August 2026 Random Ramblings

0:28This episode is brought to you by Indeed. All right. Hello and welcome to the yet another value podcast. I'm your host, Andrew Walker. Today, we've got kind of a bonus random ramblings. I'll explain why in the full episode, which I just recorded why I'm doing the bonus random ramblings in a second, but just really talking about three things that have been on my mind. Number one, my favorite company strategy, a disclosure long, a little bit of strategy, my favorite company, they publish a new 8k. And I just had to talk about how crazy it is that this company continues to share the premium and the the capital allocation there and how silly it is that I think it took them this long to evolve.

1:02And then I'm going to kind of tie that into, you know, strategy, which had one great call on Bitcoin. I'm going to tie it into the other thing I've been thinking a lot about situational awareness is blow up and, you know, the just the thought, the risk process behind that. And again, they had one great call and then it kind of blew up. And another thing I don't even mention the podcast, you know, something I've thought about a lot. If you have one great call and you make generational wealth on it. How do you judge someone as an investor on that? Like, are they gods because they had one great call?

1:30Is it just the coin flipping monkey? You know, I don't know. I think obviously very smart of Harry, very questionable risk management practices, but I don't even mention that on the podcast. Maybe that's a call for another time, but talk about the situational awareness blow up and just things. I've written two articles on the blog. You can go find them in the show notes, but talk about a little bit of that. And then, and just wrapping up, you know, speaking of situational awareness, they had a great call. long AI, short AI losers. The tough things about thematic trades is, yes, you can call it, but historically, those have been priced in.

2:00People know what's going to be a good theme for the most part. And the stock market is very good. If there's a rosy future, it's very good at pricing it with a rosy outlook. Historically, that's been a tough way to invest. But the past 10 years, if you just said, hey, I think AI is going to be a winner, let's buy AI themes. Boom, you're rich. You said, hey, I think GLP ones are going to be a huge thing. Boom, you're rich. So So thematic trends have been very easy, but I find them difficult. And, you know, related situational, if you've got a great thematic winner, when do you know what to sell?

2:30Like, you know, if the price is one or five thousand doesn't matter, you still think AI is going to be a winner. So how do you know what to sell thematic winner? Just rambling on a little bit about all of that. So we'll get there in one second. But first, word from our sponsors. Today's podcast is sponsored by Trotta.com. Look, if you've been listening to this podcast for the past year, you know what I'm going to say. If you like this podcast, you are going to love Trotta. Trotta is two buysiders who hop onto a call and discuss stocks that they're interested in. And I'll give you one. I have been really interested in the PowerShells recently because on the heels of the situational awareness blow up, situational awareness was really long PowerShells like Nebius and CoreWeave and several others.

3:12And the stocks were all slaughtered on the situational blow up. So I was trying to get up to speed. And these names, you know, it seems easy. Oh, they just lease data center. but there's the devils in all sorts of details how much more megawatts do they have to lease what are the terms of leases can you trust the management teams all sorts of stuff and trotta you know whether it's for this and there are recent calls i'll link to one there there was a galaxy call with a very handsome anonymous uh by setter on one of them uh i'll link to them it's just such a great way to get up to speed on anything you're working on and here's the great thing now they've got an mcp that connects to claude and to chat gpt and all these things so So whenever you research your name, the first thing I do, if I'm looking at the name, I say slash Trotta, have it run the Trotta skill and pull what people are actually talking about, what buy-siders are really talking about will drive and move the needle for the stock.

3:59So look, if you like this podcast, you're going to love Trotta. And if you're trying to build out your AI skills and get up to speak with our names, guess what? Trotta's got you covered with a unique database that no one else has. So go to Trotta.com. And if you want to see the Galaxy call that covers some of the stuff that I talked about. And by the way, disclosure, I'm along a little bit of galaxy. Go to Trotta.com slash GLXY and you can see a preview of that call. So thanks, Trotta, for sponsoring this episode. And now let's get to the podcast. All right. Hello and welcome to the Yet Another Value podcast.

4:30I'm your host, Andrew Walker. Let's dive right into it. So today is August 3rd and I just did a random ramblings like two weeks ago, but I'm doing I don't know if I'm going to call it my August random ramblings or a bonus random ramblings. I'm not sure, but I'm doing it for three reasons. and three reasons. Number one, I've got some two things on my mind that have just been going over and over and over again. And if I pour them out of my mind into a microphone, I will be able to move on. So that's the main reason, but also two other pretty good reasons. One, it's raining outside and I'm just going stir crazy.

5:00This is when I'd normally go on my afternoon walk and clear my head and I can't go on a walk because the weather is awful. And number three, I had a podcast guest cancel on me. So I kind of had like an extra hour, hour and a half more than that because I prep for all my podcasts, but I had like an hour, a bunch of extra time that I had kind of budgeted and I didn't know what to do with it. So between the rain driving me crazy and all this sort of stuff, but you don't care about that. Let's dive into the podcast. So I'm going to start off talking about the company I'm obsessed with, strategy, formerly known as MicroStrategy.

5:29Disclosure, I'm short a little bit of strategy and long a little bit of the prefs, but I just cannot get over this company. And I swear I'm going to land, I'm going to stake the landing. I'm going to pull this strategy thing as a whole through for this whole random robloids but you know they published an 8k this morning oh let me see if i can pull up the 8k while they're while i i'm talking but they published an 8k and the 8k says hey we thought we sold 300 million of strategy stock i mean this is a massive company so it's not like this is a giant thing but you know it's 300 million of stock and we also sold 100 million of bitcoin and we took the proceeds and we purchased like 80 million of uh stretch preferred so what you Jeff and strategy now is you have a company that's trading over NAV that is diluting shareholders and selling their Bitcoin in order to buy back preps at a slight discount on the open market and to park a lot of cash on their balance sheet.

6:22And I just you just look at it. How is this company trading at a premium? Like, it's just it's so crazy to me. I can't get over it. But the reason this is going to be a through line is, you know, I read their earnings call as someone with a position and them should read their earnings call. And it's crazy how they can talk like it's magic, right? They say, hey, look, strategies evolved a year ago, six months ago, two years ago. When we first started buying Bitcoin, we were a one way capital issuer. And what that means is they were just they only issued stock to buy back Bitcoin, to buy Bitcoin.

6:55And now they say we're a multi way capital issuer, right? We'll issue stock to buy that preferred at a discount or we'll sell our Bitcoin to buy stock at a discount. and they're saying it like there's some genius and what i mean all they're talking about is good capital allocation i mean not even good like normal capital allocation right now the reason this is the through line for this podcast is you know say what you about crypto you can be a crypto bull a crypto skeptic whatever it is i i've generally been pretty skeptical of crypto but my strategies underlying observation back in 2020 when they made the bitcoin pivot was a good one Right.

7:32And you can say that on a whole host of different levels. I think Bitcoin was trading at like 20 ,000 when they made the pivot and it's at 65 ,000 today. It peaked at like 120 ,000. Right. But a triple inside of I suppose that six year more than a triple inside of six years is a very good result. Right. Now we're going to ignore that. They kind of piled in at the top. So they're actually underwater on their overall purchases. But if you just take the first thing, a triple in six years is a very good result. And by the way, they were also right on their theme. Their theme was, hey, they're equity people who want exposure to crypto in some way, shape or form, and they cannot get it.

8:09Back in 2020, it's very easy to forget. Bitcoin was hard to get right. You get hacked. There were no Bitcoin ETFs, all this sort of stuff. A public company going and doing this and being able to trade them in your brokerage account. Like, you know, I was skeptical. I said, hey, these are financial markets like people get. But they were they were betting that people wanted a one click button to buy cap to buy Bitcoin. And they were right. Right. So they hit it out of the park with that. But they never sold. They never traded. And they never even considered it until recently. Right. Where they've evolved.

8:41And I think they evolved because their capital structure. I personally think they completely mungle their capital structure. I think they would have been better off with the kind of hodl forever thing just on the story they're telling. They kind of fall, but now they're selling. And the reason I mentioned this is, you know, it's got me thinking a lot about this is, as I've mentioned all podcasts, I try not to call out investors. I tried to think myself, but there's a lot of research that suggests investors as a whole are very good at the buying. They're very bad at the selling. Right. And if I'm using myself, you know, if I am researching a company, I will research it a lot and I'll say, hey, the stock's at 10.

9:19and I think this is a really attractive risk-adjusted opportunity and I think it's worth 20, right? And then I'll kind of start putting into my head, hey, here's where I think I'll start selling, right? If it's at 10 and I think the stock's worth 20, well, then I probably start taking a little bit off at 15 and get heavier and heavier at taking off at 17 or 18 and I sell it all at 20. And obviously there's a thousand things that go in between that, right? Maybe in between now and then I find something that's trading at five that I think's worth 20 Or, you know, if it's nothing on this podcast is tax advice, but, you know, if it's two weeks from if the stock said 14 and my cost basis is 10 and in two weeks I go long term, I'll probably consider the tax consequences.

10:01So there's a lot of things. But in general, I've kind of got the game plan when I'm coming out. And I don't think I'm alone in that. But I have been thinking, hey, when I've got this game plan, I'm coming into it. I'm saying, hey, I'm buying this at 10 and it's a I want to start selling it at kind of 15. am I mentally like am I falling into that sell trap that I mentioned where investors aren't as good at selling I'm not putting as much thought into the sale right that's kind of mechanical and in the same way that strategy before it was mechanical we sell our stock and buy Bitcoin we never do anything else if I'm saying hey I'm gonna wait till the stock hits 15 start selling am I getting too mechanical and more importantly am I failing to incorporate new news right because I talk about it.

10:44It's very difficult to execute, at least in my opinion, probably as somebody who's not a great trader or I don't know, still needs to evolve, still needs to improve. But a lot of the big money is made where you buy a stock at 10 and it goes to 20 and you say, this is better today than it was yesterday. I need to buy a lot more in particular events, but it can happen with fundamental investment theses too, right? A lot of the big money is there. Well, if you are saying, hey, I bought the stock and I think it's worth 20 and I'll start selling 15, that big clearing event might happen. And it can be very difficult for you to flip your mind because you've said, hey, I'm anchored.

11:21I'm selling at this price or, you know, the stock goes from 10 to 15 and you start selling. And then the good news happens and it goes of 20. It's very difficult not to sell when sell more to stop selling or to buy more because you started selling at 15. So, you know, I have no great answers to that, but it's something I've been thinking about. And, you know, again, this strategy thing is crazy and it cracks me up every time this company's valuation. It seems so clear to me that this is a completely busted capital structure that needs to be reset and needs to refinanced. But just the fact that they said, hey, we're going to start thinking about selling, we're going to start thinking about revolving was hilarious to me.

12:01I can't believe they managed to pull it over. but it also, you know, got me thinking about selling. And the other thing that got me thinking about selling and the other thing that's been on my mind a lot recently and has been on the mind of everyone in finance is the situational awareness blow up, right? I sure everyone knows about the situational awareness blow up at this point. I've written two posts on the blow up on the blog. You can go check them out if you want. But, you know, the other thing I've been thinking is situational along the lines of selling, they had a generational call out, right?

12:32Which was basically long AI winners, short AI losers. They did that. They had that call out in two years ago, whatever it is. And they go up like 10x on this call, right? And they've got privates and all this sort of stuff that kind of saved them because I think the fact they had this massive anthropic stake that's up a ton and that they couldn't really lever is actually why they didn't zero the fund out. but neither here nor there you know they have this generational run unbelievable call right and the issue is along the lines of not selling they didn't know or they didn't know they didn't I don't know what the reason they didn't rebalance it after this generational run right they win let's just make it very simple they went long semi and power and short software and they did it you know levered up but they did it when both were trading in 100 and the semis went to 400 and the software went to 20.

13:25And it's a, that's a naturally degrossing transaction unless you keep putting on, but they kept pressing and pressing and pressing and pressing it. And then eventually the software went from, you know, 20 to 30 and the semis went from 400 to 370 and the whole fund blew up because they kept pressing it. So I was thinking like, look, you've got this generational trade and you didn't have this, you didn't press sell, you didn't risk management. And obviously this is a failure of risk management, failure of everything. But I was thinking about that sell, They had this great thematic call. And one of the issues with thematics is when you have a thematic call, whether it's long AI, long GLP one, long choose choose your great theme.

14:05Right. There's no price. Right. And historically, the way markets have worked has been if you had this great theme that I renew, if it's in the news and the price, you know, there would be people would say, hey, we want to go long healthcare in 2006 because the population is aging and it's got all these great demographic tailwinds and it's a protected sector. Well, that was kind of in the price, right? And I think healthcare did pretty well, but these things are generally priced in. The interesting thing about the past 10 years is the themes, generally you could buy the themes at almost any price, right?

14:39If in 2016, you said, hey, software is eating the world, it basically didn't matter what price you paid for the next eight years until kind of the 2022 growth reset and then chat gpt came along and i understand that's very much saying hey eight years and then the axe did fall but uh if you said in 2024 you were going to go along a lie ai basically didn't matter the price same with glp ones and i've just been thinking with themes the tough thing about themes is how do you know if you call thematic when or right how do you know when the price has caught up to you. I don't really invest thematically.

15:16I invest micro for the most part. You know, I look at individual securities, weird setups. I try to look at setups. I will do some macro when, you know, and I'm trying to get a lot better at this because I've seen it happen a ton, particularly recently. I mean, great one software, right? I kept saying I want to be long. I see panic in software. I want to be long software, but it's too hard for me because these are not terminal zero. There's the chance of all of these being terminal zeros in March and April. You saw across the board companies giving their executives, it just really, I like the dark, the dark art term, but just really juicy comp grants at software, at software companies across the board.

15:55That was kind of your buy signal. And the software index is up like 50 % since those bottoms. And, you know, you had this buy signal of insiders getting greedy. And that's one way, like I've been trying to expand my micro to macro, but, you know, with the Maddox again, with, if you were long AI winners, like where is the top? Where does it matter? You know, just something I've been thinking about. Obviously, there's a failure versus management, but you had this great AI trade that turned out right. How do you know? Just a few more things, man. I can't believe his wedding was the same weekend he blew up.

16:28That's just a disaster. You know, it's easy to say, oh, go have fun at your wedding. You kind of solve the blow up and you can get back to work on Monday. If you've ever had a lot of stress at work, I mean, it is very, you cannot turn your brain off. And I am sure like he just had his whole fund implode from out of nowhere inside of a week, man, I can't imagine going to that wedding and thinking about that and having that hang over you. Other side of that I want to talk about is the opportunity in these names. And, you know, I mentioned this again, I wrote a blog post, but it's just really interesting.

17:01A lot of these names have come down a lot and you've heard a lot of investors over the past few years say, and this is generally investors who miss the AI trade. And you can throw me in myself, right? Though I don't believe this line of conspiracy theory, but a lot of the people who have been the biggest beneficiaries of the AI trade are either public to private crossover investors. So they were investing in the privates or they had really interesting ties to the AI trade. And, you know, the situational is a great example where the guy is a former open AI researcher and he is, I suppose, now married to the chief of staff for Anthropic.

17:37So what you hear people say is, hey, all these guys over the past 18 months had these generational runs, long AI stocks, and it wasn't particular genius on their end. What it was is they had MNPI from the not MNPI and the you will go to jail, but just MNPI. And they saw Anthropics numbers and they said, oh, it's pretty easy to see if Anthropics going crazy like this, we should go buy semis or Or Anthropic, you know, the one thing they keep calling out is they have to pay through the nose for memory. We should go buy the memory stocks. You'll hear that a lot. And, you know, you can go back to Deep Seek, the Deep Seek scare in January of 2025.

18:12You would hear a lot of people who said, hey, these guys bought the Deep Seek scare. And a lot of them say, oh, they saw OpenAI's numbers and everything and knew there was nothing to fear. Or, you know, in March, there's this big slowdown in the semi prices and you hear the all these guys piling into that into the March sell off right before everything really rips in April to June of this year. And you'd hear people say, hey, they had asked them, you know, I'm sure there's a little bit of truth there. But to me, these guys had they had conviction, right? Like they were invested in all of the stuff because they had conviction in the AI trade and they had conviction.

18:51So, yes, the numbers probably help them build the conviction a little bit. I mean, it's easy to stay long, something that's up a lot when you're seeing demand exploding in front of you. And maybe you've got those numbers. But I think they had real conviction here. But again, that's where things get interesting, right? Like it's very easy to say, hey, I'm long and I see memory. So I see memory demand through the roof. I see pricing through the roof. But that's a nice theme. But again, I would just say if you look at these memory companies, there's just simply no way you can justify the current valuations.

19:20even you know take whatever super normal profits you want for the next two years three years there's going to be a cycle at some point these are commodity plays and the back end is going to look really ugly once these get overbuilt so unless you think hey we can just no longer ever catch up to memory demand anyway that's not where i was going you know i was going with opportunity and i think one of the interesting ones you know situational the thing they were pretty much longest was the power build out and the names that have been hit the hardest on this did not hit the hardest, but names that have been hit pretty hard are things that are associated with the power build, you know, the the former Bitcoin miners that have transitioned to AI data center plays because Bitcoin mining takes a lot of power.

20:00They had these shells. Bitcoin mining sucks as a business. It's probably the work. It might be the worst business ever invented. It's hard to think of a worse one, to be honest with you. But we can talk about that another time. But, you know, you have all these Bitcoin miners. They've got terms of power. They say, hey, Bitcoin mining sucks. all of a sudden all the ai plays need power and they transition to ai plays a lot of these things have been really hit and in part that's because situation was long a ton of these things a big size of some of their biggest positions and because these things were a little smaller they owned the most of them so these things have been hit they bounce a little bit since the uh since the situational blow up but uh but they haven't balanced as much as they i don't know should have the right word they're down a lot let's say and i think that's interesting because a a lot of these you can DCF the contracts they have.

20:47And a lot of these are not trading for much more than the DCF of the contracts they have. And B, you know, if you were one of the people who believed, hey, all these crossover funds are trading on insider information. Well, all these crossover funds are telling you the fundamentals continue to explode. Understand that's asking a barber for a haircut. You know, they're kind of talking their own book there, but they're saying the fundamentals continues to flex higher. And the thing that a lot of them were the heaviest into is also down right now. So if you kind of believe that there's a really interesting opportunity there.

21:18Do I believe that, you know, it brings me, I don't know, but I do know contract securities and a lot of these things. I mean, if you get, if you can buy them for the DCF of their contracts, whether it's with a core weave or with the meta, if you can buy them for the DCFs of their contracts and get everything else for free. I mean, that's a very interesting call option to me. And I understand CoreWeave, you might worry if you're a real skeptic, you might worry about the credit risk there. But I think it's really interesting. So I've spent a lot of time doing work on them. Oh, you know, I'll mention it.

21:50Trata is a sponsor. Great product that I love. I. Maybe not me. There was an interesting call on a couple of the a couple of the AI PowerShell trades that I will link in the show notes or maybe a link in the advertisement for this company. But if you're looking to get a feed, that would be interesting. And look, if you want to talk any of them, just reach out to me. I'd love to talk to them because I'm still doing due diligence. And it sounds easy. Like, oh, yeah, they've got you've got these contracts. You do see them. But how much of the CapEx is there? What are you putting on the terminal value?

22:21Like how good stick? What what are they responsible for? What are they not like some of these contracts? The customer is responsible for the power and some of the contracts, the data center is responsible for the power. Like it varies a lot. And there's all sorts of different ones. Like, are they just doing the triple net lease to the customer or are they also going to buy the GPU? which some of these have gone, which is a much higher risk, high return business. So anyway, I guess those are the things that have been on my mind. You know, I've written about some of them. They're posts on the blog, but I had some extra time.

22:51It's raining. I had no way else to get it out. And one of the nice things about running your own podcast is if there's no way to walk around and kind of sort through your thoughts, hop on the mic and just start rambling. So this is kind of the bonus random ramblings. Again, if you've got thoughts on any of it, feel free to reach out anytime. but I will talk to you guys later this month. A quick disclaimer, nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor.

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