How did $NVDA manage to 15x its quarterly revenue in the last 4.5 years?

Everyone takes it for granted that it was due to demand for computing power for AGI. But the story goes deeper.

🧵 Part I: Changes in accounting policy

It all started with a change in accounting policy.

In the quarter ending April 2020 (Nvidia’s Q1 FY 2021), $NVDA changed its reporting segments from GPU and Tegra Processor to Graphics and Compute & Networking.

Is The Dollar Milkshake Theory Complete Nonsense?

🧵 Let's address this chart crime. The dollar milkshake theory, which forecasts a strong and forever rising dollar, claims the theory is valid because the DXY rose 30% from its 2008 lows.

When historians write history books, they don't claim to have predicted the past or call themselves oracles.

The DXY rose 30% is a factual statement. Claiming it rose because of the milkshake effect?

Karl Popper, George Soros' mentor, came up with the theory of falsification. Unlike verification, falsification focuses on categorically disproving theoretical predictions rather than confirming them.

A thread on tariffs

🧵

Only 7.1% of total US exports make their way to China, while 15% of Chinese exports make their way to the US.

So, China will get hurt more, right? Not at all. Brazilian soybeans will replace US soybeans. It's a commodity after all. Airbus will replace Boeing.

The same can't be said for all the items the US imports from China. Foxconn doesn't have a factory in Salt Lake City.

US farmers and consumers will pay a far heavier price than Chinese tofu eaters and air passengers.

Yet another $NVDA thread.

There are 4 illegitimate ways a company can grow revenue and maintain margins the way Nvidia has. The first, subtle way, is by offering something similar to a sales rebate but booking it separately so it doesn't impact net revenue.

Perhaps you pay your customer when you ship the product, but in return for future services and not as a rebate. That would show up under the balance sheet item "Prepaid expenses and other current assets".

Why does this week's move in the yen matter so much?

🧵 The Bank of Japan implemented QE and zero interest rate policy in the 1990s, in response to the implosion of a mega bubble. Since then, Japan has had a deflationary economy, i.e. the opposite of the post-Covid US economy.

Rather than get eaten away by inflation, money in the bank was able to purchase more goods and services in the future.

Because of which, the yen kept strengthening against all other fiat currencies which were on a race to the bottom.

Ignore rates, focus on liquidity

There is a reason Fed officials and MSM want you to focus on rates - it works to their advantage. The Fed gets to say it is doing its job in controlling inflation by keeping rates higher for longer. MSM reports rates are restrictive, hoping that repeating the message will lower inflation expectations.

This is the magician's trick - getting people to look one way while the science-y stuff behind the trick happens elsewhere.

I wrote about this in my December macro outlook. Time for an update 🧵

https://twitter.com/kashyap286/status/1731677900716257499

First off, banks are lending again. Note how borrowing started to take off just after the Nov FOMC, when the Fed hinted at changes to the SEP.

The dot com bubble peaked on March 10, 2000. Is history about to repeat itself?

The up tick rule rarely gets triggered even on big red days like March 5th. That's a clear sign short sellers have completely disappeared from the market. When the degen gamblers on max leverage try to exit their positions, it's going to be crickets all the way down.

Punching the biggest bully in the yard might seem cool in the movies, but when it comes to short selling I'd rather pick on the old, the weak, and the lame.

The stocks which have witnessed technical damage.

The ones showing poor relative strength to $QQQ.

The stocks with no obvious buyers on the way down.

My current watchlist, organized by market cap👇 Buffet's selling, falling out of the Mag 7, and the failure of Apple Vison Pro, $AAPL should see a trendline break soon.

I bought into Africa Oil $AOI.TO on 4th December at C$2.55.

It is a value stock and as a rule, I hate value stocks because you need to get so many things right in order to make money. Here's why I bought -

🧵 Bank robber Willie Sutton is supposed to have said that he robbed banks because that’s where the money is.

In this environment, I have to buy value – because that’s where the money is.

I have been buying a lot of value stocks of late.

I’m gratified by the response I received on my previous thread highlighting Nvidia’s $NVDA accounting tricks and buyback shenanigans.

Q3 was more of the same. Let's get into it.

🧵 Rather than re-hashing the previous arguments, which the bulls will willfully ignore and the skeptics already know, I’ll leave you with 8 points to ponder.

(1) If demand is so strong the product is flying off the shelves, why is the company unable to collect cash from customers?

NVIDIA $NVDA filed its last quarter's Form 10-Q today. If you have been as surprised by the share price action and the (unaudited) published financials as I have been, this thread is for you.

Let's get into it🧵 First, what's up with the wild revenue beat ($13.51 bn reported vs $11 bn forecast)?

And how did the company achieve this without a corresponding increase in cost?

You know you're getting somewhere when the scheming fraudsters decide to block you for talking facts against their short-and-distort campaign. I expect to add @Seawolfcap @StockJabber and @AureliusValue to this list as their bank run campaign against $SI fails.

https://twitter.com/kashyap286/status/1592948126406803456

$SI Why will their short-and-distort campaign against @silvergatebank fail, you ask? Because short interest as of Nov 30 is a frigging 11,110,000 shares, up from 5.64 million shares on Nov 14. Total share count is 31.66 mn. Institutions (77.81%) and insiders (2.06%) collectively

Valaris $VAL management says there's no demand for their harsh environment jackup rigs in the Norwegian part of the North Sea. Rigs coming off contract will be idled all of next year and await a pick up in tenders in 2024. It's 2018 all over again for the offshore drillers. Don't be fooled by the pick up in day rates or the company's return to profitability. Management also says customers are extremely reluctant to sign anything more than short-term contracts. Reactivations won't happen without longer-term deals - but customers don't want to

I made a lot of trading mistakes this year but being long crude oil this week wasn't one of them. @Josh_Young_1 should've listened to my arguments instead of blocking me and riding oil stocks all the way down.

https://twitter.com/kashyap286/status/1593658514148593664

Falling rig counts at the beginning of the month was an obvious red flag, even if you had chosen to ignore all other data...

https://twitter.com/kashyap286/status/1598871295466536960

I've followed Cameco $CCJ $CCO.TO since 2015 and I consider it the poster child for a value trap.

The company had a terrible time enforcing long-term agreements signed pre-Fukushima, with Japan's Tepco walking out of a $1.3 billion long-term
cameco.com/media/news/cam… #uranium purchase agreement for 9.3 million pounds at a contracted price of $140/lb. Cameco sued for $700 million, won the two-year long legal battle, and was awarded $40.3 million in damages, or a mere 3.1% of TCV.
cameco.com/media/news/arb…

When I began my career as an equity analyst, my thinking was based on Graham-Dodd rather than Peter Lynch/ Philip Fisher, although I had familiarized myself with both schools of investing. I witnessed the dotcom bubble as a kid and watched my mom daytrade through it successfully. Infosys $INFY paid for my schooling and probably a good chunk of my college education.

Yet, with this background, my own start was looking at the world through the value lens, searching for those proverbial cigarette butts by the gutter which were still good for one last puff

@AlderLaneEggs is either dumb or deliberately trying to manipulate (for lack of a better word) $SI shares. Silvergate Capital is a bank holding company operating a federally regulated banking institution. As per Q3 Form 10-Q, their total assets amount to $15.5 billion, of which $302.2 million consists of SEN leveraged loans, classified as Commercial & Industrial loans below. This forms part of loans held for investment in their balance sheet (above). These are loans collateralized with bitcoin or USD. What about default risk? See 10-Q page 51.