Bullseye Brief presents three thematic, actionable investment ideas every other week. My goal is to help identify only those opportunities most worthy of your time… by analyzing data, distilling complexity and sharing insights from a deep network of experts. I love what I do and invite you to join me.
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Adam Johnson

Adam Johnson anchored several business programs at Bloomberg Television over five years, interviewing CEOs, heads of state, and Nobel laureates. His daily video investment blog, Insight and Action was sponsored by a major U.S. lender. Previously he managed global risk assets for ING Furman Selz and Louis Dreyfus, trading oil futures, listed equities and equity options. Adam began his career at Merrill Lynch with a degree in economics at Princeton.


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Bitcoin Proxy

A Smarter Play

  • Bitcoin’s surging market cap makes it bigger than Boeing, McDonald’s and Pepsi
  • Scarcity of bitcoin assets creates a feeding frenzy analogous to the dot-com surge in 2000
  • Only two publicly traded U.S. companies have outlined plans to facilitate bitcoin-related trading

Bitcoin has officially busted out of Cyberspace and onto Main Street, with news from crypto-currency trading platform Coinbase its 13M accounts outnumber Charles Schwab users by 30%. Middle America clearly wants in, and while the dangling carrot of exponential trading profit provides ample incentive, thoughtful investors will find there’s more happening than an overnight money grab. We’re witnessing the early days of a grand socio-economic experiment called tokenization… the next step in an evolution which began two decades ago with rewards points, and has since blossomed into the sharing economy courtesy of Uber and AirBnB. “Bitcoin 10,000″ may grab headlines, but what’s really happening is a beta test for something much larger. The 1,500 crypto-currencies currently trading facilitate decentralized transactions in an increasingly fragmented market place, so my focus is less about what bitcoin is worth and more about what it enables. Yes, I too want to get rich, but I want to deploy my capital strategically in a way which creates the most leverage to what’s happening. Put another way, I’d rather sell shovels to miners than go digging myself. The question is what do I buy today in order to position for tomorrow.


December 02, 2017

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Deja Vu

Media Merger Redux

  • DoJ sues to block 2nd largest media buyout ever but assigns judge whose precedents may keep deal alive
  • Case hinges of whether content/distribution combinations harm or hurt consumer choice
  • Video content quadrupling by 2020 becomes the crown jewel for aging media and telecom franchises

We’ve seen this movie before, and it ends better than most expect. In the early 2000s I applied my options expertise to the deal-centric world of risk arbitrage… betting on the outcome of M&A transactions by simultaneously purchasing targeted stocks and shorting their acquirers in order to capture announced deal spreads. It was a quirky way to invest, but the experience proved immensely useful at teaching me how to discern nuance. Typically these paired trades yield 2-3x the prevailing risk-free rate, though spreads can widen significantly if regulators push back during the review process. This is where the real money is made in risk arbitrage, and the recent Department of Justice action against AT&T in its proposed acquisition of Time Warner presents just such an opportunity. Shares of both companies are in free fall since the DoJ announcement, yet the judge assigned to the case is the same person who green lit Comcast’s purchase of NBC in 2011. Does history repeat? I’m betting it does, though what I’m buying as a result may surprise you.


December 02, 2017

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One Word Investing

Inflation Anticipation

  • Federal Reserve Chair Yellen upgrades U.S. growth assessment in final Congressional testimony
  • Multiple measures of economic activity posting new all-time highs as Fed prepares to raise rates
  • The New York Fed’s Underlying Inflation Gauge (UIG) rises to its highest level in 10 years

My long-time mentor has a gift for distilling complexity. He calls it One Word Investing, and before you decry his minimalist approach as one dimensional, I can assure you singular words have made him exceptionally wealthy. He told me Oil when prices fell to $30/bbl, and profited as well-funded E&Ps came roaring back. He mentioned simply QE in 2010, and snapped up banks in single digits… look at them now. Chair Yellen offered a single word last week in her final testimony before Congress as Fed Chair: Solid. This is a big deal. As the Fed prepares to raise interest rates in December for a third time this year, Ms. Yellen is letting us know she believes U.S. economic growth has improved from moderate to solid. Her re-characterization paves the way for three additional rate hikes next year, reflecting a desire to raise the cost of capital to more normalized levels AND get ahead of the curve on inflation… yes, the I word is back. Inflation may still be below the Fed’s long term target of 2%, but not by much. Some measures suggest it’s significantly higher, and multiple indicators confirm it’s gaining momentum. One instrument in particular benefits as rates rise, and one fund enables me to buy at a discount. It also yields 3.8%. I like this combo.


December 02, 2017

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4

As in the NASDAQ is on track to post its best performance in 4 years, up 29% YTD.
#FANGandSemis

22

As in the House can only afford to lose 22 GOP votes as the Senate tax proposal goes to conference and ultimately back to the House for ratification.
#GitErDone

401

As in the DJIA fell 401 points when news broke that Flynn pleaded guilty to lying to the FBI about speaking with Russians during the transition, though the index came roaring back to finish nearly unchanged on the day.
#TaxDealMattersMore

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“Fifty-one senators want to cut taxes, one senator is trying to raise taxes.”
–Sen. Ted Cruz referring to Sen. Bob Corker’s proposal to claw back tax cuts if the deficit rises. 
#Politics

“This is a bubble and there is a lot of froth. This is going to be the biggest bubble of our lifetimes”
–Crypto Investor Mike Novogratz referring to the rise of bitcoin above 11,000

#HowDoYouGoShort?

“It’s pretty neat… very flattering, very humbling… that so many people really enjoyed what I’ve done throughout my first 20 years on the Tour.”
–Tiger Woods responding to the eruption of fans on Twitter as he took the lead at the Hero World Challenge Golf Tournament. 

#MaybeTigerIsBack