If you invest in young high growth industries like technology, you can expect to make good money if you are even half good at it. Because in old-line economies like the US, where GDP growth is a couple percent most years, your old-line industries also don’t grow very much and yet attract a wall of capital. So, if you want to chalk up some capital gains rather than a 2% dividend yield, just pick a basket of growth names, don’t buy at an obvious top and then sell at an obvious bottom, be patient, don’t get too stressed when they have a bad day, let time pass, and collect your not-too-hard-earned gains. Rinse and repeat.
Now, if tech is an adolescent to railroad’s grump-pa, space is merely a toddler. Just getting started. First flush of independence. And whilst it’s still possible in tech to have your heart broken by picking the wrong stock at the wrong time - particularly if you use everyone’s favorite weapons of mass destruction, margin and options - by and large you can print money safely in the sector. Just buy Microsoft and go play golf, for instance. In space, however, it’s very probably going to be the case that many companies won’t survive the harsh environment. It’s always hard to tell this early into a new industry but if we had to call it? We’d say AST Space Mobile is going to cause some regret, and we’d say that SpaceX, once it pogoes onto the public market, will probably irritate Anti-Muskers no end by proving to be yet another cult classic.
Fortunately, we’re here to help. We run the top two space-sector services on the Seeking Alpha research platform. Oh, wait, the only space sector services on the Seeking Alpha research platform. And if you can find a better space sector stock service anywhere out there, we’d like to know about it. We got started in 2017, one of our number attended the International Space University (yes really!) in 2018, and we’ve gone from strength to strength ever since.
And this week? This week, it was a good week. It marked the fastest double-your-money yet in our various stock services. In tech, adolescent remember, the doubles have taken a little while. Fortinet got there in a little under a year, so that was nice. Cloudflare too.
But space being all hyperactive Sunny-Delight-fueled preschooler, it was inevitable that one of the new crop of space SPACs would deliver the goods sooner or later. (So far, none have flamed out. But there’s time yet).
Yesterday, RocketLab ($RKLB) hit a 100% gain on the common stock since our Buy call just a few months back (actually if you had your wits about you, and made like it was 2020, buying that flailing dip, you could have doubled your money in just a few weeks). And making that initial Buy call, the day that the SPAC deal was announced, was an easy decision for us. It had three factors going for it. One, RocketLab is a real business with real rockets that have really gone to space and deployed real satellites to real orbits. Two, the founder-CEO is a rock star and never saw a PR opportunity he didn’t like (this is a good thing for the stock). Three, the sponsor of the SPAC structure was Vector Capital which, whilst not a household name even in the tech buyout circles in which they operate, most certainly do know what they are doing. So, simples, Buy, we said.
Now, as you probably know, most of the current SPAC crop come with both common stock and longish dated warrants available to buy. These warrants tend to be a way of (a) juicing your returns (b) breaking your heart by collapsing into nothing and/or © breaking your wallet by being redeemed for cash by the underlying company at a time of their choice. The warrants need to be handled with care, and our approach to them has reflected that. Whilst we don’t formally cover any kind of derivatives in our services, we do sometimes buy warrants and options in staff personal accounts, and where we do that in covered stocks, then just like all our trades in covered stocks we flag what we’re buying and selling and when and why - before we trade, so our subscribers can always trade before we do.
And some of these space SPAC warrants have proven very lucrative indeed - none more so than RKLB.W. With the move up in the stock this week, the warrants have been on an even greater run. Within our members, some sold warrants a few days back, we ourselves sold them yesterday, and our bravest subscriber, christened (by us) the Warrant King, sold them today.
Here’s a nice comment from the Warrant King in our chat service today. (Username has been removed to protect the wealthy).