This guest commentary was written by Mike O'Rourke of JonesTrading.
The mania continues.
Fintech microlender LongFin came public last Wednesday through a Reg A+ offering. The shares opened at $6.65 and traded as low as $4.69. Thursday the shares traded around $5.50 on volume of 185,000 shares. On Friday, the company announced the acquisition of “blockchain microlending” company Ziddu.com and traded higher than $26 on 15 million shares. Today it traded as high as $142.82, before settling at $72.38.
Interestingly, Ziddu was founded and owned by LongFin’s CEO Venkat Meenavalli. Ziddu was originally founded as a file sharing site, became a cloud services site and is now a “blockchain empowered solutions provider” in microfinance lending.
At the end of last month, we mentioned that IP Patent company Marathon acquired a Bitcoin miner and biotech company Bioptix changed its name and rebranded itself as Riot Blockchain in October. The changes have done wonders for the company's share prices. The blind greed in the market is throwing capital at any and everything associated with blockchain and cryptocurrencies, creating exit strategies for crafty operators.
The mania is reminiscent of the late 1990s.
Commerce One came public in June of 1999 and its share price reached $1000 by year end on the optimism of Business to Business ecommerce (chart below). The company declared bankruptcy in 2004. In 1995-1996, seafood and meat wholesaler Diana Corp began the transition to telecom and internet company. The company’s share price rose from single digits to over $100 in 6 months. To provide context to the extreme nature of this tape, LongFin has made a larger move in 4 sessions.
Today’s news allows us to come full circle and make sure we capture all elements of recent US asset bubbles. The WSJ reported more banks “are ramping up a business that was popular before the financial crisis—offering investors ways to lever up sometimes illiquid and complex investments to amplify their returns.”
Lastly, the NAHB Housing Market Index has risen to 74, a reading higher than anytime during the housing bubble. That is remarkable considering New Home Sale Median Prices are 25% higher than the bubble peak.
EDITOR'S NOTE
This is a Hedgeye Guest Contributor research note written by Michael O'Rourke, Chief Market Strategist of JonesTrading, where he advises institutional investors on market developments. He publishes "The Closing Print" on a daily basis in which his primary focus is identifying short term catalysts that drive daily trading activity while addressing how they fit into the “big picture.” This piece does not necessarily reflect the opinion of Hedgeye.
