New World Investor – 6.6.24

Michael Murphy
Uncategorized
2024-06-07
07
Jun 24

Dear New World Investor:

Job openings weakened, manufacturing activity weakened, and the main drivers behind the resilient American consumer – real disposable income and the savings rate – are losing steam at the same time. Real disposable incomes, pinched by ongoing inflation, have risen only modestly over the past year.

Click for larger graphic h/t @Bloomberg

The saving rate now stands at a 16-month low as households have mostly spent the extra cash they squirreled away during the pandemic. In turn, many Americans are increasingly relying on credit cards and other sources of financing to support their spending. The recent pullback in household demand is the new normal, but I still doubt the Fed will cut this year. Traders disagree with me and raised the probability of a September cut from 55% to 59%.

Manufacturing Activity: The Institute of Supply Management Manufacturing PMI Report contracted more than expected in May. After falling back into contraction in April, manufacturing activity continued to decline for the second consecutive month. The PMI Index fell to 48.7% in May, a ½ percentage point decrease from April’s 49.2%, and short of the consensus forecast for 49.7%.

The New Orders Index stayed in contraction at 45.4%, a dramatic 3.7 percentage points lower than April’s 49.1%. The Production Index was barely positive at 50.2%, dropping by 1.1 percentage points from the April’s 51.3%. The Backlog of Orders Index was even worse than New Orders at 42.4%, down 3.0 percentage points from April’s 45.4%.

Job Openings: April job openings plunged by 300,000 to 8.059 million, the lowest level since February 2021 and well below the consensus for 8.350 million. They also revised March’s job openings from 8.488 million down to 8.355 million, so the two-month loss hit 750,000. The ratio of job openings to unemployed workers dropped to 1.24x, the lowest since before the pandemic. This kind of a steep decline has been seen three times since 2000. All three ended in a sharp economic downturn.

Click for larger graphic h/t @GameofTrades_

Wednesday’s ADP National Employment Report for May showed a slowdown in private sector job growth. The increase of 152,000 jobs fell short of the estimated 175,000 and was a decrease from the revised April number of 188,000 jobs.

Click for larger graphic h/t @CScottGarliss

In addition, wage gains continue to slow, which eventually will weigh on demand and slow price increases.

Click for larger graphic h/t @CScottGarliss

We get the May payrolls guesstimate tomorrow morning. Bloomberg Economics is estimating that 2023 monthly nonfarm payrolls from the Bureau of Labor Statistics overstated 2023 job gains by over 730,000, with “hiring maybe even falling below zero in October.”

Click for larger graphic h/t Bloomberg

The BLS originally reported the September 2023 quarter’s job gains as +640,000. Using hard data from employers, they just revised that to minus 192,000. Job losses tend to be the most lagging of all data. We now wait to see when the National Bureau of Economic Research will date the recession’s onset.

Market Outlook

The S&P 500 added 2.2% since last Thursday to a record intraday high today and another all-time high close yesterday. The Index is up 12.2% year-to-date. The Nasdaq Composite gained 2.6%, also to a record intraday high today and another all-time high close yesterday, its 13th in 2024. It is up 14.4% to over 17,000 for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 4.3% as biotech finally caught a bid. It is up only 4.0% year-to-date. The small-cap Russell 2000 dropped 0.3% as small cap did not catch a bid. It is up a measly 1.1% in 2024.

BofA’s equity sentiment indicator is up to a 2+ year high, but not yet at a bullish extreme.

Click for larger graphic h/t BofA

I see a lot of superficial warnings that this market is “a lot like the 2000 dot-com bubble.” But the 2000 market was driven by unprofitable start-ups going public. This one is not.

Click for larger graphic h/t @MichaelKantro

The fractal dimension still shows a nascent consolidation, but a strong week next week could flip it back into a continuation of the uptrend. Since 1980, markets have never topped in June due to primarily to pension inflows. Even though this uptrend is in desperate need of a consolidation, it might not happen yet.

Top 5

Changes this week: None

Near-Term – chronological order
SCYX – ScyNexis – Data releases and resolution of the manufacturing problem
TGTX TG Therapeutics – Rapid recovery from overdone pullback
AAPL Apple – AI announcements at June WWDC and September iPhone 16 introduction
EQT EQT –natural gas price rebound
USL United States 12 Month Oil Fund, LP – crude should rise quickly
FCX Freeport McMoRan – copper shortage

Long-Term – alphabetical order
ABCL AbCelllera – Will become a huge pharma royalty company
EQT EQT – largest US natural gas company
IBIT iShares Bitcoin Trust – Bitcoin is headed for $100,000
META Meta – a (the?) leader in the metaverse
PLTR Palantir – a (the?) leader in AI applications software
RKLB Rocket Lab – #2 to SpaceX in space
SCYX ScyNexis –First new antifungal in 20 years
VLD Velo3D – Return manufacturing to the US

Economy

The Atlanta Fed’s GDPNow model estimate for June quarter growth plunged to 1.8% a few days ago due to weakness in personal consumption expenditures growth and real private fixed investment growth. This morning they raised it up to 2.6%, in the ballpark with the Blue Chip economists at 2.2%.

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Coming Events
All times below are ET, and most presentations and slides are archived on the companies’ websites so you can listen to them.

Friday, June 7
May payrolls – 8:30am – +185,000 expected; April was +175,000

Monday, June 10
AAPL – Apple – 1:00pm – Worldwide Developers Conference keynote
ABCL – AbCellera – 3:20pm – Goldman Sachs Global Healthcare Conference
VLD – Velo3D – 4:00pm – Annual meeting

Tuesday, June 11
RKLB – Rocket Lab – Unspec. – Wells Fargo Industrials Conference
INO – Inovio – 11:00am – fireside chat at Stephens, Inc. for institutions only, in violation of SEC Reg. FD
PYPL – PayPal – 12:00pm – RBC Financial Technology Conference
Short Interest – After the close

Wednesday, June 12
May Consumer Price Index – 8:30am – 3.4% YoY expected; same as April. Core 3.5% YoY expected versus April’s 3.6%
GILD – Gilead – 1:20pm – Goldman Sachs Global Healthcare Conference
Fed meeting – 2:00pm press release; 2:30pm press conference

Thursday, June 13
APTO – Aptose – Through 6/18 – European Hematology Association (EHA) Hybrid Congress

Friday, June 14
EDIT – Editas – 10:00am – Poster presentation at EHA

Saturday, June 15
EDIT – Editas – 5:30am – Oral presentation at EHA

Big Tech: The Biotech & Digital Dominators MegaShift
There are at least four ways to make money in the stocks of these large, growing, dominant companies. You can:
* * Buy a stock and hold it
* * Buy a stock and write a call option against it
* * With a Level IV options account, write an out-of-the-money put option
* * With a Level IV options account, write an out-of-the-money put option and use part of the premium to buy an out-of-the-money call option

Apple (AAPL – $194.48) CEO Tim Cook will keynote the big Worldwide Developers Conference on Monday and reveal Apple’s current and coming AI efforts. Bloomberg says we will hear a deal with OpenAI to integrate ChatGPT features in iOS 18, the next iPhone operating system. Apple also will say an upgraded Siri will allow users to control specific app features on the iPhone with their voice, allow Siri to analyze activity on users’ phones, and automatically enable Siri-controlled features in Apple apps. But the overhauled Siri won’t arrive until 2025 as an update to iPhone 18.

If those two announcements are all there is, I will conclude that Apple is much further behind in AI than I thought. Their 1,000-person Apple Car team was essentially an AI team, so I want to see more.

BofA isn’t waiting, though. In advance of WWDC, they reiterated their Outperform rating and and their $230 target price. They think iPhones with AI should drive a “multi-year” upgrade cycle, similar to what was seen at the beginning of the smartphone revolution. They expect the adoption curve of AI phones to be faster than the adoption of 5G smartphones, and the number of upgrades could lead to a once-in-a-decade type event. AAPL is a Buy under $175 for new iPhone rollouts and augmented/virtual reality products.

Gilead Sciences (GILD – $63.85) Chief Medical Officer presented at the Jefferies Global Healthcare Conference (AUDIO HERE and TRANSCRIPT HERE). He said: “Our goal has been to diversify, right, to be HIV plus. And by adding inflammation assets, adding oncology, it’s a very challenging and difficult thing to do. Many have tried and it’s a difficult thing. We’re about 3.5 years into our oncology journey. We’re very young oncology company with what I would describe as a very early pipeline, but I’m really proud of how much we’ve diversified and where our agents are.”

Unfortunately, the Phase 3 trial of Trodelvy in non-small cell lung cancer (NSCLC) failed. It only improved survival by 1.3 months compared to chemotherapy, which was not statistically significant. These were difficult patients whose NSCLC had progressed while on or after platinum-based chemotherapy and anti-PD-(L)1-therapy.

I am always suspicious of post-trial analyses where they data mine for good news. Gilead said in a subgroup representing two-thirds of the study population of patients who failed to respond to their last anti-PD-(L)1 treatment, those in the Trodelvy group has an overall survival advantage of 3.5 months compared to docetaxel. So maybe they’ll do another Phase 3 limited to those folks.

Gilead also said that after a year of treatment, 46.6% of those on Trodelvy were alive compared to 36.7% of docetaxel patients. So maybe they’ll repeat this trial with a longer follow-up period. Either way, the timeline just got pushed out a couple of years.

In 2021, Gilead got accelerated approval for Trodelvy for urothelial cancer, the most common type of bladder cancer. It was approved based on tumor response rate and duration of response. When accelerated approval is granted, drug makers need to conduct post-marketing studies to confirm a therapy’s efficacy. Unfortunately, the Phase 3 post-marketing trial also failed to meet the primary endpoint of Overall Survival (OS). Secondary endpoints of Progression-Free Survival (PFS) and Overall Response Rate (ORR) were met. I suspect the FDA will allow the drug to stay on the market with a label update.

At the recent European Association for the Study of the Liver (EASL) Congress, Gilead announced two-year interim results from the ongoing ASSURE study of investigational seladelpar for the treatment of primary biliary cholangitis (PBC), a rare, chronic inflammatory liver disease. The two-year interim analysis includes people living with PBC who participated in any prior clinical studies of seladelpar and participants from the pivotal Phase 3 RESPONSE study. Results demonstrated rapid and sustained improvements in markers of cholestasis, including high rates of normalization of liver biomarkers and a clinically meaningful reduction in pruritus (itch). Seladelpar has an August 14 PDUFA date and I expect approval. GILD is a Long-Term Buy under $80 for a first target of $120.

Meta Platforms (META – $493.76) said a recent study showed that a virtual reality (VR) workout with the Supernatural app is equivalent to common cardio and fitness activities such as running, boxing, and swimming. This means that Supernatural can help people meet their recommended physical activity guidelines of 75 minutes a week of vigorous activity in half the time of the recommended guideline of 150 minutes a week of low or moderate physical activity.

In a blog post on The Future of Facebook, Meta said they are focused on building the next generation of social media for young adults and leaning into new product capabilities enabled by AI. Over 40 million US and Canadian young adults are Daily Active Users (DAU), the highest in three years.

Even with the recent run, META trades well below a 1x Price/Earnings to Growth ratio (PEG) using 2024 earnings growth. It’s about a 1x PEG when using forward two-year earnings growth. It’s hard to think of a better company trading at a more reasonable multiple. I still think we’ll get a better entry point in the next market downturn. META is a Buy under $345 for a $400 target in 2024.

Palantir (PLTR – $23.89) livestreamed today nearly 70 customers showcasing their work in Palantir’s Artificial Intelligence Platform (AIP) at the fourth AIPCon in the last 12 months. New customers include United Airlines, Nebraska Medicine, AARP, Lear, Wendy’s QSCC, and Edgescale AI.

Palantir said Tampa General Hospital selected AIP as their core AI platform to power care coordination by encoding its clinical expertise into eligibility and prioritization decisions to ensure patients receive the right care in the right place as quickly and safely as possible. The hospital’s CEO said: “We are on a mission to transform health care through innovation, and Palantir’s technology platforms enable us to leverage data to improve quality and strengthen our operations.”

PLTR is a Buy under $22 for a $100+ target.

PayPal Holdings (PYPL – $67.02) CEO Alex Chriss presented at the BofA (AUDIO HERE and TRANSCRIPT HERE). It was a wide-ranging discussion of where he wants to take PayPal – and highly recommended, especially if you haven’t bought the stock yet. NOW IS THE TIME: Alex said June quarter earnings are trending ahead of guidance.

At the same time, PayPal is cheap. Of their major competitors, only Block (SQ) has a lower Price/Sales ratio.

Click for larger graphic h/t Motley Fool

New Street began coverage with a Buy rating and an $80 target. They cited PayPal’s pivot to value from price and its ability to better leverage advantages it has on both consumer and merchant fronts over competitors Adyen, Stripe, and Apple Pay. They wrote: “2024 is a transition year; we expect to hear news and supportive KPIs [Key Performance Indicators] on new initiatives before monetization comes through more in 2025, driving transaction margin $ ahead of Street estimates.”

PYPL is a Buy under $68 for a double in three years.

SoftBank (SFTBY – $30.68) is again a target of activist investor Elliott Management, which has rebuilt a stake worth more than $2 billion and is calling for a $15 billion share buyback. CEO Masayoshi Son loves to buy back his stock at a 50% discount to net asset value from anyone dumb enough to sell cheap, so look for an announcement. SFTBY is a Buy under $25 for a first target of $50 in the next two years.

Small Tech

Enovix (ENVX – $10.77) presented at the William Blair Growth Stock Conference (AUDIO HERE). CEO Raj Talluri did his usual thorough job, explaining why they are far ahead of the purported competitors. Stay for the Q&A!

Raj pointed out that not only is their battery patented, but also their manufacturing process. It’s impossible to have a 100% silicon anode replace the conventional graphite anode until you figure out how to cope with the way silicon swells when it’s charging.


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They are engaged with six of the eight top smartphone makers – their target market – to receive EX-1M samples this year.

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The way smartphone OEMs have kept up with the energy drain of modern apps is to increase battery size in order to get all-day use out of an overnight charge. Battery capacity per square inch has only grown 2% to 3% a year. AI apps take 5x to 10x as much energy as current apps, so there is literally no way the next generations of smartphones can use current battery technology.

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They have to replace the graphite anode, and silicon is the obvious choice – but requires a dramatic change in architecture.

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Enovix can show customers a battery technology roadmap that will meet their needs in the future.

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The company will make batteries for smartphones, IoT devices like watches, and laptops. They will license EV battery manufacturers for that market, and they already are working with one. A 0% to 80% charge in less than six minutes might be quite a selling point for a company like Tesla.

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Enovix is a development-stage company about to hit the first upswing in the S-curve.

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They have a cash runway into 2026 and will be very profitable at scale.

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ENVX is a Buy up to $20 for a 4-year hold to $100+ as their BrakeFlow lithium-ion battery takes market share.
Primary Risk: A new competitor invents a better battery.

PagerDuty (PD – $19.80) CFO Howard Wilson presented at both the BofA Global Technology Conference (AUDIO HERE) and the William Blair Growth Stock Conference (AUDIO HERE). Both presentations built on last week’s earnings report – the transcript for that finally was posted HERE.

The company announced the integration of their PagerDuty Operations Cloud with Snowflake Trail, a set of observability capabilities just announced by Snowflake. Joint customers can take a proactive approach to managing incidents that can deliver more resilient operations over time. PD is a Buy up to $30 for a 2- to 5-year hold as their digital operations management Software-As-A-Service gains market share.
Primary Risk: Digital operations management is a competitive area.

QuickLogic (QUIK – $12.12) presented at the Stifel Cross Sector Insight Conference (AUDIO HERE). CEO Brian Faith said programmable logic is going through a renaissance right now.

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FPGAs are not just a chip anymore, they are an IP. About 50 companies have tried to make FPGAs and failed – they are customers for the IP.

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QUIK is a Buy up to $10 for my $40 target as their earnings repeatedly surprise Wall Street.
Primary Risk: Customers’ product introductions and associated royalties are unpredictable.

Rocket Lab USA (RKLB – $4.37) successfully completed the second of two Electron launches for NASA’s PREFIRE (Polar Radiant Energy in the Far-InfraRed Experiment) climate change-focused mission, completing a turnaround of two launches within eleven days. Electron has now delivered 185 satellites to space across all its launches, with this mission being the 49th Electron launch overall and seventh of 2024. Electron is the US’ second-most frequently launched rocket annually and one of the most frequently launched rockets globally. Details for the 50th Electron launch will be released shortly.

Founder and CEO Peter Beck is now Sir Peter Beck, knighted for his services to aerospace, business, and education. Australia has knights? RKLB is a Buy up to $13 for my $30+ target as low earth orbit satellites and space exploration grow.
Primary Risk: A new competitor emerges.

Velo3D (VLD – $0.14) will facilitate returning high-tech manufacturing to the US – and that’s happening. Over the last year, nearly $54 billion has been spent on manufacturing construction in the Greater Texas area, with $41.9 billion spent in the Mountain West, another $40.5 billion spent in the Great Lakes, and nearly $33 billion spent in the Southeast.


Click for larger graphic h/t @JosephPolitano

VLD is a Buy up to $1 for my $10 target as Velo3D’s high-tolerance metal parts printing business grows.
Primary Risk:A new 3D metal printing competitor emerges.

Biotech MegaShift

If you can afford it – and it would not be too big a position in your portfolio – putting $2,000 into each of these speculative biotechs might be a good way to start. Buying these out-of-favor, fallen, or forgotten companies that can get important products through the FDA at very low market capitalizations seems like a good strategy to me.

Risks

Development-stage biotechs are subject to investor sentiment swings from wildly optimistic to excessively pessimistic – mostly the latter recently. After the Primary Risk for each company, I’ve added the clinical stage of their lead product, the probable time of their first FDA approval, and the probable time of their next financing.

As always, you need to think about an appropriate position size. You could buy a full position upfront and then just hold on, or buy some upfront and leave room to add more on the inevitable financings, transient clinical trial setbacks, and the like.

Akebia Therapeutics (AKBA- $1.07) CEO John Butler presented at the Jefferies Global Healthcare Conference (AUDIO HERE). He explained again why Vafseo won’t launch until after they have TDAPA approval, and why that can’t happen before December. Their launch will focus on doctors’ need for a drug that normalizes and then keeps hemoglobin steady instead of the way ESAs alternately push it too high and let it fall too low.


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Because Vafseo will have TDAPA approval, all healthcare providers can bill for it on Day 1 of the launch.

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Averoa, their European partner, introduced Vafseo in Germany and Austria this week. John said Akebia has two preclinical programs and one will move into human trials in 2025.

Finally, they have the cash to pull this off.

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Buy AKBA up to $2 for the vadadustat launches in the EU, UK, and (after TDAPA approval in December) the US.
Primary Risk: Vadadustat doesn’t sell in the US.
   Clinical stage of lead product: Approved
   Probable time of next approval: TDAPA January
   Probable time of next financing: Never

Aptose Biosciences (APTO – $0.94) sold 3.855 million shares with 3.855 million 18-month warrants exercisable at $1.15 a share and another 3.855 million five-year warrants, also at $1.15 a share. Net proceeds should be around $4.1 million. APTO is a Buy under $2.50 for a $300 target in a buyout.
Primary Risk: Either drug fails in clinical trials.
   Clinical stage of lead product: Phase 2
   Probable time of first FDA approval: 2027
   Probable time of next financing: Mid-2024

Compass Pathways (CMPS – $6.91) fell as psychedelic stocks were battered after a panel of experts advised the FDA to rejected the approval of Lykos Pharmaceuticals’ MDMA for post-traumatic (PTSD) stress disorder. There were two votes – one for MDMA’s efficacy and another for safety, by the FDA’s Psychopharmacologic Drugs Advisory Committee. They voted 9-2 that MDMA – with talk therapy – is not effective for treating PTSD. The second vote was 10-1 that the benefits of MDMA treatment don’t outweigh its risks.

This was the first time FDA advisers have considered a Schedule I psychedelic for medical treatment. There has not been a new treatment for PTSD in over 20 years. More than 13 million Americans, many of who are veterans, suffer from PTSD. But Lykos submitted weak clinical data, and the panel pointed out inconsistencies and unanswered questions, concluding it lacked evidence supporting the MDMA treatment used in the therapy sessions. There were allegations of misconduct and bias in the trials, which could have affected the results.

These are the kinds of problems Compass has been careful to avoid. Their trials are carefully designed with FDA sign-off to generate high-quality data for approval. CMPS is a Buy under $20 for a very long-term hold to a 10x.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Phase 3
   Probable time of first FDA approval: 2026
   Probable time of next financing: Late 2025

Inovio (INO – $10.02) was added to the Russell 2000. INO is a Buy under $14 for a very long-term hold.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Phase 3
   Probable time of first FDA approval: Mid-2025
   Probable time of next financing: After FDA approval in 2025

Medicenna (MDNAF – $1.73)was blocked from reporting their MDNA11 update at the American Society of Clinical Oncology (ASCO) meeting, so they went to the alternative (same city, previous day) Sachs 10th Annual Oncology Innovation Forum (SLIDES HERE). The presentation was the standard company overview, although they did emphasize the pipeline a bit more.

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As you can see in the above slide, they presented the complete Phase 1 data that was scheduled for ASCO. It was good.

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ASCO allowed them to present Phase 2b MDNA55 (bizaxofusp) data in brain cancer. A single treatment achieved significant survival benefit (13.5 months versus 7.2 months, p=0.009) and reduced the risk of death by almost half in unresectable recurrent glioblastoma (rGBM) patients. Bizaxofusp increased median overall survival by 88% (p = 0.009) and improved overall survival at one year by 180% and at two years by 290%. They need to find a partner for the Phase 3 trials. Buy MDNAF under $3 for a first target of $20, then maybe $40.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Entering Phase 3
   Probable time of first FDA approval: 2025
   Probable time of next financing: 2025

TG Therapeutics (TGTX – $15.81) CEO Mike Weiss was a last-minute addition to the Jefferies Global Healthcare Conference (AUDIO HERE). He said again that they are working on a subcutaneous version of Briumvi but gave no detailed update. It was a pretty casual conversation on how Mike runs the company – an interesting perspective. Buy TGTX under $12 for a target price in a buyout of $30 or more.
Primary Risk:Briumvi, the MS drug, fails to sell.
   Clinical stage of lead product: Approved
   Probable time of next FDA approval: NM
   Probable time of next financing: Never

Inflation MegaShift

Gold ($2,394.60) is stretching back over $2,400 as the rally in precious metals continues. It’s interesting that when Wall Street tilts toward a lower inflation outlook, gold goes up because the Fed is more likely to cut rates, weakening the dollar – which drives up gold. At some point, higher inflation will drive gold higher – but not yet.

After last Friday’s decline flipped an up candle on the fractal dimension to a down candle, this week’s recovery just measured as more consolidation with a few weeks to go before a new trend can start.

Miners & Related

First Majestic (AG – $6.85) released their 20-year anniversary Annual Report.


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AG is a Buy under $11 for a $23 next target price as production increases and the price of silver rises.
Primary Risk: Prices of precious metals fall due to US dollar strength.

Cryptocurrencies

Cryptocurrencies are a diversifying asset that offer a unique opportunity to make (or lose!) a lot of money quickly. You can easily buy bitcoin and other cryptocurrencies at Coinbase, Block, or Robinhood.

Bitcoin (BTC-USD on Yahoo – $70,706.45) went back over $70,000 as inflows resumed to the spot exchange-traded funds. Net flows reached $880 million on Tuesday, the second highest daily level in their five-month history. They banked about $3.3 billion in May. The funds’ total assets under management are approaching $55 billion. I think people are trying to get ahead of the impending approval of ethereum ETFs, which could could realistically launch by late June and lift all cryptocurrencies.

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BTC-USD, ETH-USD, IBIT, and ETHE are Strong Buys.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

iShares Bitcoin Trust (IBIT- $40.16) picked up $274.4 million on Tuesday, second only to the Fidelity Wise Origin Bitcoin Fund (FBTC) with nearly $379 million. IBIT, now with over $20 billion in assets, remains the cheapest and easiest way to buy bitcoin. IBIT is a Buy for the 2028, 2032, and 2036 halvings.
Primary Risk:Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

Ethereum (ETH-USD on Yahoo – $3,806.53) rose as approximately 797,000 Ether, valued at $3.02 billion, were withdrawn from centralized crypto exchanges, hinting at a possible future supply squeeze. This significant reduction in exchange reserves suggests that investors are transferring their ether to self-custody solutions, indicating a preference for holding over immediate selling. Fewer coins on exchanges typically imply reduced availability for sale, which can lead to tighter supply conditions. Supporting this trend, data from Glassnode shows that the percentage of circulating ether held on exchanges has dropped to its lowest level in years, now just 10.6%.

ETH-USD is a Buy.
Primary Risk: Bitcoin extensions outperform Ethereum.

The Grayscale Ethereum Trust (ETHE- $35.23) is a Buy under net asset value.
Primary Risk:Ethereum falls due to over-regulation or is surpassed by another cryptocurrency.

Commodities

Oil – $75.60

Oil fell after a surprise crude build of 1.2 million barrels when a 2.3 million barrel drop was expected – and it was mostly due to another Energy Information Administration “adjustment” required by their flawed accounting for imports and exports. The EIA’s “adjustment” magic is admirable. Crude oil stocks jumped despite refining 17.1 million barrels of crude oil a day and exporting another 4.5 million barrels a day? Amazing!

The move was exacerbated by an OPEC+ “taper tantrum” as they extended their production cutbacks through the September quarter and said they will slowly reduce the cutbacks over the following 12 months. The only real cutbacks have been by Saudi Arabia, and the Kingdom will always do what is in their self-interest.

Of course, the oil traders that use trend-following algorithms instead of thinking jumped on the momentum and sold lots of paper barrels, knocking oil down to four-month lows. It bounced yesterday and today on hopes of a Fed interest rate cut. Plus, OPEC+’s decision to fully roll over voluntary output curbs for another quarter will push the oil market into a sizable deficit in the September quarter and send prices higher, says Capital Economics. They think the pickup in demand over the summer will see prices closer to $90 a barrel.

When it comes to OPEC+, listen to @CroftHelima. She is “in the room” for Q&A with the key players and, most of all, has a direct relationship with The Man, Saudi Energy Minister Abdulaziz.

Click for larger graphic h/t @CroftHelima

As @ericnuttall said, the biggest mistake the oil market is making is thinking that OPEC+ will push barrels onto the market rather than allowing the market to pull the barrels from them. There are hugely different price and narrative implication between the two.

Click for larger graphic H/T @dailychartbook

The US crude build is matching the normal seasonal pattern (plus a big uptick in EIA’s “adjustment factor” of 6.2 million barrels) while global oil inventories continue to fall. I expect sentiment to shift in the coming weeks once visible inventory draws meaningfully accelerate. Peak bearishness will be forgotten in this bipolar market.

Click for larger graphic h/t @ericnuttall

The July 2026 Crude Oil Futures (CLN26.NYM – no trades) are a Buy under $70 for a $200+ target. Only buy futures for all cash; do not use margin.

The United States 12 Month Oil Fund, LP (USL – $37.91) is a Buy under $40 for a $100+ target.

EQT (EQT – $40.66) will benefit as Europe refills their storage for the winter. LNG inflows remain weak.

Click for larger graphic h/t @AndreasSteno

EQT is a buy under $35 for a first target of $70 and a long-term hold for much higher prices.
Primary Risk:Natural gas prices fall.

Energy Fuels (UUUU – $6.15) is in an enviable position, as illustrated by this excellent FactSet blog post.

Click for larger graphic h/t @FactSet

The world’s uranium problem begins with a mismatch between where uranium is produced:

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And where it is consumed:

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Energy Fuels and Astron Corporation agreed to jointly develop the Donald Rare Earth and Mineral Sands Project in Australia. It is an advanced-stage project with the potential to supply approximately 7,000 – 14,000 tonnes of monazite sand in a rare earth element concentrate per year to Energy Fuels’ White Mesa Mill in Utah, beginning as early as 2026. Energy Fuels has the right to invest $122 million and issue $17.5 million in Energy Fuels shares to earn up to a 49% interest in the project.

They said that uranium production from their US mines and alternate feed materials continues to ramp up as planned. They expect to produce 150,000 to 500,000 pounds of uranium oxide (U3O8) in 2024, ramping up to a run-rate of approximately 1.1 million to 1.4 million pounds of U3O8 per year later this year from three of their existing mines. They plan to increase mining to the rate of approximately 2.0 million pounds of U3O8 per year by 2025 and up to 5.0 million pounds per year in coming years if market conditions continue to be positive, as expected. UUUU is a buy under $8 for a $30 target.
Primary Risk: Uranium prices fall.

Freeport McMoRan (FCX – $51.25) has held up pretty well as copper prices have retreated in the short-term.

Click for larger graphic

I still think we are headed for $7.50 a pound in the next 12 months. And the chart below gets crazier and crazier every week. Why is China keeping all of this refined copper on exchanges instead of in reserves? It’s a mystery.

Click for larger graphic h/t @AndreasSteno

FCX is a buy under $44 for a $65 target within two years.
Primary Risk: Copper prices fall.

Other Recommendations

Acreage Holdings (ACRDF – $0.41) said Canopy USA has exercised their option to acquire the company. The deal will close in the first half of 2025. ACRDF is a buy under $2 for a hold for the Canopy Growth merger and beyond.
Primary Risk: Canopy Growth does not acquire the company.

Mongolia Growth Group (MNGGF – $1.20) got a nice write-up on Seeking Alpha: Mongolia Growth Group: Don’t Discount Kuppy. MNGGF is a Hold.
Primary Risk: Harris Kupperman makes bad investments.

* * * * *

RIP Parnelli Jones

American Hall of Fame racing driver and 1963 Indianapolis 500 winner.

* * * * *

Your tracking 22 CEOs who founded their Fortune 500 companies Editor,

Michael Murphy CFA
Founding Editor
New World Investor

All Recommendations

Priced 6/6/24. Check out the complete Portfolio page HERE.

Portfolio Protection
  June 21 SPY $505 put (SPY240621P00505000 – $0.33)
  June 21 SPY $410 put (SPY240621P00410000 – $0.04)

Buys
These are the stocks everyone needs to own because transformative events are happening over the next year or two, and I expect to hold them long-term.

Tech Dominators
  Apple Computer (AAPL – $194.48) – Buy under $175 for new iPhones
  Corning (GLW – $37.40) – Buy under $33, target price $60
  Gilead Sciences (GILD – $643.85) – Buy under $80, target price $120
  Meta (META – $493.76) – Buy under $345, target price $400
  Palantir (PLTR – $23.79) – Buy under $22, target price $100+
  PayPal (PYPL – $67.02) – Buy under $68, target price $136
  SoftBank (SFTBY – $30.68) – Buy under $25, target price $50

Small Tech
  Enovix (ENVX – $10.77) – Buy under $20; 4-year hold to $100+
  First Trust NASDAQ Cybersecurity ETF (CIBR – $53.69) – Buy under $40; 3- to 5-year hold
  Fastly (FSLY – $7.72) – Buy under $14; 3- to 5-year hold to $80+
  PagerDuty (PD – $19.80) – Buy under $30; 2- to 5-year hold
  QuickLogic (QUIK – $12.12) – Buy under $10, target price $40
  Rocket Lab (RKLB – $4.37) – Buy under $13, target price $30+
  Velo3D (VLD – $0.14) – Buy under $1, target price $10

$20-for-$1 Biotech
  AbCellera Biologics (ABCL – $3.78) – Buy under $6, target $30+
  Akebia Biotherapeutics (AKBA – $1.07) – Buy under $2, target $20
  Aptose Biosciences (APTO – $0.95) – Buy under $10, ultimate target $300
  Compass Pathways (CMPS – $6.91) – Buy under $20, hold a long time for a 10x return
  Editas Medicines (EDIT – $5.43) – Buy under $6 for a double in 12 months and a long-term hold to much higher prices
  Inovio (INO – $10.02) – Buy under $14, hold a long time
  Medicenna (MDNAF – $1.73) – Buy under $3, first target $20, then maybe $40
  ScyNexis (SCYX – $2.29) – Buy under $3, target price $20, then $50
  TG Therapeutics (TGTX – $15.81) – Buy under $12 for buyout at $30+

Inflation
  A Short-Sale or REO House – ($415,400) – Hold
  Bag of Junk Silver – ($31.45) – hold through silver bull market
  Sprott Gold Miners ETF (SGDM – $28.00) – Buy under $28, target price $50
  Sprott Junior Gold Miners ETF (SGDJ – $35.02) – Buy under $39, target price $100
  Sprott Physical Gold and Silver Trust (CEF – $22.90) – Buy under $18, target price $30
  Global X Silver Miners ETF (SIL – $33.89) – Buy under $30, target price $50
  Coeur Mining (CDE – $5.91) – Buy under $5, target price $20
  First Majestic Mining (AG – $6.85) – Buy under $11, next target price $23
  Paramount Gold Nevada (PZG – $0.48) – Buy under $1, first target price $10
  Sandstorm Gold (SAND – $5.58) – Buy under $10, target price $25
  Sprott Inc. (SII – $44.52) – Buy under $40, target price $70

Cryptocurrencies
  Bitcoin (BTC-USD – $70,706.45) – Buy
  iShares Bitcoin Trust (IBIT – $40.16) – Buy
  Ethereum (ETH-USD – $3,805.89) – Buy
  Grayscale Ethereum Trust (ETHE – $35.23) – Buy

Commodities
  Crude Oil Futures – July 2026 (CLN26.NYM – no trades) – Buy under $70; $200+ target
  United States 12 Month Oil Fund, LP (USL – $37.91) – Buy under $40; $100+ target
  Vermilion Energy (VET – $11.57) – Buy under $11; $24 target
  EQT (EQT – $40.66) – Buy under $35; $70 first target
  Energy Fuels (UUUU – $6.15) – Buy under $8; $30 target
  Freeport McMoRan (FCX – $51.25) – Buy under $44; $65 target within two years

Other Recommendations
  Acreage Holdings (ACRDF – $0.41) – Buy under $2 for the Canopy Growth merger

Hold
These are holds but not sells – yet. They could get moved back to one of the buy categories if their prices drop or outlook improves, or they could become sell recommendations in the future.
  Arch Therapeutics (ARTH – $0.95) – Hold for buyout
  Mongolia Growth Group (MNGGF – $1.20) – Hold for probable liquidation

Publisher: GwynRose LLC, 5348 Vegas Drive, Suite 868, Las Vegas, NV 89108

New World Investor does not act as a personal investment adviser or advocate the purchase or sale of any security or investment for any specific individual. The recommendations and analysis presented to members are for the exclusive use of members. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time. Nothing in this presentation should be considered personalized investment advice. No communication to you by Michael Murphy or any of our employees or contractors should be deemed as personalized investment advice.

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The FED is on track to snatch a loss out of a victory. They have brought inflation down to 2% if you remove rent which we know is not accurate due to time lag.

There is no reason NOT to cut in September, and really think they should start in July. If the FED doesn’t cut in September and December we are looking at a much much worse recession, one that can totally be avoided.

I totally agree. It’s only 6 months until the election and it takes the market at least that long to react to any kind of FED Hokey Pokey. So Joe is going to be on Powell like white on rice to get the party started. That plus all the other externals that are playing on the economy are going to push the FED into the rate cut narrative. Europe, Canada and other countries are already in the game with planned rate cuts . Which will put further pressure on the falling dollar. IMO

Like you, other economists (at Deutche Bank) are NOT ruling out a recession. That’s the boogeyman for Powell. They expect unemployment to rise to 4.6 percent by the third quarter of next year, as a result of a drop in the nations real gross domestic product. The current FED’s target interest rate level is overly restrictive and puts a drag on the economy. The housing market is in a stall. Young voters are NOT happy with the current administration. Interest rates are killing real estate, plus the over-the-top prices of homes today are out of reach for first time homebuyers. The national debt is kicking our ass. In 2000 the debt was 60 percent of the GDP. Now it’s 128 percent. The interest payments alone are over a trillion green backs. At this rate is it going to be 256 percent in 10 years? Unthinkable!! Just say’in.

Now with these CPI numbers, a September cut is basically 100%. Now July is a real possibility. Come on FED, don’t throw a pick six at the goal line.

Now with deflation numbers today from PPI, you have to cut in September to hopefully avoid significant damage. Once you start a trend it takes time to reverse it. If Powell doesn’t cut in September he should be impeached as he is taking unreasonable risk. Q1 inflation has should to be new year noise. Wake up FED inflation is not the risk.

Michael: I have been a considerable investor in TGTX for the last 6 years, ever since you first recommended it. I’m pretty depressed about this investment …It just seems to be going nowhere and Michael Weiss the CEO does not seem at all to be interested in selling to a Big Pharma. Quarterly it goes up a little then the shorts hit it almost every. day for the next 3 months…thinking of selling my 10K shares at the next quarterly earnings report. Any advice or council ??

TGTX sales are doing well, but the uber-bulls are impatient and have pushed the stock to short-term overvaluation. They are projecting $100, but MM’s target is more sensible at $30+. I am looking to buy more in the low teens before the next earnings report. Be patient for 3-5 years more.

Like to see that rate cut in July!! The Economy and the USA are doing well….and current administration should get the boost they deserve!!

MM–on AKBA, even though they will get much higher revenue from V when TDAPA starts Jan 2025, why can’t they launch earlier? Sure, they won’t get as much money now, but it is better than nothing.

Why do I sit around holding a biotech stock with no catalyst on the short-term horizon? For many, you can collect DIY Dividends by selling OTM monthly calls against your shares. But for others it could be because a Big Pharma deal could be announced at any time. Or a company could terminate a trial early if the FDA gives it permission because the results are coming out so well. And the final reason, word might leak out in the press that the trial is giving new hope to many. Last week I was lucky enough to add to my biggest holding, NGENF, at 1.36 (missed the bottom at $1.20). Today it closed at $1.70. This report aired on various NBC affiliates over the weekend:
https://www.nbcchicago.com/top-videos-home/study-determining-whether-investigational-drug-can-aid-those-with-spinal-cord-injuries-underway/3458314/

This is just publicity about possible success in the trial. The reporters don’t know anything more than we do. Many months ago, rumors were about 1 or maybe more patients who are having some results. The rumor was republicized a few months later. The runs to nearly $3 fizzled in both cases.

Reality–enrollment has been slow. The PPS will probably settle down again. There will be no news to hang your hat on until early 2025.

At the end of the short video, Dr. Monica Perez who is running the current trial, said “we are excited, very excited” with a smile. Sure, I’m excited about the possibility of good results, but is she giving away some actual positive news? I hope she doesn’t get into trouble for spilling the beans in this double blinded, placebo controlled trial. Meanwhile we have about 6 months before adding to shares. Enrollment is still slow. Chris is right that good things could happen earlier than 2025, such as a BP deal or the FDA permits early termination of this trial for good interim results. But buy only on weakness, maybe $1.50 or lower.

This reminds me of my own experiences seeing patients with interesting problems. Their problems may be serious, so instead of a depressing attitude I could show them, I decide to be upbeat and express fascination and eagerness to help them solve the problems. Like Dr. Monica Perez, I tell them I am very excited to help. All investigators are excited about great theories for which there is some evidence, and we are eager to prove these theories. Then when the preplanned treatment protocol doesn’t work according to theory, we get depressed and go back and rework the protocol, hopefully getting excited again that this time it’s different.

Today’s PPS was relatively flat on the usual low volume, so the bloom may be off the rose.

Vld,I think the original recommendation was to buy up to 11.00 here we go into a 35 for 1 reverse split,NICE

The price at recommendation was $10.32 so post split that becomes $361.20

The stock is currently down an incredible 99% from it’s original recommendation price, which is worse than every bio-wreck that was in the portfolio at the beginning of the year except for NVTA, which is now a 100% loss, one percentage point worse.

Last edited 6 days ago by Brent

NVTA such a shocker – ARTH etc – waiting from AKBA days – now almost hopeless – much money Gone with The Wind…

Agreed,most likely mm doesn’t feel the pain like we do,maybe he gets a ton of shares from the companies he promotes

Most likely what will happen after the split is finished,we will see a stock offering of about 3 dollars a share to raise cash to pay Benny and rest of them

Just like Nochhi did over at Arth

They will need to raise funds to pay their July 1st note payment of $10.5M plus additional funds for continuing operations for the next several months or so.

I was also disappointed that yesterday’s Annual Report had ZERO substance. It was just bureaucratic formalities. In the beginning, they said they would allow time for questions. But there were no questions in the queue. Where the heck were the analysts? Have they all sold already?

I still think the stock chart will be a U-shaped curve this year as they prove that sales meet their guidance. If cash breakeven is delayed much beyond 2024, the bottom of the U could be pennies, way below 10 cents (pre reversed split), with a 1-2 year target of 30-50 cents (pre RS) or $10-17 post split.

MM, again and again, don’t mislead subscribers by keeping “buy below $1, target $10” (pre RS). Always report on financial realities instead of pie in the sky questionable hopes, and regularly adjust buy/target prices.

To MM and all posters: what stock in MMs arsenal is the most probable to diuble by end of year, is it TGTX, SCYX, Bitcoin, etherum, any other? I need a winner!

gern

SCYX will get a small bump after the manufacturing hold is lifted. But that could be longer than we expect, due to stupid bureaucratic delays. And the stock has already risen about 25%, discounting some of the advance. Receipt of favorable CURES and FURI trial results could give another bump which would fizzle somewhat because favorable news doesn’t immediately increase revenue the way the manufacturing restart would. I would say a double is a long way off.

TGTX is rapidly increasing sales, so I see it advancing sooner and more than SCYX in 6 months. Probably not a double, but likely at least 30%. A few astute traders like Very on ymb think that TGTX could decline briefly to fill the gap below $14. MM’s buy is below $12, which I hope happens so I can add more shares.

I feel your pain. I think we all need a big win.