University of California.
At stake was who would control the patent for the most important biotechnology of the century, that for CRISPR-Cas9 gene editing.
Harvard won. And you did, too.
Tens of billions of dollars of potential profits are up for grabs.
The decision also sets up stock investment opportunities that are nothing less than spectacular. Pick the right company, and a 100-fold return on your capital is possible.
For the uninformed, CRISPR stands for "clustered regularly interspaced short palindromic repeats."
Say that fast three times.
The outline of the original CRISPR technology was published by UC Berkeley professors Jennifer Doudna, Ph.D., and Emmanuelle Charpentier, Ph.D., in 2012 in the prestigious Science Magazine.
It was widely applauded as the scientific breakthrough of the century, on par with Newton's discovery of calculus and Einstein's theory of relativity.
Building on their research, Feng Zhang, Ph.D., a Chinese immigrant, of Harvard University's Broad Institute (of real estate developer Kaufman and Broad fame) filed 14 patents the following year on derivative downstream processes.
However, because the Broad Institute used a fast track application process, it beat Berkeley to the patent.
A year of litigation ensued at the beginning of 2016, with the Unlisted States Patent & Trade Office holding an extremely rare "interference" hearing.
The Broad Institute argued that Feng Zhang conceptualized using the CRISPR system in human and mouse cells in February 2011, well before Doudna's 2012 patent application.
The USPO ruled in the Broad Institute's favor on February 14, 2017, setting off a firestorm in the scientific community. The Berkeley team still has the right to appear, potentially taking the dispute out several more years.
The decision sets up investment opportunities that are nothing less than spectacular. Pick the right company, and a 100-fold return on your capital is possible.
As a biochemist myself, I have been following with utter fascination the evolution of the groundbreaking CRISPR technology since Berkeley's Doudna/Charpentier team published its first paper.
If you have been living in a cave for the past five years, let me take a brief time-out and explain what is CRISPR-Cas 9 technology.
If you are the average Joe stock trader, which are most of you, suffice it to say that CRISPR technology is being developed that will enable you to edit your own DNA on a customized basis and then pass the changes on to your future generations.
This will eventually allow you to become immune to all diseases, increase your intelligence, and possibly enable you to live forever. Just cut out a bad gene and put in a new one and you, and all your future decedents are fixed for good.
You only have to make it five or 10 more years at the most with your current vintage DNA, and you can easily live another century.
The potential value of this technology is therefore immense.
CRISPR technology is moving forward so fast that amateurs can now rent labs by the hour, such as at Genspace in Brooklyn, NY, and use them to create the designers' DNA for yeasts that will brew out-of-this-world beers.
In other words, CRISPR has gone retail.
I gave readers my last update in August with my research piece on "How CRSPR Technology May Save Your Life"?(click here for the link at https://madhedgefundtrader.com/how-crispr-technology-may-save-your-life/).
With the patent issue decided, at least temporarily, it is now easier to pick the winner in the race to profitability.
That would be Cambridge, Mass., Editas Medicine (EDIT), in which the winner of the patent dispute, Feng Zhang, is a major shareholder.
Editas Medicine has been granted an exclusive license for the use of Cpf1 and other advanced Cas9 forms in relation to human genetic therapies.
Editas also has the coolest website I have ever seen (click here for its stunning home page at http://www.editasmedicine.com).
Editas already has a half dozen CRISPR-generated treatments in its pipeline, including those for cancer, Usher syndrome, sickle cell anemia, muscular dystrophy and cystic fibrosis.
The patent win will enable Editas Medicine to attract the additional capital it needs to expand both the breadth and depth of its product lineup.
Dozens of companies are lining up to license the revolutionary technology from the Broad Institute and Editas, including Monsanto, GE Healthcare and Germany's Evotec.
The ruling has big consequences for a phalanx of biotech start-ups racing to commercialize CRISPR technology.
Companies that backed the wrong horse will have to scramble to shore up their intellectual property portfolio.
Berkeley, Calif.-based Caribou Biosciences, Inc., holds the exclusive license on the CRISPR-Cas9 inventions made by Doudna and her colleagues, while Basel, Switzerland-based CRISPR Therapeutics licensed essentially the same inventions from the University of Vienna, where Charpentier once worked and which sided with UC in the patent case.
Even though they came out on the wrong side of the patent dispute, other companies bear consideration when looking for CRISPR investment targets.
The market for this technology is going to be so enormous that any participants, no matter what their position on the patent ladder, will reap financial windfalls.
In other words, even the losers will become winners.
Those would include Intellia (NTLA) (click here for its site at http://www.intelliatx.com) and Crisper Therapeutics (CRSP) (its site is at http://crisprtx.com).
We will continue to hear a lot more about CRISPR technology and the investment implications therein.
I will keep a laser-like focus on the sector and update my research pieces when I can.
The Winner, For Now
___________________________________________________________________________________________________
Quote of the Day
"Insanity is doing the same thing over and over again and expecting different results," said the Nobel Prize winner and theoretical physicist Albert Einstein.
