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Added to $SBM.AX at A$0.75
at this price you are literally just paying for cash + 2.75% NSR on Simberi that management sounds like they want to turn into cash as well
then you get Nova Scotia mining assets for free
significant size of my port now.
A$0.75 Liquid assets
A$0.63 in cash
A$880m in cash (post simberi transaction) - A$61m dividend = A$820m
+
A$0.10-A$0.12 in royalties
~A$150m pv of the 2.75% NSR on simberi
A$970m / 1.3B fd shares = A$0.745
This cash balance acts as fundamental value downside protection and reduces beta to gold prices.
Gold prices are holding up well and have to drop a lot more to cause damage to $SBM.AX valuation
Even at $3,000 gold the PFS headline for 15-mile Hub is C$1,565M NPV5.
A lot of technical support here as well
50SMA at $0.75
200SMA at $0.65
Aug 28: Broke out after annual report
Sep 10: Broke out after announcing sale of Simberi
Both these dates broke out from the daily low of $0.715
Long: Long End Bonds? $ZN
Inflation, growth, and front end rising pushed yields up
But theres a lot of pressure on growth
inflation + rate hikes + slowing AI growth
$CIFR got stopped out at $12.50
Sometimes trades are good process bad outcome and sometimes you are stupid
In hindsight it is much easier to figure out why a trade did/didnβt work.
For me, my takeaway was too much anchoring on my fair value/PT of the business + too bullish on being close to max pain for macro + underestimating AI fears from OpenAI news + too loose/impatient on technical entry
A better entry would have been no entry at all and just waiting.
Waiting for a base to form
Or
waiting for a good breakout & fundamental news flow to relieve macro & AI -> going long after the breakout
I have been getting killed by falling knives this year but you live and you learn
$POCI an overlooked way to play LEO/space theme & its earnings transcript from Q4 is why
$POCI dropped from $4.65 down to $4.10 back up to $4.60 since their Q4 report.
1) Why stock dropped?
Revenue guidance came in flat for FY27 at $30-$33m
why?
Existing LEO customer had launch issues -> slowing launch rates -> lower consumption of $POCI components -> customer tell $POCI to slow production.
management is guiding
Q127 revenues for this customer to be down 40%
further dropping in Q2
but states strong confidence revenues return to normal after launch issues are resolved
annual revenue run rate was $12-$13m before these issues
2) Biggest Takeaway from Q4 transcript
They have received engineering orders from another LEO customer
- state the customer wants to ramp to production within 6-12 months
- expected revenue run rate will be even bigger than the existing LEO programs $13m run rate.
Here's the quote from the earnings call
βThe $50,000 order was an initial engineering order from a U.S. space technology development company developing a new satellite constellation. It was structured on a time and materials basis so that work could begin promptly. Since our announcement, we have received a second order for approximately $50,000 for additional engineering work. The scope of both orders supports design and manufacturing planning and is expected to take a few months. We anticipate follow-on engineering and prototype work to finalize designs and establish production lines. The customer's stated goal is to begin production within approximately 6 to 12 months with a potential significant impact to our fourth fiscal quarter and fiscal 2027. This new customer came to us in part because of our reputation in supplying very precise optomechanical assemblies required for satellite communication systems. While our discussion with this customer started with sub-assemblies similar to what we manufacture for our existing customer, it quickly progressed to include additional higher level assemblies some including electro optics and electronic circuits along with optics and mechanics. These higher level assemblies could allow us to provide more content per unit and take on a broader role in this new customer's system as compared to our existing customers. Based on those discussions, we believe the eventual opportunity could be larger than our existing satellite program, although it is too early to quantify.β
"guess the one thing I could say is that the size of the constellations that we're talking about with this customer are similar or even higher, even larger than the customer that we've been working with. In the end of Q4, we were running at a run rate of, I think, $13 million a year for our existing satellite customer, somewhere around 12, 13 or so. In this other customer, this new customer, we expect the product that we make will be higher on the value chain. Therefore, I would expect it to be higher from that standpoint. Especially since the size of their satellite constellation will be similar or larger than the other. We can really say right now is it will be north of that $13 million we expect. It is difficult to say just how much higher it will be.β
3) My $POCI base PT: $6.50-$7
Assume 9 month until production starts
existing LEO contract ramped to $13m run rate ~2 - 3 years after initial production
= FY29 is when revenues reach that $13m level
FY29 total
revenues: $50m (16.9% implied revenue cagr from existing $31.5m)
- $26m from 2 LEO contracts
- $13m from medical programs (was $10m in 2026)
- $10m from others ($5m from engineering services + $5m from Ross optical)
gross margin: 37%
gross profit: $18.5m
opex: $11m
ebit: $7.5m
Discount Rate: 10%
Implied FY29 ebit multiple: 13x
4) Is 13x ebit fair?
The satellites involved in these LEO programs fall back into orbit after 5 years which means
- revenues are recurring for existing programs
- looking at industry launch growth rates it is not too bullish to assume further programs won and/or ramping of existing programs
I am long $POCI. NFA
Here's a sensitivity table to showcase the impact of
us10y nominal yields + spread
on the valuation of $CIFR
*side note this is specific to my model where every other assumption is held constant so not to say this is bible to how exactly $CIFR share price should move there are many other factors.
this is purely to showcase how a projects cap rate can heavily affect the PV
the companies valuation is essentially a SOTP of each project -> the cashflows from tenants -> discounted back to PV + exit value at a cap rate discounted back to PV
When risk free rate goes up and market is willing to take less risk those cash flows get discounted at a higher rate which leads to such dramatic swings in fair value.
June:
- $CIFR at $30
- US10Y was just 4.3%
- looking at this chart market implied risk premium of 2% = 6.3% cap rate
Oct:
- $CIFR at $14
- US10Y at ~5.28%
- assumes ~3.5% risk premium = 8.78% cap rate
Does AI lab ARR growth fears warrant a increase in risk premium of 1.5% from 2% to 3.5%? maybe?
$CIFR traded as high as $30 in June
What has changed in macro since then?
First, Iran war and its effect on market liquidity and risk appetite of investors first and foremost.
Second, rise in treasury yields.
US10Y is up 100bps since then from ~4.3% to ~5.3%
US10Y reals are up ~75bps from ~2.15% to ~2.9%
This has 2 major impacts on $CIFR price
1. discount rate -> cap rates & NOI multiples
2. higher financing costs
1) Higher Discount Rate -> Cap Rate
In theory, real yields are the accurate base to place a risk premium on to get cap rates as NOI grows at or above inflation.
But CBRE quotes data center projects withgrade A hyperscaler tenants trading at a 100-150bps spread to nominal US10y
June: 10Y 4.3% + 1.5% = 5.8% cap rate or ~17x NOI multiple
Oct: 10Y 5.3% + 1.5% = 6.8% cap rate or ~15x NOI multiple
This exercise shows how $CIFR share price may react based off the rise in US10y yields
2) Higher Financing Costs
The key dynamic here is to watch which holds the upper hand in HPC contracts.
Is AI demand * power scarcity strong enough for $CIFR to convert the increased borrowing costs through to the lease terms?
Keep an eye on yield on cost = NOI per MW / Capex per mW
The 477MW is currently in contract negotiations so that is the next catalyst from their pipeline that will help gain clarity on this.
This gives a long in $CIFR two paths to share appreciation
1) Macro
For $CIFR and other data center longs upward share price movements may come if supply side inflationary pressures relieve long bond yields through a few mechanisms
- increased market liquidity
- increased market risk appetite
- higher fundamental valuations through higher noi multiples & lower financing costs
The interesting thing here though is that long end inflation breakevens remain relatively anchored and real yields have risen a lot reflecting economy growth tolerating higher rates.
So supply side relief may not provid a ton of relief and this may just be the new norm of yields for now.
2) Fundamental Execution mostly in form of pipeline conversion into HPC contracts
*see quoted post
$CIFR traded as high as $30 in June
What has changed in macro since then?
First, Iran war and its effect on market liquidity and risk appetite of investors first and foremost.
Second, rise in treasury yields.
US10Y is up 100bps since then from ~4.3% to ~5.3%
US10Y reals are up ~75bps from ~2.15% to ~2.9%
This has 2 major impacts on $CIFR price
1. discount rate -> cap rates & NOI multiples
2. higher financing costs
1) Higher Discount Rate -> Cap Rate
In theory, real yields are the accurate base to place a risk premium on to get cap rates as NOI grows at or above inflation.
But CBRE quotes data center projects withgrade A hyperscaler tenants trading at a 100-150bps spread to nominal US10y
June: 10Y 4.3% + 1.5% = 5.8% cap rate or ~17x NOI multiple
Oct: 10Y 5.3% + 1.5% = 6.8% cap rate or ~15x NOI multiple
This exercise shows how $CIFR share price may react based off the rise in US10y yields
2) Higher Financing Costs
The key dynamic here is to watch which holds the upper hand in HPC contracts.
Is AI demand * power scarcity strong enough for $CIFR to convert the increased borrowing costs through to the lease terms?
Keep an eye on yield on cost = NOI per MW / Capex per mW
The 477MW is currently in contract negotiations so that is the next catalyst from their pipeline that will help gain clarity on this.
This gives a long in $CIFR two paths to share appreciation
1) Macro
For $CIFR and other data center longs upward share price movements may come if supply side inflationary pressures relieve long bond yields through a few mechanisms
- increased market liquidity
- increased market risk appetite
- higher fundamental valuations through higher noi multiples & lower financing costs
The interesting thing here though is that long end inflation breakevens remain relatively anchored and real yields have risen a lot reflecting economy growth tolerating higher rates.
So supply side relief may not provid a ton of relief and this may just be the new norm of yields for now.
2) Fundamental Execution mostly in form of pipeline conversion into HPC contracts
*see quoted post
$CIFR: What Is the Market Paying For at $13.50, and
What Does my base case of $24.66 Target Need to Be Right?
The question Cipher Digital has two kinds of value:
Signed data center leases, already contracted and financed
A 4.6 GW pipeline of sites that don't yet have tenants
Value the signed business and subtract it from the $13.50 share price.
What's left is what the market is paying for the pipeline.
Then compare that with what the Base case assumes.
Step 1: Value the signed leases
Each site is valued as:
The present value of its contracted NOI through lease end, plus a sale value at lease end (forward NOI Γ· exit cap rate)
Discounted at a rate tied to the tenant's credit: each site's project bond yield + ~1.25%
Black Pearl (AWS, Amazon-guaranteed, to 2041)
Discount rate: 7.4% (project bonds at 6.125%)
PV of NOI: $3.29B
Exit: $463M forward NOI Γ· 6.5% cap = $7.13B, worth $2.44B today
Site value: $5.74B
Barber Lake (Fluidstack to 2036, then a leading AI lab 2036β46)
Discount rate: 8.4% (project bonds at 7.125%; non-investment-grade tenant chain)
PV of NOI: $3.59B
Exit: $527M Γ· 7.25% cap = $7.27B, worth $1.45B today
Site value: $5.04B
Stingray (AWS, Amazon-guaranteed, triple-net, to 2042)
Discount rate: 7.3% (project bonds at 6.0%)
PV of NOI: $1.17B
Exit: $168M Γ· 6.5% cap = $2.59B, worth $0.87B today
Site value: $2.04B
Contracted total
$12.82B, about 17.6x 2028 NOI (a ~5.7% cap rate)
That's in line with long investment-grade net-lease pricing
Less project debt: β$4.54B. Construction is fully funded from cash already set aside.
Contracted equity: $8.28B ($18.11/share)
Step 2: Subtract corporate claims
Cash and bitcoin: +$0.87B
2031 convertible notes: β$1.30B. The capped call removes dilution up to $23.32.
2030 convertible notes, cash-settled: β$0.52B (38.8m shares Γ $13.50)
Other: β$0.03B
Net: β$0.98B (β$2.14/share)
Step 3: Subtract the cost of running the company
What we assume overhead will be:
Today: ~$113M a year of cash G&A and compensation (Q2'26 run-rate)
Stock comp: normalized to ~$80M a year from 2028
Ramp: overhead rises steadily to $254M a year by 2034, as Cipher scales to ~3.1 GW of operating capacity. That's ~6% of 2034 revenue, below Digital Realty's ~9%.
Path: $113M (2026) β $116M (2027) β $136M (2028) β $175M (2030) β $215M (2032) β $254M (2034) β $260M (2035)
After 2034: grows 2.5% a year (terminal growth rate)
How it becomes a present value:
Overhead 2026β35, each year discounted at 9.2%: $1.14B
Overhead after 2035: the 2036 run-rate of $267M Γ· (9.2% β 2.5%) = 14.9x, discounted back from 2035: $1.77B
Cash taxes: $0.53B. That's tax on contracted NOI after overhead, interest and depreciation, low until loss carryforwards are used up.
Less remaining tax loss carryforwards: β$0.18B
Overhead and taxes: β$3.25B (β$7.12/share)
Value of the existing business: $18.11 β $2.14 β $7.12 = $8.85/share ($4.05B)
Step 4: The rest of the price is the pipeline
$13.50 share price β $8.85 existing business
= $4.65/share for the pipeline ($2.13B)
Step 5: How much pipeline does $4.65 buy?
Value created per converted MW (Base economics):
NOI: $1.47M per IT MW (matches Cipher's signed leases) Γ 70.4% IT/gross = $1.04M per gross MW a year
Stabilized value: $1.04M Γ· 7.5% cap rate = $13.85M
Less build cost: $7.75M capex ($11.0M per IT MW) + $0.58M construction interest + $0.12M fees = $8.44M
Value created: $5.40M per MW, a 12.3% return on cost. Peers run ~11β19%.
After tax: ~7.8% goes to income tax (interest and bonus depreciation shelter most of it), leaving ~$4.98M per MW
Turning that into today's value per share:
Discount back to today at 10.7% a year (9.2% WACC + 1.5% development premium) until the site is up and running
Dilution: new shares fund the 5β15% equity share of each build. They're issued at model value growing 9.2% a year (Base ~$25 today), so dilution is small. It mostly comes from the 5% issuance discount and a sliver of 2031 convert dilution.
Start with the most certain sites, and stop when the total reaches $4.65
Energized sites (Odessa, Reveille, Ulysses)
477 MW, already powered, stabilizes 2029
$4.98M Γ 477 MW Γ 0.758 discount factor = $1.80B
After dilution: $3.86/share
Running total: $3.86 of $4.65
Colchis
1,000 MW, stabilizes 2031
$4.98M Γ 1,000 MW Γ 0.618 discount factor = $3.08B
After dilution: $6.60/share for the full 1 GW
To reach $4.65, the market needs $4.65 β $3.86 = $0.79 of Colchis
$0.79 Γ· $6.60 = ~12% of Colchis (~120 MW)
Result
$4.65 buys ~0.6 GW: the energized 477 MW plus ~120 MW of Colchis
That's ~13% of the 4.6 GW pipeline
Nothing is priced in for most of Colchis, Mikeska/McLennan or the speculative sites
Step 6: What the $24.66 Base target needs to be right
Base uses the same economics per MW, but assumes far more converts. The extra $11.16 over $13.50 comes from:
1. The rest of Colchis converts: +$5.81/share
Market: ~120 MW. Base: 1,000 MW (100%).
What has to hold: Colchis signs a lease for its full 1 GW. Its main advantage is that it sits in ERCOT's more favorable base-load interconnection bucket.
2. Mikeska and McLennan half-convert: +$3.30/share
Market: 0 MW. Base: 500 MW (50% of 1 GW), stabilizing 2031.
What has to hold: at least of the total 1GW from these 2 sites gets ERCOT approval and HPC contracts
3. A fifth of the speculative sites convert: +$2.05/share
Market: 0 MW. Base: 420 MW (20% of 2.1 GW), stabilizing 2034.
What has to hold: some later sites, most likely the Barber Lake and Stingray expansions next to existing tenants, sign by the early 2030s.
Total: $13.50 + $5.81 + $3.30 + $2.05 = $24.66
Base needs ~2.4 GW of conversion (52%), against the ~0.6 GW the market implies
The contracted leases also need to be valued on tenant credit: 7.3β8.4% discount rates and 6.5β7.25% exit caps
And Cipher has to be able to raise equity near model value, not at today's discounted price
The takeaway
On credit-based pricing, the signed leases and balance sheet, after the full cost of running the company, support ~$8.85 of the $13.50
That leaves only ~$4.65 for a pipeline my base model values at ~$15.81
Either way, the Base target needs Colchis in full plus ~500 MW from Mikeska/McLennan.
Colchis is the single biggest swing (+$5.81).
$CIFR: What Is the Market Paying For at $13.50, and
What Does my base case of $24.66 Target Need to Be Right?
The question Cipher Digital has two kinds of value:
Signed data center leases, already contracted and financed
A 4.6 GW pipeline of sites that don't yet have tenants
Value the signed business and subtract it from the $13.50 share price.
What's left is what the market is paying for the pipeline.
Then compare that with what the Base case assumes.
Step 1: Value the signed leases
Each site is valued as:
The present value of its contracted NOI through lease end, plus a sale value at lease end (forward NOI Γ· exit cap rate)
Discounted at a rate tied to the tenant's credit: each site's project bond yield + ~1.25%
Black Pearl (AWS, Amazon-guaranteed, to 2041)
Discount rate: 7.4% (project bonds at 6.125%)
PV of NOI: $3.29B
Exit: $463M forward NOI Γ· 6.5% cap = $7.13B, worth $2.44B today
Site value: $5.74B
Barber Lake (Fluidstack to 2036, then a leading AI lab 2036β46)
Discount rate: 8.4% (project bonds at 7.125%; non-investment-grade tenant chain)
PV of NOI: $3.59B
Exit: $527M Γ· 7.25% cap = $7.27B, worth $1.45B today
Site value: $5.04B
Stingray (AWS, Amazon-guaranteed, triple-net, to 2042)
Discount rate: 7.3% (project bonds at 6.0%)
PV of NOI: $1.17B
Exit: $168M Γ· 6.5% cap = $2.59B, worth $0.87B today
Site value: $2.04B
Contracted total
$12.82B, about 17.6x 2028 NOI (a ~5.7% cap rate)
That's in line with long investment-grade net-lease pricing
Less project debt: β$4.54B. Construction is fully funded from cash already set aside.
Contracted equity: $8.28B ($18.11/share)
Step 2: Subtract corporate claims
Cash and bitcoin: +$0.87B
2031 convertible notes: β$1.30B. The capped call removes dilution up to $23.32.
2030 convertible notes, cash-settled: β$0.52B (38.8m shares Γ $13.50)
Other: β$0.03B
Net: β$0.98B (β$2.14/share)
Step 3: Subtract the cost of running the company
What we assume overhead will be:
Today: ~$113M a year of cash G&A and compensation (Q2'26 run-rate)
Stock comp: normalized to ~$80M a year from 2028
Ramp: overhead rises steadily to $254M a year by 2034, as Cipher scales to ~3.1 GW of operating capacity. That's ~6% of 2034 revenue, below Digital Realty's ~9%.
Path: $113M (2026) β $116M (2027) β $136M (2028) β $175M (2030) β $215M (2032) β $254M (2034) β $260M (2035)
After 2034: grows 2.5% a year (terminal growth rate)
How it becomes a present value:
Overhead 2026β35, each year discounted at 9.2%: $1.14B
Overhead after 2035: the 2036 run-rate of $267M Γ· (9.2% β 2.5%) = 14.9x, discounted back from 2035: $1.77B
Cash taxes: $0.53B. That's tax on contracted NOI after overhead, interest and depreciation, low until loss carryforwards are used up.
Less remaining tax loss carryforwards: β$0.18B
Overhead and taxes: β$3.25B (β$7.12/share)
Value of the existing business: $18.11 β $2.14 β $7.12 = $8.85/share ($4.05B)
Step 4: The rest of the price is the pipeline
$13.50 share price β $8.85 existing business
= $4.65/share for the pipeline ($2.13B)
Step 5: How much pipeline does $4.65 buy?
Value created per converted MW (Base economics):
NOI: $1.47M per IT MW (matches Cipher's signed leases) Γ 70.4% IT/gross = $1.04M per gross MW a year
Stabilized value: $1.04M Γ· 7.5% cap rate = $13.85M
Less build cost: $7.75M capex ($11.0M per IT MW) + $0.58M construction interest + $0.12M fees = $8.44M
Value created: $5.40M per MW, a 12.3% return on cost. Peers run ~11β19%.
After tax: ~7.8% goes to income tax (interest and bonus depreciation shelter most of it), leaving ~$4.98M per MW
Turning that into today's value per share:
Discount back to today at 10.7% a year (9.2% WACC + 1.5% development premium) until the site is up and running
Dilution: new shares fund the 5β15% equity share of each build. They're issued at model value growing 9.2% a year (Base ~$25 today), so dilution is small. It mostly comes from the 5% issuance discount and a sliver of 2031 convert dilution.
Start with the most certain sites, and stop when the total reaches $4.65
Energized sites (Odessa, Reveille, Ulysses)
477 MW, already powered, stabilizes 2029
$4.98M Γ 477 MW Γ 0.758 discount factor = $1.80B
After dilution: $3.86/share
Running total: $3.86 of $4.65
Colchis
1,000 MW, stabilizes 2031
$4.98M Γ 1,000 MW Γ 0.618 discount factor = $3.08B
After dilution: $6.60/share for the full 1 GW
To reach $4.65, the market needs $4.65 β $3.86 = $0.79 of Colchis
$0.79 Γ· $6.60 = ~12% of Colchis (~120 MW)
Result
$4.65 buys ~0.6 GW: the energized 477 MW plus ~120 MW of Colchis
That's ~13% of the 4.6 GW pipeline
Nothing is priced in for most of Colchis, Mikeska/McLennan or the speculative sites
Step 6: What the $24.66 Base target needs to be right
Base uses the same economics per MW, but assumes far more converts. The extra $11.16 over $13.50 comes from:
1. The rest of Colchis converts: +$5.81/share
Market: ~120 MW. Base: 1,000 MW (100%).
What has to hold: Colchis signs a lease for its full 1 GW. Its main advantage is that it sits in ERCOT's more favorable base-load interconnection bucket.
2. Mikeska and McLennan half-convert: +$3.30/share
Market: 0 MW. Base: 500 MW (50% of 1 GW), stabilizing 2031.
What has to hold: at least of the total 1GW from these 2 sites gets ERCOT approval and HPC contracts
3. A fifth of the speculative sites convert: +$2.05/share
Market: 0 MW. Base: 420 MW (20% of 2.1 GW), stabilizing 2034.
What has to hold: some later sites, most likely the Barber Lake and Stingray expansions next to existing tenants, sign by the early 2030s.
Total: $13.50 + $5.81 + $3.30 + $2.05 = $24.66
Base needs ~2.4 GW of conversion (52%), against the ~0.6 GW the market implies
The contracted leases also need to be valued on tenant credit: 7.3β8.4% discount rates and 6.5β7.25% exit caps
And Cipher has to be able to raise equity near model value, not at today's discounted price
The takeaway
On credit-based pricing, the signed leases and balance sheet, after the full cost of running the company, support ~$8.85 of the $13.50
That leaves only ~$4.65 for a pipeline my base model values at ~$15.81
Either way, the Base target needs Colchis in full plus ~500 MW from Mikeska/McLennan.
Colchis is the single biggest swing (+$5.81).
Economic growth is fine and I am buying the dips in AI names.
Key Points;
- fragile bullish regime, AI driven
- economy still growing
- maintenance hikes not a full hiking cycle
- buying dips
- not full risk exposure
- keeping an eye on the exit
- Is this really a dip to buy or new fair value based off todays discount rates compared the discount rates 6 months ago?
My Current Macro View & Model
1) Growth * Inflation Regime = Reflation
My model uses hard economic data to give me 1 of 4 quadrants.
Now we are in reflation.
Inflation: above target and accelerating driven by supply side (oil) and a resilient consumer.
Growth: economy is growing and growth rate is resilient.
Labor market is fine.
Inflation outpacing wage growth but consumer spending remains resilient (wealth effect & reduced saving rate)
Earnings growth strong mostly from AI.
2) Market Pricing of Economy = Reflation
2a) Yield Curve 2s10s: Bear Steepening
From Sep 23 curve has steepened by 33bps
from ~20bps to 53bps
10y accounting for a majority of that steepening.
what's the interpretation?
Market is pricing a couple of hikes not a full hiking cycle & growth remaining strong to support this elevated neutral rate
if it were pricing a full hiking cycle the 10y would not have steepened as much to price the reduction in economic growth from restrictive rates
2b) Does equity pricing agree with bond market pricing?
$SPY 1M Roc +1.4%
$XLF -6.93%
$XLI -4.21%
$XLY -2.38%
$XLK +7.32%
Equity Pricing looking at GICS sectors is showing us that this is an AI driven economy. If AI rolls over the US economy will follow suit.
Combine this with YC pricing resilient growth my interpretation is that AI is responsible for a lot of this strength in growth being priced.
Summary & Exposure Plan:
We are in a fragile bullish regime. Which rests on AI carrying the economy.
Growth is resilient and hikes have been priced but they are maintenance hikes and are not enough to slow down AI driven economic growth.
Historically, as long as the economy is growing and we are not heading straight for a full on hiking cycle; dips are buys.
So that's exactly what I am doing but targeting 50-75% net long exposure instead of full risk on at 100%+.
And I am keeping one eye on the exit and making sure I have a fire exit plan.
I am being cautious and more selective with the positions I take on focusing on AI related names.
Key distinction for AI names: which dips accurately reflect the adjusted fair value using the higher discount rates and which dips went too far.
One of my favorite names as of now from a r/r standpoint is $CIFR which I will upload more work on soon.
Stopped out of $AVAV at $136
Stopped out of $LIB.V at C$0.91
$LIB.V stop was tighter on purpose because of the rising yields. Bullish on the fundamentals of the company just bearish short term movements especially for a stock that is
far along the risk curve & especially sensitive to yields due to its cash flows being far out & financing needs
Confident in an environment like this I would be able to take another swing on it at a cheaper price
$AVAV
Punting a swing trade here
Thesis is reliant on technicals and macro rather than fundamental equity
Has been bouncing off this $140 level for the past 3 months
Allows me to put a tight stop ~$136
Take Profit: $200+
R/R: ~15
With a 10% prob of success
EV: 0.6R
The macro thesis is essentially the marginal bearish impact caused by
1. Iran war
2. # of hikes priced
3. Bond yields
Decelerates from here.
The number of hikes being priced the amount bond yields have risen, and the length of time the Iran war has persisted, have all reached absolute levels and time levels, where the PROBABILITY of them continuing to increase bearishly or have a higher marginal bearish impact on risk assets is much LOWER.
Going long $BITI *Mclean (short BTC)
Thesis: $BTC is extended. $BITI is at 3 sigma extension as well with a good r/r entry point to place stop right below the previous low back in Oct 25
+
Betting that the negative correlation between real yields and BTC comes back and this most recent rise in real yields starts to weigh on $BTC here and pull this most recent rally back down
In the past 3M
5Y TIPS is up 50bps to 2.51%
10Y TIPS is up 35bps to 2.63%
meanwhile BTC up 38% (rally on aug 15-18 mostly caused by short squeeze)
*what do y'all know about Bitty McLean tho. This trade will work out beautifully because the ticker is the reggae legend himself Bitty McLean I don't make the rules
$POCI really interesting here
just added some shares on this flush out after earnings
I'm suspecting the sell-off was because they put numbers on just how much the next Q1 and Q2 revenues would be impacted based off of one of their existing LEO customer delaying orders because of inventory stockpiling due to stalling launch rates.
Expected Impact of
- 40% reduction in Q1 27 for this customers revenues
-> flat revenue guidance FY27 of $30-$33m
These shares have relatively low volume so maybe a large holder didnβt want to be patient and created this sell off.
Imo the bullish takeaway outweighed this temporary dip
They announced another satellite-LEO customer expected to ramp orders in the next 6 to 12 months, with contract values expected to be higher than the existing LEO customer, which is at a $13 million ARR right now
Still fleshing out my model, but off first looks, you don't need to underwrite much bullish assumptions for this to be undervalued.
I really like how it's a small niche player in a popular theme such as LEO, where if beta and risk-taking returns to the market, this thing could really have some torque.
Also like this nice technical entry where there's a long history of support here in this high $3 low $4 range.
Warning, average daily volume is relatively low, so hard to build a large position.
My Macro View:
We are in Reflation. Resilient Growth and accelerating Inflation.
Maintenance hikes priced not a full hiking cycle. Historically,
maintenance hikes -> bullish equities
full hiking cycle -> bearish equities
Hikes + rising real rates globally -> headwind to liquidity/long duration risky assets
but liquidity so far showing resilience with $BTC and $GLD recent rally + equity indices holding up globally
Dips in real growth regimes without facing a full hiking cycle historically work well so I am still bullish equities just more cautious and selective with longs.
Real rates are restrictive of multiple expansion so earnings growth takes front and center of longs
Dip Buys Leaning towards:
Semis & Hyperscalers - Factset forward earnings growth expectations are 33%
~25% of this is from Information Tech in form of MAG 7 and semis
~6% from energy (Oil)
Risk:
STAGFLATION
HY & IG credit spreads are the main data point I am watching to see if we are transitioning from reflation to stagflation.
Spreads holding up well here -> Market pricing strong growth/credit risk even in the face of rate hikes, supply side inflation, and rising reals = REFLATION
If HY & IG credit spreads start to spike that may be sign of rates + inflation becoming restrictive on growth
if this were to happen I would close longs and start to put on short exposure
Iran War Scenario:
If Iran conflict ends -> oil comes down -> inflation pressure relieved -> growth accelerates inflation decelerates -> GOLDILOCKS
Increase exposures of longs
$SBM.AX Intitiated a Position Recently at A$0.80
TLDR; Trades at value of cash + royalty assets.
This valuation assigns 0 value to their Nova Scotia Assets which I value at ~A$0.50 using a $3,250 gold price, 11% Discount Rate, and 4 years to production.
SOTP VALUATION:
1.3B shares fully diluted
A$880m Cash = A$0.68
A$150m Royalty = A$0.12
A$650m Nova Scotia = A$0.50
PT = A$1.30
(For reference their latest PFS Jan 26 assigns an NPV5% of A$1.4B using $3,000 gold) My valuation of A$650m implies a Nova Scotia specific P/NPV of 0.46 which matches market multiples of assets with similar characteristics.
Asymmetric: Downside Risk is Capped at the value of their cash balance of A$0.68
Beta to gold prices is reduced.
Returning Capital to Shareholders:
A$0.05 Dividend FY 26
A$0.05 / A$0.80 = 6.25% dividend yield
Ex-dividend date arrives on September 23, 2026
Record date follows on September 24, 2026
Cash payment processes on October 16, 2026
Proposed Special Dividend: A$0.13/share ~ 16.25% yield at A$0.80
Share Buyback of 100m shares ~7.6% of shares
Nova Scotia Derisking:
Financing Risks removed: Cash Balance > Initial Capital of C$280m
+ Touguoy gold beginning to processs Gold targeted by end of 2026
Permitting Risk Lowered:
They have changed the mine plan and gave up ounces to increase chances of approval.
Use a Hub and Spoke model all processing consolidated to 15-mile
- removes 2 processing plants and 2 tailings facilities
- reduces environmental footprint
C$244M closure and reclamation inclusive of backfilling waste rock into the pits at all three sites (PFS p.6 Table 1-2, p.18), plus C$26M of owner's costs that explicitly include environmental offsetting and pre-operational monitoring.
*my PT A$0.50 already embeds a 20% chance of no build scenario
Biggest Risks:
Permitting Risk for Nova Scotia (every year project is delayed destroys NPV)
Gold Price Risk
Beautiful captures what my $IREN thesis has been since Mirantis and Nvidia announcements earlier this year
