H1-B Haircuts
This Week in the Market
This week is being shaped by two threads: Washington’s moves on H-1B visas and the Fed’s rate cut. The new visa framework initially spooked headlines, but the market view is that the burden will mostly fall on employees through lower compensation, not companies through higher costs.
Meanwhile, the Fed cut rates by 25 bps, with Powell signaling that more easing is likely in the months ahead—potentially as soon as next month. That dovish stance keeps the tailwind behind risk assets, anchoring expectations for a soft landing.
Reviewing Past Trade: ATYR
Two newsletters ago, our trade idea segment revolved around shorting ATYR and hedging the position.
We combined a combination of Shorting Stock, Shorting Puts, Buying Calls.
aTyr Pharma collapsed after its lead drug efzofitimod failed to meet the primary endpoint in a Phase 3 trial for pulmonary sarcoidosis. With little revenue, heavy cash burn, and few other near-term catalysts, investors slashed valuations, sending the stock down over 80%.
Trade Update: QBTS
We mentioned shorting QBTS back in May, the stock has doubled since then but we are protected to an extent through the mentioned delta-hedge and credit enhancement techniques.
The two main catalysts for this stock trading higher is the recently signed Tech Pact (no mention of QBTS but provides quantum hype) as well as a short squeeze (we personally know people and firms covering or getting liquidated).
We still maintain a strong stance that this is a very weak company, being priced like they're on the verge of useful Quantum Computing. Insiders at the company tell us a Gate-Based Model (the important type of Quantum Computing) is no where in sight.
We've added about 50% to our position last Friday, and plan to add if things get even more out of hand. Position sizing and hedging is key during a short squeeze.
Disclaimer: We are short shares and hold various option contracts of QBTS as of writing this. The content in this newsletter is for informational and educational purposes only and should not be considered financial, investment, or legal advice. A4K Capital and its affiliates are not responsible for any financial losses or decisions made based on the information provided.
