Trading Ideas

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>>> Apple, Nvidia Score Relief From US Tariffs With Exemptions


Bloomberg

by Debby Wu, Josh Wingrove and Shawn Donnan

April 12, 2025


https://finance.yahoo.com/news/trump-exempts-phones-computers-chips-124707368.html


(Bloomberg) -- President Donald Trump’s administration exempted smartphones, computers and other electronics from its so-called reciprocal tariffs, representing a major reprieve for global technology manufacturers including Apple Inc. and Nvidia Corp. even if it proves a temporary one.

The exclusions, published late Friday by US Customs and Border Protection, narrow the scope of the levies by excluding the products from Trump’s 125% China tariff and his baseline 10% global tariff on nearly all other countries.

The exclusions apply to smartphones, laptop computers, hard drives and computer processors and memory chips as well as flat-screen displays. Those popular consumer electronics items generally aren’t made in the US.

The pause will be welcome news to consumers, some of whom rushed to buy new iPhones and other devices amid fears that the tariffs would send prices soaring. It’s also a big win for major technology companies that have presented massive US spending pledges for Trump in recent months. Trump’s tariffs upended global markets, triggered a selloff in stocks and ignited a rapidly escalating trade war with China.

The move is the first significant softening of any kind in Trump’s conflict with China. It was backdated to April 5.

The exemptions cover almost $390 billion in US imports based on official US 2024 trade statistics, including more than $101 billion from China, according to data compiled by Gerard DiPippo, associate director of the Rand China Research Center.

The biggest category related to China is smartphones. The US imported smartphones valued at more than $41 billion from China in 2024, or about 9% of total imports from China. Also covered are computers and similar devices, of which the US imported more than $36 billion in 2024.

Altogether the exemptions cover consumer electronics and semiconductors that accounted for about 22% of US imports from China in 2024, DiPippo said.

“This is a large hole in the US tariff wall that will spare key firms like Apple and consumers of laptops and phones from sticker shock,” he said. “But many other consumer, intermediate, and capital goods from China still face prohibitively high US tariffs. This exemption only covers one segment of the US economy.”

The White House also released a corresponding memo indicating that the exemptions also extend to changes in small-parcel shipping duties. Trump had moved to end the so-called “de minimis” exemption, beginning with China, that generally means parcels worth $800 or below don’t face duties.

“President Trump has made it clear America cannot rely on China to manufacturing critical technologies such as semiconductors, chips, smartphones, and laptops,” White House Press Secretary Karoline Leavitt said in a statement. “That’s why the president has secured trillions of dollars in US investments from the largest tech companies in the world.” She said those companies are “hustling to onshore” their manufacturing to the US.

The tariff reprieve may prove fleeting. The exclusions stem from the initial order, which prevented extra tariffs on certain sectors from stacking cumulatively on top of the country-wide rates. The exclusion is a sign that the products may soon be subject to a different tariff, albeit almost surely a lower one for China.

The products that won’t be subject to Trump’s new tariffs include machines used to make semiconductors. That would be important for Taiwan Semiconductor Manufacturing Co., which has announced a major new investment in the US, as well as other chipmakers.

“All products that are properly classified in these listed provisions will be excluded from the reciprocal tariffs,” the notice said.

The move appeared to exclude the products from the 10% global baseline tariff on other countries, including Samsung Electronics Co.’s home of South Korea.

The tariff reprieve does not extend to a separate Trump levy on China — a 20% duty applied to pressure Beijing to crack down on fentanyl, including the shipment of precursor materials. Other previously existing levies, including those that predate Trump’s current term, also appear unaffected.

“The US tech industry has a loud voice and despite initial strong pushback against exemptions within the White House the reality of the situation was finally recognized in the Beltway,” Wedbush Securities analyst Daniel Ives said in a research note on Saturday. “There is still clear uncertainty and volatility ahead with these China negotiations.”

The original list of tariff exemptions included some semiconductor products — including central processing units konwn as CPUs. But those measures did not carve out tech products crucial to AI development including graphics processing units, or GPUs, and the servers that they power. Servers powered by AI chips from companies such as Nvidia and their critical components are primarily manufactured and assembled in Taiwan and Mexico.

Friday’s announcement would cover both Taiwanese and Mexican production, in a significant reprieve for companies seeking to build AI infrastructure in the US.

Semiconductor Equipment Exemptions

Also crucial are new exemptions on semiconductor manufacturing equipment, made by companies such as ASML Holding NV in the Netherlands and Tokyo Electron Ltd. in Japan. Those tools are essential for building chip factories, and comprise the lion’s share of the multi-billion dollar price tag for such plants. Companies including TSMC, Samsung, and Intel Corp. are building new US facilities with support from the 2022 Chips and Science Act.

Trump’s initial “reciprocal” tariff announcement included exemptions for semiconductors and other sectors, to which Trump has regularly pledged to apply a specific tariff. He hasn’t yet done so but the latest exclusions are related to that exemption.

The move excludes most of Apple’s core products from the escalating tariffs on China, including iPhones, iPads and Apple watches. Apple shares have slid since Trump announced the tariffs.

Discussions gained additional urgency in recent days after Trump increased the tariffs on China, putting companies like Apple in a more difficult position than competitors like Samsung, who are less reliant on China. Companies and tech industry lobbyists have also argued that reshoring the final assembly of smartphones and other products is impossible, one person familiar with the discussions said.

But the move also is aimed at laying the groundwork for new targeted sectoral tariffs that are likely to hit the industry.

The administration is expected to soon launch a new investigation into imports of semiconductors. That would eventually lead to the imposition of tariffs on chips within weeks or months. Those duties, like ones imposed recently on steel and aluminum, are likely to impose duties on products that include semiconductors as well as the chips themselves.

Trump’s sectoral tariffs have so far been set at 25%, though it’s not clear what his rate on semiconductors and related products would be. It’s also not clear how widely he would apply that tariff.

Representatives from Nvidia and ASML declined comment. Spokesmen for Tokyo Electron didn’t immediately respond to a request for comment. The US International Trade Commission, the US Trade Representative and the Department of Commerce didn’t immediately respond to requests for comment.

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Looking at some conservative trading ideas, 5-10 year Treasuries might be interesting over the next year or so (as an alternative to stock or Vix trading). Trump and Bessent say they specifically want to get the 10 year Treasury yield lower (link below), so there could be some decent capital gains for patient investors. Fed % easing might not be coming until later in the year, but that should be another boost for 5-10 year bond prices.

Fwiw, I already have a 3-4 year Treasury bond ladder, so wasn't looking to add more buy / hold type bonds, but these 5-10 bonds would be for the capital gain aspect. Combined with their ongoing interest payments, they could have a decent total return over the next year or so. Stocks are usually the place to get capital gains, but when will the bottom arrive (?) Tough to say, so bonds might be an easier play. I was looking at 5-7 year individual Treasuries, or possibly an Intermediate term ETF like VGIT.


>>> Treasuries are the standout play as Trump’s trade war heats up <<<

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175995322


>>> ‘Don’t fight Bessent’s Treasury’ is new mantra in US bond market <<<

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175965892





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Things are starting to look ugly. The S+P 500 is teetering at key support (200 MA). Ideally, Trump should reverse course fast on his ill-conceived mega tariff strategy, or we all face the consequences --> crumbling stock market, global recession, etc. The Fed's media mouthpiece Nick Timiraos recently had 2 articles on the Fed's concerns about 'Stagflation' due to Trump's tariffs.

Rickards said the Fed normally will intervene when the stock market has fallen 15% from its high. But the current situation might have a lower threshold, like 10% (?) Just a guess, but Trump clearly needs to back off. He has started to back pedal somewhat, but it doesn't look like the market is buying it. Just drop the broad tariff idea Don. Do something against China and leave it at that.

Looking at some downside targets for the S+P 500 (approx) -

Peak (Feb) ---------- 6150
Current --------------- 5731 (down 6.8%)
10% Correction ---- 5535
15% Correction ---- 5228
20% Bear Market -- 4920



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Here are the current loss stats for the main stock indices (below).

Correction = 10%
Bear Market = 20%

So the Nasdaq is nearing the official 'Correction' territory, and the Russell nears a 'Bear Market' -


S+P 500 - 5755 ----- (6.4%)
DJIA ------ 42,475 --- (5.6%)
Nasdaq -- 18,210 --- (9.7%)
Russell --- 205 ------ (16.3%)





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Dimwit Don strikes again --> >>> Trump says tariffs on Mexico, Canada will arrive on March 4, vows to double China levies

Trump escalates trade tensions with new EU tariff proposal


Yahoo Finance

by Hamza Shaban

February 27, 2025


https://finance.yahoo.com/news/trump-says-tariffs-on-mexico-canada-will-arrive-on-march-4-vows-to-double-china-levies-153414044.html


President Donald Trump said Thursday that tariffs on Canadian and Mexican imports would move forward on March 4 and that he would add an additional 10% levy on China, heightening the stakes of his trade battle that has rattled Wall Street and injected an air of uncertainty during his first weeks in office.

In a post on Truth Social, Trump framed his decision to move forward with the tariffs as a response to "unacceptable levels" of drugs coming into the US from Canada and Mexico and supplied by China.

"We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect," he wrote.

His comments appeared to clarify remarks he made Wednesday afternoon during a Cabinet meeting, during which Trump suggested the tariffs on Mexico and China would begin in April. His latest post reiterates that the levies are scheduled to be implemented in the coming days.

Trump's tariff threats have weighed down public sentiment. Consumers increasingly see that coming tariffs could lead to higher prices, as suppliers pass on the cost of the levies to American shoppers. Two recent consumer sentiment surveys showed a souring outlook. In turn, Wall Street has pulled back, delivering a batch of down days, and prompting questions of a potential market correction and slowing growth.

Trump's style of negotiating, in which the threat of tariffs are used to extract policy concessions, has also added to global uncertainty.

In recent weeks, investors offered a muted reaction to Trump's tariff pronouncements. Analysts have said Wall Street is weighing whether the levies will actually be implemented and if the White House would pull back on the severity and scope of the tariffs as the deadline approaches.

The duties were originally scheduled to take effect earlier, but Trump agreed to a monthlong delay after the leaders of Mexico and Canada committed to stronger security measures at the US border. The back-and-forth, tit-for-tat dealmaking has added to the element of confusion and unease.

The run-up to next week's tariff execution date will likely deliver another dose of volatility to the market.

Trump has signaled his trade battle won't be confined to North American trading partners. During the cabinet meeting, he threatened new tariffs on the European Union, describing the bloc as an adversary to the US.

"We'll be announcing it very soon, and it'll be 25% generally speaking, and that'll be on cars and all of the things," he said.

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>>> EPAM Systems, Inc. (EPAM) provides digital platform engineering and software development services worldwide. The company offers engineering services, including requirements analysis and platform selection, customization, cross-platform migration, implementation, and integration; infrastructure management services, such as software development, testing, performance tuning, deployment, maintenance, and support services. It also provides operation solutions comprising integrated engineering practices and smart automation services. In addition, the company offers business, experience, technology, data, and technical advisory consulting services; and digital and service design solutions, which comprise strategy, design, creative, and program management services, as well as physical product development, such as artificial intelligence, robotics, and virtual reality. The company serves the financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, and other industries EPAM Systems, Inc. was founded in 1993 and is headquartered in Newtown, Pennsylvania.

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https://finance.yahoo.com/quote/EPAM/profile/

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>>> The Trump trade is getting wild


Yahoo Finace

by Rick Newman

October 22, 2024


https://finance.yahoo.com/news/commentary-the-trump-trade-is-getting-wild-194822599.html


Election Day is Tuesday, Nov. 5. In 2020, news organizations were confident enough to call the race for Joe Biden on Election Day night, which is the usual outcome. The only modern exception was the 2000 election, which hinged on a recount in Florida and took more than a month to decide.

The 2024 election could entail another delayed outcome — and this year, traders are getting in on the action.

Donald Trump’s new company, Trump Technology and Media Group (DJT), has become a sort of proxy bet on whether Trump, the Republican presidential nominee, will win or lose. If Trump wins, his company, known by its ticker symbol DJT, could become a hub of info for the new president and everybody in his orbit through the Truth Social media app. If Trump loses, by contrast, Truth Social, an also-ran behind goliaths such as Facebook, Instagram, TikTok, and X, will end up as a rump single-purpose Trump megaphone with little value.

For the last several months, the buying and selling of DJT shares has been a key “Trump trade” — a bet on whether Trump or his Democratic opponent, Vice President Kamala Harris, will win the 2024 election. Investors now seem to be betting on the timing of the election outcome through option contracts that give investors the right to buy or sell the stock in the future at a certain price. Options expire, typically on Fridays, so an investor buying an option is placing a timed bet. If investors were betting on DJT surging or crashing right after Election Day, they’d be piling into option contracts that expire Nov. 8, three days later.

But they’re not. The heaviest action by far is in DJT option contracts that expire Nov. 15, 10 days after Election Day. The amount of “open interest,” or number of contracts traded, is nearly eight times higher for the Nov. 15 vintage than for Nov. 8. After Nov. 15, the open interest plunges.

“People think we’re not going to know the election results on Election Day, or even on Nov. 8,” said Eric Hale, founder and CEO of Trader Oasis. “Traders betting on the election are betting on a Nov. 15 outcome.”

It’s plausible. Most of the seven swing states — Georgia, North Carolina, Pennsylvania, Michigan, Wisconsin, Arizona, and Nevada — appear to be dead heats that could easily be decided by less than 1% of the vote. Pennsylvania and Wisconsin prohibit the counting of mail-in ballots until Election Day, which slows the tally. Arizona and Nevada also tend to have slow vote counting. And this time around, both parties have armies of lawyers ready to contest any irregularity in court.

In 2020, Pennsylvania took five days to certify Biden’s win in the state, even though news networks projected the outcome on Election Day. Financial markets can move on wisps of information, so in a close vote count this year, DJT would likely be moving on hints that the final tally will go one way or another, well ahead of any official count.

The election will be a reckoning for DJT, which went public in March at around $50. The company has little revenue and poor financial performance — and would probably have no chance if not for Trump’s presidential bid, which could bring millions of new users if he wins. The stock's value has yo-yoed this year, in sync with Trump's electoral fortunes, hitting a high of $66 in March and a low of $12 in September. It's been on an upswing since the beginning of October, with shares up 108% to about $33.50.

The stock is massively volatile, with an “implied volatility,” or IV, of around 300%. That’s off the charts. IV reflects the range of bets traders are placing on the future price of the stock. An IV of around 20% is normal. A stock’s IV might surpass 100% prior to an unusual event such as a clinical trial for a make-or-break pharmaceutical. Hardly any company reaches Trumpian levels of volatility.

Option traders love volatility because it represents an unusual chance to score a big profit with manageable levels of risk. “Volatility is a shiny thing for traders, and right now DJT is the shiniest that exists,” said Hale. DJT is similar to a meme stock that trades for reasons unrelated to the company’s fundamentals, except for one thing: The 2024 election is a singular event that will have a binary outcome and possibly determine the company’s fate.

Standard formulas for pricing an option trade suggest DJT stock could go as high as $39.35 or as low as $16.33 within two weeks of Election Day. What the trading data doesn’t reveal is which outcome, up or down, is more likely. Traders often hedge bullish bets on a higher price with bearish bets on a lower price, hoping to profit by finding gaps or spreads giving them an edge no matter what the outcome.

Frenzied option betting, such as that on DJT, also requires market-makers selling options to buy more actual stock in order to keep their own risks neutral. That in itself can push the stock price up, creating the false impression of bullish sentiment when, in reality, the buying is driven by temporary derisking that will subside.

Betting markets are another Trump trade that has moved in Trump’s favor recently. From late August to early October, Trump and Harris were within a couple points of each other in betting markets, with Harris ahead for part of that time. But Trump is now ahead by roughly 60% to 40% in the RealClearPolitics aggregate, drawn from eight betting pools operated offshore, which Americans are not allowed to bet on but probably do through cryptocurrency and anonymous accounts.

Polymarket has drawn attention because of one “whale” known as Fredi9999 who has wagered more than $18 million on Trump winning the electoral vote, the popular vote, and certain states. The Wall Street Journal recently posited that one individual controls the Fredi account, plus three others accounting for $30 million in Polymarket wagers on Trump. Large wagers can change betting odds in their own right because they sometimes force bookmakers to adjust the odds just to assure they’re not overexposed to a small bet or group of bets.

Betting markets don’t reflect a candidate’s real election odds. One simple reason is that people who participate in betting markets are self-selected and don’t necessarily represent the electorate. Most political analysts say betting markets overstate Trump’s odds, with the presidential race essentially too close to call.

Those rising odds for Trump could make traders more eager to bet on DJT, however, pushing the stock’s volatility even higher than it would otherwise be. And this is all before any meaningful counting of votes.

The unruly 2024 election is also, for the time being, a surreal investing opportunity.

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Chart setup - >>> Archer-Daniels-Midland Company (ADM) engages in the procurement, transportation, storage, processing, and merchandising of agricultural commodities, ingredients, flavors, and solutions in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. It operates in three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The company originates, merchandises, stores, and transports agricultural raw materials, such as oilseeds and soft seeds. It also engages in the agricultural commodity and feed product import, export, and distribution; and various structured trade finance activities. In addition, the company offers soybean meal and oil; vegetable and salad oils and protein meals; ingredients for the food, feed, energy, and industrial customers; margarine, shortening, and other food products; and partially refined oils to produce biodiesel and glycols for use in chemicals, paints, and other industrial products. Further, it provides peanuts, peanut-derived ingredients, and cotton cellulose pulp; sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose; alcohol, and other food and animal feed ingredients; ethyl alcohol and ethanol; corn gluten feed and meal; distillers' grains; corn germ; and citric acids. Additionally, the company provides proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, postbiotics, enzymes, and botanical extracts; and other specialty food and feed ingredients; edible beans; formula feeds, and animal health and nutrition products; and contract and private label pet treats and food products. It also offers futures commission merchant; commodity brokerage services; cash margins and securities pledged to commodity exchange clearinghouse; and cash pledged as security under certain insurance arrangements. The company was founded in 1902 and is headquartered in Chicago, Illinois.

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>>> DJT having a good first day: Trump's Truth Social media stock price sees rapid rise


by Bailey Schulz

USA TODAY

March 26, 2024


https://finance.yahoo.com/news/now-trumps-truth-social-hit-134022713.html


Donald Trump's Truth Social stock price skyrocketed during its stock market debut, gaining more than 40% by early Tuesday afternoon.

The parent company of Truth Social, Trump Media & Technology Group, went public Tuesday morning under the ticker DJT, short for Donald J. Trump. The stock was trading at $71.63 as of 1:32 p.m. ET, up nearly $22.

The public listing was made possible by Trump Media's merger with Digital World Acquisition, a special purpose acquisition company, or SPAC. Digital World’s shareholders voted in favor of the merger Friday, and Trump Media took Digital World's place on the Nasdaq on Tuesday.

How much is Truth Social worth?

Before trading opened Tuesday, Truth Social's parent company had a market value of about $6.8 billion. Because Trump owns about 79 million of the 135 million outstanding shares, his stake in the company was worth about $4 billion.

It’s a pricy valuation, especially for a company that has racked up tens of millions of dollars in losses since its 2021 launch and generated just over $3 million in revenue during the first nine months of 2023.

In comparison, Reddit ? a social media platform that brought in more than $800 million in revenue in 2023 ? was valued at roughly $6.4 million for its IPO last week. Its stock was trading at $70.90 as of 1:16 p.m. ET.

While it's "hard to believe" that Truth Social and Reddit are close in valuation, Trump's social media company has been bolstered by investments from loyal Trump supporters, said Derek Horstmeyer, a finance professor at George Mason University in Virginia.

"It's hard to come up with any reasonable metrics that would get you to this valuation," Horstmeyer said.

What is Trump’s net worth?

Truth Social going public means a massive boost to Trump’s net worth, at least on paper.

Trump is not allowed to sell his shares or use them as collateral for a bond for the next six months. He would need approval from the Trump Media board to lift that restriction.

Trump has been ordered to post a $175 million bond as he appeals the full $454 million civil fraud judgment against him. He has also been ordered to pay $83.3 million after a defamation trial loss to advice columnist E. Jean Carroll.

Why is Truth Social’s ticker DJT?

Research shows that familiar names, such as a former president’s initials, can help a company’s stock performance.

One 2006 study by Princeton University psychologists found that stocks with tickers that are easier to pronounce tend to perform better in the first few days of trading. Another study from Pomona College in 2019 verified earlier research that found clever tickers tend to perform better, partly because they are more memorable to investors.

What is Digital World Acquisition?

Digital World is a SPAC, also known as a blank check company. These publicly traded shell companies exist to acquire or merge with private companies and take them public.

Truth Social’s merger with Digital World was first announced in 2021, when the number of companies going public via SPACs surged. The investment vehicles have since faced criticism for being bad deals for retail investors.

Why did Trump launch Truth Social?

Truth Social was founded after Trump was booted from major social media platforms following the Jan. 6, 2021 attack on the Capitol.

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Signs of a bubble --> Single stock leveraged ETFs -


>>> Inflows into bullish Nvidia ETF hit record on AI frenzy


Reuters

Mar 7, 2024

By Bansari Mayur Kamdar


https://finance.yahoo.com/news/inflows-bullish-nvidia-etf-hit-155124143.html


(Reuters) - Investors have piled into Nvidia-focused exchange-traded funds (ETFs) this year on the frenzy around AI, with inflows into a bullish fund that tracks the shares of the chip designer hitting an all-time high on Wednesday.

Net daily inflows into the GraniteShares 2x Long NVDA Daily ETF hit a record of $197 million, according to LSEG Lipper data. The assets managed by the ETF have grown to $1.41 billion from $213.75 million at the start of the year.

WHY IT'S IMPORTANT

Risk-averse investors have largely stayed away from leveraged ETFs tracking single stocks that aim to provide returns over extremely short periods.

These ETFs, which made their U.S. debut in 2022, have become popular among speculators looking to bet on the most volatile shares based on earnings and other news.

CONTEXT

Nvidia, which controls about 80% of the high-end AI chip market, has surged nearly 82% since the start of the year after a stellar forecast and amid renewed euphoria around AI.

Leveraged single-stock ETFs seek to amplify the returns of an underlying stock for a single day, generally by two or three times, using financial derivatives and debt as leverage.

KEY QUOTES

"Nvidia has been the hottest stock in 2024 and many investors are eager to seek out higher returns in exchange for added risk," said Todd Rosenbluth, chief ETF strategist at VettaFi.

"We expect to see continued demand for single stock leveraged ETFs as a new wave of must-own companies emerge."

THE NUMBERS

Net monthly inflows into leveraged ETFs tracking Nvidia such as the GraniteShares 2x Long NVDA ETF, the Direxion Daily NVDA Bull 1.5X Shares ETF and the T-Rex 2X Long Nvidia Daily Target ETF hit a record in February.

The GraniteShares ETF has already crossed its net monthly flow record within the first six days of the month.

Assets of the three Nvidia-linked ETFs jumped between five and 11 times since the start of 2024, while their prices are up between 143% and 218% year-to-date, outperforming other ETFs.

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>>> Trump Eyes $4 Billion Stock Windfall as His Legal Bills Pile Up


Bloomberg

by Bailey Lipschultz

Feb 28, 2024


https://finance.yahoo.com/news/trump-eyes-4-billion-stock-113000959.html


(Bloomberg) -- On the financial front, the news has appeared dire for former president Donald Trump this year. Within a span of just a month, two judges in two separate cases ordered him to pay about $540 million in total — a sum so great that pundits have speculated it could erode his campaign finances.

What’s gotten far less attention, though, is this: A frenetic rally in a stock tied to Trump Media & Technology Group — which operates the Truth Social platform he posts on daily — has minted a nearly $4 billion windfall for him.

There are any number of caveats to this figure, including how it’s only a paper profit for now that he’ll have to wait months to monetize, and yet the stock’s surge is a potentially huge financial boost for a billionaire candidate suddenly short on cash.

The type of transaction — known as a de-SPAC or blank-check deal — that would hand Trump this new-found wealth is a complex one that briefly became popular on Wall Street during the stock mania unleashed by pandemic-era stimulus. In this particular deal, Truth Social’s owner would enter the stock market by merging with a publicly traded company called Digital World Acquisition Corp.

Shares of DWAC, as the company is known, have soared 161% this year in anticipation of the merger, which has been green-lit by the Securities and Exchange Commission and is now slated to go to a shareholder vote next month. If it’s approved, Trump will hold a greater than 58% stake. At DWAC’s current price — it closed Tuesday at $45.63 per share — that stake is worth $3.6 billion. Trump could get even more — close to an additional $1.3 billion worth, if the shares meet certain performance targets.

It seems improbable to many analysts that a stake in a money-losing social media company with little revenue and a fraction of its rivals’ user bases could potentially more than double Trump’s net worth. But as Trump began to steamroll his Republican rivals in January, setting up a likely rematch with President Joe Biden in November, retail investors frantically bid DWAC shares up. And when a group on Wall Street known as momentum traders joined the buying frenzy, the conditions for an epic rally were in place. In just six days, the stock jumped 200%.

“This is a meme stock, it’s not the type of thing where you bust out P/E ratios — you can throw that out the window,” said Matthew Tuttle, the chief executive and chief investment officer at Tuttle Capital Management. “DWAC has now become the de facto way to bet on or against Trump,” he added.

But if Trump’s rebound carries him back to the White House — and many polls currently make him the favorite to win — there could be value, in theory, at least, in owning a cut of the mouthpiece that will carry his message.

“The fundamental bull case is that he confines his tweets to the Truth Social platform, which means if you want to see them or interact with them, you need to sign up as well, making advertising all the more profitable,” Tuttle said.

Penalties and Fees

While Trump’s windfall would more than cover the penalties and legal fees he faces — he is appealing New York state’s $454 million civil fraud verdict — he would need to wait at least five months before cashing in shares, unless the company files to expedite that timing.

“He needs the money but he can’t sell too much at once without risking tanking the stock,” said Usha Rodrigues, a professor at the University of Georgia School of Law. “Once the lockup is expired, he could use the shares as collateral for loans in order to access cash without selling the shares.”

And it’s unlikely a bank would lend him a large sum of money against the locked-up shares, according to industry watchers like University of Florida finance professor Jay Ritter.

Read More: Trump’s $540 Million Court Loss Tests His ‘King of Debt’ Claim

Representatives for DWAC, Trump Media and the Trump Organization didn’t immediately respond to requests for comment.

Even the so-called earnout would more than cover it. After the deal closes, if the stock trades above $17.50 for 20 of 30 days, Trump Media holders would be entitled to receive as many as an additional 40 million shares filings show — with the majority earmarked for Trump.

A more troubling question for Trump is whether shareholders will keep the faith for more than five months after the merger is complete. As recently as April, Trump assigned the company a $5 million to $25 million value in a financial disclosure filed with the Federal Election Commission, a fraction of its valuation in the SPAC deal terms as well as in the market.

The business has struggled, with Trump Media losing $49 million in the nine months through September while generating just $3.4 million in revenue, according to regulatory filings. As such, the company has warned that it may run out of cash without the merger, filings show.

Trump Media “hasn’t been able to turn the corner and it’s not clear how the company is going to succeed in monetizing its business,” said Ritter.

The deal’s anticipated completion is a feat in itself after more than two years of starts and stops. Skeptics questioned whether Trump Media’s merger could clear a litany of shareholder votes, as well as investigations from the Justice Department and the SEC.

After the completion and during the lockup, the share price – and Trump’s potential windfall – will hinge on how successful he is politically, industry watchers agree. Trump Media has been aiming to “rival the liberal media consortium” and fight against big tech companies like Meta Platforms Inc., Netflix Inc., and Elon Musk’s X.

Shareholders may even choose to hold onto their shares in the hope that because of Trump Media’s alignment with his campaign message, Trump would have a strong incentive not to add Truth Social to the long list of ventures he’s endorsed, then exited from.

“The majority of people who are buying and holding this thing are Trump supporters, “ Tuttle said. “I don’t think it’d be smart for him to entirely blow out of his position and leave them holding the bag.”

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Nice move for gold. Could this be the long awaited breakout? The gold chart has been forming a bullish cup + handle for 12 years, and a break out seems inevitable. So could this be the start, I wonder? Over the last 4 years gold has also formed a bullish inverted head + shoulders. Anyway, the chart says 'breakout' at some point. The gold suppression mechanism is still operational, so will see what happens.


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Terreno Realty (TRNO) --> break out, and Prologis (PLD) is close -


https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173963771


>>> Is Prologis Stock a Buy?


by Reuben Brewer

Motley Fool

March 2, 2024


https://finance.yahoo.com/news/prologis-stock-buy-141800671.html

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>>> Why Archer-Daniels-Midland Stock Plunged 25% This Week


by Steve Symington,

Motley Fool

January 25, 2024


https://finance.yahoo.com/news/why-archer-daniels-midland-stock-234506028.html


Shares of Archer-Daniels-Midland (NYSE: ADM) are down 25% this week, according to data provided by S&P Global Market Intelligence, after the commodities trading company announced a new interim CFO amid an ongoing accounting investigation.

On ADM's abrupt CFO departure

In a press release on Sunday, ADM announced it has appointed Ismael Roig as interim CFO, following a decision by ADM's board of directors to place its previous CFO, Vikram Luthar, on administrative leave, effective immediately.

ADM added that Luthar's leave is pending an ongoing investigation by outside counsel for the company regarding "certain accounting practices and procedures [within] ADM's Nutrition reporting segment, including as related to certain intersegment transactions."

ADM initiated the investigation in response to a voluntary disclosure request from the U.S. Securities and Exchange Commission (SEC).

What's next for ADM investors?

The issue is fast becoming a contentious one; at least one investor has already (perhaps predictably) filed a lawsuit accusing the company of fraud. Various industry watchers have also observed that while ADM's Nutrition segment is responsible for less than 10% of total sales, it also has an outsized influence on the executive team's equity bonus compensation structure.

While the final outcome of the investigation has yet to be determined, ADM management has their work cut out for them in restoring investor trust as long as speculation swirls around the accounting practices in question. Until the public receives more clarity on the issue, it's no surprise to see the stock pulling back in response.

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>>> 9 Short Squeeze Stocks That Could Take Off in November

Whether driven by Reddit users or tactical traders, volatile short squeeze stocks can generate huge returns.

By Wayne Duggan

Nov. 2, 2023


https://money.usnews.com/investing/articles/short-squeeze-stocks-that-could-take-off


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$SUIC Worldwide Holdings Ltd.'s enterprise value-to-revenue ratio of 39.57 indicates a strong foothold in the market, while the 50-day moving average of 2.2714 underscores its stability and potential for growth in the tech industry. Join the upcoming conference.

[QuicKtip]

Technical Analysis of $SUIC Stock | Hi everyone! I've been analyzing the charts for $SUIC and noticed some interesting patterns. Anyone else seeing the same? Let's share our technical insights and predictions for the stock's movement in the coming weeks.

Investor deck
https://sinounitedco.com/wp-content/uploads/2023/08/SUIC-Beneway-Pre-IPO-PPT-2023-EN-for-Website.pdf

conference
https://markettowatch.com/conference/#top

Research report
https://drive.google.com/file/d/1A-m468yNx4JR3HrME7D0EEzVY2MLUNiK/view?usp=sharing

[QuicKtip]

$SUIC announced that SUIC's IHart received big orders across its businesses to supply a government agency, a brand name hotel chains, the third largest convenience store network, global listed companies, raw material suppliers, and an O2O platform as more substantial orders on the way.

https://finance.yahoo.com/news/suic-ihart-secured-large-orders-100000837.html

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>>> Acurx Pharmaceuticals, Inc. (ACXP), a clinical stage biopharmaceutical company, develops antibiotics to treat bacterial infections. The company's lead antibiotic candidate is ibezapolstat, a novel mechanism of action that targets the polymerase IIIC enzyme that has completed Phase IIa clinical trial to treat patients with clostridium difficile infections. It is also developing ACX-375C, a potential oral and parenteral treatment targeting gram-positive bacteria, including methicillin-resistant staphylococcus aureus, vancomycin-resistant enterococcus, and penicillin-resistant streptococcus pneumonia. The company was incorporated in 2017 and is headquartered in Staten Island, New York.

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Rumble (RUM) chart is set up for possible breakout.



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>>> Eight Twitter finance gurus charged with criminal pump-and-dump scheme / ‘We’re robbing f*cking idiots of their money.’


The Verge

By ADI ROBERTSON

Dec 14, 2022


https://www.theverge.com/2022/12/14/23508963/twitter-atlas-trading-discord-pump-and-dump-sec-doj-lawsuit-criminal-charges


The US Department of Justice has charged eight online finance influencers with criminal securities fraud for running a $114 million pump-and-dump scheme on their collective 1.5 million Twitter followers.

According to an indictment, members of a Discord-based forum called Atlas Trading used that platform and Twitter to promote stocks they’d purchased in large quantities, making misleading statements about the stocks’ value and their intent to hold it. Once followers had driven up the price, the group allegedly secretly sold off the stock to maximize their profits. The Securities and Exchange Commission (SEC) filed a parallel civil complaint. Both complaints charge seven of the men directly with securities fraud, while an eighth member is charged with aiding the conspiracy through a finance podcast. The conspiracy allegedly ran between January 2020 through at least April 2022, covering an explosion of interest in securities trading during the pandemic.

“I’m playing this extremely smart”

The conspirators include Edward Constantinescu (who went by Zack Morris on Twitter and currently has 500,000 followers), Perry “PJ” Matlock, John Rybarczyk (who went by “The Stock Sniper,” with 267,000 followers), Gary Deel (“Mystick Mac,” with 143,000 followers), Stefan Hrvatin (“Lade Backk,” with 150,000 followers), Tom Cooperman (“Tommy Coops,” with 129,000 followers), Mitchell Hennessey (“Hugh Henne,” with 237,000 followers), and Daniel Knight (“Dan, Deity of Dips,” with 170,000 followers). Knight ran a podcast called Pennies: Going In Raw that was co-hosted by one of the alleged fraudsters and, according to the SEC, promoted the others as expert traders.

The defendants’ fraud charges carry a maximum penalty of 25 years each, and Constantinescu faces an additional 10 years from a charge of engaging in unlawful monetary transactions.

The case is a still relatively rare example of legal fallout in the risky, personality-driven, and positivity-obsessed world of finance influencers, who pair unofficial trading advice with conspicuous displays of success — in the case of the eight defendants here, “pictures on Twitter of luxury residential properties, vehicles, jewelry, and other luxury items.” And the Justice Department’s indictment quotes a series of brazen text and recorded voice conversations between the alleged scheme participants.

At one point, Knight mocks an unnamed co-conspirator who frets about getting caught and says he wants to make buys “the right way”: “The f*cking right way? We’re robbing f*cking idiots of their money,” boasts Knight. (Asterisks reproduced from the indictment.) In the same conversation, Cooperman describes the mechanics of how Rybarczyk pumps stocks:

Like, what [RYBARCZYK] does is he alerts it, and then, like, five minutes later all his little minions start, like, retweeting it, and saying ‘added with him,’ so it, like, builds the hype back up. It happens every single time. They have this sh*t down to a f*cking science. It’s great.

In another recording, though, Knight worries some other members of the right might be getting too brazen. “I’m playing this extremely smart, for the very long term. If you don’t think all these f*ckers go to jail or at least get sued, you are crazy,” the indictment quote reads. “Just wait and see ... It’s market manipulation.” (The indictment’s mention of unnamed co-conspirators and recorded conversations implies that, as is not uncommon in finance schemes, somebody was snitching on the metaphorical group chat.)

Twitter shows that Atlas Trading members were identified as stock pumpers well before the indictment. An account called GuruLeaks, for instance, posted multiple tweets warning about the group. But the replies include defenders — “who cares ... I’ve been in since Feb,” reads one tweet from May 2022.

The manipulated stocks included China SXT Pharmaceuticals, Torchlight Energy Resources, GTT Communications, Surface Oncology, Alzamend Neuro, Universe Pharmaceuticals, ABVC BioPharma, DatChat, and Brickell Biotech. The Justice Department urges people who believe they were victimized by the scam to contact the address or number listed in its press release.

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>>> Valaris Limited (VAL) provides offshore contract drilling services to the international oil and gas industry. The company owns an offshore drilling rig fleet of 56 rigs, which include 11 drillships, 4 dynamically positioned semisubmersible rigs, 1 moored semisubmersible rig, and 40 jackup rigs. It serves international, government-owned, and independent oil and gas companies in the Gulf of Mexico, the North Sea, the Middle East, West Africa, Australia, and Southeast Asia. The company was incorporated in 2009 and is based in Hamilton, Bermuda.

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>>> Why Shares of Veru Fell 10.33% on Monday


Motley Fool

By Jim Halley

Nov 21, 2022


https://www.fool.com/investing/2022/11/21/why-shares-of-veru-fell-1033-on-monday/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Veru lost $22.2 million in the third quarter.

The stock already lost two-thirds of its value two weeks ago.

Veru is awaiting word from the FDA regarding the status of a drug.


Investors are concerned that approval for a COVID-19 therapy will be delayed or denied.

What happened

Veru (VERU), a biopharmaceutical company that looks for novel cancer therapies, particularly in breast cancer or prostate cancer, saw its shares drop 10.33% on Monday. The stock closed on Friday at $6, then opened on Monday at $5.89. It fell to a low of $5.33 before closing on Monday at $5.38. The stock is down more than 8% so far this year, and has a 52-week high of $24.55 and a 52-week low of $4.34.

So what

The company's stock already lost $10 a share two weeks ago when a Food and Drug Administration (FDA) advisory panel voted 8-5 against approving sabizabulin, Veru's COVID-19 oral therapy, via the Emergency Use Authorization route.

It's not the last word, but the FDA usually agrees with advisory panels' votes. In its discussions regarding the drug, the panel noted the phase 3 trial for sabizabulin had too small a sample size and recommended additional studies before the FDA approved the drug. The company is also expecting the European Medicines Agency's Emergency Task Force review of the drug. Monday's fall reflects continued concerns about the potential FDA decision.

Now what

Veru is struggling financially, so potential bad news regarding sabizabulin is compounded. In the third quarter, the company reported revenue of $9.6 million, down 46% year over year, while it reported a net loss of $22.2 million, or $0.28 in earnings per share (EPS), compared to a net loss in the third quarter of 2021 of $2.7 million, or a loss of $0.03 in EPS.

Veru does have some therapies in late-stage trials, including enobosarm to treat metastatic breast cancer and the combination of enobosarm and abemaciclib, a therapy developed by Eli Lilly (LLY -0.08%) to treat metastatic breast cancer. The FDA granted the combination therapy Fast Track designation.

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>>> Wall Street is driving explosive volatility in stocks by ‘YOLO-ing’ into options on the brink of expiring


MarketWatch

Oct. 22, 2022

By Joseph Adinolfi


https://www.marketwatch.com/story/wall-street-is-driving-explosive-swings-in-stocks-by-embracing-a-trading-strategy-popularized-by-the-reddit-crowd-11666294951?mod=article_inline


Professional Wall Street traders are copying a trading strategy popular with the Wall Street Bets crowd, and it’s driving massive volatility in stocks.

Reddit-loving day traders are reportedly returning to their day jobs, according to the Wall Street Journal, but back in the world of high finance professional traders have adopted one of their signature trading strategies, according to one closely followed markets guru.

An explosion of trading volume in options with one, or even zero, days left until they expire is helping to drive the large intraday swings in major U.S. equity indexes that are becoming increasingly common as of late, according to Charlie McElligott, a cross-asset equity derivatives strategist at Nomura.

Large trading shops have been buying — or, as McElligott puts it “YOLO-ing” — these near-expiry options as part of a broader trading strategy that allows them to profit by anticipating the hedging activity of large options dealers.

In a note to clients, McElligott compared the behavior of these professional traders to the denizens of the popular day-trading-focused subreddit “Wall Street Bets.”

“YOLO’ing into 0 and 1 Days-Til-Expiration (DTE) Options has now been ‘institutionalized’ by Vol traders at many of the largest funds on the Street….i.e. it’s not about Retail-alone playing this game anymore,” McElligott said.

Readers of ‘WSB’ might recognize the strategy from the “loss porn” posts and memes that litter the popular forum, which rose to prominence in early 2021 when its readers were credited (or rather, blamed) for driving the massive rally in shares of GameStop Corp. GME, -0.58%

Retail traders once dominated trading in this corner of the options market, but that has changed in recent weeks as institutional traders have picked up the slack as retail traders have retreated, McElligott said.

Instead of recklessly gambling like Robinhood-using amateurs, these professional volatility traders are buying these options as part of a calculated strategy to force large dealers to move markets in their favor, as McElligott explains.

McElligott even has a name for this type of trading: “weaponized gamma” which is a reference to the hedging strategies that dealers employ to lay off risk from their clients’ options trades.

The strategy has allowed these traders to generate profits in a volatile trading environment while minimizing their risk. Traders often close out the trades “mere hours” after opening them.

In that respect, these professionals are behaving like ”full-tilt day traders, using the certainty of Dealer hedging flows that their orders create to then amplify and ‘juice’ the intended directional market move,” McElligott said.

To illustrate his point, the Nomura managing director shared several charts showing how trading volume in one- and zero-day-to-expiry options has risen dramatically as a percentage of overall trading volume in options tied to the performance of the S&P 500 SPX, +0.48%, SPDR S&P 500 ETF Trust SPY, +0.45% and the Invesco QQQ Trust Series 1 QQQ, +0.00%, which are among the most popular products for traders of equity-linked options.

NOMURA

Investors piled into these near-expiry options ahead of last Friday’s expiration, which likely contributed to the huge intraday reversal that occurred one week ago on Oct. 13, when the S&P 500 logged its biggest intraday turnaround on a percentage-point basis since 2008, according to Dow Jones Market Data.

Options tied to equity indexes, exchange-traded funds, and single stocks often expire on Fridays, but some short-dated options expire on Wednesdays as well. Equity options with trillions of dollars’ of notional value will expire on Friday.

U.S. stocks logged another intraday turnaround on Thursday when the S&P 500 rose sharply earlier in the day before falling 29.38 points, or 0.8%, to finish at 3,665.78. Both the Dow Jones Industrial Average DJIA, +0.59% and the Nasdaq Composite COMP, -5.08% recorded similar intraday swings.

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>>> Revance Therapeutics, Inc. (RVNC), a biotechnology company, engages in the development, manufacture, and commercialization of neuromodulators for various aesthetic and therapeutic indications in the United States and internationally. The company's lead drug candidate is DaxibotulinumtoxinA for injection, which has completed phase III clinical trials for the treatment of glabellar (frown) lines and cervical dystonia; is in phase II clinical trials to treat upper facial lines, moderate or severe dynamic forehead lines, and moderate or severe lateral canthal lines; and has completed Phase II clinical trials for the treatment of adult upper limb spasticity and plantar fasciitis. It is also developing DaxibotulinumtoxinA in preclinical trial for the treatment of migraine, as well as a topical program for various indications; and OnabotulinumtoxinA, a biosimilar to BOTOX. The company has a collaboration and license agreement with Viatris Inc. to develop, manufacture, and commercialize onabotulinumtoxinA. The company was formerly known as Essentia Biosystems, Inc. and changed its name to Revance Therapeutics, Inc. in April 2005. Revance Therapeutics, Inc. was incorporated in 1999 and is headquartered in Nashville, Tennessee.

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Glaxo - >>> GSK plc (GSK), together with its subsidiaries, engages in the creation, discovery, development, manufacture, and marketing of pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products in the United Kingdom, the United States, and internationally. It operates through four segments: Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare. The company offers pharmaceutical products comprising medicines in the therapeutic areas, such as respiratory, HIV, immuno-inflammation, oncology, anti-viral, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterial, and dermatology. It also provides consumer healthcare products in wellness, oral health, nutrition, and skin health categories. The company offers its consumer healthcare products in the form of nasal sprays, tablets, syrups, lozenges, gum and trans-dermal patches, caplets, infant syrup drops, liquid filled suspension, wipes, gels, effervescents, toothpastes, toothbrushes, mouthwashes, denture adhesives and cleansers, topical creams and non-medicated patches, lip balm, gummies, and soft chews. It has collaboration agreements with 23andMe; Lyell Immunopharma, Inc.; Novartis; Sanofi SA; Surface Oncology; Progentec Diagnostics, Inc.; Alector, Inc.; and CureVac AG., as well as strategic partnership with IDEAYA Biosciences, Inc. and Vir Biotechnology, Inc. The company was formerly known as GlaxoSmithKline plc and changed its name to GSK plc in May 2022. GSK plc was founded in 1715 and is headquartered in Brentford, the United Kingdom.

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>>> Why Veru Stock Is Flying High Today


Motley Fool

By Keith Speights

Aug 11, 2022


https://www.fool.com/investing/2022/08/11/why-veru-stock-is-flying-high-today/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Veru provided its fiscal 2022 Q3 update on Thursday.
The company announced lower revenue compared to the prior-year period and a worse net loss.

However, management is optimistic that sabizabulin will soon win authorizations for treating hospitalized COVID-19 patients.

Investors eagerly wait authorization of Veru's COVID-19 therapy.

What happened

Shares of Veru (VERU) were flying 31.6% higher at 12:14 p.m. ET on Thursday. The big gain came after the drugmaker provided its fiscal 2022 third-quarter update before the market opened.

Veru's Q3 results didn't appear to justify the sizable jump for the stock. The company reported total net revenue fell 46% year over year to $9.6 million. Its net loss totaled $22.2 million, or $0.28 per share. This result was much worse than the loss of $2.7 million, or $0.03 per share, in the prior-year period.

However, Veru's management sounded optimistic about the prospects of winning Emergency Use Authorization (EUA) for sabizabulin in treating hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome (ARDS). They also expect a revenue boost from the launch of Entadfi, which treats benign prostatic hyperplasia (enlarged prostate) with a low potential for adverse sexual side effects. This positive outlook appeared to be all investors needed to pile into the biotech stock.

So what

Veru filed for U.S. EUA for the experimental drug in June. The European Medicines Agency (EMA) is reviewing potential emergency use of sabizabulin in the European Union (EU) under a new emergency regulatory pathway. The United Kingdom is also expediting a review of the drug.

It's fair to say that sabizabulin could be a game changer for Veru if it's authorized. The White House has warned of a potential major coronavirus wave in the fall and winter. Sabizabulin holds the potential to prevent thousands of deaths.

Now what

U.S., EU, and U.K. authorization decisions for sabizabulin shouldn't take very long. Veru has cranked up its manufacturing capacity and expects to be able to produce enough doses to treat around 250,000 patients per month worldwide beginning in September.

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>>> Axsome's depression drug enters competitive market after U.S. approval


Reuters

August 19, 2022

By Amruta Khandekar


https://finance.yahoo.com/news/axsome-surges-oral-depression-drug-120314009.html


(Reuters) -Axsome Therapeutics Inc on Friday gained U.S. approval for its treatment for depression, giving more than 20 million Americans affected by the disorder a new option in a market crowded by older drugs.

Shares of the U.S.-based company, which expects to launch the drug in the fourth quarter, surged 25% in early trade.

The drug, Auvelity, is a new class of treatment that reduces the symptoms of depression as early as one week, giving it a potential edge over older antidepressants, which can take up to six weeks to show effect.

The treatment has "blockbuster" potential, but the company will have to make significant investment to build the market for a new branded therapy in a field full of generic therapies, Guggenheim analyst Yatin Suneja wrote in a client note.

Major depressive disorder (MDD), or clinical depression, is characterized by persistent feelings of sadness and suicidal thoughts. Axsome estimates that the prevalence of depression rose three-fold since the start of the COVID-19 pandemic.

Newer depression treatments are few and far between, with Johnson & Johnson's nasal spray Spravato being the rare new drug to be approved in 2019 after more than 30 years.

Axsome's therapy targets several neurotransmitters including glutamate and had succeeded in a late-stage trial in 2019. The long-waited approval for the therapy comes after the agency found deficiencies in the company's application last year and extended its review of the drug.

Axsome expects the ability of patients to take the pill safely at home to boost its uptake.

The company said it was finalizing a list price for the treatment and intended to start discussions with insurers in the coming weeks.

The drug comes with a boxed warning of increased risk of suicidal thoughts and behaviors in children and young adult patients.

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Occidental - >>> Here’s Why Warren Buffett Loves Oil Giant Occidental Petroleum


Bloomberg

August 19, 2022


https://finance.yahoo.com/news/why-warren-buffett-loves-oil-224739000.html


Famed investor Warren Buffett is steadily snowballing a stake in Occidental Petroleum Corp. in what could end up being his biggest-ever acquisition. His Berkshire Hathaway Inc. on Friday won approval to buy as much as 50% of the shares. Some investors believe it’s a step toward a full takeover, which may end up costing more than $50 billion.

Here’s why Occidental is attractive to Berkshire:

Oil

Inflation looks to be the mega-trend for the first half of the 2020s and crude oil is one of the best natural hedges out there. Russia’s invasion of Ukraine and a lack of investment in new oilfields over the past five years have hit supplies, leading to stagnant production profiles everywhere from OPEC to US shale. Meanwhile, demand for fossil fuels has been strong coming out of the pandemic even as governments push for a switch to clean energy.

With investments across the energy sector from utilities to solar power, Buffett claims to be a realist in the debate around fossil fuels. “People that are on the extremes of both sides are a little nuts,” he said at a Berkshire shareholder meeting in 2021.

Familiarity

Buffett first invested in Occidental in 2019 when the oil company was in a bidding war with Chevron Corp. to buy its crosstown Houston rival, Anadarko. Occidental CEO Vicki Hollub flew to Omaha, Nebraska, on the company’s Gulfstream V and convinced Buffett to add $10 billion to her war chest. It was enough to swing the deal and Chevron pulled out soon after. In exchange, Buffett got preferred shares yielding 8% annually plus warrants to buy more common stock at $59.62 apiece. Today, with Occidental at $71.29, those warrants would turn a profit of more than $900 million if exercised.

Value

Initially the Anadarko deal was a disaster because it loaded up Occidental’s balance sheet with more than $30 billion of additional debt right before the pandemic. Occidental’s market value went from $50 billion before the 2019 transaction to less than $9 billion toward the end of 2020 as oil prices crashed.

But on the flip side, this created a good value play for Buffett. When crude turned around late last year and was supercharged by Russia’s invasion of Ukraine, Occidental was best-placed to benefit. The stock is the best performer in the S&P 500 this year, up more than 140% compared with the index’s 11% decline.

“Oxy started this year heavily indebted with massive oil exposure,” said Bill Smead, who manages $4.8 billion at Smead Capital Management Inc. and is a top 20 shareholder in Occidental. Soaring crude prices mean “they’re now paying off that debt and gushing cash. It’s the best of all worlds.”

Cash

Too much cash has been Berkshire’s biggest investing challenge over the past few years. The conglomerate had about $105 billion on hand at the end of June. It is expected to generate about $8 billion in free cash flow each quarter for the next five years, according to Greggory Warren of Morningstar Research Services LLC. Inflation at the highest in 40 years is a great incentive to put that money to work.

Occidental would work better as a subsidiary of Berkshire than a stock holding “given the volatility that exists in the energy/commodity markets,” Warren said. “This could end up, though, evolving into a slow-motion takeover where Berkshire buys up to the stakes that FERC allows it to acquire until it can acquire Oxy whole.”

Shale

Occidental is not only one of the biggest producers in the Permian Basin, the largest US oilfield, but it also has one of the lowest costs with an oil price of just $40 a barrel needed to sustain its dividend. West Texas Intermediate currently trades at about $90 a barrel. Hollub has reined in the “drill-baby-drill” mentality that characterized shale for the first decade of its lifespan and is now prioritizing profits over production. Free cash flow hit a record $4.2 billion in the second quarter.

The Anadarko purchase may have been expensive, but it allowed Occidental to lift its land holdings in the Permian to 2.8 million acres, 14 times the size of New York City’s five boroughs combined. It also added steady, cash-flowing assets in the Gulf of Mexico and Algeria.

CEO

Buffett has a good personal relationship with Hollub, which began at the 2019 meeting in Omaha, brokered by Bank of America Corp. CEO Brian Moynihan. This year, the veteran investor praised Hollub after reading a transcript of Occidental’s Feb. 25 earnings conference call in which she pledged financial discipline even as oil prices were rising.

“I read every word, and said this is exactly what I would be doing,” Buffett told CNBC’s Becky Quick in “Squawk Box” in March. “She’s running the company the right way.”

Inflation Reduction Act

The oil industry mostly criticized the Inflation Reduction Act that President Joe Biden signed into law this month. The $437 billion legislation “discourages needed investment in oil and gas” and offers “the wrong policies at the wrong time,” the American Petroleum Institute said.

But Hollub was surprisingly upbeat, calling the bill “very positive.” That may have something to do with its expansion of tax credits for carbon capture, of which Occidental is a leading proponent. The company has plans to build the world’s biggest direct air capture plant which will command a tax credit of as much as $180 for each ton of carbon sucked out of the air.

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Las Vegas Sands, Salesforce - >>> Billionaire George Soros Pours Money Into These 2 ‘Strong Buy’ Stocks


Tip Ranks

August 19, 2022


https://finance.yahoo.com/news/billionaire-george-soros-pours-money-135917675.html


In the world of stock legends, George Soros stands out. While his political activities have been a lightning rod for controversy, no one can doubt his financial acumen. After all, he’s the ‘man who broke the Bank of England,’ and made a billion dollars in one day when he shorted the Pound Sterling back in 1992.

His hedge fund, Soros Fund Management, showed three decades of sustained gains, averaging 30% annual returns through the year 2000. During this time, and today in the management of his personal fortune, Soros has taken a risk-tolerant stance toward his investments, and hasn’t hesitated to trade based on news and reports of global events.

Soros once notably commented, “We [at Soros Fund Management] use options and more exotic derivatives sparingly. We try to catch new trends early and in later stages we try to catch trend reversals. Therefore, we tend to stabilize rather than destabilize the market. We are not doing this as a public service. It is our style of making money.”

So, when Soros makes a move, it is only natural for investors to sit up and take notice. With this in mind, we decided to take a look at two stocks his fund has recently loaded up on. Soros is not the only one showing confidence in these names; according to the TipRanks database, Wall Street’s analysts rate both as Strong Buys.

Las Vegas Sands (LVS)

First up is a new position for Soros, Las Vegas Sands. This casino and resort company has a storied name in its hometown – but no longer any entertainment and resort venues in Vegas. While still based in Las Vegas, Sands has now turned its focus to the international leisure scene, and owns 6 properties – one in Singapore and 5 in the city of Macao on China’s southern coast.

The company's financial reports, however, show that pandemic-related restrictions are continuing to put pressure on the bottom line. This is particularly relevant since most of Sands’ properties are located in Macao – and Chinese authorities have not been hesitant about locking down cities and restricting movement. Even so, Sands has reported $1.05 billion in net revenue in the most recent quarter, 2Q22. This was down from the $1.17 billion reported in the year-ago quarter. The company also showed a net loss from continuing operations of $414 million, compared to $280 million in 2Q21.

Despite the overall losses in Q2, Sands did see a doubling of its revenue from its Singapore property. The Marina Bay Sands, located in the city, saw EBITDA of $319 million, based on net revenues of $679 million. This compared to net revenues of $327 million in the year-ago quarter.

The results for 2Q22 are the first quarterly release for Sands since it completed the sale of its US assets. That sale was finalized in February of this year, to VICI Properties and Apollo Global Management, for a total of $6.25 billion.

As noted, this stock is a new position for George Soros, and in the last quarter he bought a total of 220,000 shares. At current pricing, this stake is now worth some $8.26 million.

Credit Suisse analyst Benjamin Chaiken lays out a comprehensive case for the bulls on LVS, writing of the stock: “LVS has held up well YTD and we think it should continue to outperform. Singapore is accelerating, Macau can’t get much worse (casinos closed), the balance sheet is in great shape, and the Singapore rebound (faster than we expected) could provide some insight into what an eventual Macau recovery could look like (maybe)... We think the stock should have a lot of support around $30, where we would argue you are embedding zero Macau value."

Unsurprisingly, Chaiken puts an Outperform (i.e. Buy) rating on LVS shares, and his 12-month target price of $59 suggests a gain of 56% lies in store. (To watch Chaiken’s track record, click here)

Judging by the breakdown of the analyst ratings, the bulls are clearly in the majority. Of 9 recent reviews, 8 have come down as Buys – against a single Sell. Overall, this gives LVS shares their Strong Buy consensus rating. The stock is selling for $37.72 and its $47.78 average price target implies a 26% one-year upside. (See LVS stock forecast on TipRanks)


Salesforce, Inc. (CRM)

For the next stock we’ll turn to the tech and marketing world, where Salesforce has long been an industry leader. The company gets its ticker, CRM, from its main product, Customer Relationship Management (CRM) software packages. These are offered as cloud-based solutions through the popular SaaS subscription format. Salesforce’s enterprise clientele use the products to manage and solve front-end marketing issues.

Later this month, Salesforce will release its Q2 results for fiscal year 2023, but we can look back at the company’s fiscal first quarter, and its recent trends, to get an idea of where it stands now.

In its fiscal 1Q23, Salesforce reported $7.41 billion at the top line, a 24% gain from the prior year’s Q1, and the highest revenue result in the past two years. The company also saw a strong year-over-year gain of 14% in operating cash flow for the quarter, to a total of $3.68 billion.

On a negative note, the company’s reported non-GAAP diluted EPS came in at 98 cents per share, down from the $1.21 reported one year earlier.

Looking forward to fiscal 2Q23, we should note that Salesforce has guided toward revenue of $7.69 billion to $7.70 billion, or a 20% increase year-over-year. For fiscal year 2023 as a whole, Salesforce is guiding toward a top line in the range of $31.7 billion to $31.8 billion. Again, this would translate to a 20% y/y revenue gain.

This is a stock that Soros was already holding a position in – and in the last quarter, he expanded that position by 138%. He first bought into CRM in 1Q21, and his most recent acquisition added 364,209 shares to his stack. Soros’ now owns 627,509 shares of Salesforce worth over $115.24 million.

Soros isn’t the only one giving this tech stock some love. 5-star analyst Keith Weiss, of Morgan Stanley, describes Salesforce as ‘the most attractive risk/reward in software.’ and goes on to say: “We believe unique exposure to the broadest of Digital Transformation initiatives focused around driving further automation and efficiencies will prove to be a more durable demand driver for Salesforce than expected. Further, partners have indicated early signs of potential consolidation of IT budgets — a trend which plays to Salesforce's strengths given the breadth of its platform... We believe a slowdown in the business — whether organic or macro-related — is already more than priced in at current levels."

In line with these comments, Weiss rates CRM stock an Overweight (i.e.Buy) and his $273 price target points toward 49% upside in the next 12 months. (To watch Weiss’s track record, click here)

Overall, Salesforce is a major company, with a market cap of $182 billion, and it has picked up plenty of Wall Street attention. There are 32 analyst reviews on record here, and they include 27 Buys, 4 Holds, and 1 Sell for a Strong Buy consensus rating. The stock has an average price target of $240.70 and a current trading price of $183.33, pointing toward an upside of ~31% in the next 12 months. (See CRM stock forecast on TipRanks)

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