Update - October 24, 2023
Good News in a Volatile Market
Volatility, volatility, volatility…
That’s the enduring theme of our current market environment. Most folks view “market volatility” as a euphemism for uncertainty. And boy is there plenty of that.
Here’s a quick look at the VIX year to date…
Volatility is back to where it was before the summer lull… while the S&P 500 is down about 8% from its 52-week high – a couple of percentage points shy of a correction.
The Fed’s “higher for longer” message has officially killed the mood. But we saw this coming from a mile away and have steadily positioned our portfolio accordingly.
Today, we’re holding shares of great companies that are pushing their industries forward and are poised to see a ton of growth no matter where rates – or the economy – go next.
Here are just a few examples…
BHP Group (BHP) announced that its newest nickel mining project, which is set to recover roughly 80,000 metric tons of nickel over the next seven years, is now fully operational. It’s expected to produce nearly half of the nickel ore in its region.
Nickel mining projects don’t get the attention that other metal mining projects get. But as the world’s demand for EVs and lithium-ion batteries increases, so will the need for nickel.
Just under 10% of lithium-ion batteries are considered “high nickel,” meaning composed of 80% or more nickel. But that number is expected to rise to nearly 50% by 2030.
And thanks to worsening geopolitical tensions, domestic production is becoming more important than ever. Last year, the U.S. produced an estimated 18,000 metric tons of nickel. Meanwhile, Russia produced roughly 220,000 metric tons.
BHP’s mining project is not good just for the company. It’s also good for the U.S.
Meanwhile, the AI revolution continues to take shape in our portfolio.
CCC Intelligent Solutions (CCCS) just launched a new AI-based photo analysis tool designed to optimize its insurance claims process and give users the ability to better estimate indemnity amounts before appraisal.
And Recursion Pharmaceuticals (RXRX) has reached the first major milestone in its partnership with Roche. Using the machine learning capabilities of its Recursion Operating System, the company has found its first potential cancer drug target, which will be further studied and developed with Roche as per the firms’ contractual agreement.
KBR (KBR) was recently awarded a five-year, $75 million contract by the Department of Defense to provide research and analysis on advanced materials engineering, renewable energy and AI.
Finally, we got stopped out of our position in SmartRent (SMRT) at last Thursday’s close.
The company became the target of a short selling firm last month. That sent shares tumbling… and they failed to rebound. If you haven’t done so already, go ahead and sell your shares.
A number of companies in our portfolio will release quarterly earnings over the next few weeks. We’ll keep a close eye on the results as they come in.
