Welcome back to Weekend Reading.
A shorter note this week, because who ever said that Friday’s are less busy must have a sick sense of humour.
Volatility has continued throughout this week, the VIX is getting a workout after a subdued April:
A lot of talk about crypto and the Technoking this week from various stories, so that previous statement about having a dollar every time I mention Elon is paying off tremendously.
Let’s look back on the week.
I’m a Believer
Cathie Wood certainly knows how to grab the headlines, even whilst ARKK remains ~36% off it’s February highs.
Perhaps not coincidentally, she is heralding the merits of Bitcoin, which is currently ~37% off its highs, feeling a kindred spirit with the cryptocurrency.
In an interview with Bloomberg TV, Cathie said that she remains convicted to the idea that Bitcoin will reach a price of $500,000 USD, whilst at time of writing the current price is just above $40,000 USD.
She noted the highly volatile sectors of the market (i.e. the ones she is invested into) are selling off amidst inflation fears, which may be correlated to the selloff in Bitcoin.
She also noted that ARK remain confident in their funds, noting that the shift to value sectors is encouraging, “The forces that the coronavirus put in motion supporting all of the innovation in which we invest, they’re not looking back,” – “We’re looking at this saying: Alright, on sale. Innovation is on sale. Oh and by the way, the bull market had broadened out.”
A Whale in Doge
Somewhere out there, someone owns the most Dogecoin in the world – currently to the tune of around $15 billion USD.
Nobody really knows the identity of the mysterious mega-owner of 36.7 individual billion coins, which represents ~28% of the entire coin’s supply – and major exchanges like Coindesk have seen almost no selling from this whale, bar a sale of 100 million coins on April 12 (the only selling in 2021).
This week the whale purchased 420.69 more coins this week, definitely placing them squarely in the meme culture of the coin – if you don’t get it, show the number to a teenager and get them to explain after they stop laughing.
There is speculation around one particularly high-profile figure and if they are the mysterious holder, they could be none other than…
Taking on the Technoking
Elon Musk may have a challenger to Tesla’s stock price, one who may be too loud and too wealthy to ignore with only a few tweets – also he’s deleted his twitter.
Famous investor Michael Burry, of “Big Short” fame, has purchased bearish put options against 800,100 TSLA shares as of March 31 according to regulatory filings.
Scion Asset Management has been short Tesla before, with Burry announcing that they had been short the stock in December last year whilst the price was around the $800 USD mark – a successful bet, considering the price fell over 30% after that point.
We obviously don’t know the timing or price he purchased the options, nor the strike price he is operating off – but you can imagine the gamma was rather low for bearish options given the positive momentum the stock had received up to that point.
*All numbers in USD from BofA Securities
Equities: $12.6bn into equities
Bonds: $6.9bn into bonds
Precious Metals: $1.3bn into gold
Cash: $3.7bn into cash
Flows to Know
Largest inflow into government bonds in 6 months ($2.8bn)
Largest EM outflow in 10 weeks ($3.1bn)
Largest outflow from tech funds since Dec 2018 ($1.1bn)
Outflows from tech funds
Fed funds rate & Dow Jones Index (1968-76)
Asset bubbles of the last four decades
Rapid Fire Round
As a show of mercy for our wonderful marketing department and my colleagues who review this, we’ll squeeze the rest of the interesting headlines into a Rapid Fire Round.
- A SPAC is set to buy back its own SPAC, with Roivant planning to go public with a SPAC and use the funds to buy back an affiliate company Immunovant that it took public using another SPAC last year. And it has to buy it back at almost a 70% premium – I’m sure a consultant of the firm can explain to you how that’s good economics.
- Hackers hold Irish Health Service public records hostage, threatening to release patient medical data unless the Irish government pay a $20 million USD ransom demand, whilst not giving a clear timeframe besides “very soon” to actually pay – maybe it’s their first case of international cyberterrorism, give them a break
- Swedish brothers Rickard and Bjorn Oste’s ‘Oatly Group’ has raised $1.4 billion in an IPO in New York last night, with the ADR of the Malmo-based company climbing from $21.30 from an original offer price of $17. This gives the brothers a combined worth of $562 million, with the company itself valued around $12.5 billion USD.
- A Swiss precious metals trader has been accused of laundering money for the mafia, supposedly buying diamonds from the Italian mafia to launder the proceeds of a $35 million USD tax scam – during the time he was purchasing diamonds, the three Italian clients he was working for had already been convicted for running a tax-fraud scheme, which may be a dent to his plausible deniability defence.
- Oaktree Capital to spend $336 million USD bailing out Italian soccer team Internazionale Milano (aka Inter Milan), representing an acquisition of around 30% of the club and making me wonder if this story will also end up being about Italians and money laundering in a few years. This comes after the European Super League fell through, which was due to inject up to 300 million euros into the club.
Our morning calls continue, please do tune in for a daily dose of market insights and access to some leading experts in the funds management field.
Have a safe and enjoyable weekend.
– Max and the Mason Stevens team
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