🍋 Hedge Funds Down Bad

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Good morning! After the stock market sell-off last week, it was crypto's turn to crash for the 1983457th time this year. In the wee hours of Saturday morning, (while many Bitcoiners were Art Basel-ing in Miami) the crypto market plunged more than 20%. Bitcoin went as low as $42k before bouncing back to ~$49k at time of writing. El Salvador bought the dip again (150 coins) and President Nayib admitted on Twitter that he's a degen trader who has been ripping trades from his phone. 

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1. Story of the Day: Hedge Funds Down Bad

The hedge fund world moves fast. Biotech stocks and funds that were crushing it last year over excitement of Covid treatments, are down bad this year. 

Perceptive Advisors, a biotech fund that manages $9 billion is down 30% this year. Another fund, managed by OrbiMed Partners, has lost 40%. Consonance Capital closed its billion dollar hedge fund in October after suffering heavy losses.

Last year Perceptive was up more than 30% and founder Joseph Edelman spent $70 million buying the most expensive ocean-front mansion in Orange County.

The change in fortune is due to a number of reasons. There are concerns Congress will put a cap on drug pricing and shares of early stage bio-tech companies as the IPO market gets hot. There was also an over piling of money in the sector when the pandemic hit and this year the sector is following a similar fate to many work-from-home stocks (RIP Peloton, down 70% this year) that had been skyrocketing in 2020. 

The OG vaccine-developers Moderna and BioNTech are holding the line though and have masked some of the biotech pain. The two stocks have had stellar years and are up 194% and 322% respectively.

Short Squeez Takeaway: While the sector is down at the moment, things can also turn around pretty quickly. Past declines have followed rallies. A number of treatments and drugs could be on the way and cause the sector to start mooning again. Maybe a good time to buy the dip?

Source: WSJ

2. Markets Rundown

• The stock market fell hard Friday, as investors winced at the disappointing November jobs report (increase of 210k compared to expected 573k)

Movers & Shakers

• (+) Marvell Technology ($MRVL) 18% after reporting quarterly results that beat estimates on the top and bottom lines.

• (+) Zillow ($ZG) 11% after it said it has sold or is in the process of selling about half of the dwellings it purchased for its home-flipping business, which it announced in early November it would shut.

• (–) DocuSign ($DOCU) -42% after issuing fourth-quarter sales guidance that was lower than what analysts expected.

3. Top Reads

• Picking the losers is easier than picking the winners in the stock market (AWCS)

• Let it ₿ (ReformedBroker)

• Managing the world’s biggest sovereign-wealth fund is about to get complicated (Economist)

• Didi Global plans to delist from New York Stock Exchange (WSJ)

• Twitter CEO Parag Agrawal restructuring social media giant's leadership team (Fox)

• Amazon enters collectibles market with Dibbs investment (FoF)

• Future returns: Investing in music industry royalties (Barrons)

• Ride hailing app Grab falls in $40bn market debut (BBC)

• Can’t find a Rolex or Patek Philippe? Blame the Reddit crowd (Bloomberg)

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4. Book of the Day: Bad Blood: Secrets and Lies in a Silicon Valley Startup

In 2014, Theranos founder and CEO Elizabeth Holmes was widely seen as the next Steve Jobs: a brilliant Stanford dropout whose startup “unicorn” promised to revolutionize the medical industry with its breakthrough device, which performed a whole range of laboratory tests from a single drop of blood. 

Backed by investors such as Larry Ellison and Tim Draper, Theranos sold shares in a fundraising round that valued the company at more than $9 billion, putting Holmes’s worth at an estimated $4.5 billion. There was just one problem: The technology didn’t work. Erroneous results put patients in danger, leading to misdiagnoses and unnecessary treatments. All the while, Holmes and her partner, Sunny Balwani, worked to silence anyone who voiced misgivings—from journalists to their own employees.

“There was a reason the Theranos blood test always seemed to work. The image on the computer screen showing the blood flowing through the cartridge and settling into the little wells was real. But you never knew whether you were going to get a result or not. So they recorded a result from one of the times it worked. It was that recorded result that was displayed at the end of each sales demo."

5. Short Squeez Picks

• Invest beyond stocks & crypto with alternative investments in art, real estate, and more to earn yields up to 18%

• Frazer Rice talks music royalties with David Pullman of The Pullman Group Podcast

• Zack Fuss talks with Freddie Lait about the business of Autozone Podcast

• Travel insurance is useless (Bloomberg)

6. Daily Visual: Suburban Scarcity

Source: Miller Samuel Inc. & Douglas Elliman Real Estate

7. Daily Acumen: Growth vs fixed mindset

Researcher and professor Carol Dweck uses the term "mindset" to describe the way people think about ability and talent. Dweck delineates between two different mindsets that exist on a continuum.

The first is the fixed mindset which suggests that your abilities are innate and unchangeable. The second is a growth mindset, which views it as something you can improve through practice. In a fixed mindset you view failure as permanent. But with a growth mindset you see failure as a chance to learn and even pivot.

Think; I’m not where I want to be now but I’m capable of getting there eventually. Attach a sense of reward to the effort process. Don’t reward the result, reward the effort. 

Life has no limitations; except the ones you make. 

8. Career Portal

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9. Memes of the Day

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