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Month: June 2020

Contrarian Calls, Revisited: Chris Stanton’s Prediction for a 20% Drop in the S&P 500

Chris Stanton, chief investment officer at Sunrise Capital, this January said a market correction was long overdue. With risk seemingly everywhere, Stanton predicted a drop of 20% in the S&P 500 by the end of the first quarter, or March 31.

“Rest assured, we’re heading for a correction and I would argue it’s going to be terrifying when it comes,” Stanton said in the Season 2 premier.

The S&P 500 was around 3,300 at the time of Stanton’s statement.

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Season 2, Episode 18: The Methods of a Short Activist Hedge Fund

With Gabriel Grego, Quintessential Capital Management

Gabriel Grego of Quintessential Capital joins the podcast to discuss his short activist strategy.

Grego finds three or four “high conviction” ideas to trade a year. His process is exhaustive but straightforward, though few managers have the stomach to replicate it. The reasons for this are discussed in the second half of the podcast.

Content:

  • How it all starts. Finding the right target is crucial. Grego’s focus on “extreme corporate catastrophic situations” (1:39);
  • Some of the typical “red flags” to look for (3:43);
  • Trendy industries are often clusters for fraudulent behavior. COVID-19 is the most recent example (6:01);
  • Narrowing the target list and creating a thesis (10:37);
  • The final step: “boots on the ground” research (16:46);
  • Background on the guest (21:57);
  • Activist shorting is “scary stuff” (25:38);
  • More terrifying than being a paratrooper? (27:29);
  • Background on QCM’s fund and current exposure (30:28);
  • How QCM has dealt with the events of 2020, including a rare (and successful) attempt to time markets in March (34:05);
  • Chinese companies traded in the U.S. look “very very interesting,” though Chinese fraud is “a different beast” (42:14).

More Information on the Guest:

Not intended as investment advice.

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Hebron Technology Shares Drop After Report At Contrarian Investor Virtual Conference No. 2

The Contrarian Investor Podcast, in partnership with ValueWalk.com and Breakout Point, hosted their second virtual conference today.

Shares of Hebron Technology (HEBT) sold off sharply after a presentation from Siegfried Eggert, CEO of Grizzly Research. “We believe the company is operating an insider enrichment scheme,” the presentation says. “All major transactions of the last year were announced and portrayed as arms-length, but we could link them all back to company insiders.”

HEBT opened around $20.80 per share on the NASDAQ this morning, already lower than yesterday’s close of $22.59. The stock sold off more sharply after Grizzly’s report, dropping from about $20.70 to around $17. At the time of this writing HEBT was trading more than 23% below yesterday’s close.

Update: Shares of Madison Square Garden Entertainment (MSGE) and Madison Square Garden Sports (MSGS) rallied after the presentation by Jonathan Boyar of Boyar Value Group.

Update 2: Shares of Vista Oil (VIST) spiked after David Neuhauser of Livermore Partners presented his bullish thesis on the company.

Update 3: At least one law firm has announced an “investigation on behalf of investors” in Hebron Technology.

The conference’s other presenters focused on long ideas:

  • Andreas Aen of Symmetry spoke about Danish “mini-conglomerate” North Media A/S, which trades on the Copenhagen stock exchange under ticker symbol NORTHM;
  • Neuhauser of Livermore Partners also presented Solgold (SLGGF)

Highlights From Our YouTube Channel

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