Eagle’s Sean Sequeira on why he sees potential in arguably the market’s ‘most hated stock’, his bullishness on the medical device sector, and the hidden value in Incitec.
What was the reason for shorting Block? Why did you exit the position?accepted bid by Block for an all-scrip takeoverSean Sequeira is a “late convert to podcasts” and is now addicted to the Macro Trading Floor with Alfonzo Peccatiello.The first reason we explored the possibility for a short was the explosive buy now, pay later growth sought by Afterpay investors would be diluted within the larger Block business.
Their dependence on a few major clients, despite years of attempting to diversify, and what we believed to be the market’s incorrect perception that Appen is an AI company, thus valuing it at a technology company multiple rather than a much lower employment agency type valuation, gave us comfort in the short position. Again, this position was closed when it met our expectations.
The valuation of the explosive company is being diluted by the volatility of the earnings in the fertiliser business. That said, there is also the potential for strong cash flow from elevated fertiliser prices for longer than the market expects as a result of global food shortages and low levels of fertiliser production, especially out of Europe.
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