Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Divest Fossil Fuel Stocks?

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A trend popular at many American universities has been to divest their holding of the stock of companies in businesses related to fossil fuel production. More recently, even the church has become involved.  In reaction to the papal environmental encyclical “Laudato Si,” Catholic Institutions worldwide are considering divesting fossil fuel holdings. Despite its popularity, there are three reasons to conclude that this effort is misguided.

First, from a strictly financial point of view constraining investment opportunities must have a downward impact on investment performance of any fund compared to unconstrained investment portfolios.  After all, an unconstrained investor can always choose to hold a constrained portfolio, but the reverse is not true.  In addition, adding constraints limits portfolio diversification which will negatively impact the risk-return tradeoff.  How important this depends on how broadly the term “fossil fuel companies” is interpreted.  If it means just major producers of fossil fuels, the issue can be largely ignored because they are a small fraction of the global market.  However, if the term is interpreted more broadly, it leads to the second point.

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The Auto Industry & Tesla

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In numerous columns, and years before that, I have been beating one drum.  The stock market is forward looking.  It attempts to figure out which firms will control the future, Amazon for instance, and which companies have dropped the ball, IBM for instance.  There are numerous examples of this dichotomy, but one I have been harping on in numerous columns is the relation between Tesla and the auto industry.  It is time for a retrospective.

Checklist For A Successful Electric Car

Back in December of 2019, I wrote, A successful electric car must check four boxes: design (modern tech look), price, range and availability in quantity.  Only the Tesla Model 3 (and potentially the forthcoming Model Y) checks all four boxes.  The Bolt is boring.  The Leaf is ugly.  The Polestar is not available in quantity.  The i3 is getting long in the tooth and still lacks the range.  The Taycan is way too expensive. 

The Jaguar and the Audi are large expensive SUVs comparable to Tesla’s Model X.  There are other competitors like Fisker, but they produce a few high-priced exotics.  Is it any surprise that in the United States the Tesla Model 3 outsells all other electric cars combined? 

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NASDAQ versus Dow

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If you thought all the major indexes moved together, think again. Between June 8 and the close on Friday June 26, the Nasdaq beat the Dow in 11 of 14 trading days.  During 8 of those days the gap was half a percent point or more.  The end result was that by the close on Friday, June 26th the Nasdaq was down only 1.7% while the Dow fell 9.3%. Although not as pronounced as the recent behavior, the Dow has lagged the NASDAQ during most of the pandemic.

Whereas the Dow contains only 30 members, the NASDAQ is made up of over 2,700 companies. To be clear, the term “The Nasdaq” refers the Nasdaq Composite Index which contains roughly 90% of the companies that trade on the Nasdaq Stock Exchange.  One common confusion is between the Nasdaq 100 Index and the Nasdaq Composite Index.  The Nasdaq 100 and the highly traded fund that tracks it (QQQ) is made up of only the Nasdaq stock exchange’s top 100 companies by market cap.

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Blue Tower’s Andrew Oskoui

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An excerpt from the Hidden Value Stocks June 2020 Issue, featuring an interview with Andrew Oskoui, the portfolio manager and founder of Blue Tower Asset Management.

Interview One – Andrew Oskoui: Blue Tower Asset Management

Andrew Oskoui, CFA, is the portfolio manager and founder of Blue Tower Asset Management. Blue Tower combines quantitative and value philosophies by using algorithmic screens to find securities with strong fundamentals and cheap valuations.

These securities then undergo traditional due diligence on the management team and a line of business industry analysis. Andrew previously worked in investment research for YCG and managed an equity strategy for Allometric Research & Management.

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Longest TSLA Bear Post Ever

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Stanphyl Capital letter to investors for the month ended June 30, 2020, discussing their short thesis for Tesla Inc (NASDAQ:TSLA).

For June 2020 the fund was down 3.9% net of all fees and expenses. By way of comparison, the S&P 500 was up 2.0% while the Russell 2000 was up 3.5%. Year-to-date 2020 the fund is down 7.0% while the S&P 500 is down 3.1% and the Russell 2000 is down 13.0%. Since inception on June 1, 2011 the fund is up 43.0% net while the S&P 500 is up 178.6% and the Russell 2000 is up 93.0%. Since inception the fund has compounded at 4.0% net annually vs 11.9% for the S&P 500 and 7.5% for the Russell 2000.  (The S&P and Russell performances are based on their “Total Returns” indices which include reinvested dividends. The fund’s performance results are approximate; investors will receive exact figures from the outside administrator within a week or two. Please note that individual partners’ returns will vary in accordance with their high-water marks.)

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