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- 🍋 Plotkin's Re-Plottin'
🍋 Plotkin's Re-Plottin'
Short Squeez
April 25, 2022
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"They laugh at me because I'm different; I laugh at them because they're all the same." — Kurt Cobain
Good Morning! In a bizarre turn of events, Twitter and Elon Musk met yesterday and a sale to Elon could be finalized as soon as this week. Musk spent the rest of his weekend clapping back at Bill Gates for shorting Tesla and posted a NSFW tweet, which amassed 1.1 million likes. Median monthly mortgage payments are wylin' too, and hit an all-time high of $2,318, up 38% from last year. Your piggy bank won't make a dent in a home purchase any time soon. The average worker is not just worried about home prices, but their health as well. Microsoft's 2022 Work Trend Index found that employees are prioritizing health over work, with Latinos in particular (2/3rds compared to the 55% general US average) saying that their well-being is more important than going into an office.
As promised, please find the latest results of the Wall Street compensation survey here.
1. Story of the Day: Plotkin's Re-Plotting
CEO of Melvin Capital, Gabe Plotkin, is back to the drawing board after announcing a plan to restructure the firm just a few days ago. In a note to investors on Sunday he said, "I am sorry. I got this one wrong. I made a mistake. I apologize. In hindsight, despite our intentions, we recognize now that we focused on future returns and team continuity without sufficient consideration of your investment losses."
The fund, I'm sure you remember, suffered an embarrassing 52% drawdown in the spotlight thanks to Reddit traders leading a short squeeze (ayyy) against GameStop in Jan 2021. In an attempt to correct the course, Plotkin announced an "unheard-of maneuver" involving cutting the fund's payout by 40%, but still requiring any diamond hands investors to pay performance fees again. Bold move considering they're still underwater.
His investors are outraged and confused, and rightfully so. They have lost a ton of money, and have no idea what is going on. One investor told the New York Post the email was "f***ing wacky," and said, "I just want my money back."
The fund was down 21% in Q1 2022, and according to reports, hopes to continue as a small shop (under $5 billion AUM). The strategy will continue to focus on shorting stocks, so meme-stock millionaires, get ready to unite again.
Short Squeez Takeaway: Gabe Plotkin, Bill Hwang, and Bill Ackman are really out here competing for Wall Street Bets all-time degenerate. Plotkin takes the gold medal for the ultimate disregard for his investors though. (Imagine asking investors to pay performance fees for making them whole) Something tells us this is also not the end of Plotkin's bag of tricks. You can read his full letter to investors here.
Source: Bloomberg, New York Post
2. Markets Rundown
It's a hat trick as equities were lower Friday making that the third week of declines. Higher bond yields are still on everyone's minds it seems, even though earnings season shows more than 78% of companies that have reported have beaten estimates for profits.
Movers & Shakers
(+) JE Cleantech ($JCSE) +375% on the first day of trading for the cleaning systems company.
(+) Blueknight Energy Partners ($BKEP) +38% after the asphalt terminalling service provider agreed to be taken private.
(–) Verizon ($VZ) -6% after the company reported a loss of 36,000 monthly phone subscribers during the first quarter.
3. Top Reads
Amazon gets a win in India (Axios)
Warnin' Warren says Dems risk losing power without inflation action (BB)
The design of JPMorgan's new HQ (Axios)
Clearly, the New York office boom is holding strong (Axios)
Lockheed Martin and union reach a deal at Fort Worth F-35 plant (BB)
Emmanuel Macron wins re-election in France (CNBC)
Fresh round of management turnover at Credit Suisse (WSJ)
Jack Dorsey's new title (Fox)
Exxon bans certain flags, like pride flag, from company poles (NYT)
A Message from FarmTogether
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Farmland, a recently accessible asset class through platforms like FarmTogether, has consistently provided returns more than double the inflation rate since before 1992; this is due to the fact that farmland’s value is underpinned by its critical role in the global economy: the country’s growing population needs to eat.
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As the supply of arable land in the United States shrinks each year, high-quality farmland should only become that much more valuable in the long run.
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4. Book of the Day: The Myth of Experience: Why We Learn the Wrong Lessons, and Ways to Correct Them
Our personal experience is key to who we are and what we do. We judge others by their experience and are judged by ours. Society venerates experience. From doctors to teachers to managers to presidents, the more experience the better. It's not surprising then, that we often fall back on experience when making decisions, an easy way to make judgements about the future, a constant teacher that provides clear lessons. Yet, this intuitive reliance on experience is misplaced.
In The Myth of Experience, behavioral scientists Emre Soyer and Robin Hogarth take a transformative look at experience and the many ways it deceives and misleads us. From distorting the past to limiting creativity to reducing happiness, experience can cause misperceptions and then reinforce them without our awareness. Instead, the authors argue for a nuanced approach, where a healthy skepticism toward the lessons of experience results in more reliable decisions and sustainable growth.
Soyer and Hogarth illustrate the flaws of experience -- with real-life examples from bloodletting to personal computers to pandemics -- and distill cutting-edge research as a guide to decision-making, as well as provide the remedies needed to improve our judgments and choices in the workplace and beyond.
“Experience is a great teacher . . . except when it isn't.”
5. Short Squeez Picks
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iPhone 14 coming at you in 11 months
The next big thing: pickleball
6. Daily Visual: Clean PE
US PE clean tech deal count, 2011-2021
Source: Axios
7. Daily Acumen: Abilene Paradox
Have you ever ended up agreeing to something that you felt really wasn’t the best idea?
It’s quite common, and has a name – it’s called the Abilene Paradox, from Jerry B. Harvey’s 1974 article The Abilene Paradox: The Management of Agreement.
"The Abilene Paradox refers to a situation when a group makes a collective decision that is counter to the thoughts and feelings of its individual members. The Abilene Paradox occurs because individuals do not want to ‘rock the boat’ or ‘be a killjoy,’ even though their perceptions of the other members’ feelings are incorrect."
In his article, Harvey recounts a story about a family that decided to drive 53 miles for dinner, during which they were uncomfortable, unsuitable, and ultimately unsatisfied. Everyone agreed to go even though they privately preferred to stay at home, since they believed that the others wanted to go. The truth came out after they returned and "the group sat in confusion, not understanding why they all decided to take a trip they didn't want."
Our mistaken belief that our views are in the minority often leads us to refrain from sharing our opinions. Our feelings of being the only voice that says "no" grow uncomfortable when we discover that the group consensus is "yes".
Source: Agile Business
8. Crypto Corner
9. Memes of the Day
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