Sigmatron stock drop

[ZGWZ]

Who's Duckruck?

Edit: You mean Yuval didn't make 6 million dollars like what the website's ebook says?

Most of the holdings of the DM closely following his latest strategy (at least according to him) are still microcaps, and I'm not saying that all of his returns come from microcaps.

Also, I don't think a momentary poor performance can be used to show that he hasn't skills.

In addition, I don't think he's unqualified to open a hedge fund. In fact, on the contrary, if I had to invest in a hedge fund, I would be more likely to invest in his hedge fund.

Considering you claim to have worked in investment banking for "over 15+ years". If what you say is real, and even people with that kind of experience still don't know the simple principle that it's better to hedge through derivatives rather than exit your entire stock positions ("you should probably stop commenting on these investments without the proper knowledge and understanding" so actually your "they are not gambling" assertion should be stopped as you admitted "there will be no more response"), my friends who work in investment banking advising me not to buy the crap they're pushing seems like wise advice.

[Victor1991]

Actually, in my own case, I use 'force into Universe'. Hence, chances are big that SGMA will end up on top of my ranking system next Monday morning.

Hence, my motivation to dig a little deeper.

I think all the fuss is about this 'notification of late filing':
https://www.sec.gov/Archives/edgar/data/915358/000119312524188888/d802869dnt10k.htm

More specifically, these 3 little paragraphs:

Summarized, they mention:

To doublecheck I took Portfolio123's numbers (see screen: https://www.portfolio123.com/app/screen/summary/299151?mt=1)

I get different numbers there, mainly when it comes to EPS.

Not sure what's going on there? 2.34 and -2.77 seems like a big difference.

Actually, looking at the invididual quarters, the quarterly numbers (unaudited numbers) also don't add up for '23 (-2.77 vs -3.40) for EPS.

I'm trying to understand how bad the last quarter was. Anyone who can make sense of these numbers?

[ZGWZ]

Is it because the site disagrees with this report on what items to use to represent EPS?

Maybe the original reports just don't add up?

Also, I wonder if the site would allow us to manually enter this updated data to improve the results of our ranking system.

This is the easiest and cheapest way to solve data problems.

[Victor1991]

I think Q4 numbers are as in yellow.

That would mean a 20% YoY drop in revenue and big drops in net income and EPS for the last quarter. Their balance sheet seems pretty solid though.

I'm still a bit confused about the FY '23 numbers of SGMA report (notification of late filing) vs the P123 screen numbers.

[ZGWZ]

It looks a little weird.

[yuvaltaylor]

@ZGWZ

Also, the official website ebook says Yuval has nearly ten million of dollars and are still available trading in a universe made up mostly of microcap stocks (it is confirmed by his crazy microcap strategy's allocation). And I read on Linkedin that he is even going to start a hedge fund, so it seems that the amount of money is not that much of an issue in the microcap universe. Or are you managing hundreds of millions of dollars?

To set the record straight, and because I place a lot of value in transparency, I put $4.5 million of my own money into my hedge fund, Fieldsong Investments, and other investors put $10 million in. I'm also managing over $4 million of my and my wife's money separately from the hedge fund. SGMA did not rank highly enough in any of my ranking systems for me to buy any shares, so I dodged the bullet there. I have not traded only microcaps. If we define nanocaps as under $50M, microcaps between $50M and $300M, and small caps as between $300M and $2B, then between Fieldsong and my own investments I have $450K in nanocaps, $10M in microcaps, $8.5M in small caps, $1M in mid caps, and $65K in a large cap. (The reason the total is higher than $14.5M is that I'm using some leverage; I'm also hedging my longs with put options.) I think it's fair to say that I've made about $8 million trading mostly microcaps, and that I've been doing that for eight years with a CAGR greater than 40%. I would be happy to answer any questions about any of this.

[RTNL]

why not stalestmt = 0

May be cleaner? Or am I missing something?

[ZGWZ]

@ustonapc

@ustonapc

private equity

The Notice.co 50 Index is the first and only weighted, real-time private market index

Considering that private equity's actual volatility/beta after excluding volatility laundering is far greater than QQQ's beta of 1.1+ (dwarfing even Nvidia's 1.8 beta), and given its actually severe negative alpha, private equity trades are extremely speculative.

@ustonapc

technology stocks

And in the last year, QQQ's beta has risen to 1.33 while Nvidia's has been increased to 2.65, with the latter's volatility exceeding 50%. And Mag7 has a beta of 1.69, which is also extremely speculative.

NVDA may be a scam: Maybe the real AI gold rush is the junk stonk we pump and dump along the way

I can't find 17% and 13% in the chart [Screenshot_20240913-173725] The "fake foreign cash" problem may also exist: [Screenshot_20240913-174624] [Screenshot_20240913-174811] "Lower tax rates abroad" may mean non-existent cash income, non-existent tax payments and non-existent cash balances. Instead, share buybacks may be mostly backed by debt financing from affiliated entities including CoreWeave. The worse part is not CoreWeave itself. It is about the AI Infrastructure Server Solution…

Of course, the extreme likelihood of serious accounting fraud at NVIDIA and possible operating cash flow/earnings/cash holdings fraud at many popular tech stocks just adds to their potential insecurity.

After all, that doesn't stop quantitative stock-picking models from possibly picking them to go long. However, given that hedge funds generally underperform the out-of-sample performance of CORE COMBINATION models or QVGM models, the vast majority of them are just taking smug gambles.

@ustonapc

VIX, cryptos

Of course, it is even less likely that they will be able to overcome the wilder VIX and cryptocurrencies (note that Bitcoin is the least volatile cryptocurrency other than stablecoins).

Hedge funds are just not as degen as WSB apes

@ustonapc

As an advise, most trading done by investment banks/hedge funds

Considering that almost no one has pointed out the extremely obvious (you even can simply detect its potential problems with the Beneish M-Score) great risk of NVIDIA's books, the vast majority of those people must at least be of very questionable competence given their track records, although that is far from ruling out serious ethical problems with those regards.

For example:

AI-linked companies are now >10% of global market cap

Dear all, Analysts are forecasting Nvidia's annual revenue will jump to $131 billion by 2026, more than double the $61 billion recorded in the fiscal year that just ended. Regards James [image]

Like a typical China Hustle or SPAC scam (or maybe we could call it Taiwan Hustle to respect Taiwan's independence from mainland China), you can just simply make up any numbers in your financial statements and guidances/forecasts, and the SEC hates this simple trick!!

In connection with de-SPAC transactions, the rules include disclosure requirements related to projections, including disclosure of all material bases of the projections and all material assumptions underlying the projections.

[ZGWZ]

Right now, it seems as if the best strategy is to sell off as soon as possible when shit hits the fan.

[ZGWZ]

@ZGWZ

Of course, it is even less likely that they will be able to overcome the wilder VIX and cryptocurrencies (note that Bitcoin is the least volatile cryptocurrency other than stablecoins).

Hedge funds are just not as degen as WSB apes

@ustonapc

@ustonapc

As an advise, most trading done by investment banks/hedge funds in VIX, cryptos, private equity and technology stocks.. etc are not gambling and you should probably stop commenting on these investments without the proper knowledge and understanding. (I have over 15+ years exp working in investment banking.)

No, zilch, zip, nada, nothingburger

Your model returns stocks you don't like

Using fund returns and fund stockholdings, we investigate whether fund managers follow fundamental analysis strategies. We show that hedge fund and mutual fund returns tend to load negatively on the long-short returns of a comprehensive sample of fundamental strategies (i.e., accounting anomalies), suggesting that fund managers are prone to trade in the opposite direction of what fundamental strategies prescribe. The negative loadings are primarily driven by the short-leg of the anomalies, m…

The truth you can't deal with is not my problem

EFMA%202021_stage-2049_question-Full%20Paper_id-344.pdf

Not only do institutional investors not engage in so-called “arbitrage”. They even increase “mispricing” and increase the market failure, just not as much as retail investors do. It's not “smart money vs. dumb money”, it's “dumb money and dumber money”.

AC21P3080_Taking-Sides-on-Return-Predictability.pdf

Trading basically means pricing by the investors, of the investors and for the investors. But investors are re...uninformed and unsophisticated.

Firms and short sellers tend to be the smart money—both sell stocks with low expected returns, and their trades predict returns in the intended direction. Firms, however, also seem to possess private information, while short sellers do not. Retail investors buy (sell) stocks with low (high) expected returns and their trades predict returns opposite to the intended direction. All 6 types of institutional investors are weighted towards stocks with low expected returns, but none of their trades robustly predict returns.

Only the short-sellers as a whole are the smart people in the room.

[taowave]

Hi there,Long time derivatives trader and am curious to hear more about your thoughts on hedging thru derivatives as opposed to hard stops.Are you talking collars,ATM puts,OTM on the individual names or hedging with Index Vol and hoping correlation holds up.

[ZGWZ]

Long volatility or short index future

@taowave

collars,ATM puts,OTM on the individual names

Anything other than diversified mid-term (1 month - 2 month) ATM options are stupid plays unless you are the market makers

Collars, butterfly or any other dumb names are just ways to donate more money to the market maker via gamblings and make you think you are smart (no), not "strategy" in any meaning at all.

[hemmerling]

Any update on the experience of managing a fund? Any surprises or pretty much like running your previous investments but on a larger scale?

[yuvaltaylor]

The launch of the fund was a great success in one respect: I was able to grow my fund's AUM to about $14M in a very short time. This has really lowered our expenses, as many of them are fixed. But running the fund has also been challenging on a number of fronts.

a) Legal. We had a disagreement with our legal team over compliance with ERISA regulations and had to change lawyers. This was very expensive. We also had to switch brokers at the last minute, which was unpleasant, though it turned out not to cost anything and had a positive outcome.

b) Market environment. Prior to 2024, in my eight years of investing the only year I lagged the market was in 2019. This year has been very similar in many respects, and once again I've lagged the market.

c) Hedging and diversification. In order to provide smooth returns I've hedged my long equity positions with puts on US stocks that I considered likely to collapse. This hedge has been bleeding money like crazy, because the market has been favoring risky stocks. I also devoted a great deal of my portfolio to European and Canadian stocks, and those have not done nearly as well as my US holdings, and are very expensive to trade. On top of that, I failed to hedge my currency risk, and the dollar has outperformed European and Canadian currencies by leaps and bounds.

d) Learning curve. Getting the right mix of leverage, hedge, and foreign exposure was something I should have planned better. I should have planned to hedge my currency exposure from the get-go too. I've solved the former and am working on the latter.

e) Transaction costs. I knew there would be substantial commissions and market impact, but those have had a stronger impact than I expected as each time I corrected course it has cost me.

f) Psychological impact. Losing your own money is a little tough. Losing other people's money, especially those who have placed their confidence in you, is much tougher.

On the whole, this has not been a wonderful experience. I do think it'll be far smoother sailing in 2025, and I am quite confident that if the market takes a downturn, my fund will outperform. I have learned a huge amount in a short time, and the people I've dealt with, particularly at my broker, StoneX, have been wonderful. I've also built an excellent relationship with my partner/COO. I've heard from others that launching a fund is always roughest at the beginning. It certainly was for me.