Busy couple of weeks on results front

[Adam Kay]

Revisiting a holding we sold in February.

Medpace just reported-a decent but unremarkable report. Why the massive pop-Silly Shorts took a big position and got caught. 13% of the float short and no willing sellers = price explosion!
This is why you don't play games you don't understand

We sold for $330(paid $165) BUT the money was put into ORCL and we are up 60% on that to date

[Slow Horses]

@Adam-Kay said in Busy couple of weeks on results front:

13% of the float short and no willing sellers = price explosion!

what does this mean in simple terms?

[Adam Kay]

Issued shares will be greater than the float 'available to sell' because insiders and institutions just don't sell. Relatively few shares to buy and shorts must buy to close their position. Supply and demand. If 100 buyers for every share you will pay a hefty price-

With MedP Short Sellers picked the wrong stock and are paying dearly, now. Medpace daily volume is always very low. The CEO owns 20%-he aint selling

[xera]

Their stock price has just rocketed up. In light of the above can someone explain to me what is happening (assuming im not that clued up on all the Financial jargon and mechanics)

[Adam Kay]

A bunch of silly people thought they could profit from selling the stock-the opposite of someone buying. This is called 'short selling'. A short position can only be closed/realised by buying the stock back. If the price moves down you profit because you can buy it back cheaper. If the price goes up you lose because you pay a higher price.

In this example short sellers want to close(Buy), relatively few sellers as liquidity is low(owners of medpace dont want to sell) so the short seller bids the price up a lot!. I suspect many got margin called and various brokers closed their positions(by buying at whatever price they could get)

[xera]

Thanks. So this sounds like short selling going wrong (vs stories we've seen in past where short sellers have taken actions to push prices down like unfavourable reports etc). Think SMCI or one of the PHT stocks had that happen to them right?

This seems like that games company type scenario

[2BToo]

I did notice that MEDP was up over 50% today and wondered ....

If that's the case then presumably the stock price will drop back down almost as quickly as it rose?

[Adam Kay]

Live event at 6pm GMT today-looks like GPT 5 is going live.

Altman said recently...GPT-5 may look and feel like early AGI to some users—especially in its autonomous, agent-like behaviours and self-directed reasoning.
“It's not AGI—but parts of it will feel like magic.”

[Adam Kay]

This month, Elon Musk ordered the shutdown of Tesla’s Dojo supercomputer team, with its leader Peter Bannon departing and remaining staff reassigned to other projects. Dojo, designed to process vast amounts of video data for Tesla’s autonomous driving and Optimus robot initiatives, was once projected to add significant value to Tesla. However, Musk’s decision signals a strategic pivot, with Tesla increasing reliance on Nvidia and Samsung for AI compute and chip manufacturing. This move suggests Musk acknowledges Nvidia’s dominance in AI hardware, as Tesla faced challenges securing enough Nvidia GPUs and developing Dojo to compete effectively. The shift aligns with Tesla’s broader focus on integrating external AI technologies to advance its self-driving and robotics ambitions.

Makes perfect sense given his out sized investment in Colossus.

[Adam Kay]

Taiwan’s July exports soared 42% year-on-year to US$56.68 billion, the fastest growth in 15-years and beating an estimated 28.7%, led by AI-related demand as exports to the US leaped 62.8% to $18.65 billion.

No slow down

[Adam Kay]

Interesting graphic. Source: Bloomberg

[Adam Kay]

They probably made the customer pay the 15%. Then again, the FT has form making-stuff-up. Regardless 85% of $5B is better than 100% of nothing

[Adam Kay]

Some may have noticed, Twilio reported last week, dropping 20% on the news to sub $100. We sold our position in February in the $140s.

Twilio keeps handing over stock to employees to the tune of $600M annually, at the expense of shareholders. One could tolerate this if there was strong growth but 10-11% top line growth and still no earnings. Feb saw the market massively over paying for the stock(imo) and we made the opportunistic decision to exit with a significant profit.

[Adam Kay]

Coreweave CEO says demand for AI racks is insatiable with the demand/supply imbalance getting bigger.

As we have said before, supply has been the constraint and will remain same. In the 'years' ahead it will probably switch to Power constraint. We have looked at power infrastructure companies in the past, discussed it internally and here. My view was that power being a commodity is relatively low margin vs high capital cost(to scale it). What I didn't consider is the massive pull fwd the market gamblers would attribute to various stocks and bid them up to a bubbly froth. Utilities companies should not trade at multiples of 50+ and only we aint playing.

[Adam Kay]

At Jackson Hole, Powell noted that a shifting balance of risks “may require adjusting our policy stance,” indicating potential readiness to lower the central bank’s policy rate if warranted.“Inflation risks are skewed upwards, while employment risks are downwards — a complex scenario,” Powell added.Consequently, the likelihood of a September rate cut increased, rising from ~71% before the speech to ~93% afterwards.

[2BToo]

.... all of which made for a nice jump in the markets. Which is most welcome as they seem to have been stagnating of late.

(And an aside: the scrolling to the bottom of a long thread like this is a bit faff-y. Could it be split into pages, a la PH? Perhaps I should suggest this elsewhere.)

[Adam Kay]

Hi O,

It's not stagnation more consolidation. Look where we have come from.

22/April to 22 July > 40% rally in Tech/Growth
22 July to 222 August has been flat.

The rally isn't typical however the pause is. Many reasons for it.

Market awaits new information
The buyers that pushed prices higher step back
Stock holders take profit
We have given back 2-3% on the FX rate

The usual psychologies weigh on our minds as rapid gains prevail it's too easy to expect them daily/weekly. It doesn't work like that. There is also (still) a lot of DT noise we have to wade through.

Cheers

Adam

[2BToo]

Thanks Adam. Always helpful stuff.

Edited to add: there dashboard numbers haven't gone up as much as I'd expect, given the market bump yesterday. Why is that? (Telling me that my expectations are too high is a perfectly valid response.)

[dingg]

Exchange rate, usd weaker v gbp by 0.8% on expected rate cut following Jackson Hole commentary

[PorkInsider]

@dingg said in Busy couple of weeks on results front:

Exchange rate, usd weaker v gbp by 0.8% on expected rate cut following Jackson Hole commentary

Also, I believe (I'm sure I'll be corrected if wrong) that the daily update of values we see is not from close of US markets, but some time before that, so if they rose, or fell, later in the session we may not see that next day?