Monthly rollup | March 2025
- Apr 1
- 9 min read
Stocks Mentioned enCore Energy (EU), CoreWeave (CRWV), Nvidia (NVDA), Microsoft (MSFT), Taseko Mines (TGB: TKO.TO), Super Micro Computer (SMCI), Enbridge (ENB), Chevron (CVX), LyondellBasell (LYB), Valaris (VAL), Seadrill (SDRL), Dell Technologies (DELL), TETRA Tech (TTI), Eog Resources (EOG), Exxon Mobil (XOM), Uranium Miners ETF (URNM), junior Uranium miners ETF (URNJ), Vietnam ETF (VNM), CF Industries (CF), Forge Global (FRGE)
Highlights
March 04, 2025
Almost time to buy Uranium
In Jan 2024 when I wrote this, uranium sentiment was uniformly bullish and the technicians and momentum chasers had turned it into a bubble.
After a disastrous 2024, Uranium Miners ETF (URNM) is down a further 19% ytd while the junior Uranium miners ETF (URNJ) is down 22%.
In 2023, the market cheered when miners raised equity to buy spot. Yesterday, US miner enCore Energy (EU) collapsed 46% on announcing lower production and increased spot purchases.
When it comes to commodities, fundamentals absolutely matter. They are extremely cyclical even if they are in secular up/downtrends.
Now that sentiment has swung the other way, uranium miners are starting to look interesting again, but I reckon we're still a quarter or two away from the bottom.
CoreWeave IPO
CoreWeave (CRWV) IPO prospectus explains the Nvidia (NVDA) revenue round tripping scheme I wrote about in this thread.
Step 1: Nvidia takes a stake in CoreWeave, with dollars flowing from Nvidia's treasury into CW's.
Step 2: CW then places orders for NVDA GPUs and sends the cash back.
Step 3: Nvidia then pays them fees for infra and platform services, returning the money back to CW.
Side hustle: Microsoft (MSFT) also contributes revenue to CW, then turns around and sells "Azure credits" to AI startups in exchange for equity stakes. The credits become MSFT revenue, whether the startups actually need them or not.
Step 4: Since CW needs GPUs to keep this scheme going, they raise debt backed by GPUs and these supply contracts, further inflating Nvidia sales.
Net result: CW has $12.9 billion in asset-backed debt and with revenue drying up, are looking to unload stock on retail investors at a fluffed up valuation.
This IPO should have more risk warnings than a packet of unfiltered cigarettes.
March 05, 2025
"Canada says NO to Prosperity".
That was the 2020 article headline when the Supreme Court and a BC First Nation killed Taseko Mines (TGB: TKO.TO) New Prosperity copper project in BC.
Taseko said FU (well, not literally) and moved on to the Florence Copper project in Florence, Arizona. Florence will enter production in Q4. It was a long road, but at least there's no First Nation risk and they benefit from Trump's trade war.
Now it seems Canada is having a change of heart and has rescinded their policy of scoring own goals.
From Taseko (TGB TKO.TO) Q4 earnings call: We have recently re-engaged and remain optimistic that we can reach a successful conclusion to that dialogue [with the Tsilhqot'in Nation and the BC provincial government on New Prosperity].
March 07, 2025
Prior to the bursting of the dotcom bubble, SEC Chairman Arthur Levitt took aim at corporate accounting fraud, filing multiple enforcement actions against companies engaged in cooking their books.
In one famous case, the SEC Enforcement Division noted that the CEO of Unison Healthcare handed the controller a note that contained the numbers he wanted, saying "I don't care how we get there".
Why was fraud so prevalent in the late '90s? Easy money. In 1998, the Fed took the unusual step of bailing out a popular hedge fund to save the likes of Morgan Stanley and GS from taking sizable losses. The top brokerage firms had lent the hedge fund money and not demanded any collateral 'cos they thought the guys running the fund were geniuses and couldn't lose.
In an era where stupidity gets a bailout, why not stretch the boundaries of accounting and cross the line into outright fraud? After all, others were doing it and getting away with the act.
Given this history lesson, it does not surprise me that once again, companies are cooking the books. Easy money distorts everyone's moral compass. I have no sympathy for NVDA and Super Micro Computer (SMCI) but I do understand why this market environment creates frauds.
And unlike the SEC under Levitt, this time there is little enforcement. The SEC even greenlit memecoins since not doing so would displease the President.
When the dotcom bubble burst, the S&P 500 had a decade of zero returns. This hangover isn't going to be any different given the excesses of this era are orders of magnitude higher. With one exception - since the Fed keeps printing, the indices will go higher in nominal terms but lose out when valued against a hard asset like gold.
March 08, 2025
Canadian pipeline company Enbridge (ENB) is increasing capacity by ~10%, notwithstanding Trump's hostility. US PADD 2 refineries are way too dependent on Canadian crude and simply can't do without it.
Chevron (CVX) might be out of Venezuela by the end of Trump's term, but Canadian crude will continue flowing to the Midwest.
March 13, 2025
Chinese stocks are dirt cheap at the end of a 10-year long bear market. While retail focuses on the Mag 7 with the forlorn hope they will stage a comeback, tech fund managers are rotating out of expensive US & India tech and into cheap Chinese tech.
March 15, 2025
EU slapped a 25% tariff on US soybeans, following in China's footsteps and retaliating against the Trump tariffs.
US agriculture is going to suffer the most from this trade war, no different from the Great Depression when prices collapsed and farmers couldn't make their loan repayments.
As a kid, I remember watching a movie where a group of farmers with shotguns would descend on a bank auction and force the bank to sell back foreclosed land at $1. I didn't understand what I was watching but that memory lingers.
By the time this show is over, Trump is going to lose his rural America voter base.
Importing eggs from Denmark while culling hens in the US - why does the government hate farmers so much?
Vietnam - A beneficiary of the trade war?
Vietnam steel exports to the US were up 159% in 2024. Aluminum exports were up 9.5%. Tariffs might end up hurting their competition more given Vietnam is a low cost producer.
The country is also a big beneficiary of manufacturers moving parts of their supply chain out of China.
But forget the fundamentals - look at the RSI on the Vietnam ETF (VNM)!
Michele Schneider and Jason Perz have been talking about this for while now.
India's massive Gold short
It is no secret that Indians love gold. Outside of India, few people know that the Indian government and central bank went short gold in November 2015, close to the historic bottom.
At least Gordon Brown only sold the UK's gold reserves and didn't go short.
The Indian govt figured they could borrow in gold and pay only 2.5% in interest, as opposed to 9-10% on rupee denominated bonds. They didn't factor in gold appreciating in value (gold had declined from $1900 to $1100 from 2011-15). The result? An epic loss and panic short covering.
This is just one among the fundamental bullish factors driving the gold price.
March 17, 2025
The NVDA CoreWeave (CRWV) fraud has been likened to GE's vendor financing schemes using GE Capital, but there's a nuance here.
Under vendor financing, GE may sell a turbine to an actual customer who has a use for it but can't afford to pay. GE Capital takes on the risk of loan losses, the turbine unit books revenue and profits. GE Capital shows loan "growth" and gets the investment bankers to give it more capital.
The NVidia CoreWeave deal eliminates the end customer. It is akin to Kekule's snake - a snake that feeds its hunger by swallowing its own tail.
Think of it like this.
An automaker (NVDA) sells 100 cars to a car dealer. The car dealer (CRWV) doesn't have to sell them to customers who come by his lot. He just keeps title, and sells back 10 cars a year to the automaker at a pre-set price. Guaranteed profits for the dealer; guaranteed immediate revenue for the automaker. Win-win.
If you do this kind of transaction in financial markets, it will be called "securities parking". The fall of Drexel Burnham, Michael Milken and Ivan Boesky was partly due to such parking transactions using high yield bonds.
If GM can't book sales this way, and this practice is illegal for financial firms, is the NVDA CRWV story any different because it involves chips rather than cars or bonds?
Nope.
Revenue round tripping and the lack of disclosures around the various Nvidia SPVs (#CoreWeave is just one of many such deals) is clear accounting fraud.
The market may not care, but the lawyers and courts most definitely will.
This is going to be bigger than Wirecard.
March 19, 2025
LyondellBasell (LYB) shut down a petrochem plant in the Netherlands citing high cost of European production which is expected to continue.
CF Industries (CF) shut down its fertilizer plant in the UK 3 years ago for the same reason.
If you want to see the future of the European Union, look no further than the former African colonies of France, Belgium and the UK, all of which de-industralized rapidly post-colonial rule.
Ceding national sovereignty to unelected bureaucrats in Brussels, who spend their time sipping Perrier and cooking up more taxes and regulations, has always been a recipe for disaster.
This time, it is hitting home rather than abroad.
March 21, 2025
Oil bulls love talking about how Valaris (VAL), Seadrill (SDRL) etc are so cheap right now.
But the CEO of Seadrill thinks that onshore drillers are the place to be.
"I think the calorific value of a barrel of oil has been underappreciated of late. And it's good to see some common sense start to prevail in terms of how our principal customers are allocating capital. We believe that we're seeing some of that shift, I mean, expenditure already, and it will only intensify, given the actions of people like BP here in recent days.
There is also a lot of people talking about the change in the US administration. We believe that the Lower 48 drillers are the principal immediate beneficiaries of that". - Simon Johnson, SDRL Q4 call.
March 25, 2025
The Great Crash
"The reality was that this dubious asset was gaining in value by the day and could be sold at a handsome profit in a fortnight.
It is another feature of the speculative mood that, as time passes, the tendency to look beyond the simple fact of increasing values to the reasons on which it depends greatly diminishes.
And there is no reason why anyone should do so as long as the supply of people who buy with the expectation of selling at a profit continues to be augmented at a sufficiently rapid rate to keep prices rising." - The Great Crash, 1929 by John Kenneth Galbraith
This passage was in respect to the Florida real estate boom but aptly describes investor behaviour in any speculative bubble.
March 26, 2025
First, consumers slow down purchases of new cars. As cars accumulate on lots, auto makers slow down production. That translates into lower inventories, which translates into less demand for steel. This is called the bullwhip effect.
The steel tariffs will end up raising prices just as demand drops off, triggering a doom spiral and worsening the woes of the auto sector.
This dynamic is also at play in the data center industry. Hyperscalers splurged on capex expecting demand to rise until eternity just as DeepSeek killed demand for training LLMs and caused a capacity glut.
Now MSFT is desperately cutting capex, recently backing out of a $12 bn deal with CRWV, and private investors in AI companies are desperately seeking liquidity through platforms like Forge Global (FRGE) before SHTF.
The Jevons paradox is BS. If you go back to the rise of AWS around 2015, cloud killed demand for Dell Technologies (DELL) servers in the SMB segment.
Why would individual users need to use NVDA GPUs at a CoreWeave data center for inference when DeepSeek R1 works just as well on the Apple M1 chip?
All capex intensive businesses are inherently cyclical, be it autos or semis. This is the part of the cycle where you want to avoid owning them.
March 30, 2025
The Permian is getting gassier
A recent Reuters article confirms what industry execs have known for a long time: the Permian is getting gassier and shale oil growth is petering out (link below).
As noted in the article, producers are also grappling with higher waste water production from oil wells.
One company - TETRA Tech (TTI) is uniquely positioned to address waste water treatment and recently signed a deal with Eog Resources (EOG) for the same. The company has also partnered with Exxon Mobil (XOM) in extracting bromine from brines in Arkansas.
My preferred way of playing this is owning onshore drillers. As DUCs dwindle, frac fleet utilization goes up. As companies move to tap Tier-2 acreage to make up for slowing growth (not to mention the decline rate starting to matter), drillers should be kept busy. I don't need higher day rates to make money, just higher rig utilization.
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Good Trading!
Kashyap
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