The Razor’s Edge

Twitter‘s CEO Change And The Market Whirlwinds Around The Company

We pick up this week's conversation where last week's (and so many of our past episodes left off) - what about Twitter, at this price, in this economy? We talk about the succession decision and why the set-up for the incoming CEO, intentionally set or not, is pretty attractive. We talk about Elliott Management's role in all this, and what they might be thinking about Twitter at this stage. We talk about downside and sector performance, and then we circle back to last week's discussion on the overall market volatility and why buying great companies irrespective of price can lead to more than the occasional pothole, even if the ride as a whole may turn out successful enough.

Topics Covered

• 2:45 minute mark – Twitter’s valuation and the set up for new CEO Parag Agarwal
• 8:00 - The succession decision
• 14:00 – Other considerations for this move
• 22:00 – The downside at this point for Twitter
• 25:00 – Elliott’s role in all of this
• 29:00 – Sector movements
• 34:00 – Market considerations
• 40:00 – Places to avoid
• 45:00 – Extreme outcomes when buying a good business
• 49:00 – The ongoing volatility event in the market

The Docusign Sell-Off And The Latest Market Veer

Docusign’s sell-off on Friday and the corresponding market (and Nasdaq) sell-off are the latest sign of market uncertainty. No one knows anything – as Monday’s rally reminds us – but the question is whether we know we don’t know. In this week’s The Razor’s Edge, we focus on the uncertainty in the market, the importance of valuation even when growth stocks work, and how to handle the volatility. This ends up being a two-parter, as we will get to Jack Dorsey’s exit from Twitter in the second part next Tuesday.

Topics Covered

• 2:45 minute mark – Docusign initial take
• 5:00 – Ringing the bell or the rolling sell-off
• 14:00 – Inflation and the macro in context
• 21:00 – Buy and hold and contrasting investing styles
• 24:00 – Starting SaaS multiples
• 35:00 – Limited entry point
• 43:00 – Bubble basket challenges
• 51:00 – Triggers and bottoms

Some references:

• Daniel’s Docusign article
• Akram’s SaaS tweet
• Akram’s Zoom tweet

The Future Of Compute: Naveen Rao on How The AI Landscape Has Changed

We wrap up our Future of Compute series with a leading force in the field, Naveen Rao. Rao founded Nervana Systems, the first next-gen AI chip company, which he sold to Intel. He then drove Intel's AI road map before stepping down from the company in 2020, and just recently announced the founding of MosaicML, an AI startup focused on making algorithms more efficient through what he calls here a 'benchmarking as a service' approach.

Given his interest in AI stretching back over two decades and his front seat position in the field, Rao's perspective on the competitive landscape, on how things have changed from Nervana to Mosaic, and the challenges facing merchant silicon firms is both valuable and a nice wrap-up of the three part series. He gives his take on the Nvidia/ARM deal, Intel's position, the supply chain, and a lot more.

Check out MosaicML, as well as their twitter account and Naveen's.

Topics Covered

• 2:30 minute mark – Naveen’s entry into the AI world over his career
• 6:00 – What did people have to learn about neural networks?
• 8:00 – The goal of Mosaic
• 14:00 – View on the current landscape
• 17:30 – The model Mosaic is targeting
• 20:30 – The significance of Nvidia’s A100 and shift to AI dedicated GPUs – the field in 2016
• 26:00 – The field in 2018
• 32:30 – How to look at the AI market today
• 38:30 – The challenges facing legacy merchant silicon makers
• 45:30 – Can the industry continue to develop with such a fragmented environment
• 51:30 – Intel’s reaction to the current climate
• 55:30 – Where are the IPOs?
• 1:04:00 – Tesla’s D1 Chip and AI ambitions
• 1:12:30 – The Nvidia/Arm deal
• 1:15:30 – Supply Chain challenges

Peloton‘s Stock Dropping Back To The Pack: A Bad Sign, An Opportunity, Or Both?

This week we take a break from our Future of Compute series on the Razor’s Edge to talk Peloton.

In an earnings season full of big moves and surprises, Peloton's downhill fall has been one of the headline events. As we mention on the call, who would imagine that COVID would still be a part of our lives, but Zoom and Peloton shares would be flat from June 2020? And yet, here we are.

We break down how management may have backed themselves into a corner and what it would take for Peloton to climb again. We also get into how this is a signal of the pandemic-related challenges that still face many companies in a market that, despite continuing to rise as a whole, has seen more and more companies hit potholes.

Topics Covered

• 2:30 minute mark – Peloton’s earnings fiasco
• 8:30 – The business model and the bull case
• 15:00 – Did Peloton’s management set themselves up for a fall?  
• 21:00 – The permanent changes vs. trends in the broader U.S. economy
• 27:30 – How to recover from lost credibility
• 35:00 – Where does upside come from
• 40:00 – How Peloton can stabilize/turn it around
• 48:00 – The narrative momentum
• 56:30 – Market dispersion
• 1:01:00 – Last call on Peloton, and comparison to Zoom
• 1:16:00 – The challenges exiting a pandemic and investing meanwhile

The Future Of Compute: Cerebras‘s CFO, Tony Maslowski, On The Fragmenting AI Market

The accelerating growth in the AI market requires different approaches from the hardware side. Cerebras's approach is that size matters and bigger is better: the company's massive wafer chip is the base of its AI intentions. CFO Tony Maslowski discusses the company's core insights and how that positions them to compete in the market. Maslowski, the former CFO at Avago Broadcom, also shares his view on the current supply chain challenges, on when these new-gen companies might go public, and on what the end game might be for the incumbent - Nvidia - and its challengers.

Topics Covered

• 3:00 minute mark - Cerebras Origins
• 7:00 – Unpacking Cerebras’s core insight
• 10:00 – How has the market evolved the past few years?
• 14:00 – Telling a new story and carving a new path in the chip space
• 21:00 – System vs. accelerator solutions
• 22:45 – Current end markets for AI
• 29:00 – Differentiating between AI and supercomputing
• 33:00 – Understanding training vs. inference
• 36:45 – The fragmentation of AI uses and suppliers
• 41:45 – When do these companies start coming public?
• 43:45 – The limits or challenges on competing for a new company
• 46:45 – What force drives AI use in the near term?
• 48:45 – The lost flexibility in the semiconductor supply chain
• 53:45 – The auto industry’s chip needs
• 55:00 – Where the leading force in the chip industry will come from

The Future of Compute: Ampere Computing‘s CPO, Jeff Wittich, On The Data Center Chip Industry

The semiconductor industry is in a period of transition. Supply chain problems and questions over whether we are now in a secular growth environment; changing leadership as Intel loses ground and Taiwan Semiconductor, Nvidia, and even a new generation of start-ups stake out a claim; and the new demands posed by Artificial Intelligence and its burgeoning compute needs.

We're rolling out a little Future of Compute series to cover this. We speak with several executives and experts in the field to hear what the state of semiconductors, technology usage, and artificial intelligence from the hardware and software side looks like.

We kick off with Jeff Wittich, Chief Product Officer at Ampere Computing. Wittich, like several of his Ampere colleagues including CEO/founder Renee James, is an Intel veteran. Ampere’s aim is to develop server chips designed explicitly for cloud usage, using an ARM chip framework, with the target of delivering much greater power efficiency. They seem to be gaining traction, with the most recent evidence being reports SoftBank is considering an investment in Ampere at an $8B valuation.

We speak with Jeff about Ampere’s journey, about why now is the time for Arm-based chips in servers, about how hyperscalers shape the industry’s demands, the state of semiconductors, and of course a bit on Intel and its challenges.

Topics Covered

• 4:00 – Ampere’s story
• 6:00 – What does a cloud focus mean for a chip maker?
• 11:30 – ARM’s experience in the data center world
• 16:45 – Why now for ARM-based server chips?
• 19:30 – TSM’s passing Intel and Intel losing its data center advantage
• 24:30 – The role of the hyperscalers as pace setters for cloud hardware
• 28:30 – Can Intel hold onto a shrinking datacenter TAM?
• 30:30 – The inflection point in the competitive landscape
• 35:00 – The in-house vs. outsourcing question for AI companies
• 41:00 – The inference vs. training distinction and the role of the CPU
• 47:00 - Optimizing for AI workloads
• 50:30 – How is Ampere lasting when other companies quit
• 55:30 – Supply chain outlook
• 58:30 – Risk of a cyclical downturn?
• 1:01:30 – Lightning round and edge vs. cloud

The Market Misperceptions Around Alibaba, Stitch Fix, And Twitter

***

Before you listen, there is a The Razor's Edge newsletter now available. Written by Akram's Razor, the Razor's Edge will come out at least twice a month and include ideas, analysis, macro input, and the insights you would expect from this podcast. Check it out at: https://the-razors-edge.ghost.io

***

We revisit three The Razor's Edge names from 2021. Alibaba is down in the dumps from regulatory scrutiny, Stitch Fix can't get no respect, and Twitter received a negative sell-side initiation. We talk about each of the stocks, and while on the surface it would seem that nothing beyond stock performance and our interest unites the three, there are a lot of echoes in how the market is looking at each of them, at least from our vantage point.

Topics Covered

Alibaba

• 3:30 minute mark - Why the recent regulatory reports around Ant Financial aren’t shocking
• 10:00 – US corollaries for the current discussion
• 14:00 – Last year’s warning
• 18:00 – The significance of the FT report and how it might help Alipay’s/Alibaba’s position
• 22:30 – The impact on Alibaba’s valuation itself
• 26:30 – China regulators vs. U.S. regulators
• 33:00 – Time horizon for clouds to dissipate

Stitch Fix

• 38:00 – Why is Stitch Fix so bad? Reviewing the story, valuation, stock, etc.
• 49:30 – The stylists’ news
• 53:00 – The market context for SFIX’s stock

Twitter

• 55:30 – The Goldman downgrade and the confusion about Twitter from bulls
• 1:02:00 – Reframing the creator tools
• 1:08:00 – Blurring lenses in analyzing Twitter (or all of these names)
• 1:12:30 – The luxury of not having the market’s trust

PagerDuty‘s Present And Future Growth With CFO Howard Wilson

***

Before you listen, there is a The Razor's Edge newsletter now available. Written by Akram's Razor, the Razor's Edge will come out at least twice a month and include ideas, analysis, macro input, and the insights you would expect from this podcast. Check it out at: https://the-razors-edge.ghost.io

***

PagerDuty has been a regular topic on The Razor's Edge for over a year, and this month's earnings seemed to reward that attention, as the company crossed the magic 30%+ revenue growth barrier for the first time since the pandemic began.

To get more details on what drove that acceleration and what might come next, we spoke with Howard Wilson, PagerDuty's CFO. We talked about the macro climate driving PagerDuty's opportunity, the competition they are seeing and why they remain confident about it, and what product expansion looks like.

Justen Stepka, regular Razor's Edge guest and formerly of Atlassian and Docker, joined us, and the conversation went deep on strategy, tactics, and opportunities across the board. We think you'll get a lot out of this episode.

 

Topics Covered

• 3:45 minute mark – The second derivative effect
• 5:45 – What’s driving growth?
• 8:15 – Where is the sales focus?
• 9:45 – How the free tier fits into the business
• 13:15 – The power of the freemium model for PagerDuty
• 16:00 – The changing competitive stance and field
• 19:30 – Success in competing as a public company so far
• 22:30 – What is the future revenue growth strategy?
• 26:15 – PagerDuty network opportunities
• 29:45 – Customer sizing and how far penetration can go
• 37:45 - Pricing tiering potential
• 40:30 – Security Ops as an opportunity
• 42:15 – Long-term operating leverage

Travel Stocks Like Booking And Boeing Set For Another Take-Off

The quick hit re-open trade of January/February came and went. The U.S. is facing the delta variant of COVID-19 in full, which has shaken out some of the fast money from the travel sector. And yet...

On this week's The Razor's Edge, we talk about why we think, in different ways, that the travel stocks are set up well for this year and beyond. There's a bit of the macro, a bit of a take on delta's persistence, and a lot more on Booking Holdings and Boeing as our focus companies. The full picture may not be clear, but we make a case for why there's enough visibility to make a bet at this point.

Topics Covered

• 2:30 minute mark – The travel sector’s air pocket
• 7:00 – The delta factor
• 12:00 – The contrasting set-up between travel stocks and COVID winners this earnings season
• 15:30 – Booking Holding’s relative advantages in travel
• 22:00 – Thinking about Booking’s valuation
• 27:00 – Boeing’s situation and the 737 MAX and so on
• 30:00 – Portfolio positioning at this stage in the market
• 33:30 – Resetting on the macro outlook
• 40:30 – The deflation in inflation talk
• 43:30 – The importance of focus with more public names out there
• 47:30 – The lurking presence of the crypto trader
• 53:00 – The incremental news flow for travel
• 1:02:00 – The Covid market pendulum

Covid-Era Comps Begin: A Look At Netflix's And Twitter's Earnings

Earnings season this quarter comes with a special kick. It’s the first one lapping full COVID comps, which means we can start to see what the wonky pull forward or shut down year ago will do to company’s reports, and how the market will respond.

We focus today on Netflix and Twitter, two of our old standbys. On the one hand, they had opposite quarters – Netflix suffered from a post-COVID hangover in their subscriber numbers, which will likely lead revenue numbers; while Twitter posted a huge revenue beat compared to a pandemic crimped Q2 2020. Look a little closer, and there are similarities between the two companies positions and how they look going forward. We break it all down.

Topics Covered

Netflix

• 4:00 minute mark - Was COVID bad for Netflix?
• 10:45 – Measuring Netflix’s numbers given the last two years
• 17:30 – The slowdown reaching streaming peers
• 25:00 – The industry implications of Netflix’s position and the market reaction
• 34:30 – Is the winnowing coming?
• 41:00 – What hope is there for other streaming stocks if Netflix is not attractive here?

Twitter

• 45:15 – The strong quarter, and the one gray note in the report
• 50:00 – Where is Twitter fitting in amongst a hot space…
• 55:00 – And how Twitter is better set up for when ads cool off
• 58:00 – The spending side of the line
• 1:03:00 – Twitter’s set up for the back half of the year

 

After Didi Global: Are Chinese Stocks Investable?

The Didi Global IPO feels like a fiasco - company goes public one week, gets booted from the app store by Chinese regulators the next. With RLX Technology undergoing a similar crackdown earlier this year, and with Ant Financial still being kept off the market, and with concerns around Jack Ma's well-being in light of his criticism of the government, it's not a huge surprise most big-name Chinese stocks on the U.S. markets are trading poorly.

A lot of questions arise, but the most basic one - can you invest in these stocks? In this week's episode we talk about Didi and what the various parties' motivation might be, what might make the picture clearer, and whether you can really invest in Alibaba, as well as whether that matters.

Topics Covered

• 3:15 minute mark – What to make of the Didi crackdown
• 8:30 – Are China ADRs investible?
• 14:15 – What does an ADR actually get you?
• 22:15 – Considering the Chinese government’s calculus
• 25:15 – The difficulty of establishing an edge in these names
• 33:15 – Norms and flows, betting vs investing
• 39:15 – How much the right price can matter
• 47:15 – Revisiting the “Amazon of China” idea
• 52:45 – The Sina example
• 57:15 – U.S. Sino accords and balances of power
• 1:06:15 – Investing in China-based companies

Short-Selling In 2021: Beware The Crowded Trade, And Eyes On Nvidia

"I'd rather short a real company than a fraud or a meme stock."

Akram's Razor made this case on a recent Twitter Space, and we unpack the point on today's episode of the Razor's Edge. In a year when many short-sellers have been run over by trains, and have the AMC and GME shaped scars to prove it, betting against a popular, universally loved name may actually be safer. We go over Akram's historic approach to shorting, how that has to adapt to the current market, what the line is between a meme stock and an ordinary dud, and Nvidia's current position, which is more precarious than the market seems to be pricing in.

Topics Covered

• 2:30 minute mark – Akram's historic shorting approach vs. the current market
• 9:00 – Microstrategy (MSTR) hodlco vs. opco
• 15:00 – Pay attention vs. avoid meme stocks
• 20:30 – More tangible shorts
• 24:30 – Sketching out Nvidia questions
• 32:30 – Sketching out tech sector questions
• 39:30 – The risk of relying on management to warn about slowdowns and the value of contrarianism (in spots)
• 47:30 – Disputing numbers vs. disputing stories and the proof of stake risk
• 53:30 – The ARM deal and Nvidia’s meme potential
• 59:30 – Staying out the way of these memes
• 1:06:00 – Building the “you’re crazy” basket

Fed Reaction and the (Re)-Rise of SaaS

Last week's Fed meeting played to expectations - slightly tougher talk, limited changes in policy.  The market's reaction was to pile back into the Covid winners, which meant SaaS stocks among others.

So for today's episode, we follow up on our Fed discussion from last week, talking their decision and the market and media reaction. We then move over to the SaaS sector, our regular field. We break down three companies in detail – Zoom, PagerDuty, and Workday. We finish off with thoughts about the growth hangover that might plague COVID winners generally.

Topics Covered

• 2:30 minute mark – Our Reaction to the Fed meeting
• 6:30 – The market and media reaction to the Fed meeting, and the difference between the health crisis and the market crisis (or reaction thereto)
• 17:30 – The analytical challenge for investors and the Fed, with the housing bull market as an example
• 23:30 – The crowding effect in the markets
• 32:30 – Shift to SaaS – Hasn’t ZM grown into their multiple and what does 2022 look like?
• 45:30 – PagerDuty – No surprises; the billings; Atlassian and Everbridge; multiple expansion
• 53:30 – Workday – Why the outlook lines up better for them than many SaaS peers – winning the finance office
• 58:30 – The distinction between Workday’s or PagerDuty’s customer base and Twilio’s or Zoom’s
• 1:09:30 – Growth hangover for Covid winners – THO as an example – and for the investors holding them

(Note: Daniel is long DBX as well as PD/THO, that disclosure was accidentally omitted from the recorded disclosure).

Meme Stonks Part Deux: AMC, Algos, and The Fed

We've seen this movie before, but it still doesn't really make sense: a group of traders has taken up the cause of inflating the stock price of a motley bunch of stocks, including AMC as the most prominent company this time around. There are hints of financial populism as there were with GameStop in January, but this time it feels more like pure financial nihilism.

On today's episode of The Razor's Edge, we talk about the difference between round one and round two, how AMC should have something of a future even if it's more than priced in, and how given the trading volumes it would be rash to assume retail traders are truly driving this movement. We also talk about the body lurking in the background who could, if they so chose, take action to stop or slow this mania. Jerome Powell, you're our only hope? We break it down.

Topics Covered

• 3:15 minute mark – Meme stocks part deux, and the bleeding from trading into investing
• 11:30 – The abstraction of what moves a stock, and AMC vs. GME fundamentally
• 24:00 – Where does this leave AMC and the countercultural movement behind the meme stocks
• 34:00 – The algorithmic muscle behind these moves
• 39:00 – The blending of signal and noise and market virality
• 46:30 – The fight against financial nihilism: Here comes the Fed?
• 53:00 – Risk reward of proactive action vs. reactive from the Fed
• 1:00:00 – The limits of regulation vs. the limits on liquidity
• 1:04:00 – What might the Fed actually do
• 1:13:00 – The weirdness of the recent past and how that compares to our current climate, and where that leaves the Fed
• 1:18:00 – Fed Credibility

Also, check out another Shortman Studios podcast, the Big Tech Ticket, featuring conversations on the biggest issues in tech. https://podcasts.apple.com/us/podcast/the-big-tech-ticket/id1565981471

 

The Yalla Buzz And The Back Talk

A couple weeks ago, Akram released a short thesis on Yalla, calling out an odd business model and then some major issues with the platform - duplicative accounts, low engagement, glitches with the gifting model, etc.

On this week's episode we recap that short thesis for those who haven't heard it yet, but then we also go into the aftermath. What's it like to have another short report come out in the same week? Where are the bulls? What about that buyback announcement? And where can this go? 

Topics Covered

• 4:00 minute mark – Background on the Yala case
• 7:15 -How Yala works
• 13:30 – The content creation red flags
• 18:30 – What's the deal with gifting?
• 25:00 – The circle that won't square
• 32:00 – Thoughts when another short (or three) enters the debate
• 37:30 – Lack of bulls and the company response
• 43:15 – Where does this go from here?
• 49:00 - An alternative playbook
• 54:30 - The state of shorting and why this one is different

Reading material

• Akram's Razor's presentation on Yalla - https://www.dropbox.com/s/wntrsycechmyxj9/YallaPrez.pdf?dl=0 and update - https://www.dropbox.com/s/y4wihdy3f7zjz6a/Yalla%20FollowUp.pdf?dl=0
• Swan Street Research's presentation on Yalla - https://www.swanstreetresearch.com/post/swan-street-is-short-yalla-group
• Yalla's press releases in repsonse: Standard refutation -  https://seekingalpha.com/pr/18325971-yalla-group-limited-responds-to-short-attack-reports - and stock buyback announcement - https://seekingalpha.com/pr/18328269-yalla-group-limited-announces-up-to-us-150-million-share-repurchase-program

Transitory Inflation Vs. The Looming End Of Covid

Inflation realities and fears struck the market last week, sending indices lower and helping drive the Nasdaq's 3rd consecutive losing week. At least that's the straightforward read, but as with so much of the market, there could be other things going on. While many are talking about the CPI report, the CDC's updated mask guidance is a reminder that a post-COVID world is coming. So is that what's moving stocks, or how are investors thinking about all this?

On this edition of The Razor's Edge, we talk about the nature of this inflation and the nature of this market, how it compares to past environments, and what sorts of changes we are or are not making in our positioning.

Topics Covered

• 3:00 minute mark - Interpreting the regime change – inflation or end of covid?
• 11:00 - The inherent rebalancing
• 19:30 - Changes in mindset or positioning
• 22:00 - What transitory inflation means, and looking back at 2000 
• 31:00 - Managing relative value as a strategy in a changing investment regime environment
• 37:30 - Disney as an example of what is a good return and thoughts on pair trades
• 45:00 - Hitting the reset button coming out of the pandemic

The Big Tech Ticket: The Calculus Behind Facebook's Oversight Board And The Trump Decision

We're sharing the debut episode of a new Shortman Studios podcast, The Big Tech Ticket. The show, hosted by veteran journalist James Rogers, will cover many of the topics you hear on The Razor's Edge, but from a different angle. AI, semiconductor supply chain, antitrust, all the big issues facing tech and our society today, from the perspective of people with a front-row seat to the stories.

The initial episode features James speaking with Jason Mollica, professor of communications at American University, about Facebook’s oversight board and its awaited decision on whether or not to let Donald Trump back onto the platform. The show was recorded a few weeks ago, and with the decision expected to come out today, the discussion is timely. So, without further ado, check out this episode of the Big Tech Ticket, and sign up for the show wherever you get podcasts, including:

Apple: https://podcasts.apple.com/us/podcast/the-big-tech-ticket/id1565981471

Spotify: https://open.spotify.com/show/3Aj3Za0kZRMpAGwzgLybPw?si=3c855142bde04233

Topics Covered

• 2:30 minute mark - The background on the Facebook Oversight Board’s pending decision
• 7:00 – What is the board considering?
• 9:30 – The board’s independence and the stakes of this decision
• 13:30 – The impact on users
• 18:00 – How might this affect Facebook’s business as a brand-safe platform?
• 21:30 – The global political impact of this decision
• 24:30 – Knock-on effect to other platforms like Twitter
• 27:30 – What would Trump’s play be in a social media network
• 33:30 – Facebook’s resiliency
• 38:00 – The legacy of Trump’s social media use

Opening The Box On Stitch Fix's Bull Case Amidst A Rocky Year

On this week’s The Razor’s Edge, we’re talking Stitch Fix. The e-commerce apparel retailer has had quite a six months – a strong earnings report in December sent shares higher, propelled perhaps by high short interest in the name. That high short interest took on rocket fuel in January amidst the Gamestop frenzy. The air came out of the shares, and then the company reported a weaker earnings in March. And then co-founder and CEO Katrina Lake announced she would step down as CEO in August. So a lot going on.

The stock has passionate bulls and bears, and we try to sort out the bull case and whether it's a keeper.

Topics Covered

• 2:45 minute mark – Daniel’s SFIX elevator pitch
• 6:00 – How to peg a valuation for a unique approach
• 12:00 – The value proposition and the edge
• 20:00 – Using (or misusing) the Netflix parallel
• 26:00 – Advantages from the back end side
• 34:00 – Is this changing the game in apparel
• 43:00 – The competitive threats that might come into play
• 49:30 – What to make of Lake stepping down and final notes

The Semiconductor Shortages And Why Building Foundries Might Not Solve It All

Semiconductor shortages have been one of the big economic themes emerging in 2021, in our ‘light at the end of the tunnel’ pandemic stage. We have to mention the pandemic because that’s a proximate cause of many of the shortages and supply chain issues that have beset the semiconductor industry and many others. The Auto industry has been a headliner for having to shut production due to lack of semis. And with some grumbling between China and the US over Taiwan, the key role that island plays in the supply chain also looks like a vulnerability.

On today’s episode, we attempt to navigate the economic, geopolitical, and investing implications of all this talk, while zeroing in on the supply chain and its oligopolistic, specialized nature.

Topics Covered

• 2:30 minute mark – The shortage and Covid dynamics in semis
• 7:15 – Working through the supply chain itself
• 16:45 – The consolidation and specialization along the chain
• 20:30 – Distinguishing the auto industry’s demand needs, and the illustration of supply chain limits (or not?)
• 28:00 – The role of the hyperscalers and what would happen if we built fabs in the US
• 34:00 – TSM’s freezing effect on the China-Taiwan-U.S. relationships
• 37:00 – Don’t forget the pandemic effects
• 41:30 – China’s successes in the chip supply chain
• 44:30 – The U.S.’s limits as a consumer market
• 46:30 – Semiconductor market outlook in light of all of this
• 56:00 – Last political notes for context

 

The Last Thing We Needed: Breaking Down the Archegos Capital Blowup

The Archegos Capital blow-up at the end of Q1 marked the second huge non-fundamental market event, mirroring the GameStop/Melvin Capital/vintage investing short squeeze dynamics of January. While these can feel like localized events, making or spoiling GSX or VIAC investors' quarters, they at the very least offer important reminders of risk management and understanding your underlying investments. We break down how something like this might happen and what it means for bystanders and active investors.

Topics Covered

• 2:30 minute mark - The Archegos and GameStop echoes
• 10:00 - The scaling of the short squeeze strategy
• 13:30 - Lone actor or market reflexivity at work?
• 16:00 - What fundamentally changed during COVID for these sorts of names
• 21:30 - The lack of an exit strategy
• 27:00 - Aftershocks of this action
• 33:00 - Adjusting to an elevated valuation environment and the leverage factor
• 39:00 - The company and prime brokers’ perspective on this situation
• 45:00 - Where do we go from here
• 54:00 - The danger of consensus
• 1:00:00 - Time to make weight for certain stocks

Bonus: Article from Michigan Radio on sewer issues