Farmer Diaries

The Quebec government will soon introduce a law to reduce/control the number of available places in English-speaking CEGEP (schools that last two years after high school and before university).  Their popularity is understandable if you are a smart francophone who had his entire education in French -- it's your last chance to "master" the English language.  Quebec is surrounded by nearly 350 million English speakers -- Quebec is a very open economy that exports all over North America. I can tell you exactly what the impact of "reducing the number of available places"  it will dramatically increase the number of application because parents concerned with the children's education will want their kids to go to the best school and the best schools are those who restrict the number of places... Anglophone and francophones that want to study outside of Quebec will go to English-speaking CEGEP, entry will become more competitive standards will become higher.  It ha...

 So yesterday Elon Musk invited Putin to a conversation on Clubhouse (new version of WhatsApp) which feels like an "early" Gmail where you needed an invitation!  The market impact was that UNRElATED company Clubhouse Media saw its share price spike 12x its morning opening... Bitcoin hit $51,000!  At this stage there is no reason to think that Bitcoin could go to $300,000 or $50 there is no reason for the crypto to rise (or fall), Bitcoin is not a tool of exchange (or payment) its a speculative instrument.  You can chart the price, see the demand but there are NO FUNDAMENTALS (granted there are no fundamentals for Gold or Silver either). In fact, gold and Bitcoin share many aspects in common.  Gold is a store of value (it has been relatively stable around $1,800 per ounce), cryptos have been on a massive tear.  Neither are really used in exchange since gold is "complicated" and has never really been used that way.  Apparently, the majority of the world'...

 I have like many been watching the events in the US (and Northern Mexico), the funniest is via Zerohedge an interesting rightwing blog post website.  Anyway, it has been published everywhere on ERCOT's website that the Principal reason for the power failure is the freezing of the state's natural gas infrastructure (and yes some wind farm have been affected too), the net loss of generation is 30MW in the natural gas sector and 4MW in the wind sector -- there's wind but also icing conditions and the Texan windmills didn't have to install de-icing systems on their wings (because it's warm -- usually -- in Texas).  Every 10 years or so, Texas has a big freeze!  Every 10 years a report is written on the failures of the grid. The amusing thing here is the right-wing "blogosphere" who seem intent on saying -- we should have kept the coal, we should not use renewable energy... let's be clear coal power plants only work one way 100% of rated capacity -- if yo...

 Well, it's a done deal Bombardier that has been part of my life -- first as a manufacturer of snowmobiles then as a train maker (famously for building the first rollingstock for NYC subway in nearly 30 years) in the late 1980s. It then acquired Learjet, Short Brothers, Canadair, and DeHavilland (Toronto).   I worked for the company for a few years.  I had just been hired from working in London and I remember as I integrated my new office a guy came into my office and asked me "what position I played"  I had no idea what he was talking about (e.g. Hockey). I asked him if Bombardier had a league (jokingly) and he replied no we have leagues (plural). It was a big company with an ever-increasing share price! Bombardier had two problems; it was more or less time to change the firm's leadership (its CEO was looking to hand off the responsibility of day to day activities), and the truth was that the commercial aircraft division had a very hard time making money -- tur...

 It seems Aero Mexico's owners have found a solution in the cash US$ 1 billion injection (in new equity) and US$ 1 billion in senior unsecured debt (the DIP financing was done in September).  The new investor Appollo Management has a long and distinguished reputation for buying troubled assets and turning them around.  It's not always been pretty but the AM model could be interesting for several players in the industry. AM went into Chapter 11, sometime last summer, when it was clear that its board could not in good conscience continue trading; interestingly enough they filed in the US, but that doesn't matter.  The challenge for the new owner is to discover how it can make money on its investment. Apollo is a medium-term investor, they will look to exit their investment within 5 to 7 years -- this has worked well for them in the past, moreover, as a fund, they really have not much choice, but I suspect that they see AM has a long term investment that just needs to b...

 So the outrage of the ordinary investors was a good story but it turns out it was mostly BS.  Some of the early investors had a strong feeling about the company and its ability to turn its story around.  These guys made big bets and were very well rewarded. However, it seems that the real play was Gamma Hedging!  First off, short interest in GME was small once the stock hit $70.  That's important, prior to that week in late January 2020 the short interest was huge something like 180% of available stock, which means many players were doing naked shorting (which is illegal), but once the stock doubled short interest went down fast -- to around 30%  still high but nowhere near the nose bleed zone of before (it should be noted that the cost of borrowing GME stock exploded in mid-February -- making the whole thing expensive). It seems now that it was the derivative market (puts and call on the stock) that created the frenzy.  These were the places where th...

A bit of levity...considering that GME dropped another 50% this morning.  The loss accumulated for the late entrants to this game.  The market cap of the company is down to $6 billion -- $30 billion was wiped out. So enjoy this classic movie Stories are that Phil was stuck in groundhog day for 10,000 years!

So about 4 months ago a small retail outlet that acted as a sales point and exchange mart for videogame that had a rather tepid market cap of $150 million became the object of a play by Wall Street's finest Hedge Fund playing their usual game of "Wakamole" the well tested game of shorting a small company -- don't kid yourself Wall Street knows how to play the game well, using "unattributable" specialized journalists they were able to push down the price of the company's shares all the way down the $2.46 -- a nice little earner if you sold the shares at $30 and have to buy them back at $2.00 Generally, it's a well-known game "picking up dimes in front of a steam roller"  a good game with no real losers (aside from the company).  One fly in the ointment was Michael Burry who has been adamant since 2019 that GameStop is actually a good company and that the new management has a "good plan", and that the company is undervalued. Enter t...