For the first time this week I feel alive, I must have gotten a little too ‘comfortable’ with my food choices here in India…
Speaking about comfort, new data suggests that the majority of firms and retail believe the market is going to top this month or next. Most are predicting this will take place as Trump takes the helm. (my observation of multiple sources, I may be wrong on this analysis).
You’ll notice a lot of news sources discussing a potential bubble, some claiming it’s the biggest in history. These are likely produced by the same people who have under-performed this year. Given the benchmark is 30% I cannot wait to see how large that number is.
This keeps me comfortable in taking new positions..
We have also set a new record for the “outflow of Chinese equities”, following the huge stuff after large scale stimulus talks this Monday. The Chinese market is not trusted and I’m not talking about government (although that’s a factor). I’m talking about how after any big day in the market, everybody including us, goes to bed thinking (for the love of god please don’t gap down).
We’re so used to the volatility that most have no interest in touching the equities again. In fact, it’s the rare instance where even some of those whom are long are also bearish, as they’ve been margin called for most of their capital already.
Those who are bullish are bullish on what names? A few immediately pop to mind BABA, BIDU, JD, PDD.
Now this got me thinking, whilst said companies are extremely undervalued and whilst said companies are of high quality, they have the largest amount of “bulls” already positioned In them. They also have the largest floats and most show slowing growth, not to mention they trade at the highest current P/E and P/S relative to the other ADRs.
Given the laws of supply and demand, pricing of options and growth factors, it lead me to believe the better opportunity may be a little more under the surface. It’s why I’ve been looking into some of the other ADRs like TIGR, JKS etc etc
As theoretically speaking, if a name has been able to grow in the past 12 months with the current monetary policy and hideous market backdrop, there’s a strong chance of accelerated growth once both change. Technically speaking, the growth names would get cheaper every day they sit still. (Stock Price/Growth%) * 365 would give you a theoretical value increase per day (This is the way my brain works, you may feel it’s retarded).
Anyways, if you compare say BABAs Earnings to TIGRs, TIGRs revenue reached a historical high, net income increased 580% Y/Y and TAUM increased 115% Y/Y. They also had a hideous backlog of retail customers trying to sign up in Octobers pump plus launched their own debit card (similar to Robinhood). They also under-wrote 13 Ipos and grew customers 19.3% Y/Y. Now this is in a market where most other names missed, so what happens when Chinas stock market gets hot again? Remember covid when a lot of retail customers never used to trade, now hundreds of millions use their broker app like a bookmaker. So when the Chinese market picks up, TIGR is almost guaranteed to benefit greatly and for a long period of time. Now I’ve mentioned that it makes you bullish doesn’t it? Easy thesis and easy to understand, they usually provide outsized moves.
This thought process had me diving into all the other Chinese ADRs and I’m still heavily researching, there will be some names without a doubt that provide ungodly percentage gains over the next 2-5 years. In fact, there are names trading a 1/20th of BABA on a relative basis, wild.
In terms of US equities most are stuffing yet opportunity still seems apparent.
THEME, THEME, THEME, is all I’m focused on.
As I mentioned in the chart yesterday, not a lot of setups right now and I’ll continue to spend my time digging into more thesis plays and getting better prepared…
AI Biotech, China ADRs, Robots.
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