Rashid

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[BOSS @thebeautyofsaas]

there is no feeling in life that comes close to realizing what you want to spend the rest of your life doing and fully embracing it, no matter what outcome awaits you in the end

it is a priceless feeling to find something that gives you a sense of existence and self-purpose

[bubble boi @bubbleboi]

A lot of people think I had inside information that Situational Awareness was blowing up.

I didn’t.

If I had, I would have flipped short on a lot of the names I owned. The real reason is much simpler. My portfolio is long & short. The longs are concentrated in maybe 10 names with some puts on some of the names to lower the max I could lose.The shorts on the other hand are mote diversified to keep risk down. In a normal month the longs carry the P&L, the shorts roughly break even, but in a sector wide drawdown the shorts should stop me from losing money.

Coming into July I was shorting photonics names to offset my concentrated longs in Intel, Astera, and flash memory, I was running about 30–50% gross exposure 2.5x levered. What made me sell my longs was how strange the tape was. Intel’s realized vol was running hotter than Applied Opto’s on some days. And the flash memory names dropped 15% or more for three straight days on no news. In a normal semis selloff my shorts are the ones exploding; here my longs were just as volatile, sometimes more. Correlations across my book went to one and vol spiked far past anything normal, so I cut every long and pulled my exposure way down.

When the Kimi K3 paper dropped, I figured the information had diffused through the ecosystem ahead of the announcement, which was reason enough to stay out. But something didn’t fit the narrative was that the names that should benefit from a competitive open model like neoclouds, and hyperscalers were in the gutter too, while IT consulting and SaaS ripped higher. That was the canary in the coal mine. Someone was getting squeezed and this wasn’t the first time I saw this kind of price action but it was by far the worst. There was no better sign of duress than Infosys being up 20% in the past month. Moving fast saved me from the worst of it. A 20% drawdown isn’t something I’m happy about, and it’s clearly a sign that my semis concentration is too large but that it said could have been far uglier if I held on for two more weeks.

Now what’s surprised me is how long SA was flash. I knew they held SanDisk from their 13-F, but i had no idea how big it really was since they used swaps to hide the true size. Additionally, the Kioxia position wasn’t reported but was probably bigger or entered in at a higher basis from the looks of the higher volatility. But the biggest surprise to me than any of that was that he was shorting SaaS and IT consulting, which were completely anti correlated to his longs, and meant he was basically in the same trade on both sides of his book….

People are just saying he made an honest mistake but idk looks to me that he just literally didn’t know the risks he was holding. It wasn’t the 4x leverage, it was leverage on effectively the same trade twice. The only semis short of his I know about was Intel, and I made sure to send him a gift during the last week of June 😊. My guess is the short book went first, forced him to sell longs, and the anticorrelation between the two pushed his shorts even higher.

Absolutely brutal way to go out. I do sympathize for him as it’s a really embarrassing thing to go through publicly and I hope he at least thinks about risk more in depth going forward. But I’m glad it’s over, and we can go back to owning some of these companies without the volatility. I’m giving myself a B- for the month since my sector exposure to semis was far too high and going forward I’ll try to be more creative with how I get exposure to AI with more diversification.

[Rashid @Rashid_builds]

@Ashton_1nvests Cringe

[Nanalyze @nanalyzetweets]

Missed the HBM/memory boom? Cooling could be the next AI bottleneck.

40% of data center energy goes to thermal management—and demand is exploding.

Key stocks analyzed:
$MOD (Modine)
$VRT (Vertiv)
$NVT (nVent)
$ETN (Eaton)
$FIX (Comfort Systems)

Full breakdown 👇

[Rashid @Rashid_builds]

@nanalyzetweets @JonkooTrades U mean it was passive flow possibly from their etfs?

[signüll @signulll]

if you wanna grow a lot very quickly, you should start a company esp if you have something on your mind that you can’t dismiss easily. co building is one of the highest bandwidth ways to grow mainly cuz it compresses so many parts of life into a single endeavor.

i.e. you learn incentives, relationships, conflict, persuasion, leadership, hiring, failure, negotiation, power, trust, capital allocation, communication, & responsibility all in one fell swoop. almost every recurring dynamic in history eventually shows up in miniature inside a company.

this makes sense cuz a startup is essentially a simulator for human nature (both demand & supply). it forces you to confront what actually matters, strips away a lot of comforting abstractions (like a boss), & often gives you painful/brutal feedback when your model of the world is wrong which is what makes it such an extraordinary education.

[Rashid @Rashid_builds]

@nanalyzetweets @PhotonCap has great writings on the company tbh. Their tech is legit, its just takes time to be adopted

[Luke Martin @VentureCoinist]

Ken Griffin gave this warning recently during a rare podcast appearance:

"You'll never manage a portfolio for every possible tail event, but you should stay very focused on what is the worst-case scenario?"

"Can I tolerate that loss? And monitor and maintain your exposures such that the loss is a tolerable loss. It may be an extreme loss, but it's still tolerable."

"Definable, tolarable, still in business, still in a position to fight back from that point. That's what you're trying to get your head around."

Almost like he was speaking directly to Leopold knowing how this trade would unfold. Savage.

[Rashid @Rashid_builds]

@FrostByte123456 @mikealfred Fair enough

[Rashid @Rashid_builds]

@propertyindexae Thats cool its just u can easily get all of that data, upload to gpt or claude and ur done. Just get them directly from DLD lol

[Rashid @Rashid_builds]

@__Con_ Man just no lol

[Rashid @Rashid_builds]

@FrostByte123456 @StockTrader_Max @mikealfred @danroberts0101 Haters gonna hate 🤷‍♂️. He used to be a ceo of billion dollar companies and have past experience in data centers and Ai

[Rashid @Rashid_builds]

@mweinbach @Omercheema What makes these basic

[Rashid @Rashid_builds]

@nanalyzetweets $HIMS thoughts

[Rashid @Rashid_builds]

@MoodyWriter13 Where?

[Rashid @Rashid_builds]

@Gaurab Name us some of these companies i am curious

[Drew Cohen @DrewCohenMoney]

$MU and homebuilders are more similar than you might think.

Everything about a home builder is basically a commodity product.

It is often taught that commodity products cannot maintain high returns, but if you look at the ROE of many home builders you’ll see many in the 20%+ range. Sometimes much, much higher.

These businesses have a product that anyone can produce, but the reason why their economics are maintained is because demand outstrips supply.

There is more demand for (moderately/ low priced) homes than we create. Thus virtually every home that gets built gets sold—and at a price that provides ample margin for the builder.

When these businesses do poorly is when demand temporary sags and the carrying cost of inventory (construction loan interest expense) weighs on returns. Aggressive financing on the builders parts, could result in bankruptcy in such situations.

Generally though, demand for homes is only going to go up overtime and will continue to outstrip the pace of building—at least in the U.S.

The situation is different in China for instance where supply increases has resulted in very soft home prices and phantom cities.

The point I wish to make is that competitive moats are only pertinent to a business when supply outstrips demand.

If you can differentiate your product sufficiently, the consumer preferences you are fulfilling are unique enough that the business itself is the sole supplier.

They have escaped the rat race of commodity competition where any business can build what they build. If you want an iPhone, there is only one seller. If you want fast delivery on millions of items through a high trust seller, there is only Amazon (in the U.S.)

The less emphasized point though is that even if your product is undifferentiated, so long as supply runs below demand, you can have a strong business.

We are seeing this phenomenon in memory chips, energy supply, and data centers. The demand is overwhelming and so many business that fit the bill of being a commodity product can reap stellar margins and returns on capital—for now.

Micron posted 68% operating margins. 3 years ago they were as low as -63%.

With capacity constraints and capital flooding into the data center build out, they certainly have strong tailwinds to continue to post such stellar margins.

However, the problem with such businesses comes from the fact that these high returns draw in incremental capital and eventually growth in supply will overshoot demand.

While a cycle can take years, it doesn’t change the fact that memory is not a differentiated product the same way a Nvidia GPU chip or Arista network switch is. (That doesn’t mean they can’t also have their own cyclically though—just that by and large the market for Nvidia GPUs, is different than the market for “GPUs”)

Investing in such businesses becomes a bet on the capital cycle duration and a bet on the rationality of multiple players. It works so long as demand is higher than supply, but when the situation reverses, the commodity-like returns of an undifferentiated product returns. (Memory investors are basically betting that AI demand has resulted in a paradigm shift where demand will continue to outpace supply for many years—perhaps a decade… but Wall Street only tends to model 3-5 years out).

Building constraints in the U.S. has prevented economic deterioration in the home building industry. (Even in a weak year like 2021 a small home builder— Dream Finders Homes had a 12% ROIC, higher than most businesses). The time it takes to build new fabs has prevented this from immediately correcting in the memory industry, but it is inherently a more precarious competitive position to be in because the businesses do not control their destiny. Apple can control the production of iPhones, but Micron cannot control the supply of HBM.

This is not to say this is a “wrong” way to invest—there are many ways to make money. But just that the timing of such investments are much more critical than say investing in a Red Bull or Monster. The customers of those business’s only want a “Red Bull” and alternatives (by and large) will not do. Thus the vectors of competition move from trying to create a better Red Bull rather than simply supplying an energy drink.

The history of businesses that do not have moats is brutal. Capitalism will eventually compete down those returns. But that doesn’t mean an investor can’t make money if they time the capital cycle right—they should just be aware that is the bet they are making.

[Rashid @Rashid_builds]

@degenlurker_ @BlackPantherCap Noce rage bait haha