Will scale into $PSTG short at open, aiming for >$92 entry.

Spent some time thinking about it. If storage component prices keep rising, players like $PSTG are nuked.

$PSTG provides storage-as-a-service to enterprises, and their contracts are renewed between an annual to a five years timeframe. Pricing is mostly fixed for their subscription contracts during the active period, except for inflation clauses - as enterprises want stability in their budget planning.

Basically, via this contract structure, PSTG is short memory spot price for the time period of the contract (excluding hedges). This has historically worked out fine as storage has been a commodity in which $/TB has always trended down due to technological node advances.

Furthermore, PSTG has historically been able to double-dip as their contracts with suppliers like Micron/SK Hynix are renegotiated on a quarterly basis given the volatility in memory spot prices.

The effective scenario for PSTG has thus been: lock in high price with customers via fixed price long term contracts -> renegotiate lower price with suppliers every quarter through short term contracts -> earn the carry spread

However, now the tables have turned and memory spot prices are suddenly inflecting upwards violently. Now, PSTG’s annual fixed price contracts with customers lock them into a short position against a commodity that is rising rapidly, while their contracts with suppliers are being renegotiated quarterly (and even monthly) at a higher price.

At 42x NTM p/e, r/r seems right for a short, and it fits well as a hedge position against our longs.

Reshorted back to original position for $COIN @ $314.4. I think this name is too heavy and probably won’t benefit as much from speculative retail flows vs smth like $HOOD

Got in $PSTG short yesterday @ $89.66

Added $HY9H SK Hynix German Depository Receipt @ $369 EUR

One of the few ways to get long SK Hynix as a foreigner that can’t buy Korean stocks. Have been putting this off for awhile because the liquidity is so low but finally pushed myself to do so as I think SK Hynix will (and has already) benefit greatly from this upcycle.

Closed $CORZ @ $17.5 for 14% loss

Loss of faith in the mgmt’s ability to execute; sounds like CRWV’s delay was caused by CORZ. Also trying to move away from small/mid caps which I think are more susceptible to corrections if the AI bubble pops

Closed $TGEN long @ $7.75 for -16% loss

Cutting more low caps. Just a small moonshot so the loss only stings

$CRCL short finally working, -8% after print. Haven’t looked at the ER but there’s really no point when the name is so far removed from fundamentals

Anyway, closed 20% of the short here @ $89 for +30% gain

Exited this additional tranche @ $268 - $270 for +17% gain. Original $SNDK position still remains.

Added more $MU @ $242-$246, with the $SNDK allocation that was just exited. $MU is my largest memory position right now

Took advantage of the mini bounce yesterday to fully fill on $DELL and $PSTG shorts @ $142 and $89 respectively

Short basket as above, with ascending size from top to bottom (PSTG largest short, SHAK smallest)

Kioxia $285A.JT reported underwhelming earnings, putting a dent on the memory rally

Seems like some idiosyncratic poor execution by Kioxia as it’s the only memory company that missed this season; not sure how their ASPs even went down when memory prices are rising everyday.

Added to $MU @ $246

Basically this lol

Closed 50% of $SNDK at $263, added more $MU @ $242 and $INTC @ $36.8-$37

$NVDA @ $186 makes sense as a short hedge to the AI bubble bursting if you have duration.

Growing competitiveness from TPUs/accelerators + $MSFT CEO mentioning that they’re limiting GPU capex because they don’t want to run the risk of tech obsolescence due to Nvidia’s 1 year product cycle.

If PPW improvements slow down from one gen to the next, then hyperscalers are less inclined to spend on next gen GPUs as the legacy ones that are fully depreciated would work almost as fine with higher resulting “cash flows”.

Ugly day no two ways about it.

AI spend concerns were exacerbated by OpenAI’s comments about wanting govt’s backstop, CRWV delays dragging down the neoclouds & power providers, Satya comments as above, Kioxia’s print dragging down memory which was one of the last few green AI sectors, and Fed comments on high inflation and a potential push out of cuts. Maybe also some sell the news on the lifting of govt shutdown

Actually all things considered, I would have expected the markets to be down more. This reminds me of a few months back when MSFT reportedly cancelled some DC leases, which caused the AI stocks to chop around violently for awhile. Essentially the market has run out of bullish catalysts in the near-term and is now overly jittery on headlines.

In times like these important not to overtrade, stick to highest conviction ideas and touch grass. Let the markets resolve to its equilibrium before being aggressive again.

Pretty interesting. The Big Short is one of my favourite movies. Not agreeing with Michael Burry’s views (for now) but the parallels here for him are uncanny.

https://x.com/onechancefreedm/status/1988823273287635403?s=46