In a fresh tale from the CryptoQuant frontier, our trusty trader CryptoOnchain reported a great washing away of the Bitcoin derivatives market over yonder at Binance, the grandest crypto exchange this side of the Mississippi. The magic words here are the Estimated Leverage Ratio (ELR), which has seen a drop faster than a hot potato in recent weeks.
With a decline of approximately twenty per cent this year, the question arises: is Palantir a prudent investment, a regrettable indulgence, or merely something to be observed with detached amusement?
The foundation of this empire, however, rests upon the business of insurance. GEICO, a household name, operates under its banner, alongside other policies bearing the Hathaway name. Indeed, the skillful management of premiums, and the subsequent investment of those funds, forms a considerable part of their operating model. One cannot but observe, however, that even the most established houses must occasionally consider the currents of change. Mr. Buffett, during his tenure, and Mr. Jain, overseeing the insurance division, alluded to a certain lagging behind in the realm of digital innovation, a vulnerability keenly felt in the face of younger, more agile competitors.
This was not a sudden impulse, but a deliberate entry. Beck Bode now holds approximately 2.93% of its reported U.S. equity assets – $601.19 million – in Churchill Downs stock. A small portion, perhaps, but a portion nonetheless. Consider the firm’s other holdings: $31.75 million in NVDA, $23.66 million in CAH, $22.73 million in CEG, $21.50 million in ANET, and $21.26 million in ROKU. These are not the holdings of a gambler, but of someone who believes, however cautiously, in the underlying value of the assets.
It is a truth universally acknowledged, that a company in possession of a good fortune, must be in want of a temporary setback. And so it has proven with these two titans. The recent sell-off, a tempest in a teacup if ever there was one, has presented us with a chance to acquire shares at valuations that would have been deemed fantastical but a season ago. Let us not mistake this for prudence, however; it is merely the market indulging in a fit of the vapors.
Don’t get me wrong, AXP is solid. It’s…flirty. It knows how to attract a crowd. But Visa? Visa is the quiet one in the corner, efficiently processing transactions while everyone else is busy peacocking. And honestly, in this market, I’ll take efficient over flashy any day.
The White House, predictably, has been agitating for something more dramatic. A forceful intervention, a swift correction. Mr. Powell, however, remains stubbornly wedded to the notion of allowing economic data to dictate policy. A quaintly old-fashioned idea, really. As a result, January passed without incident, much to the visible displeasure of certain parties. One pictures a rather frosty exchange of memoranda.
For years, these software companies enjoyed what’s politely called a ‘moat’ – a lovely image, isn’t it? – meaning they were so dominant, so deeply entrenched in their markets, that competition was minimal. This translated into healthy profits, predictable revenue, and, naturally, inflated valuations. But AI, it’s claimed, could erode those advantages. It can write code, extract information… even, apparently, compose passable poetry. (Though I suspect Keats needn’t worry just yet.) The question is, has the market overreacted? And, more importantly, can we profit from the resulting panic?
The core idea here is simple: these stocks may have more to gain than to lose. A concept, it should be noted, that applies to most things, provided you’re sufficiently vague. Freeport-McMoRan, specifically, looks interesting for three reasons. First, the company helpfully provides projections of its earnings before interest, taxes, depreciation, and amortization (EBITDA) based on various copper prices. It’s like a weather forecast for money, only slightly more reliable. Their latest update suggests $11 billion EBITDA at $4/pound of copper, escalating to $19 billion at $6/pound. Given the current price of $5.66, a rough calculation (involving numbers, which are, frankly, a bit of a nuisance) suggests around $17.6 billion. Assuming an enterprise value (EV) of $96.9 billion, that puts Freeport trading on an EV/EBITDA multiple of a mere 5.5 times in 2027 – a historically favorable valuation. It’s as if someone accidentally left a rather large discount sticker on it.
