ThumbTack Fund Report 8 – What Are These Bots Doing?

1st up, can you guys go watch this video that I took a few days ago, watch it, and tell me (if u know), what exactly are the bots or people behind the bots hoping to accomplish by doing this?

(Sorry about the ticking sound, didn’t realize my study room clock is so noisy in the middle of the night. Also, wordpress doesn’t allow me to embed videos here, so gotta click on the link to go elsewhere)

https://player.vimeo.com/video/538081216

I’ve noticed something like this happening for various companies, on occasion. The asking price keeps ticking upwards every second (it literally follows the ticking sound of my clock!), hitting a certain level (USD 7 in this case), and gets reset to a base level (USD 5.50 in this case).

I can’t figure out any reasons for anyone doing this. What are they hoping to accomplish with this? Errr, trying to con market participants into thinking there’s “increasing demand” with the asking price ticking upwards? If so, at least set the algorithm to be a bit irregular right? lol. This is kinda foolish. I’m assuming it’s some algorithm and some bot doing that, it surely must be. But even the actions from algorithms and bots are determined by actual humans and there’s just seemingly no logic for this.

Or maybe I’m just not wise enough to figure out what they’re doing.

In any case, this doesn’t affect me 1 iota. I’m just curious why these things exist as they do.

Please enlighten me if you know the reasons why. Or drop me an email: thumbtackinvestor@gmail.com


In my last post, I wrote about the electric vehicle industry. https://thumbtackinvestor.wordpress.com/2021/04/05/outlook-on-electric-vehicles-hype-or-hope/

Now, sometimes, some posts are written by “Team ThumbTack”. This means that I’m not really the sole author. There are readers turned associates who would work together with myself on certain content.

Anyway, the irony is that I currently don’t really have much exposure to the EV industry. I have a small long position in NIO, and some minor short calls in RIDE and NKLA, and that’s about it. Thing is, the clear leaders would not be cheap and have years and years of growth baked in their valuations. The clear losers (frauds, in some cases) can still enjoy a mega pop on the way down, on the back of some sudden news that’s perceived as a big positive by the markets. Both scenarios make it hard for me to make any EV ideas a core one.

So that’s it; I’d rather initiate smaller positions on both sides of the coin.

ThumbTack Fund Report 8

YEAR TO DATE (2021):

SPY: +11.97%

VT: +10.28%

STI: +12.59%

TTF: +7.25%

SINCE INCEPTION (FEB 2020):

SPY: +26.51%

VT: +24.94%

STI: +1.27%

TTF: +70.21%

Note: Returns are MWRs, all figures in USD

TTF’s NAV: USD 466,627.46

Deposits/Withdrawals: USD 319,223.93

Nett capital gains since inception: USD 147,403.53

Commentary:

A +7.25% quarterly gain would’ve normally been something that delights me, I mean, just imagine compounding at 7% every quarter, along with my capital injections over the next 3 decades… … … but it’s hard to be all that pleased when passive indices have zoomed up so rapidly this year. STI has been strong, and YTD, has even beaten both SPY and VT. That’s not all that surprisingly though, given that it’s coming from a low base + SG has been fairly successful at limiting the effects of Covid on the broader economy… thus far.

But what lies ahead? Interest rates are at record lows and have been there for a long while. Powell says it’s unlikely they’d raise rates this year… but me thinks higher inflation may just force his hand. US’s vaccination is going along rather rapidly, and with just 50% of the population vaccinated, I can forsee everything opening up with a vengeance.

Pent up demand is a real thing. Most of the folks that have had their travel, leisure, dining, wedding etc plans delayed, wouldn’t mind spending more when things open up. So that’s going to be a boost to these industries that have been so savagely ravaged the past year and counting.

Outside of that though, for the rest of the economy, it’s hard for me to see how things can be all that rosy. Latest reports of fully vaccinated individuals who end up still contracting and spreading Covid is worrisome. It just means that vaccinating large swathes of the population is not going to completely eliminate Covid, although it’s likely to mean we get to open up further and gain more normalcy. And ultimately, I think that’s where the world is slowly limping towards: more and more of the world’s population gets vaccinated, everyone starts to open up, activities return to a limited extent.. yet nothing really goes back to pre-covid days.

As an investor though, my thoughts really revolve around the Fed’s control of the money supply and the amount of liquidity in the system. As the economy opens up and inflation rises, the Fed will surely have to raise rates, and when that happens, it’d be a signal to forward looking markets that the only thing we can all expect in the near future would be rising rates. That’s a clear negative to the markets.

I’m not known for a macro view, and neither do I invest based on 1. If you’ve read the previous TTF reports, you’d know that I’ve injected capital into this new fund periodically over the past 13mths since inception. What is not visible though, is the rainy day back up kitty that I’ve built up and continue to build up. TTI’s proton cannon, so to speak. We all need 1. It’s like condoms. It’s too late to start searching for 1 when you really need it.

Some additional fund data:


In my last fund report in Feb, (https://thumbtackinvestor.wordpress.com/2021/02/07/thumbtack-fund-report-7-%e5%a4%a7%e9%9a%be%e4%b8%8d%e6%ad%bb%e5%bf%85%e6%9c%89%e5%90%8e%e7%a6%8f/), the 5 generals are:

TTI’s 5 Generals

  1. Broadcom (AVGO)
  2. Ligand Pharmaceuticals (LGND)
  3. Nio Inc (NIO)
  4. Alibaba Group (BABA, 9988)
  5. Facebook (FB) —–> (tough toss up between this and PSTH)

There have been some changes since then:

TTI’s 5 Generals

  1. Broadcom (AVGO)
  2. Alibaba Group (BABA, 9988)
  3. Rocket Companies (RKT)
  4. Pershing Square Tontine Holdings (PSTH)
  5. Still interviewing applicants.

Having said that, my recent additions/activities have all revolved around the names that were sold down rapidly due to Bill Hwang’s Archegos Capital blowup. I’ve previously analyzed DISCA some time last year, just before it begun it’s crazy run up, and ultimately decided not to take any positions as I didn’t want to over pay. So when the news broke and DISCA tanked, I thought it’s a great opportunity to monitor and finally initiate positions.

Most of these Archegos-related names have not only NOT recovered, but are still trending downwards. Reportedly, some of the affected banks like Morgan Stanley and Credit Suisse were STILL hawking blocks of shares as recently as a few days ago, so this sell down isn’t exactly a short and sweet fire sale. The amount of leverage Archegos had must be really some crazy shit stuff…

Fortunately, I’ve structured it with options, and wouldn’t mind more volatility and/or redness in these names. IMO, there are a couple of real frauds within the Archegos list, and I wouldn’t touch those with a 10 foot pole, but for the rest, they’ve been sold down heavily and deserve an intense look from the brave value investor.

Alright, that’s it for this report. By the time the next TTF report rolls out, I’d expect NAV to exceed half a mil USD comfortably. The target of USD 1mil by the end of the 2nd year remains (Feb 2022), and yes, I know that’s a real stretch cos it’d mean a gain of >100% within less than 1 yr, but it’s not impossible with some generous capital injections. Let’s see. Just a soft target. I’m not going to get executed if I fail to meet it.

Happy Investing.

2 comments

  1. Hi Thumbtack Investor

    Are you still holding onto Rocket after the 15% drop today? Perplexed at the sharp drop despite the decent results but shouldn’t be surprised since it was a wsb stock. Appreciate any insights on your stance for this company. Thanks

    Like

    1. Hi Marcus
      Markets are forward looking. The results may be “decent” (Actually if u look at the numbers alone, they are excellent!), but the markets are just looking for a sign of the company having passed it’s immediate peak, and it going downhill from here.
      So with the weaker numbers, the markets are punishing the company, viewing that the upcoming quarters are going to each be worse off than the previous quarter.

      Yes, I still hold onto RKT shares, and have sold puts today in fact. I’d prob continue accumulating.
      IMO, the supposed rate hike fears are over compensated here. It might take some time, but it’d turn when the markets are expecting worse results when the results are reasonable.

      TTI

      Like

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