ThumbTack Fund Report 16 – Caught A Falling Knife

I caught a falling knife.

And oh boy, does it hurt.

Recently, banks and financial institutions have been dropping like flies, and my itchy fingers decided to catch 1 such sharp knife, right on it’s blade : Silvergate Capital (SI)

This story probably needs no describing: news of Silvergate’s demise has been plastered all over the media, and in fact, SI’s collapse is really, 1 of the preceding factors that triggered stresses in the other banks.

For the record, I ain’t no crypto rambling bro that bought into SI when the share price was > $100, held onto it, and got caught up in SI’s collapse.

No, no. That’s not me. I’m the hero that sat on the sidelines while SI’s share price collapsed, continued eating popcorn while SI closed it’s very popular Silvergate exchange network, then looked at the numbers, and decided that ah-hah, the carnage should be almost over, THEN decided to jump in the fray, looking all confident and smug.

And as wave after wave of bad news hit the shore, I’m the dude that continued standing against the tide whilst I continued accumulating, bravely, fearlessly, …. stupidly.

Sometimes, heroism gets you the beauty. And the history books write your name for centuries to come.

Sometimes, it gets you a freaking 220,000 USD loss in 1 month.

As this screenshot shows, the loss sits at around 220k USD, which translates to almost 300k SGD.

Very significant. Esp since that’s within 1 single month.

At an average price of around USD 9 or so, buffered by some option premiums, I would’ve thought the position is pretty much derisked.

That blue arrow there… yep, that’s where I bought it at. Doesn’t look that bad when u put it up on a chart like this, but it is.

Well, why did I decide to be the hero? The short answer to this is simply “the numbers”

SI isn’t some hyped up unicorn/SPAC with no earnings, no free cashflow, no viable business model. At $9, there was a more than 50% haircut to it’s net TANGIBLE book value of almost $20. I figured that given the popularity of the Silvergate exchange network, at the very worst, they could sell it fairly easily.

It didn’t help that Ken Griffin’s Citadel Securities bought heavily into SI just the month before, giving me a healthy dose of confirmation bias. (https://www.thestreet.com/memestocks/reddit-trends/why-did-ken-griffins-citadel-securities-invested-on-silvergate-capital-si)

Well, SI is truly dead and buried now that the FDIC has stepped in. I’ve read analysts give it a liquidation value of USD 5, which would be a very welcomed -45% loss. In reality, it’s probably going to be closer to USD 1 or so by the time this is truly liquidated.

Morale of the story is…

If you want to catch a falling knife, catch it by the handle.

Well, at least billionaire Ken also most likely got some blood on his hands too. His own, that is.

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Despite the massive loss, TTF actually managed to continue adding a tiny itsy bit onto the impressive gains from the last report. For reference: https://thumbtackinvestor.wordpress.com/2023/02/26/thumbtack-fund-report-15-target-acquired-proton-cannon/

YTD 2023:

SPY: +6.99%

VT: +6.71%

STI: +2.08%

TTF: +34.28%

SINCE INCEPTION (FEB 2020), ANNUALIZED:

SPY: +9.54%

VT: +6.63%

STI: +1.62%

TTF: +34.32%

Note: Returns are MWRs, all figures in USD

TTF’s NAV: USD 2,944,859.44

Deposits/Withdrawals: USD 1,733,165.76

Nett capital gains since inception: USD 1,211,693.68

For reference, the last fund report: https://thumbtackinvestor.wordpress.com/2023/02/26/thumbtack-fund-report-15-target-acquired-proton-cannon/

Since TTF was incorporated in Feb 2020, this means that TTF has enjoyed a nett gain of USD 1,211,693.68 over a period of 37 months of investment activity, which works out to be USD 32,748.48 every month, or approximately SGD 43.5k per month from Feb 2020 to date. 

Cumulative ROI (Feb 2020 to Mar 2023):

SPY: +33.48%

VT: +22.57%

STI: +5.24%

TTF: +154.92%

TTF has generated double digit money weighted returns every year since inception:

2020: +89.83% (https://thumbtackinvestor.wordpress.com/2021/01/02/thumbtack-fund-report-6-rose-of-jericho-2020/)

2021: +24.91% (https://thumbtackinvestor.wordpress.com/2022/01/07/thumbtack-fund-report-10-hello-2022/)

2022: +11.94% (https://thumbtackinvestor.wordpress.com/2023/01/02/thumbtack-fund-report-13-hello-2023/)

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Don’t ask me what are the lessons to be gleaned here, I honestly don’t know. I don’t think there is always a lesson. Can a world class top chef ever get there without getting his fingers burnt by fire at least several times in his career? Probably not.

In this instance at least, my hindsight is the same as my foresight.

I wish I didn’t catch the falling knife cos a 300k SGD loss in a month is a bitter pill to swallow, but perhaps, one really doesn’t get to be a bona fide warrior without shedding some blood in the battlefield.

Or maybe that’s just me comforting myself

Have a good Good Friday!

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