Nick Hodge,
Publisher
Aug. 27, 2024
Editor’s Note: Hodge Family Office is meant to help you allocate your speculative capital. It contains a portfolio of speculative investments that I am personally buying to manage mine. Every speculation I recommend has the goal of generating 200% to 500% returns within 2 to 5 years. And I cover what I’m buying and why in weekly issues that have come out every Thursday for the past 15 years. If you’ve never seen Hodge Family Office before, you’re in luck. Below you’ll find a reprint of last week’s issue. It’s been stripped of covered investments to keep them exclusive to paying members. Enjoy.
—Nick
Time and time again, Lord, I been going through the motions
It's a means to an end, but the ends don't seem to meet
—Sturgill Simpson, Livin’ the Dream
Sales are back to pre-pandemic levels while costs remain inflated.
That’s the story you’ll hear from many small business owners and salesmen out there right now.
It’s a means to an end, but the ends don’t seem to meet.
In the short-term, that feeling is because of stagflation — the economy moving like molasses next to the quicker flow of price increases. The cash-flow crunch is real even for the asset owners.
In the longer-term, the situation appears much more dire given the debt loads faced by governments and consumers alike.
The void you see in the future can be attributed to the replacement of natural economic cycles with global financial engineering.
And that’s why the entire world has their head up the ass of a private equity lawyer hanging out in an establishment enclave this week.
He/they/it of course is/are going to cut rates next month. The collective “they” are likely demanding it behind the scenes given the aforementioned slowing and the increasingly unbearable interest on the aforementioned debt.
Anyone who tells you they know how it all ends is lying. But there are signs.
We aren’t waiting on some end-game scenario here because we don’t know what it will be. Instead, we are managing our way through it and allocating to trends and likely outcomes that will pay off two to five years in the future.
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Eight of our thirteen open positions have been in the portfolio for less than two years. Patience, as I have often told you, is also an asset class.
Many of our theses are playing out in the forest even if you can’t see them in the trees.
So if you ain’t having fun, just wait a little while.
We have several open positions in our 20-position portfolio, which is why my cash is at nearly 30%.
Speculation has been tough across the entire smallcap spectrum since the Russell 2000 peaked in late 2021 and the market became super-concentrated in large cap tech names.
That pendulum is starting to swing a bit, with the Russell up 16% in the past year — but it isn’t yet ready to accelerate back to equilibrium given the ongoing strong performance of the S&P and Nasdaq, whether due to financial engineering or not.
We have worked hard to be able to afford to wait for our pitch. (On a related note, this short video with Barry Bonds and Greg Maddux is worth a watch if you haven’t yet seen it.)
I know you can’t chart the VIX. But it’s not happy. And like a toddler, it needs to take a nap before we can enjoy any future activities.
Lines on charts say it’s not ready to lay down yet.
Especially with an election in ten weeks that has quickly turned an already Bizarro World into the Twilight Zone.
We anxiously await the rate cut and the election as they will at least bring a sense of direction back to the market no matter the outcome of the latter.
There is no portfolio news worth getting into this week as the last days of summer fade into the ether. Everyone will be back to it soon.
That includes your editor, who will be traveling to both Peru for a site visit and Colorado for a conference in the first half of September.
Housekeeping
Son if you ain't having fun just wait a little while
Momma's gonna wash it all away
And she thinks mercy's overrated
—Sturgill Simpson, Livin’ the Dream
I was recently putting together some welcome emails for new members of this service, and I came across the following introductory advice, which I thought was worth revisiting for everyone.
Hodge Family Office is written every Thursday. It focuses on speculations in small companies through a contrarian macro lens.
Each issue usually starts with macro market commentary around the broader stock market, the dollar, bonds, volatility, and other relevant factors of the week in the context of our positioning. And then I get into any relevant portfolio news, updates, or guidance for the week.
The model portfolio consists of up to 20 speculative positions. A full write-up and rationale are provided with each new recommendation. And each recommendation is tracked in the portfolio.
The Only Investing Advantage You Need
Getting in early is the best way to get ahead.
That’s why Nick Hodge built Hodge Family Office, an investment newsletter that looks at early-stage opportunities across all market sectors.
He’s been writing it for over a decade and has had big wins in sectors like biotech, cleantech, batteries, and 3D printing.
The model speculative portfolio is built with a goal of generating 200% to 500% returns within two to five years.
Nick's repeated success has caused thousands of investors to try and get an advantage by seeking his insights.
Here’s how you can join them.
You should never go “all in” immediately upon a recommendation. I provide a “buy under” price for each recommendation. That is the price under which you should buy a stock at that moment in time. That price can change. I may also recommend buying and selling certain position sizes, i.e., to buy or sell one-third or one-half of a position. Position sizing and buy/sell decisions are ultimately your choice.
This is not a trading service. The goal with each speculation is to generate 200% to 500% returns in two to five years. They can go up and down along the way. We might sell some of a stock one month only to buy it back the next. This is called trading around a position, and it’s how you professionally speculate with profitable results over the long term.
Shorter-term macro recommendations may be made from time to time to take advantage of changing cycles or trends. But they will still be in smaller companies or leveraged funds.
It can be very helpful to be reminded of the mission when you feel like you’re going through the motions.
Learn more about Hodge Family Office here.
Call it like you see it,
Nick Hodge
Publisher, Daily Profit Cycle