The Nasdaq stock exchange, the second-largest exchange in the world, wants to impose a quota system on corporate boards of companies that list on the NASDAQ. Nasdaq is serious…and specific. The new rule would require boards to have a minimum of one woman director and one minority or LGBTQ director. Small firms could apparently get by with two women. Do we really want to start affirmative action for American business? One can only hope the entrepreneurs that start businesses choose NYSE or other exchanges to list instead of submitting themselves to NASDAQ’s social mission. Here’s … [Read more...]

As we wrote in this month’s letter to our investment counsel clients, it’s been an unusual year. Renaissance Technologies and Two Sigma Advisers, two successful quantitative hedge fund managers would agree. Renaissance is one of the most successful hedge funds in the world. Renaissance's equities fund is down 20% YTD and Two Sigma’s funds are down 11%, 23%, and 2% as of the end of last month. What’s the takeaway? All investment strategies go through rough periods. If the strategy is fundamentally and logically sound, staying the course is the proper action to take. Bloomberg … [Read more...]

Marketwatch reports here that the Dow just completed its fastest bear market recovery in 30 years. It takes an average of 1,483 trading days for the Dow to hit a new all-time high after suffering a bear market. This time it took only 193 trading days. Trillions of dollars worth of fiscal stimulus and a monetary stimulus program that crossed multiple redlines helped quicken the recovery. Pro-growth regulatory policy was also a likely contributor. The truth is, investors who took on too much risk lucked out in this bear market. Prolonged bear markets are the most destructive variety. Next … [Read more...]

Ortenca Aliaj reports on Carson Block's harsh assessment of SPACs in the Financial Times, writing: Muddy Waters, the US short seller run by Carson Block, has launched a scathing attack on 2020’s hottest investment phenomenon, the special purpose acquisition company, and revealed it is betting against a company brought to market by former Citigroup dealmaker Michael Klein. In a report published on Wednesday, Muddy Waters said it had taken a short position in MultiPlan, a healthcare company that went public in an $11bn deal with one of Mr Klein’s acquisition vehicles earlier this year. Mr … [Read more...]

Barron's reports that McDonald's announcement of an initiative to create a plant-based "alternative-meat" burger has crippled Beyond Meat's stock price. Beyond Meat Stock Tumbles 20% Over Past Two Days The stock first dropped after McDonald’s (MCD) announced that it was getting into the alternative-meat game. The McPlant line of meat alternatives will launch next year, starting with a plant-based burger. Next came Beyond Meat’s third-quarter results on Monday evening. The company missed Wall Street estimates by a mile. Sales were almost a third below consensus, and Beyond Meat lost … [Read more...]

Despite strong results, big tech companies are under pressure. Dan Gallagher reports for The Wall Street Journal: Having a low bar helps; Alphabet’s shares have risen only 16% year to date compared with the average 56% gain by Apple, Amazon and Facebook. The company also saw a sharp bounceback for its core Google advertising business, which reported its first-ever decline in the second quarter. It also announced plans to turn its Google Cloud business into a separate reporting segment starting with its fourth-quarter report. Amazon’s share price surged 118% in 2015 when the e-commerce giant … [Read more...]

Special-purpose acquisition companies (SPACS), also known as blank check firms, have become a bit of a fad lately. The excitement around SPACS has drawn the attention of the SEC, which is giving them some new scrutiny. Dave Michaels and Alexander Osipovich report for The Wall Street Journal: Blank-check companies that have raised tens of billions of dollars to acquire hot startups are under the microscope at the Securities and Exchange Commission. Such companies, also called special-purpose acquisition companies, or SPACs, are shell-like entities that go public in order to raise cash for … [Read more...]

There are perhaps fewer things in investing more terrifying than retail investors armed with derivatives. It's like giving a monkey a shotgun in a crowded room. The influx of retail investors into the market at the onset of COVID-19 shutdowns has added an unpredictable element to the market. An abundance of naked call buying has unbalanced things, and could lead to trouble. The Economist explains: Who bears most responsibility for the volatility? First, small-trader flow is much larger in size, although it was likely dispersed among more listed companies. Second, and more importantly, … [Read more...]