This is our weekly wrap. Been a great week. Had to stop after: 1. walking thru our $SMLP valuation model / spreadsheet reflecting today's Q1 earnings 2. showing how we find potential 'setup stocks' or good runners. Need a part 2 about the markets / financials / economy. We had a highlight this week. Our favorite stock (and one we own) issued its Q1 2021 earning press release today, and held its investor call. We read the release, modeled the numbers, attended the call live, listened to the call again, then spoke with investor relations about a question we had on the balance sheet. We use this call to share the model, and go into the equity (common and preferreds), debt, and left-over capital (or book value) that we look at per share. A few highlights: Summit Midstream Partners LLP has an enterprise value of 8 x annual cash flow (or adjusted EBITDA). Also, the stock trades at 0.25 of capital valuation / book value (25%). You can see every aspect of their common, preferred, corporate debt, and the debt tied to Double E Pipeline. We then did a meandering walk down memory lane...no, we meandered to find stocks that are about to 'do a runner.' All parts of the process are free except a $15/month subscription to Nasdaq for an application called 'book viewer.' We are considering whether to load some of that logic into our model for our clients. Would be pretty cool. The only thing is that the search for runners has more to it. Once you find the candidates, you need to review them to know 'the story', then do a quick corporate valuation. It isn't that quick, so you need to narrow down the list aggressively, then do the analysis, then decide whether to go long or short, or just walk away. A friend of the firm suggests using the Washington Technical Advisory Services, of which we are a member. If you know what this is, please DM me at firstname.lastname@example.org or comment here. We did not: Talk about the markets Talk about our code (btw, we are stuck on the D-Wave Steepest Gradient Descent solver (also called greedy). Talk about inflation (hence the hot air balloon picture) Talk about the stories and articles we gathered for the week. Maybe do a 2nd video this weekend, or leave it to you to reach out. I am always glad to do a video if people will watch it. For more information please check out our website at https://www.chicagoquantum.com. Jeffrey can be reached at email@example.com
Our weekly update starts with 27 minutes about the firm.
Week 17, 2021
We have now added NASDAQ S to our analysis.
We are taking in 4,500+ shares and running 3,600+ shares, fully data validated, through our model at one time.
Our bespoke reverse simulated annealer still improves upon our other solvers.
What should we try next?
Met with D-Wave Systems and they have made enhancements, and suggestions, to help us pick stocks better on their latest quantum annealing computer, the D-Wave Advantage.
There are parameters, settings, functions and new modules to try.
We need to re-evaluate our penalty function. It broke a few months ago…or maybe the market did…or adding so many stocks?
Started work on music and virtual reality with quantum computers.
We are going to create something great together, something unique and cool.
This is a combination of vision and purpose…plus… numbers, data, math and solvers at this point.
Traffic to our website (unique visitors) is up 10x this month, without paid advertising.
Thank you world for listening and watching…it helps us.
Speeding up the code requires a whole new level of Python coding expertise.
For example, who knew for x in y loops were slower than matrix operations?
— I mean, we knew, but who spends time refactoring code to remove all for loops?
We are now Value Line customers. We can access 3,500 stocks digitally.
We ran our model this week.
Camber Energy, Inc. (CEI)
CEI was the one stock that had a better CQNS score stand-alone, than buying all NYSE American stocks equal weighting.
That is actually pretty amazing if you think about it.
CEI is pretty risky too…the rest must be either crazy…or the intra-stock movements really count in improving portfolio performance.
We still owe the world a Q1 newsletter and have not sent an email in ~2 months. What should I write about?
When it comes to the economy…the news is a zig zag…
Bullish and bearish, up and down. No commitment, no direction, no intermediate trend.
Overall trend still bullish, markets are still rising.
And now we will share a few things we saw this week.
Our discussion of the market took about an hour. Net-Net, and Key Take Away (KTA):
1. The US stock market continues in an uptrend (fact, not opinion).
There are positive things happening in the economy, monetarily, fiscally and globally. These put upward pressure on stock market prices, earnings, and suggest even higher dividends and distributions.
A few things of note: Interest rates are pretty low, cash is available and plentiful, and we see improvements in the US economy. Earnings are up, and surprising upwards. US Federal Government wants to spend more. Markets are opening up due to COVID vaccinations. Dollar falling. Consumer confidence and retail spending are up. Labor costs are up ~3% this past year, wages and benefits costs. This puts a little more money in the pockets of workers.
There are negative things happening in the economy, monetarily, fiscally and globally. These put downward pressure on stock market prices, earnings and future dividends / distributions. These things include supply chain constraints, difficulty finding skilled labor, inflation increases, commodity price increases (especially energy), plans to dramatically and significantly raise US Corporate and Capital Gains taxes. Producer price index is up, largely due to energy prices. There is more downside as well. The Federal Reserve Bank is starting to consider slowing down or halting monthly quantitative easing ($120B / month of liquidity added to the markets).
The good and the bad news seem in balance. This is why we wore our two Chicago sports teams logos: The Bulls and The Bears. Funny...how appropriate for a city that dominates the options markets.
We are looking for US manufacturers of coffee mugs that we can add our logo to, and give away to customers. If you make and sell coffee mugs in the US, please direct message Jeffrey Cohen at firstname.lastname@example.org
Thank you for listening. Your views, subscribes, and likes fuel us. They let us know you are watching, listening and care about our weekly message. Keep it up!
Good luck this coming week, and have a great weekend.
Jeffrey Cohen, President, US Advanced Computing Infrastructure, Inc.
We are live in Standard and High Definition Video!
This has been a productive week for our firm. Making progress on the technology and the model. However, the market changed behavior this week (actually the past 2 weeks). Small capitalization stocks were significantly more volatile than large cap. Also, we see a dramatic increase in the social media volume around new crypto-currencies. We have a point of view on this. Our firm has made progress in its work: - we have two clients, and have sent a proposal to a potential client - we replaced all of our core technology to run our analysis (we run our analysis in-house and over the cloud). - We wrote a reverse simulated annealer that was the best solver this past weekend. It took the best interim portfolio solution from our weekend run and improved upon it. This is a big deal...we heard that reverse annealing makes the quantum annealing computers run better and now we can recreate that effect classically. - We ran 142 stocks on the D-Wave Systems Advantage 1.1. This is 8 more than before, a new record for Chicago Quantum (and maybe the world). It ran one time...and there is a theoretical maximum of 180 stocks at one time. As always, more work and progress ahead. It was helpful and gave valid, useful portfolio solutions. - We are working on accelerating our code. Yesterday we came up with a means to cut ~ an hour or longer off our large runs. Cannot wait to get that code written, tested and into production. The faster we run, the deeper we can run, and the better solutions we can find. - We are in the process of adding another 774 stocks to our big runs. This would take us from 3,550 to 4,325 stocks pre-validation. This is amazing. Of course, it takes significant work to validate those stocks and the runs will take longer...but now we can look at a whole new stocks exchange. After this, maybe we can go global! Over the past month or so, there has been significant economic news (but little commitment): - the US Dollar strengthened then weakened. - US Govt interest rates (across the yield curve) strengthened then weakened - Covid 19 cases slowed, then accelerated...tied to vaccine availability. Cases up globally (truly a tragedy, especially in India). - the jobs picture looks stronger in the US - the housing market is firm in the US (not enough houses to meet demand) - oil prices are up, then down - inflation is up, maybe... - the US Federal Reserve assets approaches $8 trillion...will they raise interest rates, tighten, and start to taper (...slow the rate of government and mortgage backed bond acquisition which pumps liquidity into the market). Probably not, but the economy is stronger. - President Biden announces a historic tax increase plan, including the highest capital gains taxes in history...but will the US Congress support it? - Doge-coin rose from 1 cent on Jan 28, 2021 to over 40 cents on April 20, 2021, and then fell back to 23 cents this morning. How? Why? We have a point of view. New private tokens, coins and currency are coming and we are learning more. The fall in new currencies may be what is dragging down Bitcoin (under $50k today) as they are exchangeable, and create demand for BTC (cash to BTC to new coin). - the Russians appeared at the Ukrainian border with anywhere from 10k to 100k troops, then are going home without conflict. - the US Federal Government is running a $2.3 Trillion budget deficit for the FY 2021 (ending Sep 30, 2021). We will owe $22.5 Trillion in debt held by the public on that day (projected). - We are long Summit Midstream Partners LLC (SMLP) and NGL Energy Partners LP (NGL) common units. These positions require patience as both are based on belief in business turnarounds (deep value plays). These are highly risky positions and you could lose all of your investment, so please do your due diligence before investing. You could also make 2x to 5x your investment, plus distributions once restarted. This is not investment advice, and we are not investment advisors. Do your own due diligence before investing (long or short). www.chicagoquantum.com https://twitter.com/chicago_quantum Disclosures: Chicago Quantum (SM) is a service mark of US Advanced Computing Infrastructure, Inc., and offers services in the areas of quantum computing and management consulting. For more information and a full disclosure of fees, please visit our website at https://www.chicagoquantum.com. We do our own research and believe all information to be true and accurate when presented. We are not paid to produce these videos or engage in social media. Jeffrey Cohen, President, US Advanced Computing Infrastructure Inc., has active investments in $SMLP and $NGL (long). We are not investment advisors and this is not investment advice. Please see our website (footer) for a full list of disclosures.