17 epic presentations at our shorting conference tomorrow; Pot stocks; Bad Blood; The Dream
1. I just finished going through all of the presentations the 17 speakers will be giving tomorrow and I'm fired up – they are awesome! It's going to be a great day of learning, hearing actionable, profitable short ideas, and networking (click here to see the full list of speakers, the program guide and agenda).
To register, go to www.kaselearning.com/short. The list price is $2,495, but we are offering a 20% discount for in-person ($1,995) and an 80% discount for the livestream (only $495) when you use discount code SAVENOW.
I hope you can join us!
2. Our conference is totally unique, as others are dominated by long ideas as this article notes: Hedge-Fund Short Sellers Missing in Action at Sohn Conference. Excerpt:
Short sellers were thin on the ground at a gathering of hedge-fund managers in London on Thursday.
Nine out of the 10 stock recommendations at the Sohn conference were bullish bets on share prices -- even after an October market rout that wiped out many hedge funds' gains for the entire year. Fund bosses predicted increases for companies as diverse as carmaker Ferrari NV and French nursing-home operator Korian SA.
The emphasis on bullish calls was not altogether surprising given that many of the participants at the one-day event have a long-only bias, meaning they don't speculate against stocks. It could be a missed opportunity, though: the best calls from last year's conference were shorts. They were few and far between then, too. Just three out of 15 recommendations from 2017 were short bets, and two of them would have made money.
The lack of short picks is encouraging the idea that years of quantitative easing and stock prices going one way -- up -- have addicted fund managers to taking long positions. Yet this risks making hedge funds look and perform more like cheaper active funds, which could exacerbate an investor exodus.
3. In my interview on Yahoo Finance TV last week (see: Whitney Tilson: Pot stocks are a better short today than ever before), I said:
"They're a better short today than they were a couple of months ago because the momentum is broken, the pump-and-dump crowd has moved on, and now they have to trade on their fundamentals and the fundamentals don't support $10 billion market caps," Tilson said.
One of those high-flying cannabis stocks he's bearish on is Tilray (TLRY), which touched a high of $300 per share in late September. During a Yahoo Finance appearance that same day, Tilson predicted that Tilray would fall by 90%. The stock has lost about two-thirds of its value since then.
"I've been around long enough to see silly, obvious, absurd bubbles," Tilson said. "It's easy to identify obvious bubbles like that. The problem is it can be very dangerous if you're even week or two early. The best time to short obvious bubbles like this is on the backside when they're already down by 50%, like the pot stocks today."
Fundamentals are starting to matter
On Monday, Tilson will host the second Kase Learning Shorting Conference, where some of the top short-seller will present their bear cases for certain stocks. Yahoo Finance is the exclusive broadcast partner of the event.
"I think we've gone from an almost impossibly difficult environment , just a complacent bull market, almost for the last ten years to now the fundamentals are starting to matter. Investors are discovering the risk side of the risk-reward equation. And it's become, at least, a tolerable market for shorting."
4. I just finished reading (listening to) John Carreyrou's book about Theranos, Bad Blood: Secrets and Lies in a Silicon Valley Startup, which has been selected as one of the best books of the year by NPR, the New York Times Book Review, Time, the Wall Street Journal, and the Washington Post. It's shocking to me how obvious scams like this can go on and on and on – this one for nearly a decade. A good lesson for short sellers... Here's the summary:
The full inside story of the breathtaking rise and shocking collapse of Theranos, the multibillion-dollar biotech startup, by the prize-winning journalist who first broke the story and pursued it to the end, despite pressure from its charismatic CEO and threats by her lawyers.
In 2014, Theranos founder and CEO Elizabeth Holmes was widely seen as the female Steve Jobs: a brilliant Stanford dropout whose startup "unicorn" promised to revolutionize the medical industry with a machine that would make blood testing significantly faster and easier. Backed by investors such as Larry Ellison and Tim Draper, Theranos sold shares in a fundraising round that valued the company at more than $9 billion, putting Holmes's worth at an estimated $4.7 billion. There was just one problem: The technology didn't work.
A riveting story of the biggest corporate fraud since Enron, a tale of ambition and hubris set amid the bold promises of Silicon Valley.
5. Speaking of scams, I'm really enjoying this podcast, The Dream, that does an excellent job of exposing the scummy world of multi-level marketers. 10 of the 12 episodes are now available on every podcast app. Here's an article about it in Vanity Fair: This Podcast Can't Legally Tell You Amway Is a Pyramid Scheme. Excerpt:
Marie and her producer had, like many people, noticed her Facebook feed filling up with friends from high school selling leggings, or makeup, or handbags, asking their friends to buy them and sign up as salesmen themselves. They're all participating in multi-level marketing (MLM) schemes, which anyone involved will tell you are not a pyramid scheme, because pyramid schemes are illegal.
"That doesn't mean it's not one," Marie, a veteran of This American Life, said in a recent phone call. "That means it hasn't been prosecuted."
There's a lot of red tape in reporting on MLMs, and as Marie says in the debut episode, "The subjects of our investigation are highly litigious." But after months of reporting and signing up for one MLM, which sells makeup, Marie remains passionate in her belief that virtually all MLMs—including Amway, source of the DeVos family fortune—are . . . well, let's not call them scams, exactly. "I don't want to say that everyone involved is a scammer or a con man or whatever, but I would say that the business model is unsustainable in the regular marketplace," Marie said. "Legitimate companies don't work this way for a reason."
And the victims of MLMs—that is, the people who pay high buy-in fees but never recoup their investment—are usually women.