In today’s top stories, Elon Musk’s Twitter profit turns to loss, while Bill Ackman tweets his thoughts about the Fed’s efforts to combat inflation. The headlines also included UBS’s stagflation winners and a potentially improved outlook for quant funds, while TJ Rodgers bought $3.6m shares in battery startup Enovix.
Musk’s Twitter stake.
The fallout from Snap’s [SNAP] profit warning led to social media stocks tumbling on Tuesday — the Twitter [TWTR] share price closed over 5% below to $35.76. This is slightly below the $36.157 Elon Musk paid for his 73.12 million shares, or 9.1%, according to MarketWatch analysis. What was at one point a $1.1bn profit has become a $40m loss for the Tesla [TSLA] CEO.
Ackman’s Fed rant.
Hedge fund billionaire Bill Ackman has taken to Twitter to have a go at the Fed for failing to calm investors’ nerves. “Inflation is out of control. Inflation expectations are getting out of control. Markets are imploding because investors are not confident that the Fed will stop inflation,” he wrote. He added that the Fed needs to signal to investors that it’s going to do “whatever it takes” to address the situation.
UBS stagflation picks.
With equity valuations coming under increasing strain, UBS has drawn up a list of stocks that are likely to be less sensitive to pressure during a period of stagflation, according to a research note seen by CNBC Pro. They include Procter & Gamble [PG], Johnson & Johnson [JNJ], Pfizer [PFE] and Chevron [CVX]. The bank says investors should focus on value stocks as they have high dividend yields and low multiples.
TJ Rodgers backs battery startup.
It’s been a rough ride for battery startup Enovix [ENVX], with its shares down 65% year-to-date to $9.46 at the close on 24 May. Chairman TJ Rodgers, whose SPAC took Enovix public, is clearly unfazed as SEC filings showed he had bought 400,000 shares over a week in May for $3.6m. The company will be the first to deliver 100% active silicon anodes at scale, Rodgers said in a press release.
Quant funds heat up.
Hedge funds that rely on quantitative analysis and computer science to run their portfolios have seen significant profits as others nurse bruising losses. According to NFR data seen by the Financial Times, the quant industry has been making its biggest gains since the 2008 financial meltdown. These funds have had a tough few years, dubbed the ‘quant winter’, but there are signs that these problems are starting to thaw.
More than 400 of Shell’s [SHEL.L] petrol stations have been sold to Russia’s second largest oil producer, Lukoil. Shell has forecast that its profit will take a $5bn in Q2, but there are also pressing matters to deal with closer to home. Third Point’s Dan Loeb, who upped his stake in May, has called for the Anglo-Dutch firm to simplify its portfolio, prioritising liquefied natural gas..
Despite more states legalising the medical and recreational uses of cannabis, pot stocks remain in a “regulatory recession,” according to BTIG’s Camilo Lyon. Nevertheless, Aurora [ACB], Curaleaf [CURLF] and Tilray [TLRY] have high hopes for the future of the industry. If the legalisation bill that passed the House of Representatives in April eventually passes the Senate, then this would be a major tailwind.