Tag: Investing

Where are China bulls?

David Tepper was a prominent China bull in 2024.

What happened afterwards? Seem that he has been selling continuously and has mostly exited. His recent add in Baidu is still smaller than his other China sales.

 

Ray Dalio / Bridgewater similar, even faster exit.

Position 4Q24 shares 1Q25 shares 2Q25 Latest 2Q26
BABA 0.255m 5.660m 0 0
PDD 1.247m 1.743m 0 0
BIDU ~0.197m 2.076m 0 0
JD 0 2.787m 0 0
FXI 1.082m 0.691m 0 0
KWEB no meaningful disclosed position — — —

Source: ChatGPT

Li Lu / Himalaya is more of a long term investor. He recently added PDD and TME.

 

Interesting levels

Security Apr. 30 close Recent bottom close Bottom vs. Apr. 30 Intraday trough vs. Apr. 30
SK Hynix (000660) ₩1.286m ₩1.322m on Jul. 30 +2.8% −3.1% at ₩1.246m on Jul. 29
QQQ $667.74 $661.73 on Jul. 29 −0.9% −1.0% at $661.14
SOXX $461.44 $465.00 on Jul. 29 +0.8% +0.6% at $464.08
SMH $506.72 $504.22 on Jul. 29 −0.5% −0.6% at $503.63

These names bottomed at end of Apr levels.

From capex to backlog

For the past few quarter, capex figures and related comments from hyperscalers are the key metrics to watch, especially for gauging future demand for semiconductor companies.

The higher the capex number, the higher the revenue estimates.

This worked but became less useful lately.

Investors don’t like it if only the capex is growing, which pushes hyperscalers free cash flows to negative territory.

Investors want to see higher demand signal, which can justify these higher capex numbers.

Thus, backlogs or RPOs (emaining performance obligations) are more important now.

 

Quarter AWS backlog Microsoft commercial RPO Google Cloud backlog Oracle total RPO
1Q25 189 315 90 130
2Q25 195 368 106 138
3Q25 200 392 155 455
4Q25 244 625 240 523
1Q26 364 627 462 553
2Q26 496 678 514 638

Another thing to watch is the weighted-average backlog duration of these backlogs – within how many years will backlog become revenue?

Microsoft explicitly commented about 2.3 years.

RPO, including OpenAI, has a weighted average duration of 2.3 years. And roughly 30% will be recognized in revenue in the next 12 months, up 37% year-over-year. The remaining portion recognized beyond the next 12 months increased 112%.

– MSFT FY4q26 earnings call

In addition, utilization is also an indicator.

Amazon said “lion’s share” of AWS compute capacity for 2027 had ⁠already been reserved during 2q26 earning call, which is very good to hear.

The World Cup curse

A widely cited study covering World Cups from 1950–2006 found that the U.S. market lost an average 2.58% during the tournament’s defined “effect period,” versus an average gain of 1.21% over comparable-length periods outside World Cups.

The 2022 Crash: During the 2022 Qatar World Cup, the global stock market fell by 4.6% and the S&P 500 dropped by 5.4%.

Why might it happen?

1. Losses hurt more than victories help.
Fans become significantly more pessimistic after elimination, but investors do not become equivalently optimistic after an ordinary victory. During the knockout stage, every match creates one disappointed country, so the negative mood effects may accumulate globally.

2. Investors are distracted.
When a national team is playing, investors watch football instead of markets. Research covering 15 countries during the 2010 and 2014 World Cups found that trading volume could fall by as much as 48% during national-team matches. Domestic markets also temporarily reacted less to global-market news.

The current 2026 World Cup looks fine so far, although Nasdaq is weak in recent days.

The weakness started when US restarted strike on Iran over the Jul 11-12 weekend, after US team’s exit on Jul 6 (defeated by Belgium).

 

Index June 10 July 17 World Cup return
S&P 500 7,266.99 7,457.69 +2.62%
Dow Jones 49,918.78 52,146.42 +4.46%
Nasdaq Composite 25,169.50 25,520.24 +1.39%
Russell 2000 2,835.46 2,962.22 +4.47%

 

China’s Jim Cramer?

This Weibo guy, called Feng Ge (Brother Feng), said on July 8 that he can’t withstand the loss and cut positions (in tech mainly).

The next day July 9 stock market came back strong.

On the very strong July 9, he said he bought back (fully invested).

Then on Jul 10 stock market was in a bloodbath.

After Jul 10 close, he said he wouldn’t quit this time – tech is the future and will rise again.

On July 15, he commented that innovative drugs is interesting, which marked the end of a few weeks rally of HK biotech/healthcare stock.

On Jul 16, he commented that “tech has bottomed” / “correction is done”, which is actually the peak of the day.

China’s retail investors have found their Jim Cramer.

 

Opportunity cost vs sunken cost

Interesting that retail investors care much more about sunken cost than opportunity cost.

For one thing, sunken cost can be easily measured – how much you bought and how much is the unrealized p/l.

Opportunity cost is harder to measure, as you need to constantly have a view on various things.

Perhaps money market fund rate is the most obvious opportunity cost rather than S&P 500, although I believe the latter is more important.

However easiness to measure shouldn’t matter.

As I think sunken cost can be ignored while opportunity cost should be the only thing that matters.

Except that you think you are playing poker with multi round game theory – easy to fold makes you more likely to be bluffed in future.

SK Hynix 2q investment profit is more than 1q operating profit

For 1q26, SK Hynix posted ₩51.6 trillion won profit before tax.

Among that ₩51.6tn, ₩37.6tn is operating profit and ₩9.88tn is investment valuation gain, mostly related to Kioxia.

SK hynix owns convertible bonds that can be converted into substantially all the voting rights of BCPE Pangea Cayman2, and that vehicle holds the 77.4 million Kioxia shares, which is about 14% of Kioxia.

Kioxia’s closing share price was ¥19,080 on March 31, 2026 and Kioxia closed at ¥89,680 on June 30.

77.4m×(¥89,680-¥19,080)×₩9.5194=₩52tn​

52 trillion won of Kioxia investment paper gain in a quarter.

The Kioxia investment gain alone is more than 1q26 operating profit of ₩37.6tn.

While Bain Capital needs to sell as a PE fund, SK Hynix can hold much longer.

Which Buffett stock performed well during doc-com bubble?

1/ Washington Post

In 2000, the company spent about $125 million developing Kaplan, online education and Washingtonpost.com.

Kaplan became a success.

Kaplan revenue grew roughly 76% in two years, while it swung from a meaningful loss to profitability. Test preparation benefited as the weak job market sent more people back to graduate school, while Kaplan Higher Education produced record enrollment, revenue and operating income.

 

2/ H&R Block

Core tax business is a recurring, mostly cash-paid service that was largely insensitive to technology spending or stock-market valuations.

H&R Block owned Option One, a large non-prime mortgage originator. As the Federal Reserve cut rates following the dot-com collapse, refinancing activity surged. << an early subprime-housing trade

 

3/ Wells Fargo

Wells Fargo surged in 2000 as money rotated away from expensive technology stocks toward reasonably valued, profitable financial companies. Even after its 20% decline in 2001, an investor entering at the end of 1999 still made roughly 24% through 2002, versus a 38% loss for the S&P 500.

Its underlying banking businesses also remained healthy: Wells Fargo reported growing net interest income and improving earnings in parts of its business during 2002.

US hyperscalers drawdown from peak

 

Company Peak close Subsequent bottom close Peak-to-bottom drawdown
Oracle (ORCL) $328.33 — Sep. 10, 2025 $140.27 — Jul. 2, 2026 −57.3%
Microsoft (MSFT) $542.07 — Oct. 28, 2025 $352.83 — Jun. 25, 2026 −34.9%
Meta (META) $790.00 — Aug. 12, 2025 $525.72 — Mar. 27, 2026 −33.5%
Amazon (AMZN) $274.99 — May 6, 2026 $227.01 — Jun. 25, 2026 −17.4%
Alphabet (GOOGL) $402.62 — May 13, 2026 $337.39 — Jun. 26, 2026 −16.2%

Technically meta was not a hyperscaler.

FCF turning negative and shifting to memory makers is the biggest concern.