😨🤔 Scared And Close-minded Vs. Open Early?

What’s on the Menu 🍴

There’s a fine line between taking big smart risks and being foolish…

And people often miss out on life-changing gains by being closed off to new ideas.

So today, we’re taking a look at that - new ideas to help you build wealth.

Let’s go!

• Graduate Tries To Enlighten Foolish Students About Bitcoin 👨‍🎓

• Looking for Clues with Insider Buying 🔎

• Could This Out Of Favor Stock Be Ready To Run? 👀

Today’s newsletter is a 4 minute read.

Graduate Tries To Enlighten
Foolish Students About Bitcoin 👨‍🎓

In a fascinating turn at an OSU graduation, Chris Pan, a recent graduate who had taken ayahuasca for inspiration, urged a crowd of 60,000 to invest in Bitcoin during his commencement speech.

However, his call to embrace Bitcoin was met with boos from the audience as soon as he mentioned the cryptocurrency.

His speech highlighted Bitcoin as a largely misunderstood asset that, despite its simplicity in mechanics, often faces psychological barriers such as fear, laziness, and closed-mindedness.

He challenged the new graduates to be open-minded—a critical trait he associates with successful investing.

Chris emphasized Bitcoin's decentralized and finite nature, explaining its resistance to inflationary pressures from government interference—a stark contrast to traditional fiat currencies.

He also pointed out recent developments, like the launch of Bitcoin ETFs backed by financial giants such as BlackRock and Fidelity, which have made Bitcoin investments more accessible and secure, mitigating past concerns about exchange hacks.

Ironically, he pointed out, their reaction only exemplified the closed-mindedness that hinders good investing.

Chris's parting message was potent: one can either stay "fearful and ignorant" or choose to be open-minded and build substantial wealth.

This scenario paints a vivid picture of the ongoing divide in perceptions about cryptocurrency as an investment class and highlights the emotional and psychological aspects that influence investment decisions, often just as profoundly as the technical details.

Click here to watch our reaction to Chris’s speech.

Looking for Clues with Insider Buying 🔎

When public company executives and board members buy stock in their companies, it can be a great “tell” that they think the stock is undervalued.

Few people know these companies better than the insiders themselves.

Disclosure of insider buying in public companies is required by the SEC and it can be a great tool for new idea generation.

Lately we’ve noticed insider buying in some companies that recently reported earnings but experienced selloffs after their reports.

Let’s take a look at some of these shall we?

Intel (ticker: INTC)

Semiconductor maker Intel is in the middle of a multiyear turnaround, attempting to catch up to industry leaders TSMC & Nvidia.

In Q1 INTC posted 9% year-over-year revenue growth, but guided to flattish growth for Q2.

That disappointed investors and sent the shares down over 10%.

Yet CEO Pat Gelsinger stepped up and bought ~$250K worth of INTC stock in the $30-31 per share range between April 29 & May 1st.

Intel is in heavy spending and development mode, but the hope is that the company can regain market share later this decade.

INTC stock currently trades for 28X this year’s earnings estimates, but only 15X estimates for 2025.

Enphase (ticker: ENPH)

Enphase is one of the largest manufacturers of inverters used in solar & battery systems.

The company has seen revenues decline for the past three quarters as higher interest rates have slowed down energy system deployments worldwide.

Revenues were down 64% and adjusted operating income was down a staggering 84% in Q1.

ENPH stock is down 55% since the end of 2022.

Yet the CFO at Enphase, Mandy Yang, bought $470K of stock on May 2nd around $104 per share.

Analysts currently forecast ENPH could return to growth in 2025, and the stock trades at 23X the 2025 earnings estimates.

Hertz (ticker: HTZ)

Hertz is the third largest rental car company in the US.

The company went through a bankruptcy restructuring in 2020, and emerged a leaner company in mid 2021 with plans for growth.

However, despite a big bet on buying Teslas, it turned out customer demand for renting EVs was lower than expected and Hertz has fallen on tough times again.

In Q1, revenues grew only 2% and HTZ lost money.

The former CEO stepped down in March, and the new CEO Gil West was appointed.

Mr. West bought $1.1 million of HTZ at $4.46 per share on April 3rd.

It’s worth noting that the company requires its executives to own a certain level of stock, so this may not necessarily be a clear bullish signal.

Nonetheless, if HTZ can get back on track, there may be upside for the shares.

HTZ has significant debt but trades at just 11X next year’s earnings estimates.

Closing Thoughts

We’ve also seen insider buying in other beaten up stocks such as SOFI, CVS, SWKS, and MBUU.

Our contrarian nature tells us that some of these beaten down stocks could be worth a closer look.

After all, insiders see value where the market does not!

Could This Out Of Favor
Stock Be Ready To Run? 👀

Highly shorted stocks are a special niche part of the market that we learned all about during the big GME short squeeze in 2021.

The more hated the stock, the more traders sell short to bet against it (the opposite of buying a stock).

If price holds up long enough, it creates one of my favorite types of trades: buying a stock that you think will squeeze higher to force shorts out.

Trading this strategy needs to be done with skill and finesse of course.

Just because a stock has a high short interest doesn’t mean it’s for sure going to run higher.

If a business is just plain awful, fundamentals will eventually be the demise of the stock price.

Blue Apron (APRN) was a great example of this. It never had a big sustained squeeze and was sold for a meager price.

However, every once in a while you come across a business that isn’t completely doomed.

Wayfair (W), a large online furniture retailer, could be one of those highly shorted companies that survives.

20% of the float is shorted and the technicals are setting up for a potential breakout:

Wayfair has historically burned cash while aggressively chasing sales growth.

Things started to deteriorate for free cash flow generation in 2022, but it seems they’re working on turning the trend around lately.

Revenue growth also took a terrible turn for the worse after the housing and low interest rate boom slowed down.

They likely pulled a lot of growth ahead during the pandemic.

A flip of the Fed’s higher interest rate policy into rate cuts could bring new life into the real estate and furniture markets however.

If housing demand can pick up again, Wayfair should be a beneficiary as people move and need more furniture for their new homes.

So, it appears Wayfair is worth watching for the traders out there who love a good short squeeze.

Food For Thought 🧠

"The wise investor sees opportunity where others see obstacles."
- Anonymous

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.