"There is a better way to do it. Find it.”
–Thomas Edison
It’s "Macro Themes" day here at Hedgeye. The smell of alpha is in the air. Keith and the team will be hitting on the key Themes at 11:00am ET as we analyze the trending data for 1Q 2022.
Those themes are titled:
- #Quad1 or Narrow #Quad4 in Q1?
- #Peak Inflation
- Long EM #Reiterated
As a longstanding analyst on the Hedgeye Retail team, I tune in attentively to each Macro Themes call for a couple reasons. One is to understand the rate of change of macro and consumer data and the Quad outlook to highlight any important changes to our Retail Institutional and Retail Pro subscribers.
The other is to think critically about my own portfolio and how I might want to adjust capital allocation across any and all assets based on the changing macro environment.
It’s probably the best data driven presentation for perhaps the best risk managing of your net worth out there. For access email .
I found Hedgeye circa 2010. I was in the early years of a prior career as a golf club pro and had recently started investing and trading stocks.
My interest in the stock market was spurred by a middle school team trading game we did in 1998 along with follow up conversations with my father. However, it wasn’t until 2009 after starting work post undergrad that I actually had any money to invest.
Coming from a family of engineers, the Edison quote above tends to describe how I tackle any job, hobby, activity I do. I started exploring the various information sources on investing.
If you are reading the Hedgeye "Early Look," you’ve likely done this process yourself, and rather quickly you uncover the wide spectrum of quality and insight at all “levels” of the investing realm. It’s not unlike what I uncovered in searching insights on the golf swing over the decade prior.
Much of the golf instruction content out there is just fluff and many of the “top” teachers are simply the best self-promoters or salespeople. It wasn’t until I worked alongside some great teachers that had established a clear process for helping players get better at the game that I could see the difference between the hot air and the valuable insight.
Fortunately for me I found Hedgeye relatively early in my investment journey, a side benefit of working in high-end private golf clubs in Westchester County, NY that are hotbeds for hedge fund specialists. In investment research there is a better way… it’s Hedgeye, and I found it.
Back to the Consumer Grind…
Hedgeye has been disrupting investment research since 2008, but 2021 for me was an awakening year of how much of the old wall and traditional investing is still to be disrupted.
There was of course the GME/AMC retail investor revolution in January, but around that same time I started the deeper dive into blockchain and crypto exploring the impact it has on the consumer economy. The more I learned, the clearer it became that the potential here of shifting power into the hands of consumers and individual investors is immense.
An example is the potential for tokenized securities, where the opportunity to invest on a venture capital basis or public offerings is open equally to all instead reserved or prioritized for large institutions. It’s a market that tZERO (of which OSTK is a majority equity holder) has been pioneering, albeit way too slowly.
To frame up the value of tokenizing the investment process look no further than 2021 consumer IPOs. There was a lot of scrutiny on SPACs in 2021, and I’ll agree that most SPACs (at least in consumer) came with lofty valuations and ridiculous growth targets. Though I’m not sure people are as focused on what I would consider a more broken process in traditional IPOs.
Private equity and venture capital institutions make their investments in the private realm, bankers hype up the investment story to get a high IPO price with stock reserved for large institutions, then the financial media hypes up the stock to the public so the average investor generally doesn’t get to buy until the price is sky high.
For the Chart of the Day let’s take a quick look at the 2021 IPOs in my retail/consumer coverage universe ignoring those that were valued sub ~$500mm:
Only Driven Brands DRVN ended the year above its day 1 trading peak. Meanwhile the S&P made all-time highs all year long.
There are some market dynamics around the Macro environment at play for sure, but how exactly did the market view change so significantly on companies that mostly met or exceeded the numbers laid out in their offering documents? Could it be that bankers are placing overvalued shares with institutions that are just looking for the quick flip to overly excited public investors, and don’t want to be real owners?
I’d say there is a better way, though the establishment that gets all the benefits of the status quo will work hard to keep the people from finding that better way. You are starting to see more direct listings which is perhaps a sign that others also take issue with the old IPO process.
As technology continues forward, if the industry incumbents don’t evolve rapidly with a better solution, innovations like blockchain will disrupt the status quo and find a way to give power to individual investors.
Putting research power into the hands of individual investors has been a goal of Hedgeye since its founding. We think we’ve made strides in doing that while disrupting Old Wall research and Old Wall media. Still, we at Hedgeye continue to look for a better way with much more disrupting to come.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.40-1.68% (bullish)
UST 2yr Yield 0.67-0.79% (bullish)
SPX 4 (bullish)
NASDAQ 15,403-15,966 (bullish)
RUT 2 (bullish)
Tech (XLK) 170.11-178.01 (bullish)
Consumer Discretionary (XLY) 198-212 (bullish)
Housing (ITB) 77.60-84.02 (bullish)
REITS (XLRE) 49.61-52.33 (bullish)
Shanghai Comp 3 (bullish)
Nikkei 28,305-29,396 (bullish)
DAX 15,438-16,341 (bullish)
VIX 15.26-19.28 (bearish)
USD 95.6--96.49 (bullish)
EUR/USD 1.127-1.138 (bearish)
USD/YEN 113.91-116.24 (bullish)
GBP/USD 1.329-1.360 (bullish)
CAD/USD 0.773-0.792 (bearish)
USD/CHF 0.910-0.921 (bearish)
Oil (WTI) 72.03-78.47 (bullish)
Nat Gas 3.50-4.08 (bearish)
Gold 1 (bullish)
Copper 4.33-4.50 (bullish)
MSFT 326-347 (bullish)
AAPL 174-184 (bullish)
AMZN 3 (neutral)
FB 328-350 (bullish)
GOOGL 2 (bullish)
NFLX 588-622 (bearish)
TSLA 1022-1197 (bullish)
Bitcoin 45,616-51,108 (bearish)
Keep your eye on the ball, and finish balanced.
Jeremy McLean
