The Rest of the VTIQ May Market Melt-Up Story
Dear Subscriber,
This is a follow-up to our Alert out Wednesday.
For everyone's education in how blind computer-driven momentum trading and trading desks work and make a living, let me tell you the REST of the VTIQ Magical May Melt-Up story so we all:
1) Understand what happened and why it happened
2) Where a logical entry point is for VTIQ/VTIQU NOW for LONG term investing and not momentum trading, ok?
3) How we traded the meltup in our Long Term growth managed accounts and Short Term Trading managed accounts.
First--again--here was our buy advice on VTIQ/VTIQU BEFORE the May Melt-Up on April 23
BUY VTIQ under $15 VTIQU <$18
We will raise the Buy under to VTIQ $22 VTIQU $30 ahead of the early June merger.
IF VTIQ sells off down to its 20-day moving average at $18 or VTIQU to under $25--those are
a TABLE POUNDING entry points for news subscribers!
Key Point: This rare event is a very teachable moment for self-directed civilian investors. I have thankfully experienced more than a few of these. Microstrategy in early 2000 ($10-$330), Xoom.com ($2-$100) and most recently with our subscribers and money management clients AMD ($2.75 to $55) and Nvidia $22-$335).
On Xoom, I messed up and sold way too early (still I was a new millionaire many times over). MSTR I did right and guided my early ChangeWave subscribers to ride the wave (where many retired after it and many of my staff did too!)
These are the lessons I want to make sure y'all really understand about the historic VTIQ "May Madness Meltup" to add to your stock market knowledge base.
I will use our managed account actions this week to explain what I have found in 20 years of managing my money and other people's money is the proper market melt-up logic and trading protocol.
FIRST--the short lesson for our long term investment accounts: we took enough re-balancing profits to take our cost basis on remaining position to zero (as I am SURE many of our subscribers did as well based on texts and emails we received).
Why the rebalancing?
Because the portfolio risk and reward balance got all screwed up and out of balance.
In our case, VTIQ and VTIQU went from 10% of Ultra Growth positions to >50% in ten days? The only SANE approach if you are a money manager (and you are your own portfolio manager, right?) is to rebalance your portfolio in that event to get your risk-to-reward back in balance. VTIQ is back to 15% of our growth accounts but with a zero-cost basis--that means ALL reward and ZERO RISK.
How often does that happen in your investing life?
NOT very often...about every 10 years or so IF you catch a moonshot stock near the beginning of its moonshot run.
As I shared on Tuesday Alert, this insane momentum run was purely a momentum trading desk fantasy come to life. It was caused by two back-to-back news catalysts on Thursday and Friday last week--remember way back then? Reread the Alerts from last week and this week.
You must understand how a momentum ("momo") trading desk works. If the desk is run by algorithms, it's automatic. It buys extraordinary strength (relative to the overall SP 500) and keeps buying until the hot streak ends and it dumps the shares. Period, aloha.
If the desk is run by a human, that trader (or team) gets a $50M or $100M allocation from the the hedge fund boss and "eats what they kill" as in they have a P&L for their money and they get 20-30% of the profits they earn quarterly above the SP Index return (subtracted from whatever their monthly draw is).
For example, for a trading account in my shop, we get 20% of the profit above SP 500 paid quarterly. For a managed growth account we get 1.5-2% based on $$$ in the account. Like the Fisher ad says "we do better when you better" i.e. more assets under management.
Today in the 2020 market, the momo world is lead by Renaissance Capital and Jim Simons. He is the father of computer-based momo trading and runs $71 BILLION in risk capital. $40 billion of that is HIS money, $14 billion is co-founder Roberts Mercer's and the rest is the staff. They ONLY RUN their own money these days.
(PS--if you don't think these men don't massively influence American politics and fundraising, bear in mind Bob Mercer funded Brietbart.com and the rise of Sinclair Broadcasting Network. Just saying. Jim Simons is the largest donor to Democrats since...forever.).
At least half of this Top 10 list run 2 $trillion in funds that employ momentum trading desks
Here's the full list of the world's richest hedge fund managers running momo trading desks--and the Top 10 TAKE HOME PAY in 2019.
1. Ray Dalio
Bridgewater Associates
2019: $2 billion
2018 Rank: 4 ($1.3 billion)
2. James Simons
Renaissance Technologies
2019: $1.5 billion
2018 rank: 1 ($1.7 billion)
3. Kenneth Griffin
Citadel
2019: $870 million
2018 rank: 3 ($1.4 billion)
4. and 5. John Overdeck, David Siegel (tie)
Two Sigma
2019: $820 million
2018 rank: 10 ($570 million)
6. Israel (Izzy) Englander
Millennial Management
2019: $750 million
2018 rank: 5 ($975 million)
7. Crispin Odey
Odey Asset Management
2019: $530 million
2018 rank: did not qualify
8. David Shaw (this is second biggest momo/algo shop where a funny guy who started Amazon.com got his start BTW).
D.E. Shaw Group
2019: $500 million
2018 rank: 8 ($600 million)
9. Chase Coleman
Tiger Global Management
2019: $465 million
2018 rank 8: ($600 million_
10. Alan Howard
Brevan Howard
2019: $390 million
My point here? When a stock goes ballistic like VTIQ did, and you catch one of these machine-driven melt-ups again, THESE GUYS are buying the stock in SIZE and they will trample you unless you understand what is happening!
Thus I strongly advise you to create a 5-day chart that shows your position in TEN MINUTE increments.
When you do this, you see clearly through the momentum insanity fog to see
1) How to trade the melt-up insanity and ride it up
2) See when the momentum buying is finally exhausted (the inevitable double top)
3) Know where a sane initial entry point is AFTER the insane trading whoosh up has peaked and run out of buyers and
4) Where actual price discovery returns from actual long term investors
Here is the VTIQ chart from noon today. Notice the double top at $35 and the support levels
Key Point: If you are TRADING a melt-up, you sell when the 10-minute 20-day Exponential Moving Average (EMA) crosses the 50-day 10 minutes EMA. And for market context, the rest of the market was weak while VTIQ turned into a moonshot, too.
That point of the breakdown was $31.25. We got the double top buyer exhaustion signal...it did not hold...and the 10-minute 20-day moved down through the 50-day and failed to recover.
In the trading and investing accounts, we sold 100% of the trades via sell stops and investing accounts sold enough to take out 100% of our cost OUT and take a 50% profit as well from the <$15 entry point while rebalancing to 15% of growth portfolio.
YES we were glued to multiple screens all day and yes it was like hand-to-hand combat intensity and I was sweating serious bullets but that is what these melt-ups are all about. What you do NOT WANT to do is sell too early and at the same time when it breaks down you have to pull the trigger.
Why?
Look at some of the other "Millenial Monster Mania Meltups" in the past few years.
The first was bitcoin after Thanksgiving 2017 when every Millenial at dinner told their family the $500 they put in bitcoin has jumped to $5,000--or $50,000--and 12 million new bitcoin accounts were opened in 5 days after Nov 26.
Then it was pot stocks that got the new Millennial trading junkies really excited (FYI--when your first trade makes you 50X your money like Bitcoin, a whole new generation of cocksure traders is created--remember the Internet Bubble? Barbara Streisand giving our internet stock tips???).
Tilray (TLRY) and Aurora Cannabis. the prime example of another Millennial monster mania meltup. Tilray was the first cannabis stock to IPO in the USA and it got some big money institutional investors. Aurora Cannabis got big money from Constellation Brands
BOOM from $20 IPO to $300 in the classic Millenial melt-up. Can you imagine how crappy you would have felt if you took a double at $40? The other key in melt-ups is PEAK VOLUME. You hold these meltups until you hit peak volume (the green bar at 30 million shares traded in ONE DAY in stock with only 8 million shares outstanding!).
Voila.
Then we have Beyond Meat--yet another Millenial MeltUp Mania stock.
And now VTIQ--and oh yea I was hoping for another BYND or TLRY/ACB mega meltup I can't lie after the meltup started.
But VTIQ story has actual orders for $10 billion of their BVs and FCEVs. It will have massive cash flow and profits by 2022. It has major $billion worldwide partnerships and will be the darling of the $30 trillion ESG fund managers (and a major part of the approved Environment, Sustainability, and Governance Index run by S&P Global and others.).
So--what to do now?
If you did not rebalance your portfolio and take some melt-up profits, no worries.
Consider these last 6 trading days your crash course in 21st century Millennial MeltUp Mania stocks.
We did NOT anticipate this kind of melt-up obviously when we started positions under $15 (our original basis in around $13.25 for trading and growth accounts BTW).
But understand Millenials are VERY concerned about keeping the world functioning by 2050 and blame us Boomers for fff-ing up the environment. 2050 is the year of course that most environmental scientists tell us IF we don't radically reduce the CO2 and other greenhouse gases into the atmosphere, we hit a tipping point of no return on greenhouse gas-based global warming.
Millennials want to support that not happening. And they unflinchingly support companies that they see unambiguous proof are part of the 2050 solution and not adding to the problem.
Thus global consumer brand companies from Walmart to Coca Cola and Anheuser Busch (and hundreds of others) who move their goods around North America and Europe and Asia by truck and want to curry favor with the now largest consumer market in the world (>340 million Millenials) HAVE TO PROVE to them that they respect the Millenial desire to not have the world end in 2050.
I will leave it to you to make your own judgment on the issue--personally, I go by the science not the subjective beliefs based on your political ideology.
Many of our subscribers and managed account clients are, how should say this, not going to around in 2050 unless there is some kind of age reversing drug invented.
But like I said in our initial report on Nikola Motors, Millennials DO strongly care about reducing greenhouse emissions and so does $30 trillion of ESG investment capital. BTW--the ESG funds BEAT the 2019 performance of the S&P 500 by 14% and they are ahead of the SP 500 by 18% so far in 2020.
That kind of outperformance in the $120 trillion pension plan world means MORE $$$ are going to be allocated to ESG managers. Its why we are planning to launch an ESG newsletter and managed account for rich millennials (and "woke" Boomers too!).
Final Word
The 2025 $100 billion NKLA story is still intact. That story caught the fancy of Millenials and traders and who knows perhaps Tranformity Research goes down in history as the source of the VTIQ mania. That was certainly NOT our intent. And our new subscribers did not bring a $TRILLION in trading cash with them that is 100% sure.
Have a great weekend. All the commotion pushed back our Ultra High INcome update till early next week. Our May Newsletter "The Transformity Digital Next Normal Ultra Growth Portfolio" comes out next week as well.
PS: Look at what has happened to DraftKing stock after closed their IPO reverse merger on April 24.
Shares of DraftKings (NASDAQ: DKNG) jumped as much as 18.4% in trading Friday after a reverse merger with Diamond Eagle Acquisition. In fact, it was Diamond Eagle's stock that became DraftKings today once the deal closed. Shares held gains throughout the day and were up 10.4% at the close.
We WILL speculate with a VTIQ June 22 long call option for sure! And our All-Access members will get a few other option tricks between now and then (selling put options for example). IF you are an option junkie, All-Access is for you.
And if you plan on owning Nikola Motors for the next 5 years or longer like me, why not lock in 5 years of Transformity Research now (the 5-year All-Access offer goes away on VTIQ IPO day, OK?
Click here to take advantage of 50% OFF savings)
THIS IS THE NEXT $100 BILLION American COMPANY And You GOTTA GET IN NOW BEFORE THE IPO MERGER in Late (now early) JUNE
We have a VERY special new transformational growth company to add to our growth stock list that I have labeled "The New Tesla" before it's IPO that we will buy today under $15!.
The tease is this: Knowing what you know today about the future and fortunes being made from electronic transportation technology, if you could go back in time to June 10, 2010, and buy the Tesla IPO at $18, would you?
OF course, you would...so then let me ask you this: Knowing what you know today about the future and fortunes being made from electronic transportation technology, would you buy the NEXT Tesla before it's IPO under $18 today if you could? For under $15?
Yea I thought so--you would be an idiot not to right?
But what if...what if you could buy one share of the Next Tesla for under $18 today and get a warrant to buy another share for just $11.50 or a total basis of $15?
The company I am referring to is Nikola Corporation in Phoenix, AZ.
They will be Nasdaq listed under NKLA ticker symbol by end of June in a merger IPO (now first or second week). I have spent a lot of quality time investigating this company (I was tipped off by an NKLA engineer who is part of our TR Experts Alliance this year).
I am here to tell you all the future valuation models we have made say this $3 billion IPO company is on a very strong pathway to becoming a $100 billion market cap company.
Yes--a 30X bagger from here as the world comes out of a deep recession (disclosure: AFTER this email and a large newsletter subscription campaign, my family office and managed accounts own LOT of this combined stock + $11.50 Warrant unit under the ticker VTIQU)
Why? Because the short answer is they are the fast track to becoming the crown jewel of $600B annual long and short-haul industrial transportation industry or better said what Tesla is to the electric consumer vehicle industry, Nikola Motors is in the sole pole position to become the game-over dominator in Fuel Cell Electric Vehicles (FCEVs) and trucking and trucks in particular.
They also will be the MUST OWN stock for the $30 trillion ESG pension investment world (more on that in a moment).
YOU get a shot to buy the shares pre-IPO because Nikola is merging with a $200 million in cash Special Purpose Acquisition Company Vector Capital VTIQ in late June (run by the ex-Vice Chairman of GM BTW). When they merge, the raise $500 million with a pre-funded private investment in public equity deal run by Fidelity and Morgan Stanley (aka a PIPE).
A special purpose acquisition company (SPAC) is a type of investment fund that allows public stock market investors to invest in private equity-type transactions or in this case a pre-package IPO.
There are multiple highly compelling reasons to grab as much of their <$15 pre-IPO stock VTIQ as you can afford NOW before the late June official merger and even more reason to grab their stock+$11.50 warrant unit VTIQU.
The Top 10 Reasons Why Nikola is the Next $100 billion Tesla (And Why You Would be a Knucklehead TO NOT to Buy Shares BEFORE the IPO in late June)
1) BECAUSE as of today, Nikola has literally sold out their ENTIRE production for the next 24 months! That is right--Nikola has in cash deposits and contracts for over $10 billion/2 years of production ALREADY booked with deposits from EVERY large transportation company in the world.
Who has pre-ordered Nikola Self-Charging Long haul e-truck and short-haul E-Truck? Anheuser Busch, ABInBev, Pepsi, Wal-Mart, Amazon, Fed-X, Ryder and many more.
Why the massive 2 years sold-out demand?
1) Because a the Nikola self-charging electric long haul/short-haul commercial truck has a combined value-proposition that diesel trucks could NEVER EVER match
A. Because every major company that uses long haul transport knows that diesel fuel is getting outlawed or highly restricted emissions in many key regions (already in Europe, China, and Southeast Asia) all over the world.
B. For consumer brands, using Nikol's fuel-cell charged zero-carbon emission electric truck positions their company as a leading GREEN and global warming killer, not a global warming villain (ask a Millenial how they feel about global warming and climate change, OK. If you are a consumer brand, it's vital to show you are not only AGAINST global warming and killing the earth to its tipping point at 2050--that you are doing something BIG to fight back ).
C. Because the total cost of buying and operating the Nikola vehicle is a fixed cost per mile lease for 7 YEARS--and while that cost is comparable to diesel trucks for now
D. Nikola trucks are 100% ready for autonomous/driverless long haul operation which gives Nikola rigs a 15% LOWER per mile cost of operation than loud, slow, polluting diesel rigs (and a proven and simple solution to America's shortage of 100,000 truck drivers)
2) Amazing Exponential Growth! Nikola's Incredible growth from zero to $10 billion in contracted sales. Look--Tesla was founded on July 1, 2003. In comparison, it took Tesla 14 YEARS to get to $10 Billion in sales.
In comparison, Nikola gets to $10 billion in sales in less than 5 years. And 100% of those sales are pre-sold TODAY. To Wall Street secular growth investors, they have never ever SEEN sold-out growth like that from an IPO.
3) Because unlike a normal truck sales transaction where the dealer is paid for the truck and then sells service and parts to the truck owner, Nikola gets paid roughly one dollar for every mile their truck in driven (via an all-inclusive 7 year lease)
4) $30 TRILLION in ESG Capital is Drolling For Nikola Corp. Stock. Nikola is an absolute MUST OWN stock for the now $30 TRILLION in capital dedicated to ESG investing. ESG investing — or strategies that take a company's environmental, social and governance factors into consideration — grew to more than $30 trillion in 2018, according to Global Sustainable Investment Alliance, and that number is set to keep rising as consumer tastes shift and investors demand more transparency (read "Millenials and Public Endowments and Pensions).
FACT: My investment management firm Tranformity Family Office is in the process of setting up an ESG growth 2050 fund for other Family Offices. I can tell you--by going public early and 100% pledged to follow ALL the ESG sustainable/social and fully transparent governance standards which you have to follow to be an ESG worthy investment, NIKOLA is literally the MOST ESG WORTHY publically trade stock in the world.
Think of the FORCED buying demand as Nikola becomes a member of EVERY ESG index fund. Literally every ESG fund that invests in U.S. companies will HAVE TO OWN THIS STOCK or turn in their ESG certification. Nikola will be literally the FIRST ESG stock we buy with my fund--and Nikola will be the toast of the ESG world in Davos in January trust me.
5) The best news? The post-money valuation is just $3 billion (now $4.5 billion). I am not exaggerating that as this rolls out, it will be another 30x-40x winner with just $40,000 in stock now becoming our next "Meltdown Millionaire" investment.
I have spent time some incredible time with our insider (they are in Phoenix; I am in Scottsdale).In fact, in my 20 years of editing investment newsletters, almost every 30-40X winner we have ever recommended (APPL/Monster Beverage/ ANSS/WFR/CREE/XM Radio/AMD/Nvidia) came from one of our investment research syndicate.
Yes in this case like many of our 20X bagger stocks, I first learned about Nikola late last year from one of our TR Experts Alliance members who is a fuel cell engineer and works for the company.
The REALLY BIG IDEA: Carbon Free Commerical Transportation-as-a-Service at 50% LOWER Total Cost
The Nikola transformative vision is NOT to build electric trucks. Yes, they are building very amazing long haul e-trucks. But those trucks batteries are charged by an onboard fuel cell by 2021. The Nikola truck goes 1800 miles before it gets a refill of...hydrogen! In 20 minutes or less, they are ready to roll another 1800 miles without a fill-up.
But what Nikola is really selling is an unbeatable value proposition: By the time autonomous long haul truck driving is legal, they will cut the cost of owning, servicing and fueling a long haul (or short-haul) truck by over 15% vs. owning, servicing, repairing and diesel truck. The driver cost is the same no matter the truck (but the Nikola is 100% set up with autonomous driving technology when autonomous truck transport is legal).
Nikola is also building a national network of hydrogen fuel-based electric battery charging stations on EVERY major regional and long haul transportation corridor for ANY Electric Truck. They can charge an electric battery truck or a Nikola Fuel Cell that charges the battery on the Nikola truck.
Final Point: When up and running, the NIKOLA ZERO carbon footprint is so transformative I wanted you to see this amazing opportunity for yourself before we put this out in a newsletter promotion we are starting next week to 250,000 plus investment newsletter subscribers, OK?
I Am POUNDING the Table Buy for VTIQ shares Under $18-20. We are lights out crazy about this company. I am pounding the table for you to buy the VTIQU today <$18 which has one share of stock and a warrant to buy another share at $11.25--and put it away and not look at it for 24 months.
NOTE: I fully expect NKLA to double or triple in price the first day it is available for public trading like Tesla did and rings the NASDAQ buzzer and spends the next 48 hours on a mammoth media tour.
To be there for the open, you have to be in BEFORE the reverse merger transaction close in late May/ mid-June. Because NKLA are in their quiet period until the merger closes, VTIQU will be under investor radar except for our thousands of new subscribers who will be getting our special report on Nikola starting next week as part of their new TR PRO subscription.
PS: My investor group plans on owning and controlling a significant number of shares AFTER our newsletter promotion cycle is over--early bird gets the worm!
For you engineering types, here is ALL the background data and facts behind this once-in-a-lifetime pre-IPO opportunity.
PS: Here is my link to the NKLA business merger deck--You MUST read this amazing deck which is no longer available to the public (but I got one anyway--thanks to our insider).
Here is the NKLA video Analyst Day introduction
Here is the first announcement on CNBC of the merger
Here is the Fox Business interview on the merger (you gotta let the ad run)
Here is the press release on the merger and company.
Here are just a few of the 413 Articles on Nikola.
Final Piece of Advice: BUY the VTIQW and some VTIQ common tomorrow and put them away for the next 36 months--do NOT think of selling them on the first or second day IPO melt-up I expect. $3 billion market cap to $100 billion market cap is a 33X winner--$40,000 becomes $1.2 million and a legendary investment score with ZERO revenue risk for the next 24 months, OK?
NKLA Merger Transaction Details
NKLA Q&A
VectoIQ currently has three types of securities outstanding. Common shares trade under VTIQ. Warrants trade under VTIQW. Units (each consisting of one common share and one warrant) trade under VTIQU. Both the warrants and common shares will remain outstanding following completion of the transaction. The ticker of the common shares will change to NKLA, and the ticker of the warrants will change to NKLAW. At the closing, each unit will automatically separate into its components (one share of common stock and one warrant).
What percentage ownership in Nikola will the SPAC shares in VectoIQ receive?
Assuming no redemptions, public VectoIQ shareholders will own approximately 6%, and VectoIQ sponsor shareholders will own approximately 2% of Nikola.
If I have 1,000 VectoIQ warrants, will I have the right to buy 1,000 shares of NKLA stock at $11.50?
Yes. The warrants that trade under the ticker VTIQW will remain outstanding following the transaction and trade under a new ticker, NKLAW. Each warrant has a 5 year exercise period from the closing date of the transaction and is exercisable into one share at an $11.50 exercise price.
If I own 1,000 VTIQU units, how many shares of NKLA, after the closing, do I have a right to buy?
Each unit consists of one share of common stock and one warrant. After the closing of the business combination, you would own 1,000 shares of NKLA common stock and 1,000 NKLAW warrants. These warrants would have the same terms as described in the question above.
What was the implied enterprise value of Nikola when it announced the business combination with VectoIQ?
$3.3 billion valuation or 1X 2022 presold truck revenues.
What is the sales multiple valuation of TSLA today?
Tesla TSLA on April 22, 2020, has a market cap of $120 billion on $24.5 billion of 2019 sales or 5X sales multiple. in 2020 TSLA has had up to an 8X 2019 sales multiple.