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Comments of the Day
29 January 2021
Video commentary for January 28th 2020
Eoin Treacy’s view
A link to today’s video commentary is posted in the Subscriber’s Area.
Some of the topics discussed include: bonds yields rebound from 1%. monetary conditions still accommodative, stock markets steady, silver and ethereum outperform gold and bitcoin, vietnam pulls back on rising cases.
Email of the day – on the validity shorting and market manipulation
It is satisfying to see some hedge funds losing because a crowd of ordinary investors are smart enough to play the game against the big guy. Does the GameStop example not suggest there is something wrong with a system that allows more short position to exist than the number of shares the company issued? Why are short positions reported only quarterly in the US? Should there not be an obligation to report short positions above a certain level in real time, at a level much less than the similar obligations for long positions (say 0.5% of the number of shares issued)? Why are short positions allowed at all? The markets are supposed to be places to raise capital, but short positions raise no capital – they are primarily used for financial manipulations that are of no benefit to society.
Eoin Treacy’s view
Thank you for this note and I think a lot of people are engaging in Schadenfreude at the expense of hedge funds. The practice of initiating a short position, then putting out of bearish report has been rife over the last decade. The instigators of this practice typically cover shortly after the initial drop and move onto the next target. It’s a predatory practice and amounts to market manipulation. Putting your put option positions in 13-F filings amounts to the same thing. So, it is high time this form of manipulation was targeted.
Shorting exists because it helps the market function more efficiently. In the competitive world of finance there should be no room for the weak. The reality today is there are legions of zombie companies supported by little more than access to cheap capital.
Big Ideas 2021
Thanks to a subscriber for this report from Ark Invest. Here is an important chart:
Eoin Treacy’s view
This report is packed full of blue sky thinking and gels with a lot of how I see the path of technological innovation over the next decade. The simple reality is that every innovation in how we communicate has created an industrial revolution. The printing press allowed for the dissemination of information and fostered inquisitiveness. The telegraph made the world smaller and allowed even more communication. The semiconductor created the conditions for instant communication. The internet realised that potential.
Coinbase is going public via direct listing
This article by Lucas Matney for techcrunch.com may be of interest to subscribers. Here is a section:
Last month, the company shared that it had confidentially filed an S-1 with the SEC, we still haven’t seen those financials but we now know that they have opted out of the traditional IPO process. Direct listings have been slowly gaining popularity and given some of the most recent first day pops from tech IPOs, it’s unsurprising to see a company like Coinbase which is likely flush with cash thanks to recent gains in the cryptocurrency market opt for a path to public markets that involves less fuss.
Direct listings allow companies to skip much of the heavy-lifting of the IPO process by stripping the public debut of a release of new shares, instead giving existing shareholders like VCs and employees a path to just liquidate their equity in the company.
This has been one of the friendliest IPO windows for tech stocks ever with investors racing to back technology companies that are primed for what’s been called the “digital transformation.” Coinbase is in a pretty favorable spot with the public markets and cryptocurrency markets aligned in frothiness. Bitcoin is currently trading near $33,000 just weeks after reaching on all-time-high.
Eoin Treacy’s view
Coinbase filed confidentially with the SEC in December and the announcement of the direct listing suggests the IPO will occur shortly. Many people have been looking for an easy way to buy cryptocurrencies and Coinbase will be a popular vehicle to express a view on the sector. It also has the added benefit from coming to market with a strong likelihood of being profitable which can’t be said for many of the shares which listed over the last year.
Eoin’s personal portfolio – stop triggered on hedge position
Eoin Treacy’s view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.
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