When the smoke finally clears, what will be the defining theme for Q3 2025? Will it be the quarter when everything went up? Will it be the quarter when the cap-ex boom finally became a reality? Companies entering into circular deals? Round-tripping revenues? From one pocket into another? How about the old standby of not counting your chickens before they’ve hatched?
That last one comes to mind when thinking about Oracle (ORCL) and their monster revenue guide. Here you have a situation where over the next year or two their half trillion dollars in freshly-minted deferred revenues (remaining performance obligations, or RPO’s if you prefer) start coming due. Much of this balance is expected to be recognized from companies (like OpenAI) that simply don’t have that level of cash available, though if you squint hard enough, you may be able to imagine how it can all happen.
Then you have CoreWeave (CRWV) either buying or leasing out chips from Nvidia (NVDA) which in turn is spreading money around and investing in a variety of companies and startups which in turn are inking deals and funneling the proceeds back to CRWV (or some other company). Even the giants like META have gotten in on the act.
My favorite cautionary theme for the quarter, however, is the story of Wolfspeed (WOLF), one which has been building up ever since the company first announced that they were filing for Chapter 11 bankruptcy protection back in July. Now, I’m not quite sure when a bankruptcy filing turned into just another reason to buy a company’s stock, but that’s exactly what happened to shares of WOLF. Despite being faced with the overwhelming likelihood of suffering a complete and total loss, there was a group of investors who for some reason opted to throw caution to the wind and hit the bid and buy the stock. It’s like they believed the courts would simply wipe out all $7B in senior company debt and leave the bottom-of-the-totem-pole common shareholders unscathed.
Well, scathed they were, and the denial was there until the final day of trading last Friday. WOLF’s 156M shares were cancelled and those holding onto their shares to the bitter end received 1.3M shares in their place.
“on September 29, 2025, all of the previously issued and outstanding shares of Wolfspeed’s common stock were cancelled, and existing common stockholders received their pro rata share of 1,306,903 shares of Wolfspeed’s common stock at an exchange ratio of 0.008352”
So if you went to sleep on Friday night owning, oh, 100K shares of WOLF at $1.21 worth $121K, you woke up on Monday morning holding only 835 total shares which are now trading at a current $28.60. Do the math and it’s one big ouch. Oh, but on the off-chance that WOLF does something totally out of character and, you know, actually performs fairly well, there is a slight chance that you may get an extra 500 shares or so for your troubles at some point down the line.
In my mind at least, that sums up the market for the entire quarter.
New Ideas for quarter
I shared a total of 10 new ideas this quarter: 2 of the new ideas were for the “Founding Members” while the other 8 ideas were for rest of my paid subscribers. Talking just about the 8 ideas sent to paid subscribers, 6 of them were on names I had not previously highlighted (BTQ, CRDO, MENS, NEGG, NNNN, and U), while the other 2 were names that had been highlighted in the past (RR and YDKG (a symbol change from ANTE)) but were once again of interest.
At the current moment, of those 8 names, 5 of the stocks are currently down (NEGG, NNNN, RR, U, and YDKG), one is flattish (BTQ), and the other 2 are higher (CRDO and MENS). It has only been a week to 3 months for this latest group of ideas so it’s still early, but against a backdrop of a levitating market the performance has been encouraging.
A quick reminder on terminology. The “date of first mention” is the day the spiel first came out; “stock performance” is simply the change from when first mentioned to the close of 9/30/2025; IWM performance is how the IWM Russell 2000 Index performed during the same period of time; and “simple alpha” is the stock’s performance less the IWM performance.
So in the case of NNNN, the shares are down 6.9% while the IWM is up 9.4%, both since July 8th, leading to a “simple alpha” of -16.2%.
And remember, we’re talking short ideas here, so a negative number is a good thing.