Short Squeez
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🍋 Inside Buyer

🍋 Inside Buyer

Short Squeez
July 26, 2022

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"There's also no investment so safe that can't be rendered risky by buying too much of it with borrowed money." — Howard Marks

Good Morning! Elon Musk denied having an affair with Sergey Brin's ex-wife and shared a picture of partying with Brin recently as proof they're still on good terms. While billionaires are soaking up the sun, the US economy is on the edge of a recession, with Q2 GDP data dropping on Thursday. White House is working overtime to change the definition of a recession (apparently no longer two quarters of negative GDP growth), a strong indication of negative growth in Q2. Apple announced plans for a high-end watch, with a new design and larger screen. Can't I just slap my iPhone's running holster onto my wrist? Facebook is also trying to cater to the future and said that it will soon let creators make money on videos that have licensed music.

Sweater is a fintech platform providing everyday investors access to venture capital investing. If you're looking for a simple way to gain access to the VC asset class, Sweater is the way to go.

1. Story of the Day: Inside Buyer

Yesterday, former Republican Indiana Rep. Stephen Buyer was charged with insider trading by the SEC. Buyer earned over $300k in "illicit profits," after buying stocks in companies he knew would be acquired... twice.

Buyer sniffed out a couple of juicy trades while he was running his own consulting firm after serving in Congress from 1993 to 2011. The first "ill-gotten gains" happened in 2018, when Buyer was consulting for T-Mobile. He learned that the cellular giant was planning on acquiring rival Sprint, so he bought $500k worth of Sprint stock before the info went public. Buyer made roughly $100k on this trade.

In 2019, Buyer was consulting for consulting firm Guidehouse (so I guess nobody knows what they're doing?) and bought 1 million shares of Navigant. Again, Navigant was set to be acquired by Guidehouse, so Buyer made over $200k.

Gurbir Grewal, director of the SEC Enforcement Division, said, "When insiders like Buyer - an attorney, a former prosecutor, and a retired Congressman - monetize their access to material nonpublic information as alleged in this case, they not only violate the federal securities laws, but also undermine public trust and confidence in the fairness of our markets."

Short Squeez Takeaway: Mr. Grewal is not wrong. These situations do make Average Joe's feel like we're playing a losing game. There's always a solution though. You could become friends with Brijesh Goel, a former Goldman banker, who used to tip off his squash buddy on upcoming M&A activity. His buddy would use the information, and then was nice enough to share the profits with Goel.

2. Markets Rundown

Disappointing results from Snapchat and Twitter pulled down the Nasdaq, and crypto seems to back in risk off mode ahead of economic announcements coming later this week.

Movers & Shakers

(+) World Wrestling Entertainment ($WWE) +8% as Loop Capital upgraded the stock and raised the price target since the company has a greater likelihood of selling without Vince McMahon as CEO.
(+) Ryanair ($RYAAY) +5% after reporting quarterly earnings that beat analysts' profit estimates.
(–) Newmont ($NEM) -13% as the mining company reported a lower than expected Q2 profit.

Private Dealmaking

Cleerly raises nearly $200 million in fundraise led by T. Rowe Price and Fidelity
Luxury cookie maker Last Crumb nabs $3 million from VCs
SuperShare raises $6.5 million from Accel for its content sharing platform
SIG acquires Miers Construction Products for $28 million
Digital inspection startup Lumiform raised $6.5 million
BAI Capital targets China’s globalizing startups with $700 million fund

3. Top Reads

Why the Fed has no choice but to punish stock markets (YF)
Amazon knows a lot about me - One Medical takes it to a new level (CNBC)
Rich Americans keep borrowing, defying economic gloom (WSJ)
The financial risks of becoming your own boss (CNBC)
The upper middle class is getting squeezed (WSJ)
Tough time to be bullish on tech (Fox)
U.S. dollar worth more than euro (CBS)
Hybrid working is killing remote summer - but it doesn’t have to (WSJ)
How long can this bear market rally last? (Entrepreneur)
What trucking tells us about the economy (Axios)
Blackstone posts loss as market turmoil hits private equity portfolio (WSJ)

A Message from Sweater Ventures: The Venture Capital Fund for Everyone

Sweater opens venture investing for everyday investors, regardless of accreditation status.

The venture capital ecosystem was begging for change. The majority of investors—even founders, analysts, and venture insiders—couldn’t meet the requirements for most of the existing paths into venture investing, so we decided to reshape the landscape for everyone, for you.

With the Sweater app, you can start investing in venture capital at a low minimum investment and grow your position in the fund with automatic recurring investments. We report on the investments we make right back to you through the app.

Venture capital shapes the future, and here at Sweater, we believe the right to shape that future belongs to everyone.

Sweater VC has officially launched. Download the app.

4. Book of the Day: The Island of Extraordinary Captives: A True Story of an Artist, A Spy, and Wartime Scandal

A gripping untold war story: using exclusive new archive material, letters and diaries, this is the story of the prisoners of war in internment camps during the Second World War.

The police came for Peter Fleischmann in the early hours. It reminded the teenager of the Gestapo's moonlit roundups he had narrowly avoided at home in Berlin. Now, having endured a perilous journey to reach England - hiding from the rampaging Nazi thugs at his orphanage, boarding a Kindertransport to safety - here the aspiring artist was, on a ship bound for the Isle of Man, suspected of being a Nazi spy. What had gone wrong?

In May 1940, faced with a country gripped by paranoia, Prime Minister Winston Churchill ordered the internment of all German and Austrian citizens living in Britain. Most, like Peter, were refugees who had come to the country to escape Nazi oppression. They were now imprisoned by the very country in which they had staked their trust.

Painstakingly researched from dozens of unpublished first-hand accounts and previously classified documents, The Island of Extraordinary Captives tells, for the first time, the story of history's most astonishing internment camp and of how a group of world-renown artists, musicians and academics came to be seen as 'enemy aliens'.

The Island of Extraordinary Captives is the story of a battle between fear and compassion at a time of national crisis. It reveals how Britain's treatment of refugees during the Second World War led to one of the nation's most shameful missteps, and how hope and creativity can flourish in even the most challenging circumstances.

“Extraordinary yet previously untold true story...meticulously researched...it's also taut, compelling, and impossible to put down.”

5. Short Squeez Picks

Why boomers, bosses, and Elon Musk are all wrong about remote work
Flipping Air Jordans is no longer a slam dunk
Why seed stage is the perfect place to start your startup career
How a $9 bottle of Trader Joe’s sunscreen ignited a summer war
If you can’t get a salary increase due to inflation, ask for this instead

A Message from Fantasy Life

We do the same thing over at Fantasy Life, except it’s for the fantasy football markets.

Fantasy Life is a FREE daily newsletter presented by Matthew Berry that delivers you all the fantasy information you need to make money in your leagues and best ball tournaments.

Each day our contributors compile the latest NFL news, drafting strategies, players to draft and fade, and betting opportunities.

There’s no better way to stay busy during a bear market than fantasy football, the ultimate distraction.

Short Squeez 🤝 Fantasy Life

Subscribe for free here.

6. Daily Visual: Sick Days and Vacations Hit Businesses

Source: Axios

7. Daily Acumen: Miracles

"There are about eight billion people on this planet. So, if an event has a 1-in-a-million chance of occurring every day, it should happen to 8,000 people a day, or 2.9 million times a year, and maybe a quarter of a billion times during your lifetime.

Even a 1-in-a-billion event will become the fate of hundreds of thousands of people during your lifetime. And given the media’s desire to promote shocking headlines, you will hear their names and see their faces.

Physicist Freeman Dyson once explained that what’s often attributed to the supernatural, or magic, or miracles, is actually just basic math. He explained:

In the course of any normal person’s life, miracles happen at the rate of roughly one per month.

The proof of the law is simple. During the time that we are awake and actively engaged in living our lives, roughly for eight hours each day, we see and hear things happening at a rate of one per second. So, the total number of events that happen to us is about 30,000 per day, or about a million per month.

With few exceptions, these events are not miracles because they are insignificant. The chance of a miracle is about one per million events.

Therefore, we should expect about one miracle to happen, on average, every month.

The idea that incredible things happen because of boring statistics is important, because it’s true for terrible things too.

Think about 100-year events. One-hundred-year floods, hurricanes, earthquakes, financial crises, frauds, pandemics, political meltdowns, economic recessions, and so on endlessly. Lots of terrible things can be called “100-year events”.

A 100-year event doesn’t mean it happens every 100 years. It means there’s about a 1% chance of it occurring on any given year. That seems low. But when there are hundreds of different independent 100-year events, what are the odds that one of them will occur in a given year?

Pretty good."