Tech Letter Archives - Mad Hedge Fund Trader

The Product of No Regulation

No government interaction means the duopoly of digital ads continues as is and investors cannot be short Facebook unless massively hedged on a short-term trade.

CEO of Facebook Mark Zuckerberg and his data leak-optimizing tech company is at it again with plans to roll out an online dating feature on the Facebook platform.

The new business is coined “Facebook Dating” which is the new façade in which Facebook will gouge your personal data in every shape and form possible so Mark Zuckerberg can add to his plethora of gaudy mansions that dot Hawaii, Palo Alto and Lake Tahoe.

It’s nuts that most people still subscribe to Facebook’s unfair terms, but this takes it up a few notches higher by gifting the company access to the most personal of personal content that a person holds dear to his heart.

Facebook, as usual, has the marketing spinners putting out the misleading reasons to join such as starting “meaningful relationships” which shows that Facebook has shrugged off any type of personal data scrutiny to double down on this new data business.

As it stands, their cryptocurrency business looks as if the momentum has been hijacked for the moment as regulatory issues could stand in the way of that, but dating online is the lower hanging fruit.

Instagram users will be able to integrate posts seamlessly into their “Facebook Dating” profile and Facebook will roll out a new feature called a “Secret Crush” list which allows users to add people to this ridiculous list.

This is Facebook’s master plan for integrating Instagram before the anti-trust regulators deem the company anti-competitive.

Some of the risk involved is the alienation of a younger Instagram audience by forcing Facebook integration down their throats.

This will unhinge a few of the Instagram diehards but on the flip side, it could cause more engagement by an older Facebook seeking their partner on a younger Instagram world, meaning more ad dollars.

On the business side of things, Facebook has every incentive to try this and even lusting to get into many other short-term engagement tricks and gimmicks by moving into marginal industries.

It is no secret that quite possibly, the best place to get opioids is on Facebook’s platforms.

Until the government does something meaningful, Facebook will run wild trying to create these types of engagement cesspool businesses out of thin air.

The imminent collateral damage is Match Group, Inc. (MTCH) cratering over 6% now that a FANG is a direct competitor.

I wouldn’t want to be in their offices today.

September 6, 2019 - Quote of the Day

Tech Letter

“Our goal is not to build a platform; it's to be across all of them.” – Said CEO of Facebook Mark Zuckerberg

September 4, 2019

Tech Letter

Mad Hedge Technology Letter
September 4, 2019
Fiat Lux

Featured Trade:

(HERE’S YOUR NEXT GENERATION SEMICONDUCTOR)
(USHIO)

Here's Your Next Generation Semiconductor

Tech Letter

Transistor capacity has always put the kibosh on semiconductor chip performance.

Chipmakers have for decades drained investment into a revolutionary new Japanese technique to push the limits of physics and cram more transistors onto pieces of silicon.

A secretive Japanese company that mastered the skill of manipulating light for applications is about to go mainstream with cutting edge technology.

Ushio Inc. announced it had achieved the once thought impossible task of refining powerful, ultra-precise lights needed to test chip designs based on extreme ultraviolet lithography (EUV), a process through which the next generation of semiconductors will be made.

The milestone means that the Japanese company will become a prominent player in future chipmaking and technology that harnesses it.

“The infrastructure is now mostly ready,” said CEO Koji Naito in an interview.

Testing equipment was primarily holding back EUV but with that hold-up dealt with, production efficiency and yields can finally go up setting the stage for electronic manufacturers with the possibilities of producing substantially better consumer products.

The Tokyo-based company developed a light source for equipment used to test what are known as masks: glass squares slightly bigger than a CD case that act as a stencil for chip designs. These templates must be picture-perfect, even a minute of malfunction in one of them can render every chip in a large batch unfit.

That’s where Ushio seamlessly slots in.

Its technology operates lasers to vaporize liquid tin into plasma and produce light closer in wavelength to X-rays than the spectrum visible to the human eye.

That light aids chipmakers in detecting errors in the product.

This process takes a room-sized machine that looks like a sci-fi death ray and requires a phalanx of workers to operate.

After 15 years of industrious development, the EUV business will generate profits next year.

Only Intel Corp., Samsung Electronics Co., and Taiwan Semiconductor Manufacturing Co. desire to go smaller than the 7-nanometer processes that are the current status quo of CPU design.

The focus on niche areas and creating things that others can’t is set to pay off for Ushio.

Ushio is poised to seize control of the market for light sources used in testing of patterned EUV masks, there are several boutique tech companies in the Tokyo area that are incessantly focused on high-precision manufacturing.

Ushio dominates lithography lamps used to make liquid crystal displays with 80% market share and controls 95% of the supply of excimer lamps used in silicon wafer cleaning.

Their secret sauce is balancing mass production with craftsmanship.

Materials like quartz glass are arduous to work with and possess peculiar thermal expansion properties from metals like the molybdenum in which they are housed.

Ushio was established in 1964, and it was the first Japanese company to develop and produce halogen lamps.

Starting from 1973, fishermen used its lights to catch squid.

The firm has succeeded in more than tripling its sales over the past 25 years.

The company is now venturing into the use of sodium lamps to nurture plants and using ultraviolet light calibrated to such a precise wavelength to kill bacteria without damaging human skin.

September 4, 2019 - Quote of the Day

Tech Letter

“If you can't make it good, at least make it look good.” – Said Founder of Microsoft Bill Gates

August 30, 2019

Tech Letter

Mad Hedge Technology Letter
August 30, 2019
Fiat Lux

Featured Trade:

(DIVING BACK INTO VEEVA SYSTEMS)
(VEEVA)

Diving Back Into Veeva Systems

Tech Letter

A tech company that I won’t hesitate to pull the trigger on new trade alerts is Veeva Systems (VEEVA).

The most recent results illustrate how investors can never discount strong cloud companies even if the elevated levels of risk scare many people out of making committed investments.

Q2 was another strong quarter with total revenue of $267 million, up 27% year-over-year.

Subscription revenue grew 28% year-over-year, and non-GAAP operating margin was 39%.

Veeva has now passed the $1 billion revenue run rate.

This is 1.5 years ahead of the target first laid out in 2015, an influential contributor to this success has been customer satisfaction.

Strong momentum in Commercial Cloud contributed to outperformance in Q2.

In core customer relationship management (CRM), Veeva continues to extend its leadership position with new small and medium business (SMB) customers and additional enterprise expansions.

Customers continue to adopt more CRM add-ons. This happens on a product-by-product and region-by-region basis.

I’ll offer a few pertinent examples.

Veeva CRM Engage had one of its strongest quarters as 4 top 20 pharmas expanded their use of Engage to new field teams.

Customers are attracted by the deep functionality and multi-platform support of Engage and the tight integration with CRM.

Veeva notched some important design wins at the top 20 pharma for Events Management.

A current customer has been using core CRM globally for many years and recently decided to expand their Veeva relationship to include Events Management in more than 90 countries over time.

They chose Veeva because of the deep functionality and professional services capabilities needed for global events management rollout.

They will replace multiple custom systems and spreadsheets leading to a more efficient and compliant global process.

This type of commitment to Veeva’s products is a positive sign as it tries to retain a more long-standing customer.

Who else does Veeva Systems work with?

They recently signed their 10th top 20 Pharma for Vault QualityDocs. Following their success with Vault PromoMats, eTMF and Submissions.

The pharma customers selected QualityDocs as part of their move away from the legacy content management platform.

What is Veeva QualityDocs?

It is software that provides superior ease-of-use and seamless collaboration, Vault QualityDocs reduces compliance risk and improves quality processes.

It accelerates review and approval workflows and facilitates sharing of GxP documents among employees and partners.

The dire need for modernization is driving the move to Veeva in this area as is the benefit of having QMS integrated with QualityDocs and Training on the Vault platform.

This is another great example of the innovation Veeva captures from an underserved market.

There has also been meaningful progress in 3 targeted industries: consumer packaged goods (CPG), chemicals, and cosmetics.

Since announcing the new Vault Claims product last quarter, Veeva now has projects in place at 3 top CPG companies.

Veeva is also making similar inroads in chemicals and cosmetics industries.

In total, Veeva now has major business at a top 20 CPG, a top 20 cosmetics company and 2 major chemical companies.

And this is just the beginning.

I’ll continue to bet on this stock going up.

It’s the best health tech cloud play out there, no reason not to love the direction of the company.

August 30, 2019 - Quote of the Day

Tech Letter

“I don't want to be liked.” – Said Founder of Alibaba Jack Ma

August 28, 2019

Tech Letter

Mad Hedge Technology Letter
August 28, 2019
Fiat Lux

Featured Trade:

(WHY ROKU WENT BALLISTIC)
(ROKU)

Why Roku Went Ballistic

Tech Letter

Roku has had a year to remember and the party isn’t over yet after a tech analyst issued another upgrade.

This company was one of my picks to knock it out of the park this year and it has delivered in full force.

The premise behind the upgrade was that Roku (ROKU) could have 82 million active accounts by 2025 as it expands internationally.

What does Roku do?

Roku is a leader in advertising-supported video-on-demand streaming services. It does this by running commercials on its Roku Channel and other channels.

A minor part of their business is involved in making set-top boxes and streaming sticks to access internet video services such as Netflix and Hulu. Plus, it licenses an operating system to makers of smart TVs.

Roku currently relies on the U.S. market totaling 30.5 million active accounts, up 1.4 million from the prior quarter.

As the analyst reemphasized his outperform rating on Roku stock, the stock levitated, and this morning crossed the intraday level of $146 and finished the day over $147.

Roku's international growth could echo Netflix.

The company has been tagged to experience the same type of uber-growth that Netflix experienced as it went global.

If Roku can accumulate 82 million active accounts by 2025, it should have $4.5 billion in annual platform revenue.

This would make Roku's market capitalization around $40 billion to $50 billion in 2025. Its current market value is about $16.5 billion.

Operational superiority filters into the financial results with Roku expanding revenue to $250 million, up 59% year over year.

Roku posted a loss per share of $0.08, both metrics were better than analysts' consensus estimates.

Roku distributes content from a powerful list of streaming providers providing both paid and free ad-supported options. This allows the company to collect not only a piece of each paid subscription on its platform but also benefits from a growing advertising base.

Unless the government bans digital ads, Roku is poised to harvest the lion’s share of the spoils for the streaming revolution.

The unfortunate side to Roku’s stardom is the herculean task of trading a stock that moves up and down in dramatic fashion.

If the stock ever exhausts back to the $100 level, buy and hold long term.

If you try to trade this beast, your positions will get roughed around on the massive swings in the price action.

A great company deserves its plaudits and Roku positioned itself as the tech company in the right place and the right time in 2019.