Hey Jake. I enjoy your content. Thank you. How would you square MOB being your top favourite idea for Q2 vs. MOB being way down in terms of position size going into Q2?
I understand you don't get that fortress balance sheet protection a la CRON or ROIV (e.g.) and that this is still a speculative, biopharma, name.
But the upside is commensurately huge and the max you can loose is 100%. so maybe worth a bigger swing? Do you think CPH a better way to play the MOB story as you have more ways to win?
It's ultimately just a product already having capital committed to pre-existing position that I still like and don't want to incur tax drag on. If i were building a portfolio from scratch or had more cash today, I would definitely have MOB as a top 5 position in terms of sizing. It's also the first thing I will buy with the next material inflow of cash I'll receive provided the share price has not run up too far. I'll also note that MOB has moved up a few spots in that ranking after the run this week.
Hit send too soon. It is now actually just above SPWH on that list given the major move the last couple days.
And I hear you on the Cipher vs. MOB thing. But I do think we need to remember that there is always a chance MOB-015 runs into issues during the P3 trials. I think that is highly unlikely to be clear, but I've seen plenty of high probability biotech trials run into unexpected issues. Of course, so much of the upside with MOB is them retaining the US rights -- so if that opportunity is closed off or even delayed, that obviously becomes an issue. On the other hand, we are still barely paying above fair value for Cipher's core business + cash here, though Cipher has its own risk now with respect to the impending M&A deal - that could either add a lot more potential upside or be a disaster (though I'm optimistic it will be the former). In short, the R/R is great on both names still in my opinion, though I agree the upside is much larger with Moberg here, even after the run.
I'm a big believer in letting a portfolio "concentrate itself". Two related reasons: 1) historically I've done more harm than good selling my winners to reallocate the capital and 2) I live in NYC which make the tax burden quite onerous, particularly short-term capital gains, and I'm fairly young, so my tax exempt accounts are unfortunately very small relative to my taxable ones.
Likely finished accumulating my position in spwh, average of $3.04. Fingers crossed earnings is a beat. Anything better than -0.20c would be incredible with all the discounting. Looking for that debt level to be under 135million.. lets see
Thee key items IMO: 1) Revolver down to $135; 2) inventory balance down materially (that's obviously the key to #1) and; 3) SG&A as % Sales to normalized levels. Gross margins are obviously going to be in the toilet, but that's perfectly fine and priced in.
Hey Dave - below is what I wrote in the chat. I expected these chats to work a bit differently, so I'll make sure these get uploaded as posts moving forward:
Moving on. Instil Bio, the deep-value net-net I wrote about in January, dropped its 10k yesterday without notice. The liquidation math looks effectively unchanged, with shares trading at nearly a 65% discount to NAV if you buy their reported real estate valuation (I don't) or closer to a 55% discount if you assume the real estate equity is a doughnut. Unfortunately, I didn't love the language in the press release, which noted the company is looking at exploring opportunities to acquire new candidates. I was hoping we would have a strategic review announcement by now, but this language makes me skeptical that they are ready to throw in the towel. I've been thinking through what I want to do here this morning: on one hand, the discount to NAV is just enormous, the founder/CEO owns 30% of the shares, and they have done a really impressive job of cost control and preserving cash; on the other hand, the CEO does not have a good track record of capital allocation and I do not like the idea at all of him looking for reasons to spend the cash balance, and they have still not found a lessee or buyer for the real estate. Ultimately, given the opportunity cost (I would love to own more CRON and OGI), I am going to close this out as an idea for less than a 1% loss. That said, I am going to keep an eye on how things progress and would consider reentering upon a strategic review announcement.
In the air now. Thanks very much. By the way, just so you have it: BML Partners filed a +5% interest in TIL today and their MO is to get involved in busted biotechs undergoing strategic reviews. That's certainly a piece of evidence that favors my initial thesis, but I'm still skeptical given the CEO's control. https://x.com/Lord_of_Biotech/status/1775519074027483308?s=20
It's a really frustrating situation. Just so much free money there, but a huge question mark whether there's any hope of getting it out given the control.
Hey Jake. I enjoy your content. Thank you. How would you square MOB being your top favourite idea for Q2 vs. MOB being way down in terms of position size going into Q2?
I understand you don't get that fortress balance sheet protection a la CRON or ROIV (e.g.) and that this is still a speculative, biopharma, name.
But the upside is commensurately huge and the max you can loose is 100%. so maybe worth a bigger swing? Do you think CPH a better way to play the MOB story as you have more ways to win?
It's ultimately just a product already having capital committed to pre-existing position that I still like and don't want to incur tax drag on. If i were building a portfolio from scratch or had more cash today, I would definitely have MOB as a top 5 position in terms of sizing. It's also the first thing I will buy with the next material inflow of cash I'll receive provided the share price has not run up too far. I'll also note that MOB has moved up a few spots in that ranking after the run this week.
Hit send too soon. It is now actually just above SPWH on that list given the major move the last couple days.
And I hear you on the Cipher vs. MOB thing. But I do think we need to remember that there is always a chance MOB-015 runs into issues during the P3 trials. I think that is highly unlikely to be clear, but I've seen plenty of high probability biotech trials run into unexpected issues. Of course, so much of the upside with MOB is them retaining the US rights -- so if that opportunity is closed off or even delayed, that obviously becomes an issue. On the other hand, we are still barely paying above fair value for Cipher's core business + cash here, though Cipher has its own risk now with respect to the impending M&A deal - that could either add a lot more potential upside or be a disaster (though I'm optimistic it will be the former). In short, the R/R is great on both names still in my opinion, though I agree the upside is much larger with Moberg here, even after the run.
I'm a big believer in letting a portfolio "concentrate itself". Two related reasons: 1) historically I've done more harm than good selling my winners to reallocate the capital and 2) I live in NYC which make the tax burden quite onerous, particularly short-term capital gains, and I'm fairly young, so my tax exempt accounts are unfortunately very small relative to my taxable ones.
Love the thoughts and structure of post. Only suggestion is whether you could include % weighting of holdings in portfolio
100% I'll include next time.
Likely finished accumulating my position in spwh, average of $3.04. Fingers crossed earnings is a beat. Anything better than -0.20c would be incredible with all the discounting. Looking for that debt level to be under 135million.. lets see
Thee key items IMO: 1) Revolver down to $135; 2) inventory balance down materially (that's obviously the key to #1) and; 3) SG&A as % Sales to normalized levels. Gross margins are obviously going to be in the toilet, but that's perfectly fine and priced in.
"Alibaba (BABA) - Jan 25 $75 LEAPS (Why do I do this to myself?)"
I feel you.
Couldn't find the reasons for TIL sale. Thanks.
Hey Dave - below is what I wrote in the chat. I expected these chats to work a bit differently, so I'll make sure these get uploaded as posts moving forward:
Moving on. Instil Bio, the deep-value net-net I wrote about in January, dropped its 10k yesterday without notice. The liquidation math looks effectively unchanged, with shares trading at nearly a 65% discount to NAV if you buy their reported real estate valuation (I don't) or closer to a 55% discount if you assume the real estate equity is a doughnut. Unfortunately, I didn't love the language in the press release, which noted the company is looking at exploring opportunities to acquire new candidates. I was hoping we would have a strategic review announcement by now, but this language makes me skeptical that they are ready to throw in the towel. I've been thinking through what I want to do here this morning: on one hand, the discount to NAV is just enormous, the founder/CEO owns 30% of the shares, and they have done a really impressive job of cost control and preserving cash; on the other hand, the CEO does not have a good track record of capital allocation and I do not like the idea at all of him looking for reasons to spend the cash balance, and they have still not found a lessee or buyer for the real estate. Ultimately, given the opportunity cost (I would love to own more CRON and OGI), I am going to close this out as an idea for less than a 1% loss. That said, I am going to keep an eye on how things progress and would consider reentering upon a strategic review announcement.
thank you. Still delayed? Where are you departing from and heading to? Safe travels.
In the air now. Thanks very much. By the way, just so you have it: BML Partners filed a +5% interest in TIL today and their MO is to get involved in busted biotechs undergoing strategic reviews. That's certainly a piece of evidence that favors my initial thesis, but I'm still skeptical given the CEO's control. https://x.com/Lord_of_Biotech/status/1775519074027483308?s=20
Thank you. Explains the move.
It's a really frustrating situation. Just so much free money there, but a huge question mark whether there's any hope of getting it out given the control.