I'm just doing what I do, buying stocks every week when I get paid. Learning everything I possibly can every day, and adding intel to spreadsheets. Today I was diving into $IREN Ltd(IREN)$, $PayPal(PYPL)$.
Not much uncovered on either but a little more color on both. With Iren it was their capped call capital raise that has them reporting at GAAP profit for Q4 of over $600 million, in paper profits. Capped call capital raises are totally mis reported. Commentators always throw up their hands crying wolf, screaming shareholder dilution. But they are so wrong.
I'll simplify, but Iren raised just over 1 billion issuing new shares, but used part of the money raised to basically buy calls. These calls worth $600 million now on paper can now be used to reduce the 1 billion dilution to $400 million. And, well actually quite a few companies have now issued new shares using capped calls. These transactions are actually very specific with dates and share prices that are exact. Basically, it all relies on share price appreciation but capped calls create the potential to raise money today, at no interest cost, and buy Back all of the dilution in a specific time frame. Obviously the stock needs to go up, but with massive financial institutions backing these deals and potentially banking massive coin... well the price will go up.
this capped call thing is quite new, I think palantir did it early on, rocket lab definitely did it. A few others too, but everyone is making it difficult to understand, and they all hide it in footnotes to financial statements. Hmmm.
The $600 odd million paper gain by Iren provides me with better ammo. And enables me to point that lazer guided ammunition at specific lines in the financial statements. So stay tuned on that. But for now I will reiterate my current thoughts... a capital raise that uses capped calls results in ZERO dilution, provided stock appreciation hits a specific price point at a specific time. And it will, because everyone makes a ton of money if it does.
PayPal was less exciting, been bag holding that for over a year, learned more about their further move into business lending, the strategy looks Very promising. But I'm glad it represents less than 1% of my portfolio.
I will get into a new stock in a tiny way because it could be amazing, but with PayPal no. My initial tiny position, well it's still my position. I see conservatism not vision. A moat yes, but one that could easily erode over time.
I watch a lot of stocks, every day. I pick a few when I see potential. But, emotions can easily cloud investment decisions. FOMO is huge here.
for me, I just understand everything I can about the stocks that stack up for me. And just put money on the ones that are "cheap" that week. I get paid tonight, so tomorrow I'd love to buy even more $Rocket Lab USA, Inc.(RKLB)$, but personally it's over 30% of my portfolio. At one point, it had appreciated so much it was 90% of my portfolio. So tomorrow I'm buying $IREN Ltd(IREN)$
Merry Christmas tigers
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