Categories
401k and Personal Finance

YTD thoughts: first half of 2022

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This is the worst stock market I experienced for last few years. As shown below.

I am not disheartened though. Because I think long term is always good to get rid of the extreme speculations, just like the subprime mortgage last time around (2007 to 2009), this time it seems the speculation in cryptos is equivalent, if not more. China, on the other hand, they successfully cracked down the cryptos (Bitcoin ₿ etc). But China’s economy was very much dependent on the real estate industry in last few decade. In other words, there were lots of speculation and bubbles there. So there is some reckoning of that due to the recent zero covid / shutdown policy: or put it another way, it’s the the straw that broke the camel’s back （压死骆驼的最后一根草）。

Back to last 6 months, the bottom started to fall out during Jay Powell congress hearing (I think it was this one, or this one. I felt the google video search functionality can use some improvements). I recall the market reaction when he said that.

There is an old saying in the wall street: don’t fight the fed. In similar tone, I think we don’t want to fight the market either.

Cyclical stocks and econ cycles

We all know the real estate and commodities (oil, gas, metal, etc) tend to be cyclical: boom bust and so on. To some extent, the internet and software stocks too. If one bought the $AMZN or $MSFT at the high in year 2000, it would take many years (maybe 15) to get back even. For $CSCO (Cisco), it never reached its high (about $77 on March 31, 2000), more than 22 years later. This is due to the “irrational exuberance” as Allen Greenspan said. And comparing that to $AAPL (Apple). Is Apple at the Cisco moment in March 2000 now? I recall I got my 1st job in March 18, 2000 and Nasdaq hit its dot com high on March 20, 2000 (over 5,000). I don’t know. We don’t know. We only know after 22 years 🙂

Btw, I listen to this amazing background music (FLYING OVER JAPAN (4K UHD) Amazing Beautiful Nature Scenery with Relaxing Music | 4K VIDEO ULTRA HD) on Youtube when write this.

Last but not least, listen to this word from the Oracle of Omaha.

Last but not least, the YTD performance of S&P 500 individual companies stocks. Interestingly I have the best performer of last year $DVN #Devon Energy and this year $OXY #Occidental Petroleum. Guess who is the worst performer in S&P YTD? Hint: it’s a familiar name and a former high flyer.

Categories
Software development

Oil, gas and cryptos

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First let me get the Cryptos out of the way.

https://twitter.com/TrungTPhan/status/1538270638179221505

Oil:

Categories
Software development

Brutal selling

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also

Btw, I sense the current market probably wiped out a lot of new retail investors (home gamers in Jim Cramer’s words), or many new Robinhood app users.

Last but not least, is this transitory?

https://twitter.com/WallStreetSilv/status/1536340362062700544
Categories
Investing

Benson Hill $BHIL a food company

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(06-17-1023) (STL Business Journal) Matt Crisp, who co-founded Benson Hill, out as CEO of the publicly traded firm. Quote the article:

Crisp received total compensation of $17.1 million for 2022, including a base salary of $613,462 as well as stock awards and incentive plan compensation.

Benson Hill has recently enacted a “liquidity improvement plan” aimed at reducing costs and improving cash flow, with Benson Hill setting a target of achieving profitability by 2025. Initiatives that Benson Hill has outlined to improve liquidity include refinancing “high-cost” debt, trimming operating costs, staffing cuts, and exploring a possible sale of a soybean crushing facility it owns in Seymour, Indiana.

My quick comment: the CEOs got the usual gold parachute. For investors, not so much. Again quote: Since going public, Benson Hill has rapidly grown its revenue but has operated with losses. Its share price has also sagged since becoming publicly traded, down significantly from its starting point of $10 per share to close Thursday at $1.19 per share.

(05-11-2023) The Q1, 2023 results are here. It looks like they burned about $38 m cash. They still have about $110 liquidity (cash + marketable securities) per page 19. One thing I am not 100% is on page 20, they were saying “Cash, cash equivalents and restricted cash, end of period $ 41,107”, that cash equivalent may include “Current assets held for sale” in page 19. Anyway in about 2 to 3 quarters, they may run out of cash. It seems the stock rallied in last 2 days after earning report though.

(01-03-2023) The Q3 results is here. It looks like they burned about $49 m cash, and they have $30 m cash on hand. Keep in mind they came to market via SPAC and in last year or 2 SPAC bubble pretty much busted. Another example is Nextdoor ($KIND). Note the marketable security position is the same: still about $163 m. Also, it seems they may issue new shares down the road (quote from the Q3 release again): “The Company also filed a registration statement to put in place an At-The-Market (“ATM”) facility for up to $100 million. Once effective, the ATM facility is expected to provide additional flexibility to supplement the Company’s cash position over the next two to three years.”

(Update 09-20-2022) They released the q2 results. It looks like they burned about $50 mil cash in q2 and I also noticed they do have some marketable securities: worth $163 m. They also made an announcement on the ADM partnership news. I am staying away from them for now.

(Original 05-25-2022) They are across the street neighbor (linkedIn, web page, career page, current openings, Investor Relations, google finance stock).

Some readings

Latest 10-Q for the 3 months ends at 03/31/2022; investor presentation April 2022; investor presentation June 2021). They seems to have cash to sustain two quarters (source: from 10-Q page 8 we can see $53.2 m being used in operation in Q1, and they have $104 m cash on hand at the end of the Q.

Earning call transcript (seekingalpha)

“The total reported mark-to-market loss was approximately $13 million, with $5 million realized during the quarter for settlement of contracts corresponding to higher price sales in the quarter…Lastly, use of cash to fund our operations during the quarter was $53 million, which included a temporary timing effect of approximately $15 million for the margin calls on the mark-to-market losses in the quarter…” || #MajorsTake: it sounds like they are buying soy beans and do some food processing. Assuming they sold the processed material to the brand name or store name food makers. In terms of food chain (figuratively speaking) or business model, this is not the top of the food chain.

The PIPE news

It’s combined with the full year 2021 results news release, quote below: Today, Benson Hill also announced that it has entered into definitive agreements with certain investors for a PIPE (Private Investment in Public Equity) offering of common stock and warrants to purchase common stock, which delivered approximately $85 million in gross proceeds. The Company intends to use the proceeds from the transaction to help fund its ongoing business growth, namely in its Ingredients segment...

The definitive agreements define the issuance and sale of 26,150,000 units at a purchase price of $3.25 per unit in a private placement. Each unit consisted of one share of the Company’s common stock, par value $0.0001 per share, and a warrant to purchase one-third of one share of the Company’s common stock. In the aggregate, 8,716,661 shares of the Company’s common stock are underlying the warrants.

The warrants have an exercise price of $3.90 per share of common stock (subject to customary adjustments), were exercisable upon issuance, and will expire on March 25, 2027. Each warrant is redeemable by the Company for $0.10 upon the Company’s common stock trading greater than $9.75 per share for 20 of 30 consecutive trading days.

Impact of Russia / Ukraine war

Because both are main grain producer / exporter of the world, Benson Hill plant based food (mainly soy beans) seems poised to benefit from the war, ironically. “Benefit from war” is cringy to me, to say the least.

More info: Benson Hill | A SPAC to solve world hunger?!

2021 Letter to shareholder (dated 05/09/2022 by CEO Matt Crisp)

My comments: right now as of 06-08-2022, this is still on “too good to be true” or “too hard to understand” people. However, I am holding a small position and trying to understand it better.

“Founded in 2012 by two pioneering researchers in the photosynthesis field, Andrew Benson and Robin Hill, Benson Hill Biosystems is an agricultural solutions company dedicated to increasing crop yield primarily by increasing photosynthetic efficiency and carbon fixation. Benson Hill employs an integrated approach of computational and systems biology, bioinformatics, synthetic biology, and next-generation phenotyping, which afford it significant advantages in the field of intrinsic yield.” (source: BENSON HILL BIO INCREASES TOTAL FUNDING TO $34.7 MILLION)

Last but not least: couple YouTube videos below. The first one (business wire) sounds a bit like infomercials to me, when I watched it.

This one has a bit more analysis.

Overall, I don’t like companies used AI (artificial intelligence) and ML (machine learning) too much in its pitching deck. For that matter, big data, data science and in a promotional video.

Categories
Software development

Topics in Mathematics With Applications in Finance

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Link to all videos; course overview page.

I saw the first video (Introduction, Financial Terms and Concepts) a while ago. Some background on instructor Dr. Jake Xia.

Portfolio Management (also by Jake Xia)

Categories
Software development

Weekend thoughts: what a market and apple fitness+

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The stock market continued its downward trend this past week, and on Friday, S&P 500 went down 20% from the beginning of the year, and it officially tested the bear market (20% down is a measurement of bear market). But, per other measures, such as Schiller PE, it’s 36 as of 04-01-2022 (may down a bit since then), and historically this PE is still quite high. Some people are expecting the giants such as Apple $APPL (I heard it’s 7% of S&P 500, and 13% of Nasdaq 100), and Microsoft $MSFT to fall, before the capitulation.

I don’t know. Predicting market is a fool’s game. Predicting individual stock’s near term performance is hard too. For Apple, in particular, it will experience some fall out from the manufacturing / logistics challenges in China (mainly around Shanghai zero covid extended lockdown), as well as weakened demand from Europe (war in Ukraine), China (again Covid policy and economy slowdown), and the US (rising gas price, and we saw the fallout from Target $TGT and Walmart $WMT earnings last week).

Apple Fitness+

I tried Apple Fitness+ the second time. As the old saying goes, second time is a charm. Plus this time I got Apple Music from the Apple One subscription as well. It works better for me when I tried “Time to Run”, and I picked the Charleston themed music and picture. I cancelled the Peloton sub recently, and I think I will likely stick to the Apple Fitness+: start with walk and run, and maybe expand to meditation and Yoga later on. Btw, talking about Yoga, I recall JCC (the J) will restart pool side Yoga on Saturday morning again: after 3 years due to pandemic in last 2 years.

Youtube Videos

I watched quite a bit of those last few weeks. Topic varies from Warren Buffett Berkshire Hathaway shareholder meetings over the years, to travel or city vlogs, and other business / investing related topics as well. I listened to some old pop songs I listened when I was in college too (陳淑樺 Sarah Chen; 梁靜茹 Fish Leong): sometimes YouTube will reminds me try YouTube music if the same playlist is available there, and potentially it could save me some data if I am on the cell phone data plan.

老范讲故事: I like this channel. Interestingly enough: first time I saw his video, he was talking about why Coca-Cola is more popular than Pepsi Cola during Shanghai lockdown. He is former developer (Borland), development relationship, investor relations (Cheetah Mobile), and VC. He is about my age.

Categories
Economy

Who is to blame for inflation in the US?

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I heard a lot of inflation talk among friends recently. I think the CPI data kinda confirms it. The gas and food prices went up a lot in recent months. Last time we saw $4 a gallon gasoline, it was about 2012 or 10 years ago. The answer to “whom to blame” question, like many things in this country, depends on “to whom” you ask this question. Once I saw a small Biden sticker at local Sam’s Club gas station, the point the sticker trying to convey is “the high gas price is all president Biden’s fault”. I think the real answer is more nuisance, and I think it’s largely supply and demand. For the crude oil, the Russia and Ukraine war, aka. Putin is to blame, because he started the war. But again this can get political quite easily. There are a lot of supporter of Putin in this world, unfortunately. Then there is the refinery cost. I think recently the refiners are adjusting from the winter to summer (they need to tune their refineries), and this cause some disruption and could reduce the output too. Diesel is in similar situation as gasoline. Note the crude oil, fuel cost etc is a part of cost for many other things such as fertilizers, transportations (cars, trucks, rails and airplanes) and so on. So there is the secondary effect (tangential effect) from the rising oil prices. Last but not least, inflation adjusted, the gas price seems flat in the US for last 40+ years.

Gasoline and diesel aside (and the war), other factors I can think of is the supply chain issue, and related China zero covid policy did not help here either. Then there is this labor shortage in the US due to pandemic, basically the people doing the physical labor were a bit hard to find especially in the early phase of pandemic due to various reasons: some people got Covid; some people got money from the government to stay at home for quite a while; at the same time the demand actually increased since pandemic, here is a good example at Starbucks. I saw similar situation at local Chipotle’s and Pot’s Belly. People are now used to order online via mobile phone.

Last and definitely not the least, the Federal Reserve. I think they have been accommodating the stock market for too long since 2008 financial crisis, and they did buy too much assets, printed too much money to prop up the economy artificially since March 2020 pandemic shutdown. Note the money was made way to the real economy via congress, via various rescue packages since March 2020 (both presidents), or President Biden’s infrastructure plan.

How to counter the inflation? For that I would borrow Warren Buffett’s idea. Blame someone else does not help in the real world, on the other hand, if we can make us more valuable to others, and live below the means, we will get desired outcome.

Categories
Life Life Tips

Weekend thoughts 05-14-2022

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Indoctrination (powered by Oxford Language): the process of teaching a person or group to accept a set of beliefs uncritically. When I grew up in China, I recall my first Chinese lesson is “Chairman Mao lives always in our heart” （毛主席永远活在我们心中）。I recall the time when Chairman Mao passed away: when I was about 5. That’s the first time I recall I knew someone passed away. And I can feel the sorrow and uneasiness of the grownups around me: the sad music in the broadcast, and people are rushing to make white paper flower and 黑袖章 (black armband).

Fast forward to 1997 to 1999, I came to the US, and to be more specific, Rolla, Missouri, for graduate school. I went to church for a while, mostly for social reasons, but sometimes I did have some other worries too: such as find a job or get the sought after H-1b visa. The belief system or some people literally follow every word on the bible initially puzzled me but now when I heard about there is a similar movement in the Chinese textbooks nowadays, especially on the natural science (math and science), I think I found a common thread between the two. This, along with what I saw in terms of the different attitude toward science, medicine, masks, vaccines, etc. during the last 2 years’ of pandemic, made me to think many people are indoctrinated or manipulated. This include my own extended family members too.

The key to growth, though, is always be open minded, listen to the facts on the ground, as well as scientific findings, rather than some pseudo facts, half truth, but it’s always easily said than done. We have seen a lot of silliness in the Missouri legislature too. For example, this one in which Missouri legislature says pharmacists should not express opinion on the horse dewormer.

My comments are: 1) We live in an interesting time now; 2) We can only influence those who are willing to listen.

Interesting YouTube videos

Wang Jianlin at Harvard Business School, Going Global the “Wanda” Way (No Subtitles): I like his comment and thought on giving manager autonomy (don’t do micro management), among other things. Mostly are Q&As, not much speech / talk. (In Chinese, Wiki, NetEase).

Categories
401k and Personal Finance

Alternative investments to cash

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Inflation adjusted bond
Series I Savings Bonds (wiki)

S&P 500 index funds
How to Invest in the S&P 500.

There are many, below is one from Vanguard. I know fidelity has one too. There should be others.

Some of the stocks I think it’s safe to own for long time
BAC (bank of America)
KO (Coca Cola)
BRK.A or BRK.B (Berkshire Hathaway)

Categories
401k and Personal Finance Business Fun Investing Master Series

Weekend thoughts 05-07-2022: Berkshire Hathaway 2022 shareholder meeting

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I went to Omaha last weekend, left STL on April 29 Friday, attended meeting on April 30 Saturday, and left Omaha back to STL on May 1st Sunday. The full comment and Q&A session (including the actual shareholder meeting) is broadcasted by CNBC and available at YouTube.

Note when I drove to Omaha on Friday 4/29, the market was in a tail spin, and so did the market perform poorly this week. But at the Berkshire church, we are value investors, and we don’t care about the daily (weekly, monthly) fluctuations. I think with the modern technology (don’t recall exactly at which year Berkshire starts to broadcast its annual shareholder meeting), the technical side of things can be learned at the comfort of home. On YouTube there are a lot of materials on Warren / Charlie spoke at past shareholder meetings, such as this YAPSS channel, note there are others too including Warren and Charlie’s other talks especially to college students. The whole #BRK2022 meeting video is about 6 hours long, with the last hour being the official shareholder meeting, with questions related to shareholder proposal (somewhat politics related). One thing surprised me a bit is the tone of some of the shareholder proposal, and Buffett’s patience on answering some of those, such as this one at 5 hour 18 minutes mark of the video. My sense is very few CEO would have that kind of patience. This is shown in the Q&A part of the meeting as well, I imagine some of the questions have been asked again and again because they have done this probably for 20 years. But Charlie and Warren answered those regardless.

The movie at the beginning of the meeting: I noticed Susan Buffett (Warren’s daughter) is the executive producer, and it was fun to watch overall. It has some ads, as well as some old video clips such as Warren’s testimony during Salomon Brother crisis. Other notable things are the exhibits, which has things from Brooks Running, to Clayton homes (manufactured home), DQ, Netjets, See’s candies. The movie also showed all Berkshire managers including Ted and Todd (investing managers). Warren’s skit with Bill Murray was a bit interesting too (confuse Warren Buffett with Jimmy Buffett, the singer). I noticed Bill Murray is a BRK shareholder and recently he got into hot water. I was not 100% sure that Susan Buffett (or Warren Buffett) was taking a side here. Also I am not positive the movie is available online: this seems like one benefit that’s only available for shareholders attending in person. Overall I liked the movie especially on the side of “don’t take oneself too seriously”, “poke fun at self” (again Warren vs Jimmy Buffett) and so on. It’s a strength of American culture, as poking fun at politicians are allowed, sometimes I felt bad for Bill Clinton as I saw comedians and talk show hosts pounced on him all the time, but hey, why would he looked at Aliana Grande (who could be his grand daughter’s age) in such a creepy way. Okay I will back to the topic.

International audience: there are many international audience in person, as some may have see from the questions being asked, also I noticed in the hotel I stayed, there are quite a few private jet pilots. Maybe next time I will fly the private jet, instead of driving back and forth. Talking about driving, I was a bit tired on the way home, both due to the 5k I ran in the morning (the invest in yourself 5k), and also because of I was a bit sick coming in, plus I had a small incident on Saturday.

The incident was I messed up my only long pant in the morning when I was waiting outside CHI health center. The line was long at about 7:30 am, so I decided to go to the nearby hotel to see if I can use the restroom. It was a bit too late… thus on the rest of the day I only had a swimming trunk as my bottom. The temperature was in 50s that day, and people may think I am a runner or something. Yes I do run, but I would probably wear a long pant in that kind of weather. The lesson here is always have some margin of safety (room for error or unexpected), so I will bring an extra pants next time when traveling. Another lesson is try to look out for restroom in a new area, just in case, in this scenario it seems the nearest one is Marriott hotel across the street.

Some other odds and ends: I noticed there are a few homeless people near the downtown hotel I stayed. I stayed at the Hyatt Inn near old market in downtown Omaha. I also found a bit authentic Chinese restaurant (Blue and Fly) eventually, after eating ramens at two Japanese restaurants near downtown. I found and walked near the Berkshire HQ office as well. CHI Health center: it’s a big place, noticed they did not charge sales tax for See’s candies etc, don’t know why. But they don’t allow outside snacks or food, drinks in (to protect their concession sales). I did not bring much, but they threw away a few small snacks I bring in the case I don’t know where to get lunch. Warren said “midwestern time” instead of “US central time”. I noticed Gerald Ford, the former US president, was born in Omaha (saw a sign on highway on Ford). I think “midwestern value” can be seen in both in Omaha, and in Berkshire (Warren and Charlie). In addition to international audience, there are lots of domestic audience including US, midwest and Omaha residents too.

PS: this is my dream 16 years in the making. Back in 2006 I thought about going, but didn’t due to various reasons (maybe mostly financial). I am glad I am in a better position now 🙂 All in all, I like what I saw in this trip, and hope to visit sometime in the future too. If my kids and my wife can join, that will be even better.

Photos and video

Slideshow for 04-30-2022

Berkshire Hathaway HQ outside view

Tweets thread (Mine, Thomas Chua, The Rational Walk)

Planning trip

Past BRK Shareholder meetings (full sessions)

2020

2012

2011 (before 48 mins mark, there are quite a bit coverage on David Sokol. Tom Murphy: you can always tell a man go to hell if this is such a good idea. -Charlie Munger summed it well)

2005 (TIMESAVER EDIT – FULL Q&A) (Fun momemnts: at 43 minutes mark, a kid asked about See’s Candies and Petro China) (One hour 30 minutes: public school systems in Omaha) (2 hours mark: the comments on AIG and Hank Greenberg are interesting, as we know AIG blew up about 3.5 years later, amid 2008 financial crisis)

2001 (3 hours 54 mins mark: don’t go short. At 4:12 mark, Warren talked about California utility does not have incentive to produce more electricity due to new regulation. This sounds like what the US oil industry is doing in recent years. Note I am not taking sides on politics / climate change)

1999 (At one hour 4 minutes mark, shareholder asked about a question on Chinese stocks, Charlie commented “I don’t know much about China”. This is interesting, as Charlie grew closer to Li Lu in last 20 years or so, and Berkshire bought $BYD shares too. Also at one hour 8 minutes mark, “rich vs wealthy” is interesting.) (Books Charlie and Warren recommended: The Warren Buffett Portfolio, Titan the biography of the original John D. Rockefeller, Guns, Germs, and Steel,” which was a physiologist’s view of the economic history of man, The Wealth and Poverty of Nations.” And the guy’s name is [David] Landes; “Common Sense on Mutual Funds,” by Jack Bogle)

1998 (TIMESAVER EDIT – FULL Q&A, I just noticed all the TIMESAVER EDIT video have all the notes)

1997 (At 3 hours 28 minutes mark, an audience asked a Disney question which is relatable to today’s political environment. Buffett’s answer: I’m delighted to have my grand children expose to full range of #Disney products, and I love to take them to #DisneyLand #DisneyWorld, Disney movie and videos…I don’t have problem gays being employed (clap). Ditto here for me taking my kids to Disney. At 4 hours 19 minutes mark, the comments about McDonald’s are interesting.) || I just noticed the video has all the notes too, such as the McDonald’s vs Coca-Cola… this is excellent.

1996

1994

Last but not least, below is a tweet thread of interviews of “becoming Warren Buffett”, total 11 videos. I noticed YouTube (HBO) has a condensed version too (a documentary movie).