Hey Subscriber,

Merry Monday! 

Well, TTCHW jumped up $1 to $10.50 out of the box this morning and we and many others took some profits and risk off the table on the spike. 

As you will learn when you get our soon-to-be hot off the presses SuperSPAC PRO Trader "The SuperStar PRO SPAC Trading Playbook" from yours truly and Steven Adams aka Wall Street's Warrant King, virtually ALL de-SPACed securities (shares and warrants) trading at least 50% over their $10 IPO price get a bump in the first 2-5 days of trading but especially the first two. 

The reason is primarily two things: 1 hedge funds that own $10 IPO shares like to HEDGE their now valuable positions by shorting the equity and being long the warrants going into the de-SPAC reverse merger--or vice versa. So--on the big day and the next trading day or more--IF you see a ten thousand Robinhooder's rush into the limited float shares, you see a NKLA or HYLL type short-covering melt-up.

Bear in mind, this melt-up price action has NOTHING AT ALL TO DO with the 5-year discounted present value of the stock's revenues. This melt-up has EVERYTHING to do with the mechanics of the stock market with small float growth companies; it's usually wild and aggressive short-covering (forced buying of the equity shares) because shorting a stock means you sell borrowed stock and pay the broker for the right to borrow and sell shares. 

Now IF there is a big run-up in the share price, you the short seller must post MORE collateral for your short positions...and by post I mean you need to have CASH MONEY in your hedge fund account by 10 am EST (this is called an "SEC Margin Call") or your prime broker BUYS those shares back with either your cash or cash they get from selling OTHER securities in your account.).

BTW, this is where the term "getting your face ripped off" comes from because getting caught in the wrong end of a short squeeze feels like you are getting your face ripped off of your brain. 

ANYWAY...what should you do with your TTCF shares and warrants?

Here is Steven Adams analysis of the TTCFW warrant scenario--take the cash in redemptions or go with a "cashless conversion"
 

TTCF is using "average reported last sales price" (same as Phunware did BTW) to get to their exercise price on a "cashless basis." The terms are below, but I see no way in hell they will get to that, as they definitely need additional capital and the warrants are a bucket of free money sitting right in front of them. 

Toby here: TTCF could do a secondary offering and sell less shares at say $22-25 but it is faster and cheaper to redeem warrants at $11.50 

For you math geeks, the  "fair value" equatin is Number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the difference between the Warrant Price and the “Fair Market Value” (as defined below) by (y) the Fair Market Value.   

The resulting equation is X = Y(a-b) / a where: X = the number of common shares you’ll receive when exercisingY = the number of warrants you are exercisinga = “fair market value”, or the average closing price of the common for 10 days, ending on the third trading day prior to the date on which the notice of redemption is sent to the holders. The notice of redemption will have this price in it, and you can always verify the price with your broker.b = the per share exercise price It's also detailed in this post: https://www.stockwarrantshq.com/cashless-warrant-exercise-why-growth-companies-covet-your-cash/

Net-Net--let's count on our warrants being redeemed at $11.50.

Now Let's talk Hedges

IF you hold TTCF shares with enough profit that you don't want to take that profit this year for tax reasons, let's look at the charts.

#1 We are right under short term support with the 10-day/20-day TRADING support at the close today. KEY support obviously is down at the 50-day support line at $21.50. This chart says price action is pretty weak and the 50-day support is the next key support level for long term shareholders.

NOW--if the SEC says something nasty about SPACS again--and we plunge to $16 for an hour like September 24, BE READY TO BUY $20 call options and sell $16 put options! 



Hedge Idea #1: With all the excitement (or is that excrement?) in the election run-up, volatility will surely crank up and if it is not a decisive win, the excrement will certainly fly like a chimpanzee cage fight.  

You could simply buy a November 27 $20 call on the VIXY ETF for $2.20 or so equal to the amount of downside exposure you see in TTCF or your portfolio --which today is 12% to the 50-day. 

THEN, BUY a January 15 TTCF $20 PUT OPTION and sell Jan 15 $25 Call Option for $4 BUCKS (one call option is 100 shares of TTCF) and now you are "collared" with downside protection and have $29 in your pocket if your TTCF shares get called away at $25 ($25 + $4 premium you collected minus the put option you bought). 

BTW--in the All Access program, we SOLD TTCF put options that expired worthless last Friday which earned us $6 per share! We also bought some cheap calls with some of that premium and they expired worthless... but earning $4 and change per share from put option premium harvesting is an AWESOME way to reduce your cost basis on your TTCF positions.

I conversely daily with a LOT of All-Access members--like I always say it keeps me plugged into your concerns in real-time and we LOVE answering your questions. But from those convos (on TEXT of course--a phone call is my mortal enemy during market hours and even after--we shut down about 6 pm here at TR HQ.) I can tell you that a LOT of our TTCF shareholders have a VERY low-cost TTCF basis from selling short term put options in the run-ups and sell out-of-the-money call options when the run-ups run out of gas.

Do these gents and ladies have jobs? I don't know--but it DOES take time in the day to actively manage an ultra growth stock portfolio ok? The upside is to becoming an option premium selling junkie is when you are taking advantage of greedy option BUYERS, it just feels so good! And I will tell you--that extra $2k-$4k-$8k (or more) in cash every month beats working and REALLY juices your annual returns. 

WARNING: IF ALL THAT COMMENTARY ABOVE MAKES YOUR HEAD SPIN, my take is either 1) you are not sophisticated enough as an investor to hold a big >10%+ TTCF position in your portfolio or 2) you are fine with volatility and you are not depending on your TTCF shares to friggin retire! 

And yes sports fans, the hedge above is the basic hedge we are putting on our managed accounts who hold @6% of portfolio value in TTCF. And we are long volatility going into December with a VIXY call option. 

But let me play Dr. Smith for a moment.  When we got the NKLA windfall, and I yelled and screamed for you to SELL the $93 spike (with a 5% trailing sell stop), I hope that you all made collectively $100 million dollars in new wealth.  When we screamed "Sell the NKLA Warrants at $55" I hope you made another fortune.

But YOU CALL your trades. As I have "shared" with you all MANY MANY times, I nor anyone at Transformity Research or TR Wealth Management is your financial advisor or your therapist. 

But here is the thing: I do get a little scared when I hear from enough of our All-Access members that are sitting on 30k-50k-75,000 TTCF shares/warrants. I "share" with them that as long as that $$$ represents 5-10% MAX of your total Ultra Growth and Ultra Income portfolio, then they must come to grips and make peace with the volatility of high growth stocks like Tattooed Chef. 

But if your stomach is churning and head exploding with the 10%-20% ish INTRADAY moves of either the stock or the warrants, then you own too much.

Period.

IF you are telling me that you "need TTCH to get to $120 a share in three years so you can retire" I'm telling ya that could very well happen, but a whole lot of things would have to go right for that to happen. The stock market is a risk-reward business, and while the risk of another pandemic hitting the world next year looks unlikely, long-tail risk (meaning unexpected outlier events) happens 
  Let Me Try To Establish HOW VAST We Have Outperformed "The Market" In The Last 10 Years
As I repeat it seems every week now, it is a fact that since 1969 US stocks have returned 7% per YEAR including dividends. 

Thus being up 72% in one year is earning 10 YEARS of stock market gains in just ONE year. 

Your 700%+ gain in TTCFW warrants from $1.50 is 70 YEARS of market returns.

Today, the Transformity Research Ultra Growth portfolio 2013-2020 is up over 105% PER YEAR IF you add our 360% growth/profit-taking in 2020.

THAT MEANS if you have been following us and buying our Ultra Growth shares since say 2015, you have
  Just Earned 50 YEARS of stock market wealth in only 5 YEARS. 
There literally are not 100,000 people on the Earth who have grown 50 years of wealth in the last 5 years as a stock market investor professional or civilian (of course I am not counting bitcoin geeks in BTC at $5 or corporate or start-up stock and stock option owners aka the REAL WAY to get really rich in stocks!).

No hedge fund, no Buffet, no mutual fund, not even Jim Simons at the greatest hedge fund EVER the Renaissance Fund has made the annual returns we have earned investing in and riding the transformity waves of change.

What I am saying is this: You and I have been extremely fortunate that since 2010, the Federal Reserve has made the discounting method for stock valuation ZERO for the last ten years. Now the Fed has pledged to hold the present value discount rate of financial assets at ZERO for the next 3 years best. When the discount mechanism for valuing fast-growing 30-60% CAGR secular growth companies in a 2-3% GDP growth world is infinity, the Buffets of the world lose (OK except for his Apple stock) and the Transformity Research team kills it. 

And when the Fed FINALLY moves to restore short-term interest rates to "normal" we will be positioned for that transformation, too.

But I just want ANYONE to take for granted earning 345% in one year to NOT take risk for granted. Because in my house and my wealth management business, actual WEALTH is when you convert the paper stuff to CASH MONEY. 

OK? 

Housekeeping: We are in process of updating  ALL positions in Ultra Growth and Ultra Income portfolio. We will put NKLA back on the buy list under $20 PURELY because all the chatter we hear is GM is going to take a bigger piece of NKLA but that they need to get a TON of new business into their fuel cell and battery divisions so they can spin the WHOLE EV business out as a stand alone.

SPAQ, HCCO warrants and HCAC warrants have been dead in the water. A potential issue with HCCO is a patent lawsuit from Teledoc against Amwell about their "Video Trays" aka the movable video screens wheeled into the ER for specialist telehealthcare.

SOC Telemed is not named in the lawsuit, but it is confusing the market. It is also pretty clear with the 20% haircut the Chamath Palihapitiya SPAC that is merging with Clover Healthcare--a Medicate Advantage healthcare start-up, that to the heart and sould of SPAC investing--the 20 million subscribers/account holders at Robinhood and others, there is nothing "aspirational" or "decarbonizing about bending the cost of healthcare for 65-year-olds. 

The deal with Healthcare Merger Corp. (NASDAQ: HCCO) would allow the local telemedicine provider to start trading Nov. 2 on the Nasdaq stock exchange, said Hai Tran, SOC Telemed's chief financial officer and chief operating officer. The transaction values the local company at about $720 million.

The company reported Monday that it expects its contract bookings for 2020 to reach between $11.5 million and $12.5 million. That’s up from its previous estimate of $10.9 million, and an 88% to 105% increase from its 2019 performance.
It comes as SOC expands its services on 24 existing contracts — and brings on new customers altogether. That list of latest additions includes: Rockford, Illinois-based Mercyhealth of Wisconsin and Illinois; Crestview, Florida’s North Okaloosa Medical Center; Christiansburg, Virginia-based Carilion New River Valley Medical Center; Cleveland, Ohio’s St. Vincent Charity Medical Center; and New Orleans East Hospital.

HCAC and SPAQ are still in the right space, right time but Fisker's projected sales numbers are pretty hard to see now that VW has 2 versions of their BEV SUV coming out in the U.S. end of the year (and they will be built in the U.S. next year. The world auto/truck industry is a $1.3 trillion per year market, and a $9 billion niche player like Fisker can be profitable.

But as you will see in our new SuperSPAC PRO Trader service, we pass on 9-out of 10 SPACs that don't fit our formula. 

https://transformityresearch.com/ultra-income-portfolio
 
https://transformityresearch.com/ultra-growth-portfolio

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