Mad Hedge Technology Letter
March 19, 2025
Fiat Lux
Featured Trade:
(ONE TO KEEP AN EYE OUT FOR)
(ORCL), (TIKTOK)
Posts
The U.S. administration has kicked around the idea of Oracle (ORCL) chairman Larry Ellison as a possible buyer to one of the hottest social media assets TikTok.
Oracle isn’t intending to outright acquire a majority stake, but their involvement shows that Oracle is at the seat with the big boys in tech and that seat carries a great deal of clout today.
Remember that Oracle’s stock was dead as a doornail a few years ago.
But the AI revolution seemingly revived a slumbering stock jolting it to higher highs.
Before that AI boom, Oracle was known as the company with outdated database cloud software and even today, most people don’t know what they even do.
Oh, how do just a few years change everything?
Realistically, Oracle likely doesn’t have the cash to buy into the asset.
The company is spending much of its cash on building new AI data centers and has over $90 billion in debt, partly due to a prior acquisition. Plus, the infrastructure-focused company has little experience running a consumer-oriented app.
The likelier scenario, and the one that’s under consideration with Trump administration officials, would involve Oracle reprising its role in providing a security backstop for US users’ data backstop would guarantee that TikTok’s US operations under new ownership would not contain a back door that China’s government could exploit.
Under a prior arrangement, the cloud giant would have taken a minority ownership stake in TikTok’s global business and provided technology and data storage services for the app to protect US user data.
But the arrangement hit a snag when officials in Washington and Beijing disagreed over whether ByteDance would maintain any involvement in the new TikTok entity.
The second challenge is more technical. Chinese authorities are unlikely to approve a deal that involves selling the new buyer TikTok’s valuable content algorithm, which determines the posts that users see in their feeds.
We are still trying to analyze where the dust will settle because it is not clear to the outside lens.
As it stands, Oracle pouring capital into AI data centers is a strategic move that has benefited the stock price and there is a high chance that shareholders start to bid up the stock after the macro contagion passes.
If somehow Oracle can even finagle a massive contract to managing TikTok’s data, I do believe the stock will be up 12-15% on that news. That development isn’t in the price yet and investors haven’t been sniffing it out yet.
In short, there is a great deal of upside potential in Oracle’s share price and outsiders shouldn’t minimize or water down the possibility for a short-term short squeeze of monumental proportions.
At the very minimum, it is hard to bet against Oracle even if the stock is down YTD by 8% and investors should expect some sort of appreciation when the broader landscape settles down.
Mad Hedge Technology Letter
January 29, 2025
Fiat Lux
Featured Trade:
(DIGITAL MIGRATION HITS THE U.K.)
(SKY), (BBC), (TIKTOK), (GOOGL)
If you thought that the cord-cutting trend is just confined to the United States – it’s not.
It’s happening at breathtaking speed throughout the world.
The biggest English language media base after the United States is also experiencing a huge step forward in digital migration.
How do know that?
Take a look at their linear flagship media company Sky.
They are drowning financially and have taken the hacksaw out to cut in large chunks.
Sky is planning to cut about 2,000 jobs in the UK in 2025, as the media group moves towards more internet-based services. They fired 1,000 people last year. BBC is also going through a similar type of change.
It is understood a significant number will be engineers, as fewer people require satellite dishes to be installed at home.
Sky currently employs about 26,000 people in the UK.
Sky has been shifting its strategy since it was bought by the US media giant Comcast for more than £30bn in 2018.
The British broadcaster wants digital revenues - which accounted for 27% of its total last year - to pass 50% by 2030.
It comes as Sky News tries to reverse a slump in audience due to the plummeting content quality of legacy media stations.
This has forced many subscribers to ditch Sky and go with higher-quality content platforms and channels.
Sky is racking up losses which total in the 100’s of millions pounds PER YEAR, and the hard question of what is the point of paying these high-profile personalities and expensive international assignments when they just drive the audience away?
The same could be said about CNN’s decision to demote media activist Jim Acosta who was unceremoniously downgraded to CNNs worst time slot yesterday.
He resigned instead announcing his resignation on air and clearly couldn’t accept a lesser role at his company.
With the losses in revenue staggering, for some reason, US media giant Comcast guaranteed to maintain the funding commitments until 2028.
Then there is the intense question of whether there will be a Sky after 2028, because at that point, who will be left watching it?
Comcast has already taken an $8.6bn write-down on its investment in Sky.
Staff at Sky News are preparing to unionize in protest against pay and working conditions.
It is understood that a group of employees at the channel have held preliminary talks with the National Union of Journalists (NUJ) about joining the group.
Attempting to unionize will cause the acceleration of firings from legacy media, but it demonstrates the extreme level of desperation at these dinosaur channels.
The future of Sky News, which is led by veteran Murdoch executive David Rhodes, is likely to be on the agenda amid ongoing budget discussions between Sky and Comcast.
Part of the massive changes the world is grappling with is how this new digital media fits into how we live everyday life.
Instead of corporate entities giving us what they think is the “truth,” media has fractured off into individuals doing their own version of media.
Much of this new media is accessed for free on platforms that only require a free signup.
Is it almost impossible for corporate media to compete with free content, especially when corporate media is one of the lowest forms of quality content available to the public?
If X.com was still a private company, then that is the best social media stock available. TikTok is a private company owned by the Chinese. YouTube is one of the platforms I am talking about, but that is part of a bigger company in Google.
Mad Hedge Technology Letter
December 20, 2024
Fiat Lux
Featured Trade:
(BUYER BEWARE)
(TIKTOK)
Sometimes, the best way to become successful at investing in technology stocks is to avoid the black swan or the big disaster.
I hate to say it, but investment risk has never been higher as we migrate our lives to the internet to extract what we need from personal to business affairs.
One question that keeps getting rehashed that I thought I might take time to address is the rise of the TikTok influencer-adviser.
According to a brief Google search, TikTok, known in China as Douyin, is a video-sharing social networking service owned by Chinese company ByteDance.
The social media platform is used to make a variety of short-form videos from genres like dance, comedy, and education that have a duration from three seconds to one minute.
Unfortunately, for serious retail investors lately, content has migrated into high-stakes themes like financial education and financial advising, giving rise to content that is produced by video creators to get a piece of the financial industry.
Naturally, this has brought down the quality of the financial content on the internet to historic lows simply because most of the content is marginal at best.
These promulgators often preach about their status as “trading gurus” and often leverage the hype of digital currencies to claim they are fully invested in “crypto assets” and urge anyone reading to become one of their new “cult followers.”
They are also usually paid to market a “bulletproof” financial app or certain crypto asset to avid followers without properly disclosing that they are being paid for the advertisement.
This behavior is being encouraged by the TikTok algorithms, who order this type of misleading content at the top of searches simply because it gets more hits being a click-bait type of content.
The more outlandish the videos become, gloating about get-rich-quick schemes and 1,000% daily returns, the higher up in the search queries they usually populate when filtered through TikTok algorithms.
These accounts are known as financial “influencers” and post 100s of such videos every month featuring fraudulent success or minimizing the difficulty of profiting through trading and a mix or mash of everything in between.
Even some proclaim to have unlocked the holy grail of trading and “guarantee” 100% returns or your money back.
Another speaking point they like to touch on is how video watchers can “also” afford wealthy lifestyles without having to work, at least in the traditional way.
To dumb down the travails of investing and trading to something easier than pouring a glass of water is a lie.
Many of these novice investors are duped into paying for exorbitant services that are nothing more than promotional buzz offering hyped-up marketing language as specific trading advice.
Unfortunately, US regulators have turned a blind eye to what is happening on this nefarious Chinese platform, and imitators are spawned daily and are certainly incentivized to do so.
While I must admit that regulating this type of behavior on TikTok is incredibly messy, to leave this unchecked will result in massive fraud for the little guy that I try to help.
I will say the main reason for ignoring these TikTok “influencers” is because there is even worse cybercrime taking place out there, and the content these influencers are peddling is straddling the gray areas of the law.
The digital migration during Covid has created a tsunami of fresh cybercrime that is really making the TikTok gurus look like choir boys.
Here are some statistics to stew over, according to Gartner research.
- 88% of organizations worldwide experienced spear-phishing attempts in 2023.
- 68% of business leaders feel their cybersecurity risks are increasing in 2023.
- On average, only 5% of companies’ folders are properly protected in 2023.
- Data breaches exposed 36 billion records in the first half of 2023.
- 86% of breaches were financially motivated, and 10% were motivated by espionage in 2023.
- 45% of breaches featured hacking, 17% involved malware, and 22% involved phishing in 2023.
When digital professionals went remote, this also increased the risk of cybercriminals wreaking havoc by isolating their targets.
In the grand scheme of the internet, the TikTok trading “gurus” are small fish to fry when hackers are attempting to topple state of federal governments and Fortune 500 companies, yet that doesn’t make it okay.
The Financial Conduct Authority (FCA) is already looking into trading scams and considering ramping up its capacity to monitor those TikTok creators and others who are flogging trading signals, managed investment services, or other fraudulent services.
But it’s not enough, and readers need to understand the heightened risks of diving feet-first into these TikTok polar vortexes where you just get whipped around unknowingly.
Pre-emptively protect your portfolio by avoiding these TikTok trading gurus is the order of the day.
Stay vigilant and happy trading, and just know there is no holy grail of trading.
It’s hard work earning your crust of bread.
BUYER BEWARE
Mad Hedge Technology Letter
July 17, 2024
Fiat Lux
Featured Trade:
(BUYER BEWARE)
(TIKTOK)
Sometimes the best way to become successful at investing in technology stocks is to avoid the black swan or the big disaster.
I hate to say it but investment risk has never been higher.
One question that keeps getting rehashed that I thought I might take time to address is the rise of the TikTok influencer-adviser.
According to a brief Google search, TikTok, known in China as Douyin, is a video-sharing social networking service owned by Chinese company ByteDance.
The social media platform is used to make a variety of short-form videos, from genres like dance, comedy, and education, that have a duration from three seconds to one minute.
Unfortunately, for serious retail investors lately, content has migrated into high-stakes themes like financial education and financial advising giving rise to content that is produced by video creators to get a piece of the financial industry.
Naturally, this has brought down the quality of the financial content on the internet to historic lows simply because most of the content is marginal at best.
These promulgators often preach about their status as “trading gurus” and often leverage the hype of digital currencies to claim they are fully invested in “crypto assets” and urge anyone reading to become one of their new “cult followers.”
They are also usually paid to market a “bulletproof” financial app or certain crypto asset to avid followers without properly disclosing that they are being paid for the advertisement.
This behavior is being encouraged by the TikTok algorithms who order this type of misleading content at the top of searches simply because it gets more hits being a click-bait type of content.
The more outlandish the videos become, gloating about get-rich-quick schemes and 1,000% daily returns, the higher up in the search queries they usually populate when filtered through TikTok algorithms.
These accounts are known as financial “influencers” and post 100s of such videos every month featuring fraudulent success or minimizing the difficulty of profiting through trading and a mix or mash of everything in between.
Even some proclaim to have unlocked the holy grail of trading and “guarantee” 100% returns or your money back.
Another speaking point they like to touch on is how video watchers can “also” afford wealthy lifestyles without having to work, at least in the traditional way.
To dumb down the travails of investing and trading to something easier than pouring a glass of water is a lie.
Many of these novice investors are duped into paying for exorbitant services that are nothing more than promotional buzz offering hyped-up marketing language as specific trading advice.
Unfortunately, US regulators have turned a blind eye to what is happening on this nefarious Chinese platform, and imitators are spawned daily and are certainly incentivized to do so.
While I must admit that regulating this type of behavior on TikTok is incredibly messy, to leave this unchecked will result in massive fraud for the little guy that I try to help.
The justification for ignoring these TikTok “influencers” is because there is even worse cybercrime taking place out there and the content these influencers are peddling is straddling the gray areas of the law.
But it’s not enough, and readers need to understand the heightened risks of diving feet-first into these TikTok polar vortexes where you just get whipped around unknowingly.
Pre-emptively protect your portfolio by avoiding these TikTok trading gurus is the order of the day.
As we enter the back half of 2024, the collapse of crypto broker FTX was a reminder of the large risks associated with investing in an unknown alternative asset class.
The TikTok crypto marketers were largely being sponsored by crypto exchange FTX.
They were peddling FTX’s own digital currency that was made out of thin air.
Anyone trading in this FTX in-house digital coin known as FTT lost most of their money as the CEO of FTX Sam Bankman-Fried was extradited back to the United States and found guilty in court.
FTX’s FTT coin went from $40 at the beginning of 2022 to 80 cents on December 30, 2022, highlighting the dangers of listening to fake crypto “trading gurus” on TikTok pushing FTT coin like there is no tomorrow.
Stay vigilant and happy trading and remember, there is no free lunch in trading.
It’s hard work earning your crust of bread.
Mad Hedge Technology Letter
April 22, 2024
Fiat Lux
Featured Trade:
(TIK TOK IN HOT WATER)
(SMCI), (NVDA), (TIKTOK), (META), (MSFT), (GOOGL), (AMZN)
Tech is getting real political and that’s a problem for tech valuations.
On one side, there are foreign companies hoping to make a buck stateside and they are finding out it is not always smooth sailing.
The cradle of capitalism isn’t unfettered access to unlimited Benjamin’s.
The difficulties and examples are sprinkled through the sub-sectors of tech.
For example, to secure the EV battery plant subsidies from the US federal government, Korean companies have to produce the battery inside the United States.
Being a Korean company, Hyundai and Kia, pulling this off delivered painful financial expenses related to the companies.
Another Asian company grappling with additional political fallout is the social media app TikTok.
The most recent House bill easily passed meaning that if Senate approved the bill, TikTok might need to divest or be banned from the US.
TikTok told employees it will fight in the courts if a US bill forcing a ban or divestiture of the Chinese-owned app is signed into law.
US President Joe Biden has said he will sign the legislation promptly if it reaches his desk.
TikTok’s 170 million American users and 7 million small businesses would need to find a different platform.
ByteDance, the Chinese communist party-sponsored owner of TikTok, intends to fight the US ban in court and exhaust all legal actions before it considers any kind of divestiture, people familiar with the matter have said.
Beijing, in the meanwhile, will have to green light any TikTok deal on the tech-export ground, and it has reiterated it opposes a forced sale.
The environment for trading tech stocks has nudged into this ferocious backdrop of trading barbs and its increasingly disturbing tech companies from carrying out their duty to serve the end customer.
Tech customers don’t like that and it doesn’t matter if it’s waiting on an iPhone or software product that can’t be delivered in full, the product gets watered down or withheld.
Irreparable harm is being caused if customers don’t have full faith that tomorrow they will wake up and see an app not disappear from the app store or a device become obsolete because of regulation or government saber-rattling.
Part of this is the angst in which traders are seeing the market now as highly fraught, and tech stocks have run into a logjam at these higher levels because profit-taking is the best recipe of the day.
There needs to be a great reason for incremental investors to jump in, because let’s not kid ourselves, tech stocks are expensive at this point.
We pile into them because there are more or less 5 stocks growing robust earnings while many zombie companies don’t punch above their weight.
This is why traders are piling into Nivida, Meta, Microsoft, Amazon, and Google. I would put Super Micro Computers (SMCI) on that list too as a volatile super growth stock.
Tech still is the place to be, but the geopolitical strife is exacerbating the short-term consolidation of tech and we are experiencing larger selloffs than would be otherwise.
Tech readers must be patient as expectations for this earning season must be scaled back and we wait to unload on the next move up.
