Mad Hedge Technology Letter
November 22, 2024
Fiat Lux
Featured Trade:
(PICK YOUR SPOTS)
(NVDA), (TSLA), ($COMPQ)
Mad Hedge Technology Letter
November 20, 2024
Fiat Lux
Featured Trade:
(THE FUTURE IS HERE)
(NO CODE)
The future is here.
No code or low code will bring a raft of new innovative tech companies to market, and we are in the early innings of this transformative development.
What is no code?
No-code is an approach to designing and using applications that requires zero coding or knowledge of programming languages.
This type of software hits us at a perfect time when the home office is beginning to become ubiquitous.
The self-service movement that empowers business users will support the creation, manipulation, and employment of data-driven applications.
If we turn back the pages of history, companies needed an army of software programmers to develop even the measliest application.
That was then, and this is now.
Fast forward to today, and automated technology doesn’t only include cutting-edge industries like automotive cars but also software on laptops that can be rejigged by individual entrepreneurs.
That’s right, one person with no coding experience will be able to design, develop, and offer a real-life application with meaningful business value without the help of expert programmers.
The research data backs up my thesis with research firms projecting a 23% increase in the global market for this type of technology.
During the pandemic, low-code/no-code tools saw steady growth due to their effectiveness in addressing some of tech’s most complicated challenges.
The essential need to digitize workflows and enhance customer and employee experiences will be a boost to the efficiency of commercial and operational teams.
No-code platforms have evolved from just facilitating mundane tasks to making it possible for a broader range of business employees to truly own their automation and build new software applications with no coding while increasing organizational capacity.
A few risks that larger companies might consider is that even for remote developers building new applications, governance is paramount.
IT staff will need to install guardrails in place and have those built into low-code/no-code platforms to maintain consistent levels of security across the organization.
Cybersecurity solutions need to be integrated into this workflow by training every employee at the organization on security behavior and using compartmentalization and limited access to prevent opportunities for mistakes.
Hard landings are hard to recover from, and some can be crippling to the business model.
For no-code companies, harmonizing workflows is a key requirement for success.
In a low-code/no-code organization, departments should be able to work without silos and communicate freely across functions.
Elevated performance enabled by low-code/no-code tools will mean that the number of useful apps hurling toward the marketplace will be more and merrier than ever before.
Higher performance will no doubt usher in a new renaissance of efficiency and even better performance.
This also puts a 3 or even 4-day workweek squarely in play.
Many of the best tech minds in the world have supported the concept of working smarter instead of working harder.
A low code/no-code standard will allow for these achievements to take place.
The cratering of costs to start and run a tech firm is affected, too.
Deploying startup capital to pay for other expenses will make it easier for successful incubation.
This will ultimately mean that this new type of tech company will need to embrace the fusion of IT and business staff, empowering them with composable applications to speed up the time to market for new solutions.
Low-code/no-code APIs and other tools are enabling companies to integrate new applications into their existing tech stack in a more seamless manner with a lift-and-shift approach vs a rip-and-replace.
At the entrepreneur level, individuals will be able to harness the technology to build $100 million companies with a snap of the fingers when it wasn’t possible to do it before.
This is finally a chance for the little guy to recapture their moxie in the vast and sometimes overwhelming business world.
Mad Hedge Technology Letter
November 18, 2024
Fiat Lux
Featured Trade:
(SPOTIFY WORTH A LOOK)
(SPOT), (META), (PINS)
If new research from Pew Research is anything close to accurate, there appears to be a massive shift underway that has major ramifications for the online media landscape.
Pew Research discovered that 40% of young adults rely on social media influencers without formal journalism training.
Gone are the days when journalists needed to cut their teeth doing coverage on the ground.
This phenomenon has reversed with social media influencers and podcasters dishing out the real media from the comfort of their home.
Yes, this has been happening for a while, but the data suggests we are on the cusp of the legacy media becoming the minority.
The evolving landscape was most notably taken advantage of the richest man in the world, Elon Musk, who used X.com to propel him into politics.
Most social media users relying on news influencers say the information they offer is unique and sometimes more helpful than what they’d find elsewhere and less likely to be fake.
Social media news is also reliant on ad revenue to stay afloat, so in that sense, it could be beholden to advertiser demands on viewpoint and ideology. The legacy media has the same ongoing problem with advertisers, and I believe there is no perfect model.
Yet, the direct connection of social media profiles to audience has grown and will remain attractive moving forward.
According to the survey, traditional journalism is dead, and 40% of young adults under 30 rely on these news influencers to stay updated on current events and politics.
While X, formerly Twitter, is the most popular platform for news influencers, video app TikTok and Google’s YouTube are home to the largest share of news influencers who monetize their content and have no formal background in journalism. Of the news influencers on TikTok, 84% haven’t worked in journalism, and roughly three-quarters of those influencers try to make money off their news analysis, whether by asking for tips, peddling merchandise, or touting separate subscriptions to additional exclusive material, Pew found.
The Pew report analyzed hundreds of news influencer accounts with more than 100,000 followers; surveyed more than 10,600 US adults about their news consumption habits; and reviewed content from more than 100,000 posts across Facebook, Instagram, TikTok, X, and YouTube from July and August.
One of the reasons traders cannot short META stock is because of this cash cow business tied to social media.
Instagram and Facebook are still great businesses, even if they aren’t growing like they used to.
TikTok is a private company, and so is X.com, and there are no stock opportunities there.
However, I would suggest readers take a look at Pinterest (PINS) and Spotify (SPOT).
PINS is still growing almost 20% per year, and I do believe the stock has an upside with the recent involvement of venture capitalists.
SPOT is in the podcast industry and has a locked-in quasi-monopoly in this sub-sector.
Podcasts and their popularity have exploded in the past few years, highlighted by SPOT signing podcaster Joe Rogan to a monster $100 million contract.
Legacy media has also followed up the election with terrible audience numbers, suggesting that the existing viewer base has decided to move on or temporarily pause participation.
META, PINS, and SPOT should be serious buy-the-dips candidates moving forward as the pivot to alternative media goes from a drip to a waterfall. As I am rereading this newsletter, the AP just fired 8% of its staff, citing “fast- changing conditions in the media industry.”
“Any product that needs a manual to work is broken.” – Said CEO of Twitter Elon Musk
Mad Hedge Technology Letter
November 15, 2024
Fiat Lux
Featured Trade:
(ACCOUNTING STANDARDS COULD TAKE DOWN SUPERMICRO)
(SMCI), (NVDA)
Super Micro Computer (SMCI) has some dubious management and accounting methods and it is coming back to haunt them with the potential boot from the Nasdaq index.
In fact, they are really cutting it close to secure their existence inside the index, because they haven’t offered any clear updates yet.
It is hard to believe they have loitered around not making any decisions to replace their accounting firm.
The optics is terrible because it appears as if no reputable accounting firm is willing to take their account.
There is fudging the numbers and then there is outright fraud and the situation at SMCI suggest the latter.
Remember, the world is still waiting to hear when SMCI will file their 2024 year-end report with the Securities and Exchange Commission, and why it was late.
That report is something many expected would be filed alongside the company’s June fourth-quarter earnings but was not.
The company’s auditor, Ernst & Young, stepped down in October, and Super Micro said last week that it was still trying to find a new one.
A public tech company that can’t find an auditor, because their accounting practices are so toxic, nobody wants to touch it with a 10-foot pole.
Even though the company sells a great chip wanted by many other companies, the stock has crashed by almost 90%.
Getting delisted from the Nasdaq could be next if Super Micro doesn’t file a compliance plan by the Monday deadline or if the exchange rejects the company’s submission. Super Micro could also get an extension from the Nasdaq, giving it months to come into compliance. The company said Thursday that it would provide a plan to the Nasdaq in time.
The Nasdaq says it looks at several factors when evaluating a plan of compliance, including the reasons for the late filing, upcoming corporate events, the overall financial status of the company and the likelihood of a company filing an audited report within 180 days. The review can also look at information provided by outside auditors, the SEC or other regulators.
Between 2015 and 2017, Super Micro misstated financials and published key filings late, according to the SEC. It was delisted from the Nasdaq in 2017 and was relisted two years later.
In the short term, the bigger worry for Super Micro is whether customers and suppliers start to bail.
It’s hard to crash a stock when sales more than doubled last year to nearly $15 billion and many analysts believe they can do $25 billion in sales in 2025.
The mismanagement is on an extreme level here to the point where if you buy stock in this company, they might be delisted and it will be hard to get a refund on that stock.
Then there is the real hit to the reputation because vendors must think that if SMCI’s accounting practices are so bad, then what perhaps customers should be worried about the chip products too.
Where there is smoke – there is fire.
It’s nothing good for SMCI and the optics keep going from bad to worse.
Luckily, Nvidia has said that doesn’t really affect them and so any sort of contagion risk is confined.
The trading around the chip stocks have been incredibly volatile with the surge after the election then the profit taking this week.
Chip stocks would be a great buy the dip coming up.
“When we launch a product, we're already working on the next one. And possibly even the next, next one.” – Said Current CEO of Apple Tim Cook