💥 Hindenburg Strikes Again

MARKET UPDATE

Good Morning Investor! On Tuesday, shares of both pharmacy chain Walgreens ($WBA) and telehealth company Hims & Hers Health ($HIMS) dropped significantly off the back of Eli Lilly’s ($LLY) announcing a new vial version of its Zepbound drug which will sell for as much as half the price.

Additionally, news emerged that the Gallagher brothers — the two frontmen of the British band sensation Oasis, have settled their differences and got the band back together. Demand for tickets of their upcoming UK and European tours which will be sold on Ticketmaster ($LYV) is expected to be feverish.

TODAY’S BIG HEADLINES

Hindenburg Strikes Again, Shorting SMCI

Rosy Forecasts for Defense Sector Cash Flows

An Age of Censorship Revealed

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SHORT SELLERS & SEMICONDUCTORS

Hindenburg Strikes Again, Shorting SMCI💥

Super Micro's Super Mess: Hindenburg Research, the short-selling Sherlock Holmes of Wall Street — renowned for their in-depth short seller reports has struck again with a report focusing on chip maker Super Micro Computer ($SMCI) that's more explosive than an overclocked CPU. This key server partner for Nvidia ($NVDA) is now under the microscope, and it's not looking pretty. Despite this news hotter than a GPU running Crysis, SMCI shares only dipped 3% on Tuesday morning, leaving the stock down a whopping 54% from its high back in March of this year.

When 'Super' Isn't So Super: Hindenburg's report alleges that Super Micro has been playing fast and loose with its financial practices, even after getting a stern talking-to (and a fine) from the SEC in 2018.

• The report paints a picture of Super Micro operating through a network of shady entities shadier than a beach umbrella factory. These entities apparently have close ties to Super Micro's executives.

• Super Micro's silence in response to these allegations is deafening. It's like they're playing the corporate equivalent of "If I can't see you, you can't see me."

Fool Me Twice... Let's Do It Again!: The report suggests that Super Micro's turnaround plan after their 2018 SEC spanking was about as effective as a chocolate teapot. They fired key executives and promised to be good, but apparently, that lasted about as long as your average New Year's resolution.

• Hindenburg alleges, former employees spilled the beans, claiming Super Micro has 'receded' to its old tricks faster than a bad hair transplant. They've even brought back the fired employees but also began improperly recognizing revenue yet again.

• The report has also accused SMCI of shipping defective or partially completed products close to the financial period end in order to beef up revenues.

• The short seller also alleges that exports "of Super Micro’s high-tech components to Russia have spiked ~3x since the invasion of Ukraine, apparently violating U.S. export bans, according to our review of more than 45,000 import/export transactions.”

SEC Has Entered the Chat: These allegations are more serious than a heart attack at a burger eating contest. If true, Super Micro could be in for a world of hurt that makes root canal surgery look like a day at the spa. Shareholders of the company have every right to be concerned after the release of this report as Hindenburg seems to have a knack for uncovering the truth, one way or another.

DEFENSE & INDUSTRIALS

Rosy Forecasts for Defense Sector Cash Flows🔫

The Next Gold Rush: It’s the best kept secret out there right now, governments are mobilizing their budgets, spending fortunes on military equipment, and defense contractors are cashing their checks. According to Vertical Research Partners, the top 15 aerospace and defense companies are projected to generate a staggering $52 billion in free cash flow by 2026 — nearly doubling their 2021 figures.

• European defense companies BAE Systems ($BAESF), Rheinmetall ($RNMBF), and Saab ($SAABF) — whose stocks are up between 20-80% this year — anticipate a combined 40%+ jump in cash flow.

• The top five US defense companies, are projected to generate $26 billion in cash flow by the end of 2026, increasing by more than double since 2021. These firms include Lockheed Martin ($LMT), RTX ($RTX), Northrop Grumman ($NOC), Boeing ($BA), and General Dynamics ($GE).

When Geopolitics Meets Your Wallet: Taiwan is beefing up its defenses faster than you can say "cross-strait tensions," allocating a record $20.2 billion to defense in 2025. That's roughly 2.45% of its estimated GDP - talk about putting your money where your mouth is! NATO countries are also jumping on the spending bandwagon, with an 18% average increase this year as a percentage of their GDP across Europe and Canada. It's like they're all rushing to place the winning bid at an arms-dealer’s auction.

• But Germany’s reported plans to rein in Ukraine aid this month sent shockwaves through the European defense sector.

• In the United Kingdom, the Ministry of Defence has committed £7.6 billion over the past three years for military aid to Ukraine, including replenishing stockpiles.

• One big caveat to all of these rosy forecasts is that the recent surge in orders is likely to decrease, especially once the conflict in Ukraine concludes.

POLITICS & SOCIAL MEDIA

An Age of Censorship Revealed🤫

Zuckerberg's Zinger: Mark Zuckerberg, the boy wonder behind Meta Platforms (formerly known as Facebook), just dropped a truth bomb that's making the internet lose its mind. In a letter to a congressional committee that's spicier than your aunt's Facebook rants, Zuckerberg confessed that Facebook had been "forced" into censoring COVID-19 content by the Biden-Harris administration for months. And we're not just talking about misinformation - even humor and satire got the ol' Zuckerberg zap! He also went on to mention his regret in complying, and how he’ll be pushing back against any censorship attempts in the future.

• Zuckerberg wrote in his letter to a congressional committee saying 'I believe the government pressure was wrong and I regret that we were not more outspoken about it,'.

Telegram's Top Dog Gets Collared: This comes just days after Pavel Durov, the Founder and CEO of Telegram — a private messaging platform with over 400 million users worldwide — and your conspiracy theorist uncle swears by, found himself in hot water in the City of Love (Paris). French authorities detained Durov citing a cybercrime investigation.

• Telegram's claim to fame? Everything's encrypted tighter than your grandma's secret recipe. The French allege Telegram failed to fight crime on its platform - a bit like accusing a mime of being too loud, if you ask me.

• Here's the kicker: even Russia is wagging its finger at France over this arrest. When Putin's playground is calling you out on freedom issues, you know you've entered the Twilight Zone!

Free Speech Crusaders: Pavel's part of a ragtag bunch of social media moguls, including the Meme Lord himself, Elon Musk, and Chris Pavlovski — founder of video streaming platform Rumble, who'd sooner eat their smartphones than compromise on free speech. After hearing about Pavel's Parisian predicament, Pavlovski hightailed it out of Europe in an effort to avoid the same fate.

• It's becoming crystal clear that we're living in times that would make George Orwell say, "I told you so!" The powers that be are flexing their muscles to keep a chokehold on the online narrative. Express a view that doesn't fit the mold? You might as well be asking to be arrested.

• If you think this is just another conspiracy theory cooked up in someone's basement, I encourage you to take a gander at the United Kingdom. They've introduced laws so vague, you could be arrested for a social media post that "encourages or incites violence." The problem? It's about as clear as mud and highly subjective, which I surmise is intentional.

MORE NEWS

Additional market-moving events🌎

Another EU Fine: Uber was fined €290 million for breaching the European Union’s General Data Protection Regulation. (TechCrunch)

Weight Loss Drug Costs: Eli Lilly (LLY) will begin offering some doses of Zepbound, its popular weight loss drug, in vials for about half the price of its standard injection-pen devices. (WSJ)

X on TV: Elon Musk’s X, formerly known as Twitter, is launching an app for video and televisions that will be compatible with most smart televisions and include a tailored algorithm to rival the likes of Youtube. (Forbes)

Hims Sponsors Graham: Hims & Hers Health has become an official sponsor of Graham Stephen’s Youtube podcast “The Iced Coffee Hour”. (X.com)

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Our selections performance👾

On Monday the 11th of March, we released our “superperformers” stock pick which we believe will provide significant outperformance compared to the S&P 500. Then on the 14th of June we released our next stock selection. Lastly, on August 6th, we initiated a position in Celsius holdings.

Here’s how the stocks have performed since:

• Hims & Hers Health: $14.92 (📈+3.18%)

• PayPal: $71.65 (📈+18.16%)

• Celsius: $40.18 (📉-0.48%)

A quick update about Hims & Hers Health: The company reported exceptional earnings earlier this month, reinforcing our confidence in its performance. However, the stock has become significantly oversold following the announcement of Eli Lilly's new Zepbound vials product, which is priced at half the cost of the original. It's important to note that GLP-1 drugs currently constitute only a small portion of Hims' overall business. Consequently, I have more than doubled my personal investment in the stock, taking advantage of the current market weakness.