There’s A “Chip” Shortage: And TSM Holds All The Cards
by ValueWalk - February 26th, 2021 2:29 pm
By Mauldin Economics. Originally published at ValueWalk.
“You drove 1,000 miles just for this game?” Christmas 1988 was a stressful time for many American parents. Nintendo’s Super Mario Bros. 2 was the must-have toy that year. But copies of the hit videogame were as scarce as hen’s teeth.
Q4 2020 hedge fund letters, conferences and more
ABC News ran a 20/20 special on the shortage called “Nuts for Nintendo.” They chatted to one dad who drove 1,000 miles from Indiana to NYC in the hopes of grabbing a copy.
“I’ve tried 7 stores a day for 3 weeks and still can’t find it,” he told reporters. They called it a “chip famine.”
Why was it so hard to get your hands on a video game? Longtime RiskHedge readers know computer chips, also called semiconductors, are the “brains” of electronics. There would be no iPhone, Amazon Webstore, or online messaging apps without them.
Semiconductors were also a key part in those old bulky Nintendo game cartridges you may remember from the ‘80s and ‘90s. And they were in short supply in 1988.
They were so scarce, employees in chip factories across Japan had to cancel vacations and work around the clock. In short, this capped the number of video games Nintendo could physically make.
Did You Hear About the Latest Shortage?
Japanese carmaker Toyota shut its factory in San Antonio last month. GM, Volkswagen, Ford, Honda and Fiat Chrysler were forced to idle their plants too. In fact, GM said assembly lines won’t restart until late March.
This wasn’t due to lockdowns or a COVID outbreak. The reason was a semiconductor shortage.
Automakers spent $43 billion on microchips in 2019. And did you know the average electric car is packed with roughly 3,000 chips? These microchips often cost just a few dollars, but you can’t ship a $50,000 car without them. Everything from power steering to dashboards and automatic brakes runs on semis.
In fact, GM and Ford both warned the shortage could cut profits by $2 billion this year. And now it’s hitting everything from PlayStations to iPhones.
I walked by a line 100 deep in Dublin city center last week. They were all gamers waiting to get their hands on the PlayStation 5. It was released last November, but Sony said a lack…
 Twitter
|
LinkedIn
|
 del.icio.us
|
|
Clean Energy: A Bubble Burst?
by ValueWalk - February 26th, 2021 1:23 pm
By Jacob Wolinsky. Originally published at ValueWalk.
The rapid rebound in clean energy shows signs of weakness. Indeed, investor enthusiasm apparently overestimated growth potential and overlooked challenges such as fierce competition and pressure on margins. We adjust our view to cautious, as today’s elevated valuations increase the risks of a reality check and further setbacks. However, selected opportunities are still on offer, primarily for those companies that have an “edge” to safeguard their profits, said Norbert Rücker, Julius Baer’s director of economics and research for Next Generation.
Q4 2020 hedge fund letters, conferences and more
Rebound In Clean Energy
The clean energy issue saw a dramatic rebound through January, followed more recently by consolidation. Benchmarks, such as the S&P Global Clean Energy Index, are down more than 15% from their highs. Investor enthusiasm apparently outpaced fundamentals. The clean energy business is highly competitive and the challenges companies face in achieving sustainable profits should not be underestimated.
The transition to renewable energy, that is, to wind and solar energy, was already in full swing before 2020. Capital is not a constraint on the transition, but rather on lengthy permitting processes that reflect the so-called “no” issues. in my backyard “(NIMBY). Therefore, the green stimulus has its limits. Substantial capital inflows, in part augmented by the large amount of funds that oil companies command, inflate the prices paid for projects and put pressure on rates of return. Of course, some companies have advantages in terms of knowledge and scale, but on average, the clean energy business faces pressure on its margins.
Pressure On Energy Prices
The latest UK offshore wind auction attracted attention in this regard. Strong growth in clean power generation puts pressure on energy prices in the longer term and shortens the duration of new power purchase agreements. The exposure of energy producers to price volatility increases, undermining the inherent stability of the business model. Some of the recent earnings posts point to this problem.
We see risks that the clean energy issue is about to face a reality check. We adjust our position to cautious as today’s elevated valuations increase vulnerability to a setback. However, some opportunities are still on offer.
Norbert Rücker, Next Generation Director of Economics and Research, Julius Baer
The post Clean Energy: A Bubble Burst? appeared first on ValueWalk.
Sign up for ValueWalk’s free newsletter here.
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Global Economy To Rebound In 2021 With APAC To Lead Recovery
by ValueWalk - February 26th, 2021 12:27 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Global economy to rebound in 2021 with APAC to lead recovery, says GlobalData
Q4 2020 hedge fund letters, conferences and more
APAC Set To Become The Fastest Growing Region
The Asia Pacific (APAC) region is set to become the fastest growing in terms of GDP growth in the world followed by the Americas, Europe and the Middle East & Africa (MEA) in 2021, says GlobalData, a leading data and analytics company. Economic factors in this ranking that are aiding global regional recovery include the rollout of vaccines, revival of global demand, effectiveness of government spending, and oil prices gaining traction. Particular, the APAC region is seeing fewer lockdown restrictions, a rebound in domestic consumption and an uptick in export demand.
Gargi Rao, Economic Research Analyst at GlobalData, says: “The collapse of oil prices and increasing COVID-19 cases has hurt all global economies. Europe witnessed a steep contraction in real GDP growth by 7.16% in 2020 followed by the MEA region (-5.23%), and the Americas (-5.16%). The APAC region saw a slower contraction of -2.12% last year, with China witnessing positive growth amid the pandemic.”
Timely implementation of fiscal policies, along with the procurement and distribution of vaccines, are expected to be the main drivers of growth recovery in 2021. The Americas region is expected to rebound with 4.7% growth backed by rising oil prices, whereas Europe and the MEA will grow by 4.46% and 3.66%, respectively, during the year.
Rao noted: “The Purchasing Managers’ Index (PMI) for manufacturing in the APAC region has witnessed an uptick since the closing months of 2020, which indicates a sharp recovery in business activities and production. The expected progressive rollout of COVID-19 vaccines will help countries contain the spread of the disease and economic activities to rebound in 2021. In addition, the rebound in growth of major APAC countries such as India and China will create further opportunities for trade and spur growth.”
Growth In Manufacturing And The Service Sector
Growth in manufacturing and an uptick in the service sector will also spur growth in the Americas region, with an increase expected in business activities and online retail trade. The monetary authorities in Latin American countries have maintained…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
First-Time Acquirers Surf The Web For Deals
by ValueWalk - February 26th, 2021 12:04 pm
By Jacob Wolinsky. Originally published at ValueWalk.
First-time strategic acquirers looked to the internet to embark on their maiden M&A voyages in 2020. As consumers across the globe sheltered in place due to the pandemic, new buyers made big bets on digital commerce. And, with the shift in consumer behavior appearing to be sticky, 2021 may well see more of the same kind of rookie dealmaking.
Q4 2020 hedge fund letters, conferences and more
First-Time Acquirers Spent $34.3 Billion In 2020
According to 451 Research’s M&A KnowledgeBase, first-time acquirers of tech targets spent $34.3bn in 2020, which was nearly $9bn more than that class of buyers spent on deals in 2019. Internet content and commerce transactions, specifically those focused on classifieds, services, news and games, accounted for nearly 43% of the total first-time M&A capital outlay.
The robustness of that spending was also the result of some significant individual deals in those digital commerce subcategories. Norway-based online classifieds provider Adevinta, for example, turned heads in 2020 with the $8.9bn purchase of eBay’s global classifieds business, while food and beverage veteran Nestle made its tech M&A debut with the $950m pickup (not including a $550m earnout) of mobile meal delivery service Freshly.
In both cases, deals were struck after the outbreak had taken hold – July and October, respectively – and can thus be viewed as attempts to capitalize on the COVID-19-inspired shift of consumer eyes and dollars from brick-and-mortar channels to digital ones. As discussed in our 2021 Trends in Customer Experience & Commerce report, this digital shift will not be a short-term phenomenon, either.
Online Shopping Now A Norm
According to 451 Research’s Voice of the Connected User Landscape: Connected Customer, Loyalty & Retention survey, 35% of respondents say they will continue to shop for most items online even after coronavirus restrictions are lifted. Additionally, consumers who tried curbside pickup and mobile ordering for the first time during the pandemic report respective satisfaction rates of 96% and 95%, and 90% of those who began deploying digital wallets online during the lockdown intend to continue doing so.
Based on these findings, it seems likely that internet content and commerce targets will continue to attract increased demand throughout the rest of this year and even beyond. And, as we’ve seen, where such demand leads, first-time acquirers are bound…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
These Are The Ten Impressive Green Startups
by ValueWalk - February 26th, 2021 11:42 am
By Aman Jain. Originally published at ValueWalk.
More and more entrepreneurs now are coming up with green ideas, or ideas that tackle environmental issues. Some startups take up green initiatives either to reduce environmental harm, while some do it to gain customer support. Over the past few years, social entrepreneurs have come up with a range of ideas, including energy sharing, ride-sharing and more. Detailed below are the ten most impressive green startups.
Q4 2020 hedge fund letters, conferences and more
Ten Most Impressive Green Startups
Our list of the ten most impressive green startups is based on the data from Investopedia, Welp Magazine and other sources. This list is in no particular order or ranking. Following are the ten most impressive green startups:
-
Fuergy
Founded in 2018, this company is based in Slovakia and claims to be the Airbnb of clean and renewable energy. Fuergy has come up with brAIn, which is a proprietary hardware device and artificial intelligence (AI) software. As per the company, this product helps to “optimize energy consumption and maximize (the) efficiency of renewable energy sources.” It helps to reduce energy costs through collaborative consumption or sharing renewable energy with the community or businesses.
-
Facedrive
Founded in 2016, this Canadian company provides the same services as Uber and Lyft. Basically, it is a ride-sharing and food delivery service that uses an environmentally-friendly transportation system. Drivers who work for the company and use hybrid or electric cars get the opportunity to earn more. As per Facedrive’s website, its food delivery app is Canada’s first green service of its kind. Facedrive has a market cap of $4.122 billion CAD.
-
Power Ledger
Founded in 2016, it is an Australian technology company. The company uses its proprietary peer-to-peer (P2P) application to operate in two markets – environmental commodities trading and energy trading. Similar to Fuergy, Power Ledger‘s energy trading platform assists users to optimize their energy use by enabling them to share surplus power with others. Last year, the company bagged a contract to test blockchain energy trading.
-
Wren
Founded in 2019, this U.S. company helps users to…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Lawmaker bought cannabis stocks while pushing for decriminalization
by ValueWalk - February 26th, 2021 11:32 am
By Michelle Jones. Originally published at ValueWalk.
A well-connected House Democrat bought a large number of shares of cannabis stocks while pushing for decriminalization of the drug. According to a financial disclosure form, Rep. John Yarmuth bought $60,000 worth of cannabis stocks while publicly calling for decriminalization.
Q4 2020 hedge fund letters, conferences and more
Democrat buys cannabis stocks while pushing decriminalization
Yarmuth is chair of the House Budget Committee. On Feb. 12, he bought $1,000 to $15,000 worth of shares each in Canopy Growth, Aurora Cannabis, Tilray and Cronos Group. He bought the shares a little more than two months after the House passed the Marijuana Opportunity Reinvestment and Expungement Act, which he co-sponsored in September. The bill seems to de-schedule and decriminalize marijuana. The Senate has yet to vote on the legislation.
A spokesperson told Fox Business that Yarmuth bought the cannabis stocks after four states legalized recreational cannabis in the November elections. They also said he was “transparent about it and followed all House Ethics and financial disclosure rules.”
Members of Congress can purchase stocks, but the STOCK Act prohibits them from trading on non-public information.
Cannabis stocks continue to soar due to decriminalization efforts
Fox Business notes that shares of Cronos, Tilray, Aurora and Canopy Growth have all more than doubled year to date as momentum traders pushed them higher. Speculation that cannabis would be legalized at the federal level in the U.S. has been driving the shares. Democrats have been pushing for the legalization of pot, and since they have control of the White House, the Senate and the House of Representatives, it looks more likely that they will make good on their efforts.
However, Fox Business believes Yarmuth has lost money on his cannabis stocks despite his push for decriminalization. The news outlet notes that the four companies’ shares were down between 6% and 20% since Feb. 11, which is the day before he bought them, through Wednesday.
Scrutiny of stock purchases increases
Scrutiny of lawmakers’ stock purchases has increased amid the pandemic. House Speaker Nancy Pelosi’s husband bought up to $1 billion worth of call options in Tesla in December, while then-President-Elect Joe Biden was working on his plans to fight climate change.…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
GameStop’s Dead Cat Bounce; Munger’s Annual Meeting
by ValueWalk - February 26th, 2021 11:25 am
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email to investors discussing GameStop’s dead cat bounce; stop the speculative and manipulative madness; and Munger’s Daily Journal annual meeting.
Q4 2020 hedge fund letters, conferences and more
GameStop’s Dead Cat Bounce
1) The behavior of speculators these days boggles my mind…
Only a few weeks after losing more than 90% of their money as shares of GameStop (GME) – or “GameStink,” as I’ve been calling it – collapsed from a peak of $483 to less than $40, they’re at it again…
The stock rose 313% from an intraday low of $44.70 on Wednesday to an intraday high of $184.68 yesterday before closing at $108.73 – a 41% drop in a mere three hours!
There were similar bounces and crashes in other stocks in my “Short Squeeze Bubble Basket,” most notably AMC Entertainment (AMC) and Koss (KOSS).
This mini-bubble is even more ridiculous than the initial one – these are classic “dead cat bounces.” Mark my words: These three stocks will never again reach the highs they hit yesterday and will continue their collapses back to their fair values, which are much lower than today’s levels.
This reminds me of what one of my investing mentors once told me – he called it the “law of twos and threes.” What this means, he explained, is that every stock, on its way to zero, doubles three times and triples twice! (I do not think these three stocks are zeros, but the rule still applies.)
Stop The Speculative And Manipulative Madness
2) What’s going on sickens me – it’s high time that regulators cracked down on all the things that have turned our markets into casinos. My friend Doug Kass of Seabreeze Partners has some great ideas:
Stop the Speculative and Manipulative Madness by Introducing a Financial Transaction Tax and by Eliminating Weekly Stock Options
- Speculation is an almost constant condition – it has been going on through history
- But manipulative practices ruin our markets
- The introduction of a financial transaction tax and the elimination of near term (weekly) call options would help to eradicate the manipulation in our markets
- A financial transaction tax would also squash high frequency trading and front running (of order flow)
…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Microstrategy Invests Another $1 Billion in Bitcoin
by ValueWalk - February 26th, 2021 11:08 am
By Jacob Wolinsky. Originally published at ValueWalk.
Microstrategy has invested a further $1.026 billion in Bitcoin, bringing its total investment in the asset close to $5 billion. With corporate and institutional interest in crypto assets at an all time high, the move is likely to spur further adoption of the asset class.
[soros]
Q4 2020 hedge fund letters, conferences and more
With this in mind, below is an expert comment on the implications of this move from a leader in the crypto space, Konstantin Richter, the CEO and Founder of Blockdaemon, the leading independent blockchain infrastructure provider.
Commentary Microstrategy’s Investment In Bitcoin
Konstantin Richter, CEO and Founder of Blockdaemon:
“The rapid pace of institutional inflows into cryptocurrencies continues in 2021 with the news that Microstrategy has invested a further $1.026 billion into Bitcoin. The firm now holds over 90,000 Bitcoin totalling close to $5 billion as a reserve treasury asset. This strategy is paying dividends in the mainstreaming of crypto assets among corporations and institutional investors, evidenced by the fact that 1,400 firms attended the free “Bitcoin for Corporations” course provided by Michael Saylor.
More institutions will follow suit as the narrative of Bitcoin as an inflation hedge continues to hold considerable weight among investors, with recent moves by Tesla, Square, and BNY Mellon likely to be only the tip of the iceberg in what will come next. Unlike national currencies, Bitcoin has a finite supply of 21 million, which makes it a hedge against inflation akin to gold. We are moving into an exciting phase for crypto assets as the asset class moves from the fringes to become a core offering of financial markets. Overall it is great news for the crypto asset class and portends a major transformation of the crypto landscape.”
The post Microstrategy Invests Another $1 Billion in Bitcoin appeared first on ValueWalk.
Sign up for ValueWalk’s free newsletter here.
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Finally – The Stock Market Tanks
by ValueWalk - February 26th, 2021 11:03 am
By Matthew Levy. Originally published at ValueWalk.
Surging bond yields continues to weigh on tech stocks. When the 10-year yield pops by 20 basis points to reach a 1-year high, that will happen.
Q4 2020 hedge fund letters, conferences and more
Dow, Nasdaq And S&P 500 Down
Tuesday (Feb. 23) saw the Dow down 360 points at one point, and the Nasdaq down 3% before a sharp reversal that carried to Wednesday (Feb. 24).
Thursday (Feb. 25) was a different story and long overdue.
Overall, the market saw a broad sell-off with the Dow down over 550 points, the S&P 500 falling 2.45%, the Nasdaq tanking over 3.50%, and seeing its worst day since October, and the small-cap Russell 2000 shedding 3.70%.
Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, say welcome back to inflation.
I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.
He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.
Buying Opportunities
This slowdown, namely with the Nasdaq, poses some desirable buying opportunities. The QQQ ETF, which tracks the Nasdaq is down a reasonably attractive 7% since February 12. But there still could be some short-term pressure on stocks.
That correction I’ve been calling for weeks? It may have potentially started, especially for tech. While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of March could happen.
I mean, we’re already about 3% away from an actual correction in the Nasdaq…
Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
The Topic Of Gender Diversity On Boards Is Gaining Traction
by ValueWalk - February 26th, 2021 10:46 am
By ActivistInsight. Originally published at ValueWalk.
A trio of proxy fights announced this week show the benefits of collaboration for activist investors, as well as the impact of a successful track record.
Q4 2020 hedge fund letters, conferences and more
Activists Collaborate To Pounce At Kohl’s
Macellum Capital, Legion Partners Asset Management, and Ancora Advisors were joined by 4010 Partners in nominating a control slate at department store operator Kohl’s. Separately, Legion and Ancora announced their own solo fights, at OneSpan and Blucora, respectively.
Running concurrent proxy fights has always been a skill available only to a few dedicated activist funds. In recent years, the number of competencies demanded of a board slate has only increased, and in the wake of COVID-19, institutional investors and issuers could be more skeptical of the benefits of introducing unknown elements into the boardroom. Legion, one such activist (with 10 public settlements for board seats since the start of 2018) noted in The Activist Investing Annual Review 2021 that it planned to contest at least three fights this year.
Collaboration therefore spreads the burden, while allowing small funds to hunt bigger prey. Activist Insight Online data suggest that $8 billion Kohl’s is the largest target for any of Macellum, Legion, or Ancora. For Macellum, which raises separate funds for each activist campaign, the additional firepower is no doubt welcome, while the three have worked together successfully in the past.
Previous Campaigns
Indeed, campaigns at Bed Bath & Beyond in 2019 and Big Lots last year highlight the increasing scalability of the playbook. At the time the Bed Bath campaign was initiated, Macellum, Legion, and Ancora initially owned 5% of what was then a $2.3 billion company. Last March, Macellum and Ancora amassed 10% of the then-$2.5 billion market cap Big Lots. Regulatory filings suggest both investments returned multiples of their initial purchases.
The strategy at Kohl’s resembles both of those triumphs, with an emphasis on controlling costs, improving strategy, and optimizing the balance sheet with a sale-leaseback. Small wonder that the value of the quartet’s stake was around $800 million when they announced their campaign on Monday.
The achievement is also noteworthy because of the pandemic. Activism in the retail and leisure sector fell by one-third to just 55…
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.