Kuppy Profile picture
May 14, 2022 7 tweets 2 min read Read on X
1/n Quick thread: Most HFs have quarterly liquidity. The redemption notice period is Q-30 or Q-45 days. Q1 was a miss for most funds, Q2 is a bloodbath. You’re not allowed 2 bad quarters. Notices have been showing up all week, the big bulge will be from tomorrow until month end
2/n PMs are in denial. These guys have had long relationships with LPs. LPs are “just putting in the notice as a placeholder.” PMs think if things bounce, maybe redemptions get rescinded. Everyone is pleading and in denial. No one knows their real liquidity.
3/n Even if you know your outflows, you don’t sell today at what you think is the lows. Imagine selling the low and having it bounce on you while you hold cash? You’ll just end up screwing the LPs that stay in bc they have no exposure to the bounce. Your CAGR is toast. You wait..
4/n As we get closer to quarter end, the selling will pick up. Everyone wants to go flat on the last day so they have the least tracking error, but that is impossible for illiquid names, impossible for big funds. The selling there has started, it will be a crescendo…
5/n I’m amazed at all the fukwitz retail baggies stepping up now to fade this move. The real selling hasn’t even started. Can we bounce? Sure. We are massively oversold—waves of margin calls ended Thursday. This is a trading mkt for the BTFD crowd. Trade em, don’t own em (yet)…
6/n The week before quarter end, the “bid wanted” situations in small cap will start. My stinker bids will get laughed at, then spanked. The liquidity isn’t there in these names. The cleanup in large cap is the last few days. I’m being patient.
7/n We haven’t had a real redemption cycle in anything but energy in a decade. Guys forgot how it goes. Many PMs are dealing with this for the first time since 2008/2009, they forgot how it works…

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More from @hkuppy

Mar 27
1- Has anyone else noticed the spikes in gold that have peaked at around 7am EST this week…??

What could be causing this rally during European hours, only to be reversed when NYC wakes up…??
2- Pet theory of mine. So bear with me here…

When the West buys gold, we think of it as another CUSIP in the portfolio. Something you buy and sell for trading gains. Something that you can use to hedge other portfolio positions.

When Asians buy gold, they buy for keeps…
3- This is important, b/c they keep buying, and the rate of buying is accelerating. Over the past few months, we’ve seen divergences between COMEX and Chinese gold exchanges. Divergences that should have been arbed. Eventually, the arbs closed, but they then diverged again…
Read 8 tweets
Oct 3, 2023
1) Much as I predicted, markets are starting to waterfall. It has a very December 2018 feel to it. Difference is that in 2018, markets got cranky that JPOW pushed Fed Funds too tight with a bit of excess QT. This time is different…
2) This time, markets are watching the 10-year melt away and they’re starting to panic as 10s are the collateral for the whole financial system and there are now hundreds of $$ billions of MTM losses suffered through the collateral stack…
3) Besides, everything funds off the 10-year, so cost of capital is up. Issue is that JPOW cannot just tweak Fed Funds and fix it. 10s are in a panic bc fiscal is running at 8 on the way to teens. Despite the panic, they’re still inverted. What can JPOW do..???
Read 6 tweets
Sep 23, 2023
1) Assets sometimes undergo a sudden phase shift. Just like a liquid can become a gas when you add heat, the same can be said of public assets. It seems that uranium has now undergone a phase shift. The personality of the trading changed dramatically…
2) Think back to earlier this year. Uranium would rally a few dollars, then pull back. The spread stayed tight. It sometimes went weeks without moving a full dollar.
3) After WNA something changed. Someone panicked and stopped acting price conscious. Someone just wants pounds. Suddenly uranium is gapping a few dollars at a time. The pullbacks are rarely more than a few ticks and the bid/ask spreads are frequently a few dollars wide.
Read 6 tweets
Sep 7, 2023
1) This is VERY bullish for SPUT, but there’s nuance: (conference chatter)

-Limited redemption is designed to ensure that the discount cannot permanently widen past a certain threshold (say 5%) + is limited to industry players + only certain limited windows of redemption/size
2) This is designed so that the trust never overwhelms the physical market with selling. I believe this will help to build liquidity while providing a release valve during times of market stress.
3) During periods of selling in SPUT, a physical trader can short physical and buy SPUT and then settle that trade either by unwinding in the market or one of the limited redemption windows. This will better tether SPUT to physical, by creating arbitrage opportunities.
Read 8 tweets
May 15, 2023
1) OIL THREAD - In April, we were drawing roughly 2m+ bbl/d with an expected expansion to roughly 4m bbl/d as OPEC+ cuts began in May. The question was - why was oil trading so sloppy. SPR was selling a few hundred thousand a day, but that wasn’t enough to move the needle.
2) A lot of oil traders frantically asked each other - what the hell are we missing? We looked under every rock, and we found a few wrinkles, but not enough to smash the price. Effectively, the only bear thesis was “recession, bro.” Then we started looking at the spec positioning
3) Over a 3 week period, specs flooded the market with ~10m bbl/d of paper supply. It was one of the most rapid net position liquidations ever, with a massive buildup of spec shorts. Suddenly, we had our answer. The market was overwhelmed by the supply of paper barrels. twitter.com/i/web/status/1… Image
Read 7 tweets
Mar 28, 2023
2) From left to right, St Eustatius, St. Kitts, Nevis, Montserrat…
3) Of course we hiked to the highest point in Netherlands…
Read 4 tweets

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