Investing is hard
Down the capital stack
Joined December 2019
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The leather jacket affectation in an adult wasn't a clue?
Didn’t realize Jensen has been married since 1985 to his wife Lori and they have two kids together
I know we’re not certain that he was shagging the CCP spy but if he was (which it’s looking more and more likely) and he can lie to his wife of 41 years then it makes you wonder what else he could lie or mislead about
I don’t think he’ll have to resign over this but I do think people may question his character
Industry-wide, and over a full year, is GPU utilization higher in training clusters or in inference clusters?
They're calling it the most European tweet ever
It’s getting surreal.
A mathematician on X announced a solution to one of the most beautiful and elegant problems in mathematics. I’ll keep him anonymous. You’ll see why in a moment.
Is ℤ Diophantine in ℚ? In other words, can a single polynomial equation pick out exactly the integers among the rational numbers?
Equations like these go back to the ancient Greeks. This particular question has been open for decades. There are good reasons to expect the answer to be no. Surprisingly, the proposed answer is yes.
So, what’s the problem?
The problem is that the author candidly says in the post “I don’t have the expertise to understand this solution”, but he posts it anyway as he has “high confidence” on it.
The proof doesn’t even have the formal Lean verification.
This is literally an AI generated proof that looks plausible, but nobody has actually verified.
This is exactly what we call Epistemia. The argument looks plausible, and plausibility takes the place of verification.
Until recently, a mathematician would be embarrassed to announce a proof he couldn’t understand.
Now it risks becoming the norm.
I think this is partly due to short term incentives.
Announcements like this get you thousands of followers and interviews with journalists. (Now you know why I’m keeping him anonymous.)
Epistemia is already a big issue.
It’s a tragedy that short-term incentives - Andy Warhol’s 15 minutes of fame - are pushing people to become even more sick.
*
In the first comment, you’ll find our epistemological fault lines paper, where we discuss Epistemia at length. I think it’s useful to understand what’s happening.
Fav example of the Chud Veto is how mathematicians are trying to get a guild in place to ban AI proofs, and normies basically say "Hands off 'em, boys. Love me mafs, simple as.'
My friend at a pod shop has gallows humor about all this
Him: [compelling fundamental pitch with 18mo time horizon]
Me: Wow, compelling. How much do you own?
Him: None.
Me: Huh? Why not?
Him: My job is waking up at 4am to day trade chip stocks
Agree. I know quite a few people at Walleye, and Samlyn Capital for that matter. Tough to see what’s happening at both firms. October was certainly brutal for parts of the industry.
But I think there’s a more interesting question here than whether the pod model continues taking share.
What happens to market structure when an increasingly large proportion of active capital operates under similar risk constraints?
Traditional fundamental investing is principally concerned with the relationship between price and intrinsic value. Multi-manager platforms introduce another variable: the relationship between expected returns and the amount of risk capital required to capture them.
And those objectives don’t always align.
As more capital migrates towards platforms with tightly controlled drawdowns, exposure limits and relatively short performance measurement windows, you potentially create a market increasingly sensitive to positioning and flows rather than fundamentals.
The irony is that individually rational risk-management decisions can become collectively destabilising.
One PM reducing exposure after a drawdown is prudent. Hundreds of PMs doing so simultaneously, particularly where their portfolios share common factor exposures, can create price dislocations entirely disconnected from intrinsic value.
Which raises an interesting possibility: could the continued institutionalisation of the pod model actually increase the opportunity set for patient fundamental investors?
If the marginal investor is increasingly constrained by short-term volatility, the investor capable of underwriting longer-duration uncertainty without facing forced liquidation potentially possesses a structural advantage.
Of course, that advantage is only meaningful if you can survive the volatility yourself.
Perhaps the real distinction isn’t pods versus single managers, but investors whose time horizons are dictated by their investment theses versus those whose horizons are dictated by their risk budgets.
And if the latter increasingly dominate price discovery, the former may ultimately have more opportunities to exploit.
A fascinating paradox if the very model taking market share ends up creating the inefficiencies that others monetise.
Funny that the Financial Mail keeps quoting the parts liquidation thing as underpinning my belief that HCM is in talks to acquire IA Bell. That's like the 19th thing down my list of reasons, and it could be nothing at all. $jsebel
Shipyard Capital retweeted
Situational awareness used margin and got liquidated. Walleyes, carrying on the work was similarly liquidated.
Now it is our turn to use margin.
Shipyard Capital retweeted
$TMDX TransMedics Q3 results are lipstick on a pig - the business is becoming increasingly bizarre. 72% of the already-tiny sequential increase in revenue came from a newly-consolidated German business-jet charter operator -- not organ transplants or medical devices. The core business already appears to be ex-growth without it. TMDX looks like an aviation/logistics business masquerading as a medical device company.
This was the new CFO’s first earnings call. He’s 6 weeks into the gig. Third CFO in two years. His predecessor didn’t last long.
The unusual CFO turnover is typical of scams, as is the bizarre accounting: TMDX acquired a minority equity stake in PAD Aviation, yet consolidates the German operator's revenue under variable interest entity (VIE) accounting. The result: $9.4 million of unrelated private aviation revenue included in TMDX's Q3 results, accounting for nearly three-quarters of its sequential revenue growth.
Excluding PAD, total revenue grew just 2% QoQ, while services revenue was also essentially flat. Gross margin deteriorated, as well.
The stock bounced after-hours on a revenue "beat" and raised 2026 guidance. But the bulk of the increase in the guidance midpoint came from PAD Aviation, the German private aviation operator.
Details:
1. Almost three-quarters of Q3's sequential revenue increase came from German private jet charters unrelated to transplantation
Q3 revenue was $203 million versus $190 million in Q2, an increase of just $13 million. However, $9.4 million - or 72% - came from PAD Aviation. Excluding PAD, revenue increased only $3.7 million, or -2%, sequentially.
2. The core U.S. medical device business appears to have hit a wall
U.S. product revenue has barely budged in three quarters: approximately $102 million in Q1, $106 in Q2, and $107 in Q3. Sequential growth was barely 1% in Q3.
Total product revenue increased only 2% sequentially, from $111 to $113 million.
3. TMDX's services "growth" was almost entirely German jet-charter revenue
Services revenue increased $10.8 million sequentially, from $79 to $90 million. But $9.4 million — or 87% of that increase — came from PAD's unrelated charter operations.
Excluding PAD, services grew just $1.4 million or approximately 2%.
Meanwhile, services have grown to 44% of total revenue -- the revenue mix is shifting away from high-margin medical devices toward lower-margin services, including private jet charters unrelated to transplantation.
4. The guidance "raise" is largely a German charter-jet business dressed up as growth.
TMDX raised the midpoint of 2026 revenue guidance from $747 to $769 million, or $22 million. But $14 million — nearly two-thirds of the increase — is attributable to PAD Aviation.
5. Our analysis of publicly available third-party flight tracking also raises concerns about Q4 revenue. Based on the current run rate, we see risk of a massive miss unless transplant flight activity rebounds sharply in November and December.
Disclosure: We remain short $TMDX. Please refer to the disclosures on p. 2 of our January 10, 2025 report on TransMedics, which this post incorporates fully by reference.
Shipyard Capital retweeted
And now there’s a third constraint: crowding is incredibly hard to measure. Everyone knows this. It’s just really fucking hard. Much harder than any other factor. Qualitatively everyone (esp on the sell side) knows crowding when they see it, but getting that in a normalized cross sector fashion across time out of 1 million conversations with the sell side and into the model as a X parameter……hard…..
But wait there’s more! The pods are levered. This is also why they’re so rich! If you’re levered 6x you can make a lot of money on 6 different teams betting separately on which shoe retailer was slightly less affected by leap year dynamics.
Wait! One last one! Payouts are one way. They can pay you a lot of money, they can fire you, but they CANT claw back what they’ve paid! (Payouts also have a bit of a hurdle dynamic: we all went to Harvard and only need to be explained a multivariate regression structure once….clearly we can all make the implicit 200+200 fairly easily…..less clear that we can walk away and make 200+3800 somewhere else)
Now as a backdrop, the pods have been winning share and they’ve been winning share for many of the above reasons alluded to: they are capital light business models that deliver an insane product to LPs (insanely reliable income streams) via diversified alpha driven leverage.
With success comes some of the curses of success. In this case some of said curses are 1) wage inflation (a cost), 2) rising competition. The said combination of which has resulted in a talent battle for people who share some common “factors” (pun!): they tend to be liquidly employable, they tend to behave and think in similar ways, they tend to be young, and (if they’re good) they tend to be rich.
Pods are ultimately a human resource business (some legitimate advantages of scale notwithstanding) but this poses some real adverse selection problems. Firstly, when you have a bunch of people who are liquidly employable they move a lot! And if the firms are raised on the same business model they likely have the same investment ambitions and risk limits. So if the same people are working in the same structure they might be building similar systems???
Now you should be reading this and the answer is obvious: correlation risk! And indeed that is the case, everyone knows it. Correlation risk has been rising at the stock level, the team level, and even in the realized fund performance level (especially once you strip out some legitimate idio elements in master fund capital contribution & investment mandates) (allocators will get that comment)
So correlation risk has been rising for a decade+ now. And it didn’t really matter when the untapped pool for multistrat edge was large. But now there’s a fuck load of multistrat capital. This is really what people complaining about the market being broken mean. The market isn’t “broken”. There’s just an unobserved variable (a custom factor so to speak) of a particular stock being useful in pod factor land. This results in apparent one way price action and massive over/undershooting especially around thematics (SAASpocolypse!) (for the sharps among you note that these themes can be quite narrative driven transient which is mathematically speaking from a risk perspective equal to saying they’re really fucking hard to identify and measure)
Honestly this is fine. In the end water finds its level, edges get competed away, stocks eventually earn what they earn, etc. But there is a cohort here who is not so well positioned. It’s the least desireable multistrats.
(Continued)
LTAs mark peaks for the same reason your cold gets better after you go to the doctor, regardless of what he gives you: mean reversion. You sign an LTA (see a doc) when things are unusually bad, & when things are unusually bad there are more ways for them to get better than worse
Congrats to $JSEBEL on launching a rental and used equipment initiative. This has been the company's dream for over a decade, but they've always said they need the balance sheet of a larger partner to fund it. I hope they can find that larger partner!
Tho a friend points out that HCM doesn't need Bell's involvement to do rentals within their network. So the more interesting implication here is that rentals will be extended beyond the Landcros network. Harder to square with a partnership, easier to square with an acquisition.
Another reason this tweet is wrong: owning the rental channel makes less sense in the construction-heavy US. $jsebel rental efforts will be in mining-heavy Africa and LatAm, presumably with Itochu's balance sheet.
Instinct is great. Been making and cancelling appointments with it, making online orders with it. Already a time saver. Obviousiy the frontier labs will have to offer something similar, but will they be able to charge for it, or will margins just compress?
RT @atelicinvest: Looking for someone really fucking good at
- agentic masking
- agentic 3d model building - measurement level accuracy…