🍋 ClosedDoor

Short Squeez
September 20, 2022

Together With

"Thinking in decades avoids a lot of bad behavior." — Shane Parrish

Good Morning! The push to the weekend may look a little bleaker as a beer shortage looms with a gap in carbon dioxide supply. Return-to-office rates are nearing pandemic highs (office use on average was 47.5% of early 2020) as employers crack down on remote work.

The 10-year yield reached a decade-high of 3.51%, but that news may have been overshadowed by one of the Street’s newest hires, Warren Buffett's granddaughter, Lili is joining JPMorgan Wealth. And make sure to get your weekend trips to Ibiza or Bali now because some business class seats are expected to reach up to $20,000 for some routes next year.

Figuring out life insurance can be hard, especially with all the obscure options your employer gives you. It’s time to find an insurance policy on your own terms. Join 30M others and find a policy today with Policygenius.

1. Story of the Day: ClosedDoor

Looking to find creative ways to save for a down payment? Consider shorting Opendoor Technologies. Opendoor Technologies ($OPEN) instantly buys and flips homes, also known as 'iBuying.'

iBuying platforms like Opendoor seek to cut out the middlemen of realtors and, through technology and data science, significantly increase efficiency in the real estate market. While innovative and promising, the past few years have seen iBuyers getting burned in Zillow and now Opendoor.

Opendoor is down -74% this year and lost another -4% on Monday after news the company lost money on 42% of August transactions. (ooof)

Opendoor was founded in 2014 and enjoyed a meteoric rise, especially amidst the rise in remote work and low interest-rates in the pandemic. Opendoor even beat out real estate behemoth Zillow in 2021 to become the preeminent iBuying platform.

iBuying is promising, except for when it’s not. Opendoor’s data-driven approach couldn’t save the platform for a ‘perfect storm’ brewing in the real estate market. Amidst rising interest rates coupled with talks of correcting the ‘Covid bubble’, platforms like Opendoor that instantly buy and seek to flip homes are getting burned.

Short Squeez Takeaway: Opendoor is ‘all-in’ on iBuying, despite a sharp nosedive in profits and market cap. Zillow abandoned its iBuying business during a rocky time, but Opendoor seems to be in it for the long run. Experts predict even more bloodbath for home prices in September and even into 2023, spelling looming tough times for Opendoor and the real estate market as a whole.

2. Markets Rundown

Stocks close higher as Wall Street braces for Fed meeting but may be heading for more turmoil approaching a historically ‘very-Bearish’ late September.

Movers & Shakers

(+) Wix ($WIX) +16% after activist investor Starboard Value revealed a 9% stake in the web development platform company.
(+) SunOpta ($STKL) +7% after being named a top pick by Cowen
(–) Coinbase ($COIN) -6% after Bitcoin and Ether fell amidst regulatory concerns.

Private Dealmaking

GiveCampus, an educational fundraising platform, raised $50 million
Sievo, a product analysis platform, raised $44 million
African crypto exchange Yellow Card raises $40 million
Clayton Dubiller & Rice raises $10 billion for latest buyout fund
RedBird Capital Partners sells 40% of stake in IP licensing business platform OneTeam at $1.9 billion valuation
Ownera, a blockchain infrastructure startup, raised $20 million

3. Top Reads

Warren wants DOT to block JetBlue-Spirit Airlines merger (Axios)
FedEx in ‘penalty box’ after profit warning (YF)
Work-life policies are increasingly high-stakes economics (Axios)
Three reasons why JPMorgan strategists believes market downside is limited from here (CNBC)
Amex plans hiring spree (BB)
The structure of the planned Porsche IPO (Reuters)
Why Facebook is facing an existential moment (CNN)
Fed may be long way from where it can stop hiking interest rates (CNBC)
Big U.S. bank CEOs to be grilled by Congress over consumer, social issues (Reuters)

A Message from Policygenius: Life Insurance on Your Terms

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4. Book of the Day: Anatomy of the Bear

How does one spot the bottom of a bear market? What brings a bear to its end?

There are few more important questions to be answered in modern finance. Financial market history is a guide to understanding the future.

Looking at the four occasions when US equities were particularly cheap - 1921, 1932, 1949 and 1982 - Russell Napier sets out to answer these questions by analyzing every article in the Wall Street Journal from either side of the market bottom.

In the 70,000 articles he examines, one begins to understand the features which indicate that a great buying opportunity is emerging.

By looking at how markets really did work in these bear-market bottoms, rather than theorising how they should work, Napier offers investors a financial field guide to making the best provisions for the future.

“When it comes to investment in equities, it is indeed true that everything comes to he who waits.”

5. Short Squeez Picks

The difference between an expert and a novice
Time to talk about the LinkedIn mafia
Math is the great secret
Why it’s time to start paying with $2 bills
5 skills every salesperson needs to succeed

6. Daily Visual: More Home Buyers Paying in Cash

Share of home sales made in cash

Source: Axios

7. Daily Acumen: Thinking in Decades

“Thinking in decades avoids a lot of bad behavior.

If you think about relationships lasting decades, you'll often handle the current moment differently. This works for co-workers, partners, suppliers, customers, friends, etc.

Think twice before you interrupt time.”

Source: Farnam Street

8. Crypto Corner

Treasury and Justice reports tackle crypto crime
Ether plunges after SEC chair says ‘the Merge’ could make crypto a security
Former senior Obama advisor guides lobbying, policy strategy of London crypto firm
Bitcoin falls under $19,000 under rate hike risk
Crypto market cap tithers above $900 billion as Bitcoin falls
The lawless world of crypto scams

9. Memes of the Day

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