Commodity Futures

  1. Trading Mechanism

Long position:
Commits to purchasing the commodity on the delivery date

Short Position:
Commits to delivering the commodity on the delivery date

A contract is never really bought or sold like a stock or bond; it is enterred into by mutual aggrement. At the time the contract is enterred into, no money changes hands.

The clearing house functions as the trader counter-party.

U.S. Security Market Trading Note

  1. Tick
    The minimum price change that can be placed in order. (A tick is a measure of the minimum upward or downward movement in the price of a security)

Uptick: A transaction that occurs at a higher price than the previous transaction
Downtick: A transaction that occurs at a lower price than the previous transaction
Uptick Volume: Uptick volume refers to the volume of shares traded while a stock price is rising.

  1. Uptick Rule
    Securities and Exchange Act of 1934, Rule 10a-1. A short sell order should be placed at a higher price than the previous trade in the market.

  2. SEC Alternative Uptick Rule (Rule 201)
    When the price of a security drop more than 10% in a day, short selling is only allowed when the price of the order is higher than the current best bid.

  3. SIC
    Industry Classification Code

TLRY Research Notes

  1. Terminology and History

Hemp: A plant that is grown specifically for the industrial use of its derived product.

Cannabis: A general name for cannabis plant and related products. Male and female cannabis plant, industrial use cannabis and drug/narcotics cannabis.

THC: The principle chemical component in drug use cannabis.

CBD: The second most abundant cannabinoid in cannabis

Marijuana: A custom name for both medical and drug use cannabis, origined from South America.

Compassionate Access: Potential patient benefit justifies the potential risks of treatment, like using drugs that have not passed the clincal trial; drug used for pain release purposes.

  1. Geographical Distribution of Revenue
    Six months ended June 30, 2018, 97% of Revenue were generated in Canada. 3% of Revenue were generated outside Canada. The company has 15% fixed assets located outside Canada and expects the overseas revenue to catch up.

  2. Growth of Expenses
    The growth rate of S&M expenses and G&A expenses far exceeds the revenue growth. The profitability of the business is questionable if these expenses cannot be properly optimized.

M&A Deal Notes

UQM

$ 1.71 acquiztion proposal, as of June 28, 2019, market price $ 1.65

Merger Disclosure

5% beneficial ownership rule: Schedule 13D reports
FORM 13H (Large trader reporting rule)

Tender Offer: Schedule TO
Target Company Response: Schedule 14D-9

Tender Offer
A tender offer is a broad solicitation by a company or a third party to purchase a substantial percentage of a company’s Section 12 registered equity shares or units for a limited period of time. The offer is at a fixed price, usually at a premium over the current market price, and is customarily contingent on shareholders tendering a fixed number of their shares or units. Under the Securities Exchange Act of 1934, parties who will own more than five percent of a class of the company’s securities after making a tender offer for securities registered under the Exchange Act must file a Schedule TO with the SEC. The SEC also requires any person acquiring more than five percent of a voting class of a company’s Section 12 registered equity securities directly or by tender offer to file a Schedule 13D.

The filings required by Section 14(d) of the Exchange Act and Regulation 14D provide information to the public about persons other than the company who make a tender offer. The company that is the subject of the takeover must file with the SEC its response to the tender offer on Schedule 14D-9. The rules also set time limits for the tender offer and provide other protections to shareholders. When a public company makes a tender offer for a class of its own equity securities, it similarly must file a Schedule TO and may also need to file a Schedule 13E-3.

Except for the anti-fraud and a few other provisions of Regulation 14E, the SEC’s tender offer rules generally do not apply to tender offers that result in ownership of five percent or less of the outstanding shares —also known as "mini-tender offers." You can learn more about the risks of mini-tender offers by reading our information on that topic.

A Summary of My Short Strategy

Questions to be answered ?

  1. Is the downward momentum in prive movement exploitable in general, if not, what is the scope ?
  2. Is exploiting downward momentum in conflict with value investing ?
  3. What's the fundamental difference between upward momentum and downward momentum ?
  4. What is the historial performance of trading on tier 1 signal for non-pharmaceutial-non-merger comanyies ?

Shorting Criteria

  1. Price > USD 5
  2. Position Holding Period < 5
  3. If profit for over 15%, close position immediately
  4. Short only when price record meet RS0, RS1, or RS2
  5. No medicial or drug related stocks
  6. Close position when price up by 20% after short selling

My Investment Philosophy

Intransic Value

Intransic value only concerns about the earning power of the business, not including the growth potential. Value investing is about buying at a bargin price (compared to intransic value) with enough margin of safety. Invest in certainty.

Investing in growth potential is speculation and add more factors on top of the intransic value and current price level (bargin or not). More factors, higher uncertainties.

Evaluation of An entities'ability to pay back debt

  1. The ability to service debt interest

EBIT/Interest Payment
Net Cash Inflow/Interest Payment
2. The ability to service debt principle

Net Income/Debt Principle

Maintaining a long-term short position should be avoided.

  1. As long-term short position does not offer possible dividend income and foregone the trend of long-term economic growth, it should be avoided.

Distinction Between Inflationary Debt Cycle and Deflationary Debt Cycle

Inflationary debt cycle and deflationary debt cycle diffes in the deleveraging phase. Inflationary debt cycle refers to a debt cycle with a deleveraging process that is inflationary. Deflationary debt cycle likewise.

做空的理由

做空的理由是股票价格被严重高估(相对于intransic value),而不是股价即将下跌。

Intransic Value

The discount rate of intransic valuation based on future free cash flow should be based on the risk-free interest rate.

About Short Term Prediction

In most times we do not predict the short-term movement of the price of a specific stock, because it is impossible to make it right in a realible way. Not mention the general market. However, in extreme cases, short-term price movement can be attempted, especially when the stock experience a tremendous price jump (50% upward overnight), or extremely good news was released to the market.

Aside of the conditions mentioned above, the return of speculation on short-term movement either by news or price fluctuation depends on the timing of buy/sale and calculated guess.

Short Term Investment

  1. Short-term investment out of margin of safety
    Short-term short sell = Event driven/News driven, it is very unlikely that the price will go upward in short term. = Margin of safety

  2. 利用市场的价格波动性来获利,即择时反向操作,利用价格波动的必然性,无论涨跌,股票价格的上下波动本身是一个恒定不变的模式。 对优质股来说,价格不会剧烈波动,从而保证了利用波动本身获利的交易策略具有一定的风险可控性。 ----> This is not a good strategy since both the timing and the amplitude of price movement cannot be reasonably assured.

Positio Holding Term

  1. Penny Stock (Less Than $5)
    Very High Volatity, low average volume with sudden volume surge, Low Market Cap, Easy to manipulate.
    Holding Period Should Be 1D to 30D

  2. Normal Stock (More Than $15)
    Moderate Volatity, medium average volume, Mid-to-Large Market Cap,
    Wide-spread Shareholders
    Holding Period Should Be 1D to 60D

Short Sell on Penny Stock

It is dangous to short sell penny stock since the potentional loss is huge given that the possible gain is limited (Price cannot fall under 0 dollar while penny stocks are usually around $1). Loss can be tremendous when the price of a penny stock doubled or trippled in short-term, since the price of penny stocks are easy to manipulate (relatively small market cap).

2018年8月随笔

趋势下的个股走势自我强化

AAPL突破一万亿美元市值之前,媒体的大肆宣传,客观上刺激了AAPL的买入需求,强化了市场的看涨预期

巴菲特对投资安全边际的重视

拼多多 – Research Memo

根据招股书,拼多多此次计划发行85,600,000份ADS,代表342,400,000份拼多多A类普通股。在IPO后,黄铮持有全部的拼多多B类普通股,拥有对公司事物约89%的投票权,占有绝对控制地位。

腾讯和红杉资本在IPO中被分别授予7,894,737和7,894,735份拼多多ADS。
招股书正文开头的致股东信似乎由中文翻译而成,信里介绍了拼多多的企业价值和愿景。

Money Supply and Interest Rate

Federal Funds Effective Rate

The weighted average of the negotiated federal fund lending rate among banks.

Federal Funds Target Rate

The target federal funds effective rate set by the Federal Open Market Committee.

GDP平减指数

名义GDP增长量与实质GDP增长量之商