ThumbTack Fund Report 14 – “Huat Is Your Return”

That is literally what my wife texted me yesterday.

I didn’t know if it was a question or a statement. No punctuation at the end. Or maybe it was a CNY blessing disguised with a word play.

So I replied with a “👍”

And she followed up with “?????”

So yeah, now I know she really just wanted to know. No intelligent word plays, it was a genuine question with a typo.

Anyway, just to illustrate how disconnected my wife is, I asked her, do u know if the US markets were in the green or the red for 2022? And she replied confidently: “Definitely green. Correct?”

CNY is 1 of the very few times in the year when I get a relatively long (read: few days) break from work, and that’s when I rest, recharge, relax and sometimes write some nonsense here. I anticipate that after this post, it’d probably be radio silence for a while. So time to update:

YTD 2023:

SPY: +3.52%

VT: +5.66%

STI: +1.30%

TTF: +18.30%

SINCE INCEPTION (FEB 2020), ANNUALIZED:

SPY: +9.01%

VT: +6.75%

STI: +1.48%

TTF: +30.35%

Note: Returns are MWRs, all figures in USD

TTF’s NAV: USD 2,537,986.77

Deposits/Withdrawals: USD 1,680,551.36

Nett capital gains since inception: USD 857,435.41

For reference, the last fund report: https://thumbtackinvestor.wordpress.com/2023/01/02/thumbtack-fund-report-13-hello-2023/

Since TTF was incorporated in Feb 2020, this means that TTF has enjoyed a nett gain of USD 857,435.41 over a period of 35 months of investment activity, which works out to be USD 24,498.15 every month, or approximately SGD 32.3k per month from Feb 2020 to date.

Cumulative ROI (Feb 2020 to Jan 2023):

SPY: +29.14%

VT: +21.36%

STI: +4.44%

TTF: +119.47%

TTF started 2023 with a massive bang, shooting out of the starting blocks with some eye popping, world beating returns, as many of my planned longs hit the paydirt. TTF’s AUM increased by 420k USD since the last report, and that was only at the end of 2022. That’s a 420k USD gain in 3 weeks! Hmmm, I could live with that, I think. Hehehe.

I continued applying my market edge, gaining ground over the S&P on every single day of 2023 thus far:

In my previous report (https://thumbtackinvestor.wordpress.com/2023/01/02/thumbtack-fund-report-13-hello-2023/), I wrote that I have 2 objectives for 2023:

Generate an annualized return above the current annualized 3yr average of +19.27%. That’d further increase my long term CAGR.
Increase AUM for TTF to USD 3mil.

Thus far, the CAGR has increased to a massive 30.35%, meeting the 1st objective. AUM has also increased rapidly, and what seemed like a crazy target just 3 weeks ago, is now not so crazy. It’d still require a 500k USD or 20% increase in AUM for the rest of 2023, but I think that’s really now quite do-able. It was a crazy target, but now, I’d be disappointed if I don’t meet it at the end of 2023.

As mentioned in the previous report, I believe that with a small portfolio currently, market beating, outsized, seemingly crazy returns is possible, but I’ve no illusions that this task will get increasingly tougher as the portfolio size gets larger.

And it wouldn’t have to be some super large few hundred mil kinda AUM before it gets tougher. It’d probably be sooner because a lot of what I do currently is extremely effort intensive. It is a intense process, but currently, I can continue to find what I think are market inefficiencies, with a predictable outcome, as well as a catalyst that’d correct this efficiency relatively quickly.

I’d end this short post by replying a couple of comments in my previous fund report (that I’ve promised to reply):

Well, I will have to renege on this a bit, simply cos it’s too much effort, and it’s CNY, and I just feel like eating an excessive amount of Ferrero rocher, drink soju and watch some mindless movie online like what everyone else is doing. Also, the winners are mostly quite complex to understand tbh. They are not straight up longs, or straight up shorts. They vary a lot, and are structured a bit differently from what most folks would easily understand.

Like… what’d you expect man…. u can’t get exceptional alpha by doing normal stuff right?

Instead, I’d just share my list of potential or existing long term longs aka long term Generals:

Now, let me make this clear first. I don’t currently own shares in ALL these names. I don’t have any short positions in any of these names, that’s for sure. But I may not have a long position currently, and if I do, they also may not be straight up equity positions. Some may even be 100% derivative positions.

But in a nutshell, over the long term, I wouldn’t want to bet against any of these companies. Actually, not even over the short term. I think these companies have long term, durable competitive advantages, and I wouldn’t mind building up a buy and hold position in these names, at the right price.

Pls take note of the emphasis “at the right price”.

Finally, let me share a “short” winner in 2022. I’d obviously summarize it very very briefly, but in a nutshell, this is what transpired and my thoughts on it.

On the 27th September 2022, Biogen, a biotech/pharma company, announced results of their Phase III study on Lecanemab, an innovative new drug in the pipeline, targeting Alzheimer’s disease:

https://investors.biogen.com/news-releases/news-release-details/lecanemab-confirmatory-phase-3-clarity-ad-study-met-primary

Now, some of you paying attention to this space would know that currently, there is a shit ton of research going on, trying to find better treatment modalities for Alzheimer’s disease. And rightly so, it’s a damn disgusting disease, and currently, there is no real cure. It’s especially disgusting because it not only destroys the life of the victim, more crucially, it destroys the life of the caregiver aka your immediate family.

Now, Biogen’s Phase III trial yield good results, as the study of 1,795 people met it’s primary endpoints, as well as all key secondary endpoints. With these good results, the share price skyrocketed on that day:

It ended the day up 41%, but I remember it was up even more crazily intra-day, like well over 60% at 1 point.

This is not surprising though, it’s common for biopharma companies to shoot up or crash in a single day on such critical news.

What caught my eye though, was ANOTHER biopharma company: Acumen Pharmaceuticals

Following this piece of news, Acumen also shot up:

That’s an almost 140% gain on the back of this positive news…………….. from a COMPETITOR’S Phase III study.

The reason for the market’s optimism for Acumen, was that Acumen (ABOS) has a drug candidate for Alzheimer’s too (named ACU193). And this drug compound has a similar mechanism of action (MOA) as Biogen’s, basically an amyloid oliogmer targeting antibody.

A bit of technical stuff here, but basically the beta-amyloid 42 is a sibei damn toxic protein that joins together to form some massive plaques in the brain and that causes Alzheimer’s, so both their drug compounds work somewhat similarly (there are small differences, but if I go into that level of detail, most people will stop reading), and the drug compounds work by targeting these amyloid compounds.

Now, I sat up when I saw the 140% spike in the share price for several reasons. I’d summarize it here:

As mentioned, although they have similar MOA, there are slight differences. The markets are not wrong in assigning SOME optimism to ABOS… but +140% worth? That’s like pricing in a huge chunk of any potential upside already
Even if they have similar MOA, come on, your COMPETITOR gets approved first, that’d at least be some negativity for you, ain’t it?
ABOS is a single drug company, ACU193 is their only drug in the pipeline, so it’s very “clean”. The jump in the share price is purely due to this piece of news. There aren’t any other confounding factors that’d blindslide me.
Unlike Biogen, ABOS is in PHASE 1 trials! It’d be umpteen years before they even reach commercialization, and along the way, any number of things can go wrong.
Most importantly, nestled within Biogen’s loudly trumpeted success, if one bothers to actually peer into the actual data, lecanemab only showed a 27% slowing in cognitive decline in that Phase III trial. Only 27%! It’s good… but 27% improvement is not exactly game changing. Also, with only 27%, you gotta wonder if there will be any PERCEIVABLE improvement in clinical outcomes. You gotta remember, Alzheimer’s disease is mostly a… “qualitative” disease, unlikely something like say…. high blood pressure, where you can measure it quantitatively.
There are some doubts regarding the safety profile: 2 study participants died (I think. Can’t remember the exact number, writing off the top of my head now). There’d surely be some form of “black box” warning label needed as the FDA covers their own ass.
The literature also suggests that all the amyloid targeting therapies are more likely to be adjunctive therapies, aka used in combination with other drugs. Basically, they won’t be your Messi equivalent, more like an Antoine Greizmann.

All things considered, I felt the 140% jump in the share price was way over warranted, and largely due to the optimism from the success of a rival’s drug. I also felt that the share price would likely come crashing back down to a more realistic level after the intial optimism waned.

The only way I’d have been skewered if I shorted at those levels, would be if ABOS suddenly released some positive developments. This was very unlikely cos firstly, they are at freaking Phase 1. Secondly, the company already had the sufficient capital requirements for the next several years, so they’re unlikely to be raising cash anytime soon, so positive news of some debt issue/capital raise etc was unlikely to be announced anytime soon.

I ended up shorting ABOS heavily in many ways as it shot up, and recognizing a near 100% ROI in a matter of days as the markets realized their folly.