1/ The math & economics on why I think homebuilders have a problem (all sources at end):

a) Consumers spend 30-35% of gross annual income when buying a new house

b) Median new home price is $436,800

c) 30-yr mortgage, 10/25/21 = 3.23%
30-yr mortgage, 10/20/22 = 7.22% 2/ Using MS Excel PMT function, let's run the numbers

=PMT(3.23%/12,360,$436800) = $1,896 monthly payment
=PMT(7.22%/12,360,$436800) = $2971 monthly payment

The monthly payment is 57% higher today than a year ago.

Recall consumers spent 30-35% of income when payment was $1,900

Quick thread on price increases in consumer staples.

Most set to take effect this summer.

(Pro tip: Consumer staples do not typically "give back" price increases later)

$CLX $KMB $MMM $NWL $WHR Kimberly Clark
$KMB

unhedged.com/companies/5c54…

1/ $JOE is a blast from the past. Back in 2005 when I was at Greenlight, we received a call from a sell-side analyst wanting to pitch a long idea. These usually get routed through the trader, who then sends to an analyst. Idea sounded kind of dumb/not in wheelhouse, so...

https://twitter.com/BlueDuckCap/status/1364751574703038466

2/ it went to me, the new guy. The sell-side analyst (still working, won't name names) proceeded to tell me about this great long opportunity in St Joe at $80/share (late '05).

1/ Not sure why this is so confusing and controversial, but what *almost certainly* happened is that Robinhood's counterparty/custodians saw too much risk in Robinhood's *aggregate* account on $GME.

The custodians don't "look thru" their client's massive list of accounts... 2/ Let's just say its Bank of New York custodying Robinhood's assets. And say Robinhooders own 60mm shares and Robinhood margin is, idk, $5 billion.

BONY says "Sorry, no more $GME shares for you".

They do *NOT* say, "well, let's look at all 5 million of your accounts that own..

1/ Seems the WSB strategy that is working well is two-fold:

a) Identify high short interest stocks
b) Find ones with (or create) high open interest

This forces two groups' hands:
1) Short sellers
2) Options market makers

Can be a very effective way to force buying 2/ Regarding the 'short squeeze' on short sellers, I think that part is fairly well covered.

What may be less understood is what rapidly rising prices on high OI stocks does to options market makers

1/ Corn at highest prices since 2011-2014

Ammonia fertilizer prices (used for corn) were 50-75% higher then than now.

$CF largest producer by far, and primary cost is natural gas.

Huge operating leverage. $10+ EPS if ammonia up 50%.

unhedged.com/companies/5c54… 2/ Of course, corn supplies need to actually tighten and stay tight for a year or two. Recent increase driven by bad weather in Argentina and Brazil (next 2 largest corn producers) and high demand from China.

Domestically, demand was weak, as feed usage (beef, hogs) low b/c...

1/ This is really interesting data/analysis on DoorDash $DASH

DoorDash is now earning ~7% contribution margin from deliveries.

Further, gross order volume now >3.5% of total consumer restaurant spend in the U.S.

Data here: unhedged.com/files/034e7911…

https://twitter.com/UnhedgedApp/status/1327626126223667200

2/ Per the table below, we can see consumers in the U.S. spend upwards of $700bn per year at restaurants...

1/ Brief thoughts: See lots of info on higher website traffic here or there, longer drive thrus at McDonald’s or wherever, more cars at Walmart or Home Depot. All time high software stock prices. Here’s what I think is lost in the mix... 2/ start with Home Depot. We go there now. Always a line to get in. Social distancing, masks etc (warranted, not suggesting otherwise). Plexi glass at checkout, PPE at checkout. Is it “full”? Sure. Is it “as full”? 100% not. Is it more costly to operate this way? 100% $HD

To me, Buffett is looking at the facts: NYC had like 10% infection rate and it brought to its knees. Almost everywhere else still new. This is a 2-3yr problem and current policy response is so far from what will ultimately be needed

https://twitter.com/special_sits/status/1256738405666480128

There are two places this isn’t a problem:
1) stock market
2) president press briefings
Will there be any major sporting events before the fall (and even after), let alone other events (concerts). Airlines, restaurants, travel?

1/ Thread on technical aspects of $USO crude oil ETF.

$USO has over 80% of its assets in June 2020 oil futures (that expire in May). They now hold over 25% of the total outstanding June futures.

$USO form 10-K filed with the SEC available here:
unhedged.com/companies/5c54… 2/ $USO has grown so rapidly this year, as investors "pile in" to the long oil trade that its share count has grown from 148.5mm at 2/18/20 to nearly 1.2 billion shares today (over 7x growth)

unhedged.com/secfilings/5e5…

1/ A brief refresher on why the Boeing 737 MAX has significant engineering problems that make it uncompetitive versus the Airbus 320neo $BA

All sources, research and documents available here:
unhedged.com/exchange/5dd14… 2/ Around 20-25% of the cost to fly an airplane is fuel costs. Therefore, fuel efficiency is critical. When Airbus unveiled the 320neo, it was 15-20% more fuel efficient than existing 737s or prior Airbus 320's

Is anyone interested in how the Fed's balance sheet works? If yes, happy to write it up and provide the data and explanation.

Will provide brief summary anyway just for fun 1/ The fed buys assets (based on its mandate) and can provide funding (if needed) by creating digital reserves (i.e. free equity). They publish weekly balance sheets in the H.4.1 release, available here:
federalreserve.gov/releases/h41/c…

1/ My takeaway from David Tepper interview on CNBC today (the only time I tune in annually):

a) Not time yet to take a lot of risk; if you see opportune stuff you know well and can identify temporary source/reason for selling pressure, be buying those specific things; 2/
b) it will be time to take risk once there is a reasonable health plan & path fwd, and a reasonable fiscal plan. Not there yet. (this was his identical playbook in 09/10 - waited till problem was quantifiable, waited till fed program was sized to address quantified problem)

1/ Brief thread on my experience shorting Lehman Brothers, the Great Financial Crisis, and my opinion on this crisis.

I ended up with the short position on Lehman at Greenlight Capital. Was a couple unique circumstances that...

Folder with sources here:
unhedged.com/exchange/5e6d6… 2/ That gave us some 'edge' on the analysis. First, I had been short AvalonBay, the residential multi-family REIT at the time Lehman Brothers top-ticked their acquisition of ArchstoneSmith. Issues here were already fairly obvious (high exposure to finance sector employees)

1/ For fear of missing out talking about Corona, here's my two cents:
First case Dec 1, 2019 in Wuhan, city of over 11 million.
A month later, lots of cases showing up.
Fast forward ANOTHER month, and China finally locks down Wuhan at end of January (virus out for 2 months now) 2/ City of 11 million. Virus running for 2 months DURING CHINESE NEW YEAR. What % contracted it? Less than 1% on official statistics. Assume it was under reported by 10X, and you get to maybe 6%. After 2 months, during the winter & holidays.

1/ My wife, who is a far better investor than I - no investment training/background, a Peter Lynch type eye (has no idea who Peter Lynch is) - instructs me tonight to sell $TWTR and buy $LEVI
brief thread on her rationale, curious to hear feedback 2/ Sure, $TWTR is a great platform and growing in importance, but Jack has made it clear that profits are not a priority. So much so, in fact, that he's basically aligned the entire organization behind the idea of pursuing the company's agenda of social good ahead of profits

1/ $BA Why "normal" expert network due diligence is failing to help people understand the true nature of the problem:
There are 3 related, but distinct issues that require different professional backgrounds. No one expert seems to be able to speak intelligently to all 3... 2/ the three variables at play that have led to the current problem are:
a) Aerodynamic issues around lift/stall and center of gravity
b) Fuel efficiency - critical to compete with A320neo
c) Software design
Yes, as any expert can tell you, aerodynamics need not be the issue...

1/ $PTON Peloton subscriber churn looks to me to be around 20-30% per year. But they reported churn of 0.7%!!
Math with me here.. the reported churn is a 'monthly' churn, calculated as net cancels in the period, divided by 3 months. So 0.7% = 2.1% per quarter, or around 8.4%/yr. 2/ but given the massive growth, of the 500k+ subscribers we get to use in the denominator for churn, we added half those in past 12 months. So we lost 8%+ of the 500K, but that 40-50k really applies to the 250k from last year... BUT... the plot thickens further..

(1/n) A short story on fleeting opportunities: back in 1999, I had the opportunity to intern in the trading pits on the floor of the CBOE in Chicago. I was living in southern Illinois at the time, had applied to 20-25 jobs, and got 2 interview offers... (2/n) Chicago is 5 1/2 hours north and I didn’t have a car, so I actually went to my dads house and “stole” his car to go to the interviews (he threatened to press charges as I was an unruly 19yr old but that dust settled)

Thread: I lost my mind once. Was late 2009, had been working at a hedge fund for a number of years, and had some early success at a young age... I grew up in southern Illinois, in Belleville, parents from east St. Louis. No experience with the water, but was always intrigued...