Unlike going long on stocks, shorting stocks (at least by our experience) requires a more technical approach.
When we are long a stock, and it moves against us, the net impact of the name in our portfolio diminishes. For example, a 10% drawdown on a 1% long position leaves the stock at 0.9% (10 basis point loss) of the portfolio, such that another 10% loss only impacts it by an additional nine basis points.
When we go short a stock, our risk is compounded by the fact that the size of the position gets larger when the stock goes against…
ATEC was too myopic.
Whilst we previously believed the main reason for the clampdown on the likes of Ant Financial, DiDi and so on was just to reel them in and force the titans to realign their interests with Beijing, the picture becomes a lot more sinister and worrying if we zoom back.
For there appears to be a larger issue of data security and sovereignty at play. In many ways, this was bound to happen, given the tension that had already been built up since Trump came to power. However, unlike during the trade war of 2018, the implications…
There will be many times in our life as an investment professional when we lose confidence and doubt ourselves. Yup, no bed of roses here.
Perhaps it was due to a bad period of losses. Perhaps it was a difficult market environment such as the one we currently find ourselves in. Whatever the reason, we should expect this will happen often.
In a few of ATEC’s past hedge funds, there was this practice of what was called a ‘Stop Out’ period. Should the trader hit a certain amount of percentage loss on their book, the firm will liquidate the entire…
Asia has broken lower as represented by the APEX50 below, led by the massive liquidation of positions in the Chinese internet names.
ATEC did not profit from the down-move by going short. But we are thankful we heeded the warning signs in the market as published back on 19th July.
As a recap, this is what we saw on 19th July and we think there are lessons here for the future.
After the APEX50 made a low on the 9th of July, it could not make further progress beyond its 20 day moving average (warning 1). Then on 19th July…
Before we embark on this question of how to enter a long trade, ATEC assumes one has already done the necessary fundamental work behind a stock/investment idea one intends to invest in.
Then, it really comes down to style.
How much volatility can you handle? When/how will you know you are right and when/how will you know you are wrong? How much time can you afford whilst waiting for the trade to go your way? What is the time frame you are anticipating for your investment to reflect your anticipated thesis?
Having a sense at least, of how you might…
On 21st July, it was reported in Bloomberg that Beijing will release another 30,000 tonnes of Copper from its reserves on the 29th July.
This is an increase of 10,000 tonnes from what they sold back in early July. What did copper prices do? It was up slightly.
ATEC thinks it might be telling us something about the underlying demand.
ATEC has previously talked about the secular view around EV and hence views the recent pullback in BYD with interest.
While still preliminary, the stock appears to find some support around here, with its technical indicators showing less downside pressure.
If the stock is ready to rally, we should ideally see a pick-up in volume, married with a more decisive turn in both its MACD and RSI. Taking out its recent congestion area at 235/6 could be a trigger level.
Let's stay alert.
Asia started this week once again on a weak tone.
Large-cap sectors like the Internets, Semiconductors and even the Commodities sector continue failing to show leadership. We now also have the added burden of tired-looking U.S. indices.
Looking at the MSCI Apex50 index, the inability to follow through as it hit the 20/50/200 day moving averages, coupled with the inability of the technical indicators to show strength, suggests there is now a heightened chance we might re-visit or even break the 9th July low.
ATEC is once again back to humbly keeping a low exposure, and waiting for further signs of selling exhaustion in the days ahead.
ATEC has often been asked in the past by clients and bosses alike: “in which trades lie your greatest conviction?”
It was always an exercise in academia, in that we would have our analysts prepare a spreadsheet ranking the different bets by upside targets (or downside) potential. Then the story-telling ensues.
Truth be told, based on ATEC’s recollection, perhaps less than some 30% of those predicted targets ever came through. When we think about it, this happens for a very simple reason — that life (or sh*t) happens.
As an extreme, let us use Gamestop as an example. Every one…
On 9th July, the Biden Administration signed an Executive Order initiating anti-competitive investigations into a whole host of industries. Amongst them, Container Shipping was cited.
The details went on to say that the rates being charged to American exporters are considered exorbitant and expressed concerns that with the industry being consolidated, there was rising concern that exporters are increasingly at the mercy of these shipping companies.
While the investigation is still preliminary, ATEC thinks it could dent sentiment around the sector from here in the months ahead and could turn shipping companies cautious about trying to increase freight rates any further from here, even as we approach the supposed peak season.
ATEC is short tactically on Cosco Shipping with a target of around HK$11.00 for now. We set cutloss at HK$14.50.
Read the original Container Shipping note here.