About two decades ago, some unscrupulous hedge funds began tricking unsophisticated small cap companies into agreeing to “death spiral” converts (convertible debt). These were called “death spirals” as there was no set floor to the conversion price. Rather, they converted at some date in the future based on then market prices. Despite promising not to, these funds immediately began shorting shares with the goal Read More

Him: I think people are wrong. There are lots of instances where the Fed has raised rates and nothing bad has happened. Me: Name one time. Him: hmmm…. Oh crap!! Yea, we’re getting to that moment where people realize that rates may finally matter in a highly leveraged economy. My good friend Tal, made that point over a year ago.  I hope you took his warning and lightened up Read More

As I scour the world for opportunity, I’m usually looking at macro themes or misplaced pessimism or some other reason for an asset’s current undervaluation with an eventual catalyst. Sometimes, in that process, I simply stumble upon something that is unusually cheap. Normally I choose not to write about these, because being cheap tends to be boring—especially if there’s no added story. After some Read More

I like to invest in commodity sectors that are currently losing money but at an inflection point. The companies tend to be undergoing a winnowing process with lots of bankruptcy and dilution for existing shareholders. While this may sound terrifying for some investors, this process sets up the next bull market for that sector as it consolidates players, reduces capacity and often eliminates debt. Read More