The Razor’s Edge is an investing podcast that combines a prop trader’s viewpoint and deep-dive fundamental research to provide a unique take on the markets. The show is co-hosted by Akram’s Razor, a trader and investor with decades of experience and a track record of truly differentiated ideas and analysis, and by Daniel Shvartsman, an individual investor for the past decade who saw thousands of investing pitches and ideas and how they played out during his previous time at Seeking Alpha.
The duo start with a theme or idea from Akram’s investing, then break it down to understand what goes into the idea, what could go wrong, and what else investors and traders need to know. They also interview industry leaders, executives, and other investors to get a wider perspective. The show has thousands of listeners around the world.
Covid-Era Comps Begin: A Look At Netflix's And Twitter's Earnings
Earnings season this quarter comes with a special kick. It’s the first one lapping full COVID comps, which means we can start to see what the wonky pull forward or shut down year ago will do to company’s reports, and how the market will respond.
We focus today on Netflix and Twitter, two of our old standbys. On the one hand, they had opposite quarters – Netflix suffered from a post-COVID hangover in their subscriber numbers, which will likely lead revenue numbers; while Twitter posted a huge revenue beat compared to a pandemic crimped Q2 2020. Look a little closer, and there are similarities between the two companies positions and how they look going forward. We break it all down.
4:00 minute mark - Was COVID bad for Netflix?
10:45 – Measuring Netflix’s numbers given the last two years
17:30 – The slowdown reaching streaming peers
25:00 – The industry implications of Netflix’s position and the market reaction
34:30 – Is the winnowing coming?
41:00 – What hope is there for other streaming stocks if Netflix is not attractive here?
45:15 – The strong quarter, and the one gray note in the report
50:00 – Where is Twitter fitting in amongst a hot space…
55:00 – And how Twitter is better set up for when ads cool off
58:00 – The spending side of the line
1:03:00 – Twitter’s set up for the back half of the year
After Didi Global: Are Chinese Stocks Investable?
The Didi Global IPO feels like a fiasco - company goes public one week, gets booted from the app store by Chinese regulators the next. With RLX Technology undergoing a similar crackdown earlier this year, and with Ant Financial still being kept off the market, and with concerns around Jack Ma's well-being in light of his criticism of the government, it's not a huge surprise most big-name Chinese stocks on the U.S. markets are trading poorly.
A lot of questions arise, but the most basic one - can you invest in these stocks? In this week's episode we talk about Didi and what the various parties' motivation might be, what might make the picture clearer, and whether you can really invest in Alibaba, as well as whether that matters.
3:15 minute mark – What to make of the Didi crackdown
8:30 – Are China ADRs investible?
14:15 – What does an ADR actually get you?
22:15 – Considering the Chinese government’s calculus
25:15 – The difficulty of establishing an edge in these names
33:15 – Norms and flows, betting vs investing
39:15 – How much the right price can matter
47:15 – Revisiting the “Amazon of China” idea
52:45 – The Sina example
57:15 – U.S. Sino accords and balances of power
1:06:15 – Investing in China-based companies
Short-Selling In 2021: Beware The Crowded Trade, And Eyes On Nvidia
"I'd rather short a real company than a fraud or a meme stock."
Akram's Razor made this case on a recent Twitter Space, and we unpack the point on today's episode of the Razor's Edge. In a year when many short-sellers have been run over by trains, and have the AMC and GME shaped scars to prove it, betting against a popular, universally loved name may actually be safer. We go over Akram's historic approach to shorting, how that has to adapt to the current market, what the line is between a meme stock and an ordinary dud, and Nvidia's current position, which is more precarious than the market seems to be pricing in.
2:30 minute mark – Akram's historic shorting approach vs. the current market
9:00 – Microstrategy (MSTR) hodlco vs. opco
15:00 – Pay attention vs. avoid meme stocks
20:30 – More tangible shorts
24:30 – Sketching out Nvidia questions
32:30 – Sketching out tech sector questions
39:30 – The risk of relying on management to warn about slowdowns and the value of contrarianism (in spots)
47:30 – Disputing numbers vs. disputing stories and the proof of stake risk
53:30 – The ARM deal and Nvidia’s meme potential
59:30 – Staying out the way of these memes
1:06:00 – Building the “you’re crazy” basket
Fed Reaction and the (Re)-Rise of SaaS
Last week's Fed meeting played to expectations - slightly tougher talk, limited changes in policy. The market's reaction was to pile back into the Covid winners, which meant SaaS stocks among others.
So for today's episode, we follow up on our Fed discussion from last week, talking their decision and the market and media reaction. We then move over to the SaaS sector, our regular field. We break down three companies in detail – Zoom, PagerDuty, and Workday. We finish off with thoughts about the growth hangover that might plague COVID winners generally.
2:30 minute mark – Our Reaction to the Fed meeting
6:30 – The market and media reaction to the Fed meeting, and the difference between the health crisis and the market crisis (or reaction thereto)
17:30 – The analytical challenge for investors and the Fed, with the housing bull market as an example
23:30 – The crowding effect in the markets
32:30 – Shift to SaaS – Hasn’t ZM grown into their multiple and what does 2022 look like?
45:30 – PagerDuty – No surprises; the billings; Atlassian and Everbridge; multiple expansion
53:30 – Workday – Why the outlook lines up better for them than many SaaS peers – winning the finance office
58:30 – The distinction between Workday’s or PagerDuty’s customer base and Twilio’s or Zoom’s
1:09:30 – Growth hangover for Covid winners – THO as an example – and for the investors holding them
(Note: Daniel is long DBX as well as PD/THO, that disclosure was accidentally omitted from the recorded disclosure).
Meme Stonks Part Deux: AMC, Algos, and The Fed
We've seen this movie before, but it still doesn't really make sense: a group of traders has taken up the cause of inflating the stock price of a motley bunch of stocks, including AMC as the most prominent company this time around. There are hints of financial populism as there were with GameStop in January, but this time it feels more like pure financial nihilism.
On today's episode of The Razor's Edge, we talk about the difference between round one and round two, how AMC should have something of a future even if it's more than priced in, and how given the trading volumes it would be rash to assume retail traders are truly driving this movement. We also talk about the body lurking in the background who could, if they so chose, take action to stop or slow this mania. Jerome Powell, you're our only hope? We break it down.
3:15 minute mark – Meme stocks part deux, and the bleeding from trading into investing
11:30 – The abstraction of what moves a stock, and AMC vs. GME fundamentally
24:00 – Where does this leave AMC and the countercultural movement behind the meme stocks
34:00 – The algorithmic muscle behind these moves
39:00 – The blending of signal and noise and market virality
46:30 – The fight against financial nihilism: Here comes the Fed?
53:00 – Risk reward of proactive action vs. reactive from the Fed
1:00:00 – The limits of regulation vs. the limits on liquidity
1:04:00 – What might the Fed actually do
1:13:00 – The weirdness of the recent past and how that compares to our current climate, and where that leaves the Fed
1:18:00 – Fed Credibility
Also, check out another Shortman Studios podcast, the Big Tech Ticket, featuring conversations on the biggest issues in tech. https://podcasts.apple.com/us/podcast/the-big-tech-ticket/id1565981471
The Yalla Buzz And The Back Talk
A couple weeks ago, Akram released a short thesis on Yalla, calling out an odd business model and then some major issues with the platform - duplicative accounts, low engagement, glitches with the gifting model, etc.
On this week's episode we recap that short thesis for those who haven't heard it yet, but then we also go into the aftermath. What's it like to have another short report come out in the same week? Where are the bulls? What about that buyback announcement? And where can this go?
4:00 minute mark – Background on the Yala case
7:15 -How Yala works
13:30 – The content creation red flags
18:30 – What's the deal with gifting?
25:00 – The circle that won't square
32:00 – Thoughts when another short (or three) enters the debate
37:30 – Lack of bulls and the company response
43:15 – Where does this go from here?
49:00 - An alternative playbook
54:30 - The state of shorting and why this one is different
Akram's Razor's presentation on Yalla - https://www.dropbox.com/s/wntrsycechmyxj9/YallaPrez.pdf?dl=0 and update - https://www.dropbox.com/s/y4wihdy3f7zjz6a/Yalla%20FollowUp.pdf?dl=0
Swan Street Research's presentation on Yalla - https://www.swanstreetresearch.com/post/swan-street-is-short-yalla-group
Yalla's press releases in repsonse: Standard refutation - https://seekingalpha.com/pr/18325971-yalla-group-limited-responds-to-short-attack-reports - and stock buyback announcement - https://seekingalpha.com/pr/18328269-yalla-group-limited-announces-up-to-us-150-million-share-repurchase-program