The Penn Wealth Report Vol 9 Issue 03 The Show Must Go On

P E N N

W E A L T H

P U B L I S H I N G

|

I N V E S T M E N T

I N T E L L I G E N C E

THE PENN WEALTH REPORT

VOLUME 9/Issue 03 22 Aug 2021 $5.99

The Show Must Go On Meme Stocks Financial Engineering

NFTs

“This will not end well”

SPACs

Convoluted Derivatives

Dogecoin

IN THIS ISSUE Tulip Mania: The West’s First True Financial Bubble

ON PAGE 08 ON PAGE 10 ON PAGE 14 Archegos: Fallout Feeding Frenzy: New United Embraces the from a Rogue Trader Investment Vehicles Future of Air Travel Copyright 2021. All Rights Reserved. Penn Wealth Publishing.

penn wealth

publishing

Volume 9 Issue 03

Cover: Vintage circus act against backdrop of old European city.

Photo licensed by Penn Wealth

Investment

Strategic Vision

Front Matter

14

06

Tulip Mania: the West’s First Financial Bubble Four hundred years ago a tulip trading frenzy gripped Holland; since that event, one aspect remains unchanged: human nature

04

United

Now that t

Tactical Awareness

08

From the Editor Discerning highly-orchestrated theater from real opportunity is becoming quite the challenge

Archegos: A Case Study in Risk Management How a family office group was able to build massively-leveraged and concentrated positions undetected by investors and regulators alike

05

10

The Story in Charts A look at some of the charts which have shaped the past few weeks

Feeding Frenzy From cryptos to NFTs to SPACs, FOMO has spurred a new wave of investment into vehicles which few fully understand

2 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Copyright 2021. All Rights Reserved.

Materia

It doesn’t al in materials always prov

WTealth he Penn . SW uccess ealth. report Happiness.

Executive Summaries for Decisive Leaders

The Penn Wealth Report

t Intelligence

Weekly Business Report 20

Roblox is not just another gaming stock, but should you invest?

The new administration took a tough stance with China in first official meeting; now, let’s look for continuity Will GoPuff be the poster child for the coming post-pandemic market reality check?

Embraces the Future of Air Travel

21

the hapless Oscar Munoz is gone, United can finally move forward

16

17

Under the Radar

Could an internecine battle in Germany help bring about a major regime change?

A good sign for the US economy: Americans are quitting their jobs in record numbers

22

Outcome of Peruvian national election highlights the country risk associated with precious metals and mining stocks Amazon poised to make its second-largest acquisition ever: a storied movie studio

als Select SPDR

lways make sense to take a stand s, but when it does, this fund has ven to be effective

23

Bright Ideas Being Ignored

Top quotes of the week...

Pope on Humility

Two Aerospace & Defense companies, a health services provider, and a steelmaker: Four ideas that are being missed—or ignored—by investors and the press

Dryden on Temptation Walpole on Focus

The Trading Desk

18 Upgrades, Downgrades, & Trades Actions we have taken at the Penn Trading Desk, plus a look at what other Wall Street Analysts have to say, along with accompanying charts

Copyright 2021. All Rights Reserved.

22 Aug 2021

The Penn Strategies 24

Strategic Income Portfolio

26

Dynamic Growth Strategy

28

Global Leaders Club

30

Intrepid Trading Platform

32

New Frontier Fund

34

Most-Shorted Stocks List

Penn Wealth Report

volume

9 issue 03 3

Penn Wealth Report

From the Editor/ A Timely Issue, with Timeless Reminders When investors cannot discern highly-orchestrated theater from real opportunity, trouble awaits.

Whether or not American showman P.T. Barnum ever actually uttered the words “There’s a sucker born every minute” is irrelevant—the point is well taken. A major aspect of the investment world—from tulip mania to cryptocurrencies—has always been showmanship; after all, it takes some theatrics to get millions of people to part with their hard-earned dough. We have no problem with the marketing of investment vehicles per se, but we do have a problem with enthusiastic buyers jumping in before performing even a minimal amount of due diligence. To an alarming degree, that seems to be where we are right now.

Several months ago, as I was ruminating about an issue of The Penn Wealth Report revolving around more questionable investment vehicles, something popped on the screen, almost on cue: Bernie Madoff had been found dead on the floor of his prison cell. A couple of years ago, I recall hearing a quote from Madoff saying that he “had never been more at peace in his life.”

So much for remorse.

The fact that this showman had so many highly-intelligent clients willing to entrust large percentages of their wealth to him speaks volumes about the power of persuasion over logic. If anyone dared to question his investment practices or the legitimacy of his rather remarkable alleged returns, he would send their money back and they would become persona non grata. A warning sign for others to fall in line and question nothing.

We are not comparing the vehicles in this report to Madoff’s expensive shell game; for example, we believe that cryptocurrencies are here to stay, and that investors will find many golden opportunities in the space over the coming years. What we are saying, however, is that too small a percentage of those who invest in vehicles they barely understand will ever perform the basic market research required to achieve long-term success.

Reading social media posts about a position may be entertaining, and perhaps even enlightening, but it takes a deeper dive into the true fundamentals of a company to determine if it is worthy of a cash outlay.

Certainly, there are the Andrew Fastows (CFO of Enron) and Scott Sullivans (CFO of WorldCom) who will simply cook the books, but those are rare instances. In the overwhelming majority of cases, the true numbers are simply sitting there, waiting to be deciphered by a trained eye, all at no cost. For newer and more exotic investments, a dearth of financial information does make the task more difficult, but that is when an investor must lay out a viable case for the company’s successful liftoff. And the case must be built on sound evidence, not social media threads or the lofty aspirations of the CEO (Nikola founder Trevor Milton comes to mind). If nothing else, use these brief narratives as a reminder that things aren’t always as they appear. Learn to perform the basic research, and have some fun along the way!

—MSH

Penn Wealth Publishing Subscription Information https://www.pennwealthreport.com Penn Wealth Publishing 9393 West 110th Street 51 Corporate Woods Suite 500 Overland Park, KS 66210

Michael S. Hazell editor-in-chief

4 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Copyright 2021. All Rights Reserved.

Penn Wealth Report

The Month in Charts

Charts tell the story. Here are some of our favorites from the past month. For the top business and economic stories of the week, visit Penn...After Hours at www.penneconomics.com.

New leverage for job seekers...

As a sign of just how roaring the post-pandemic US economy actually is, look no further than the June JOLTS, released in the second week of August. A record ten million job openings currently exist, while a record 3.87 million Americans willingly quit their jobs—a sign of confidence that more lucrative positions are waiting for them. Employers are increasing wages and adding new perks to attract workers.

Don’t fight the party...

We’ve all heard the saying “don’t fight the Fed,” but what about “don’t fight the party?” The communist party of China, that is. Amidst a major crackdown on Chinese Internet companies by the ruling CCP, the bottom has fallen out from underneath these companies’ stock prices. While the price of a general basket of Internet stocks is flat for the second quarter, China-based Internet companies have seen their market caps cut in half. Investors should heed this warning before buying into freedom-less companies.

A thematic home run...

Wise investors are always on the lookout for themes; gathering movements which can push a certain group of stocks forward with outsized force. The cybersecurity trend is a great example. With government-sponsored cyber threats on an ever-increasing trajectory from the likes of China, Russia, North Korea, and Iran, investors need to be in this industry. We play the theme with CIBR, the First Trust NASDAQ Cybersecurity ETF. Top holdings include CrowdStrike, Fortinet, and Zscaler.

Copyright 2021. All Rights Reserved.

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 5

strategic

vision Western Civilization

Tulip Mania: Arguably the West’s First True Financial Bubble Four hundred years ago a tulip trading frenzy gripped Holland; since that event, one aspect remains unchanged: human nature.

In the late 16th and early 17th centuries, the Dutch Republic—of which Holland was a part—dominated world trade, boasting the largest fleet of merchant vessels in existence. These merchantmen brought new and exotic products from far-off regions back home to the wealthy members of the Dutch upper class; formerly unheard of items such as potatoes, peppers, and tomatoes. In addition to these future staples of the European dinner table, the Sultan of Turkey delivered a quite unique item to the citizens of Vienna in 1554: the first tulip bulbs and seeds had hit European shores.

Trade flourished within the Dutch Republic in the 1500s; image licensed

When tulips made their way to Holland in 1593, these notoriously finicky plants were placed under the care and supervision of a group of professional cultivators. Due to their rarity and beauty, they quickly became an obligatory mainstay in the gardens of the region’s rich and famous—a status symbol of the elite.

Human nature being what it has always been, the masses of the middle class, primarily merchants, became obsessed with owning tulip bulbs, both for their own egos and as a profit center. These plants were so unique, and their varieties so diverse, that members of every class of Dutch society wanted in on the action.

6 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Tulip mania grips—and then torches—a society By 1634, tulip mania was sweeping through the region.

Bulbs of the more rare varieties of the plant were suddenly selling for as much as six times the average citizen’s salary. In one case, a thriving brewery was traded for one bulb of the Tulipe Brasserie variety.

Those without the guilders to pay outright for bulbs began to barter their homes for a piece of the action; others were allowed to buy using an early form of the margin loan—with the principal and interest to be paid back using the profit from the subsequent sale of the bulbs.

When the speculation became so fevered that ordinary citizens could not afford even the most common of bulbs, the nightmarish hangover began. By early 1637, prices began to dive and owners were forced to sell their prized possessions to pay off their debts.

While there are wild stories of some tulip bulbs reaching 10,000 guilders in price, it is reasonably certain that bulbs selling for around 200 guilders in late 1636 were suddenly being liquidated for something more like ten guilders—a 95% drop in value.

For those who bet the farm—often quite literally— on the rich promises that came with trading tulip bulbs, their financial futures were in shambles. While the nation’s economy remained relatively unscathed, the lives of those in an extensive number of individual families were deeply affected. Many spent the rest of their lives trying to pay off the debt they incurred from the foray.

There are so many timeless lessons to be gleaned from the bubble that was tulip mania. Financial engineering has come a long way over the past four hundred years, devising all types of new schemes, but human nature hasn’t changed a bit; and that is an explosive mix.

The same cause and effect, the same greed and fear, that existed in 17th century Holland surges through today’s markets. When people hear about others hitting it big in this scheme or that, it is natural for them to want a piece of the action. While it is now easier than ever for ordinary citizens to take part in complex trades once limited to the elite, it is critical to live by the creed “caveat emptor,” let the buyer beware.

Copyright 2021. All Rights Reserved.

Penn strategic Wealth Report vision

Jan Brueghel the Elder’s portrait of tulips and other flowers in vase, circa 1600-1625 Photo in the Public Domain

Tactical Awareness Capital Markets

Archegos: Ripple Effects From a Cavalier Trader How a family office group was able to build massively-leveraged and concentrated positions undetected by investors and regulators alike.

A lot of chapters are yet to be writtin in the story group (FOG), thus freeing it from the pesky regulaof one of the greatest meltdowns of personal wealth tory scrutiny of the SEC. in recent history, but plenty of intrigue is already Archegos Capital Management, like most of the bubbling to the surface. At the center of the storm over 7,000 family office groups in existence (which is one man and his family office group which were manage around $6 trillion in wealth), was set up able to operate virtually undetected despite building to serve the needs of one wealthy family. In a 2010 enormous—and highly leveraged—positions in a few carve-out within Dodd-Frank legislation, FOGs concentrated media stocks. which serve primarily one family and do not offer 2012 was not a good year for Bill Hwang. A investment advice are able to make major trades protege of Tiger Management’s Julian Robertson, without the typical filings required by other financial Hwang had successfully launched his own hedge institutions. Hence, a major lack of transparency for fund, Tiger Asia Management, a decade earlier with both investors and regulators. seed money from Robertson. After amassing impresMeanwhile, prime brokerages, lenders which sive returns in 2011, the wheels began to fall off the bundle services for hedge funds, are in a heated comcart in 2012. Accused of insider trading and wire petition to serve these groups. Fat fees and lucrative fraud, Hwang was forced to pay a $44 million fine potential profits have driven this mad dash, with and shutter his hedge fund—sort of. In reality, he many firms trying to break into the rarefied air where simply morphed the platform into a family office the likes of Goldman Sachs and JP Morgan reside.

The contents of this report reflect the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers.

This is not a solicitation to buy.

Always consult your investment professional before investing any money.

Lenders to Archegos were forced to make tens of billions of dollars in block trade unwinds in one week, pummeling the likes of ViacomCBS

8 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Copyright 2021. All Rights Reserved.

Tactical Awareness A heated competition for business leads to incredible risks—for the prime brokers Bill Hwang’s wealth—he was now a multi-billionaire—didn’t come from simply investing his clients’ money in stocks he believed would go up; it was built on a foundation and a philosophy of massive leverage. Instead of investing $10 million in a company you expect to double in price, why not borrow $90 million, invest $100 million, and pocket nearly ten times as much when your bet pays off? That was Hwang’s quite perilous modus operandi.

Known for taking concentrated positions, Hwang was now focused in on media and Internet-based tech stocks, particularly those which had been heavily shorted. Notable positions included ViacomCBSVIAC$44, Discovery IncDISCA $43, and a US-listed Chinese private education firm called GSX Techedu IncGSX $31.

Using the prime brokers’ desire for the lucrative fees which come from lending to affluent FOGs, and the constant craving to best their competition, Archegos built a network of lenders to fuel the company’s ravenous appetite. In many cases, Hwang was able to borrow amounts five times higher than the collateral he was required to put down.

More extensive than simply loaning Archegos capital, these prime brokers were using instruments known as swap agreements to actually purchase equities for Hwang. Distilled down to its simplest terms, the swap arrangements allowed Archegos to pay the hefty fees—plus the interest accrued—in return for the investment banks buying the baskets of stocks Hwang desired. The banks would then pay Archegos the capital gains and dividends generated from the holdings at pre-determined intervals.

Critically important to the story of this massive meltdown is the fact that the prime lenders were not aware of what Archegos was doing at the other houses.

For example, Deutsche Bank may be purchasing large blocks of ViacomCBS shares for the firm, unaware that Credit Suisse was doing the same. Massive leverage and a complete lack of transparency: what could possibly go wrong with that cocktail?

Indeed, ViacomCBS had risen from $13.94 per share to $100 per share in the matter of exactly one year. Didn’t that seem strange to anyone? After all, this was a staid, established media giant, not a small-cap biotech startup with a breakthrough cancer therapy. There was no rationale for a seven-fold move in the share price over the course of a year, but I don’t recall anyone questioning if something deeper may be going on beneath the surface.

Of course, we now know that something deeper was, indeed, going on; something hidden from investors, quickwith-the-quip journalists, and even securities regulators. Through the massive house of leverage it had built via the brokerages, Archegos now controlled tens of millions of VIAC shares, but that aggregate position would remain invisible on any listing of top shareholders. This meant that any deviation (from Archegos’s bullish narrative) could spell disaster for all involved.

While no analysts were pointing to any funny dealings with respect to Viacom trading, many were beginning to point out that the shares did seem overvalued.

At the beginning of the year, nine analysts had “Buy” ratings on VIAC; by the time the shares hit $100, that number had dropped to five. Then, one specific act by Viacom’s board of directors set off a chain of events that blew the story wide open and sent the company’s shares reeling in a matter of days.

The great unwinding One of our most critical components when performing fundamental research on a firm is the quality of the management team. And one important tactic for a management team to master is knowing when to raise capital by issuing new shares—and when to avoid such financial engineering.

When VIAC shares hit $100, the firm’s board got greedy, issuing 20 million Class B shares at $85 and 10 million Series A Mandatory Convertible Preferred shares at $100. The $2.7 billion or so in proceeds wouldn’t go towards paying down the company’s corporate debt load, it would be used for “investments in The phony premises behind the price move streaming.” To say this new issuance was Without using names, I vividly recall a miscalculation would be an epic underlistening to one very well-known busi- statement. That was all investors needed ness journalist speaking glowingly of to begin jumping ship or, at least, trimViacomCBS when it was sitting at $100 ming positions. per share. There was no sense of “what is As VIAC shares dropped from $100 on going on here?”; rather, just a diatribe on Monday the 22nd of March to $91.25 on how investors are finally buying into the Tuesday, margin calls began landing on company’s aggressive streaming strategy. Archegos’s doorstep. There was just one His lack of curiosity is telling. problem: the firm didn’t have the cash to Copyright 2021. All Rights Reserved.

22 Aug 2021

meet the margin requirements. Although the brokerages requested that Archegos sell its shares to avoid default, Hwang balked.

On Wednesday, shares fell another 23%, and the lenders called an emergency joint meeting to discuss options.

Reminiscent of the old saying, “...no honor among thieves,” Morgan Stanley secretly unloaded $5 billion worth of its Archegos “basket,” mainly to other hedge funds. This caused shares to drop further.

Goldman, Wells Fargo, and Deutsche Bank quickly followed suit. Two main companies, Credit Suisse (CS $11) and Nomura (NMR $5), were left holding the bag.

Six trading days after the nightmare began, ViacomCBS shares were sitting at $45, down 55%, and Credit Suisse was about to announce a $4.7 billion loss. As could be expected, a number of senior executives at the firm were suddenly looking for new work.

While it is hard to say precisely how much Bill Hwang’s net worth has dropped, a fair guess would be from around $10 billion to around $1 billion, all in the matter of a week. Taking stock of the carnage, approximately $20 billion has been lost in the ordeal. Fortunately, unlike the 1998 blow-up of hedge fund Long-Term Capital Management, no taxpayer-funded bailout was required.

Be smart, and be ready to strike The most disturbing aspect of this case is the fact that it unfolded completely under the radar of investors, analysts, and regulators. Scouring the financials or shareholder ownership data would have done little good. But that doesn’t mean we can’t learn from what happened.

We didn’t own ViacomCBS, thankfully, as the story began to break. In fact, we weren’t fans of CEO Sumner Redstone before his death, nor his daughter Shari Redstone at the time she exerted control.

There was an ugly fight brewing at the top, and we wanted no part of it.

Furthermore, while the company’s streaming plans seemed promising, they certainly didn’t elicit the excitement of a Disney+ or even an HBO Max. Understanding what sets a company apart from the competition, and having a feel for how well management will execute on its vision are wiser investment strategies than trying to grab onto a shooting star.

Value over momentum.

Ironically, this momentum play became a value play virtually overnight, and we quickly added it to the Intrepid Trading Platform at $43.50. No leverage involved.

Penn Wealth Report

volume

9 issue 03 9

Investment Intelligence Alternative Investments

Feeding Frenzy From cryptos to NFTs to SPACs, FOMO has spurred a new wave of investment into vehicles which few fully understand The investment world is full of contradictions. Back in 1999, we truly were entering the Golden Age of computer and Internet technology: a transformative period which would level the playing field by giving individuals power once reserved for huge corporations.

Yet, we were also on the precipice of a 78% downturn in the tech-laden NASDAQ. We now have 24/7 business coverage which can alert us of important events within minutes, yet that didn’t prevent the stock market from losing one-third of its value in the matter of a few months in the spring of 2020.

Individual investors now have free access to a wealth of knowledge and the ability to execute commission-free trading using a device in the palm of their hands, yet their portfolios can be decimated within a matter of days due to forces outside of their control.

Financial engineering, a term we typically use as a pejorative, has been churning out a slew of alternative investment vehicles over the past few years; mesmerizing beasts from cryptocurrencies to non-fungible tokens (NFTs) to special purpose acquisition companies (SPACs). Chemical engineering brought the world a slew of transformative products in the middle of the last century; it also brought us DDT-infused wallpaper which promised to “keep disease-carrying pests out of your child’s room.”

We are fully supportive of new investment vehicles and technologies designed to enhance an individual’s ability to invest successfully. Sadly, however, too many of these individuals are being sold a bill of goods designed to line the pockets of the issuer rather than the investor. With all the information at our fingertips, too few are willing to perform the due diligence required to avoid being fleeced, and a few stories of glowing success attract others to jump in—the “fear of missing out” syndrome.

1947 DDT wallpaper ad; Creative Commons 10 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

In the midst of the GameStop (GME) trading frenzy, a documentary was released which outlined the Robinhood/Reddit/WallStreetBets phenomenon. One early “successful” GME trader was highlighted, and a particular comment he made was both stunning and emblematic of the current trading zeitgeist: “I spent an entire day researching everything about the stock market before making my investment.” Talk about shades of 1999.

Using the GME trader’s comments as a clarion call warning of trouble ahead, let’s consider a few of the over-hyped bundles of energy which are setting up nicely for an implosion.

The cryptocurrency craze: anything can happen in an investment’s infancy It is common for investors to look back at recent history and lament, “If only I had made an investment in (pick the company or the industry)!” Let’s play that inclination out with respect to one of the greatest growth booms of all time: online shopping.

To be sure, a decent investment in a small outfit called Amazon (AMZN $3,444) back in 1998—when it was sitting at $5 per share—would have made an investor quite wealthy (assuming they never wavered during all of those tense periods when the shares were cratering—a huge assumption). But what about an investment in arguably (at the time) an excellent play on the nascent movement: Pets.com. Not only was the online shopping movement about to mushroom, the company was built around our cuddly, furry, lovable household animals.

What seemed like a great investment ended up in a pile of charred wreckage, taking 100% of investors’ money with it. It wasn’t that the concept was faulty— just fast forward two decades and look at $29 billion Chewy—it was that the technology platform needed for Pets.com to actually make money wasn’t yet in place. Which swerves us directly into cryptos.

Few—with the possible exception of co-curmudgeons Warren Buffet and Charlie Munger—are arguing that cryptocurrencies are just a fad which will soon pass. But is the infrastructure which will allow them to flourish as a means of exchange still decades off?

Copyright 2021. All Rights Reserved.

Investment Intelligence Which brings us to another major issue: no matter what the snake oil salesmen and neophyte investors say, cryptos are not currencies in their current form. The dollar is a currency. The renminbi (Yuan) is a currency. The Danish krone—which actually sounds tasty—is a currency. The same cannot be said for bitcoins, dogecoins, ether, or most of the other cryptos.

Inflation may erode the value of the dollar, and political instability may make the Somali shilling fluctuate in value, but cryptos trade like a Dutch tulip in 1636.

Yes, one can actually buy real goods with bitcoins or dogecoins, but a dozen or so tulip bulbs would have bought a home buyer a nice little townhouse in Amsterdam four hundred years ago.

Cryptos can more reasonably be described as a commodity, like gold or silver. If we are to believe the powers that be, there are only 21 million bitcoins to be mined, and 18.7 million are already “out of the ground.” Just like gold or silver, there is a finite quantity; at least that is what the crypto bulls tell us. But we have a few issues with that.

While the Bitcoin source code limits production to 21 million units, it is possible that the protocol will be changed to allow for more production. But the biggest threat to the price of bitcoins comes from competitive cryptos, with a new one seemingly being created daily.

As of the beginning of the year, there were more than 4,000 cryptos in existence.

Certainly, the vast majority have very few users/followers, but some are already nipping at Bitcoin’s heels. Based on current prices, Bitcoin has a market value of around $1 trillion. Ethereum, which uses ether as its currency, now has a total market value of $500 billion. Then there is Binance ($98B), Dogecoin ($60B), Tether ($57B), Cardano ($54B), and the comically-named Internet Computer ($39B).

Speaking of comical, it should be noted that Dogecoin was literally created as a joke. Two friends, who also happened to be software engineers, created the crypto as a parody based around a fictitious Shiba Inu dog—one who couldn’t spell particularly well. Dogecoins were never expected to have any value. We know what happened next, from Elon Musk’s tweets on: the actual price of a dogecoin rose from $0.05 last Christmas to $0.68 on 08 May 2021­—a 1,360% gain. Proving that buying cryptos is an entertaining game rather than an investment strategy, six weeks later the coin had dropped to $0.26—a 61% loss. A May headline proclaimed, “Dogecoin Expert: Doge to $100 in 2021.” Um, OK.

Then we have the People’s Bank of China (PBOC), which is under the authoritarian control of the Communist Party of China. The PBOC just banned the use of cryptos by financial and payment institutions, stating that “they are not supported by intrinsic value, and are not currencies.” We hate to agree with this communist mouthpiece, but they do have that correct. There is a very telling twist to this story however. It seems that China is in the process of creating a digital Yuan, which it hopes (to be outlined in one of the country’s interminable master 5-year plans) will replace the US dollar as the world’s reserve currency.

While the Fed doesn’t have the stomach to create a digital version of the US dollar just yet, and the legislative branch (hello, Maxine Waters) can’t wrap its collective mind around the concept of money you can’t actually hold in your hands, it is simply a matter of time before we do get a US-backed crypto. And when there is a digital dollar, what happens to the endless supply of non-fiat cryptocurrencies out there?

All that being said, there is no doubt that huge sums of money have been made trading cryptos, which is actually part of the problem. Wealth was also created by the trading of tulip bulbs four hundred years ago, until it all came crashing down.

Copyright 2021. All Rights Reserved.

Business pages and social media sites are filled with stories of ordinary Joes making extraordinary loot in this game.

One recent headline read: “I just became a Dogecoin millionaire.” The story went on to tell how this 33-year-old used all of his savings and invested on margin (courtesy of Robinhood) to “let it all ride on Doge.” He said he has no plans to sell his stake. Diamond hands, baby. Let’s see, no diversification, borrowed money, no savings left, and no exit strategy. What could possibly go wrong?

So, what is the best way to invest in the cryptocurrency craze without risking it all? First and foremost, remember that cryptos are part of the “alternative investments” slice of your investment portfolio, with that slice representing around just 10% of the overall pie (based on Penn’s Summer 2021 Tactical Asset Allocation).

This is risk management 101, and living by this concept will prevent a lot of financial heartache in the future.

As for specific investment vehicles, consider the gold miners’ analogy. When the California Gold Rush hit its peak in the early 1850s, some 300,000 miners were panning for gold. The overwhelming number of these wishful nouveau riche went bust. Meanwhile, the brilliant operators who sold them mining equipment made a killing—with very little risk.

Graph courtesy of Visual Capitalist

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 11

Investment Intelligence Coinbase (COIN $224), which is a full-service crypto exchange, just went public on 14 April. Coming out of the gate hot, shares of COIN, raced up to $429.54 within hours of the company’s debut. They have since fallen back, joining the recent crypto slide, back to $224.

This seems like a reasonable entry point.

We also recommend crypto bugs open a Coinbase account. Not only will this create a personal digital wallet for the trading of cryptocurrencies, the site also contains of wealth of knowledge designed to educate newbies.

Just remember, gold mining is still a multi-billion-dollar enterprise, but most early miners lost it all.

happens when blockchain technology, the new medium by the traditional “arts and infrastructure used for trading cryptocur- croissant” crowd. rencies, is applied to artwork? Voilà, we Digital designer and “artist” Mike have non-fungible tokens.

Winkelmann, who goes by the name At its core, blockchain is simply a type Beeple, sold his digital montage, of database: a collection of information “Everydays: The First 5000 Days” through stored on a computer system in the cloud. Christie’s for $69.3 million. Forget the Since NFTs are unique digital assets, it fact that the montage is a pile of excremakes perfect sense that blockchain— ment—which may well be one of the Ethereum in particular—would be used 5,000 images in his piece of garbage. to trade them. That said, the auction houses are getting in on the game as well.

They may be unique, but what does it really mean to own an NFT? After Non-fungible tokens: the Greater Fool all, it’s not like someTheory put into practice one could hang it We’ve all seen pieces of art which make us above the hearth firequestion, after said piece sells for tens of place in their home millions of dollars, the collective sanity of library at their Aspen the ultra wealthy. Non-fungible tokens, or cottage. Maybe they NFTs, put that question to rest. just hold up their What exactly are these newest beasts iPhone to friends 5,000 images from a warped and depraved mind. Image licensed. brought to us by the creative minds of and say, “Dude, look the financial engineers? Breaking the what I just picked up for $65 million.” Winkelmann is upset that he is not being title down, a fungible good is something Let’s consider a few real-world examples. embraced and adored by the traditional which is interchangeable. For example, The word “art” is often used to describe arts crowd. He should be laughing all the Brent crude oil is fungible, as one barrel NFTs, but they can really be just about way to the bank; instead he is upset that of it can be interchanged with another anything either already in the digital he is being shunned by the art commubarrel of it from another part of the world. realm or convertible to a digital form. nity? The world has gone mad.

The same is true for the US dollar, No. 2 For example, Twitter CEO Jack Dorsey As we write this, an NFT of the yellow corn, or an ounce of gold. recently sold his first tweet, which simply source code used in the development Non-fungible items, on the other hand, reads, “just setting up my twttr,” for $2.9 of the World Wide Web was just sold are considered unique. Baseball cards, million to a businessman based out of at Sotheby’s for $5.4 million. Its author, diamonds, and land are all non-fun- Malaysia. So, instead of receiving a physi- Tim Berners-Lee, freely admits that a gible assets as their uniqueness shapes cal piece of art for the wall, a buyer might screen shot of this code can be accessed receive a JPG image, by anyone with a computer. In defense a GIF, or even a song of the screen shot that was purchased for in MP3 format. $5.4 million, it did come with an autoThese pieces are graph and a video. Cool. all still available for There is a wonderful book store called others to see or hear, Half Price Books which has a collectibles depending on the section near the front of each store. A few medium; the only years ago, I discovered an original edition real difference is that of a book entitled The Royal Path of Life. the buyer of an NFT It has an inscription in the front which gets a piece authen- reads “Christmas 1880, Miss Florence ticated by the creator Davis (From her Mother).” I paid approx(in the descriptive imately $69.3 million less for it than metadata) saying they Vignesh Sundaresan paid for the Beeple bought the so-called piece, and instead of zooming in on vile original. A digital sig- filth, I own 600 pages of exquisite maxnature, if you will. ims on how to conduct one’s life. And In fact, NFT nobody else owns the physical copy in my The NFT logo against a digital background. Image licensed. advocates claim that collection. their value. An acre of land in downtown this is no different than copies of Edvard While we listed three extreme examples Manhattan, for example, would have a Munch’s The Scream hanging on bedroom of the NFT craze, anyone can find one of wildly different value than an acre of land walls around the world, while the orig- these concoctions on the Web at virtually in mid-Kansas. inal still brought in a cool $120 million any price point. Here’s our warning, howArtwork is one of the best examples of when it was sold back in 2012. That’s not ever: unlike real artwork, don’t buy these a non-fungible class of goods. So, what exactly reflective in the response to this pieces if you ever plan to turn a profit.

12 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Copyright 2021. All Rights Reserved.

Investment Intelligence SPACmania: betting on the jockey, not the horse As soon as we wrapped our heads around the concept of SPACs, or special purpose acquisition companies, we identified the marketing angle, and the financial engineering foundation on which the concept rested. First, let’s take a look at the rather brilliant way these schemes are being marketed.

SPACs function in essentially the same manner as private equity or venture capital firms. While the former invests capital in entities which are not publicly traded, the latter provides funding to promising startups which show nice growth potential. There is typically one family office group (FOG) or one supposedly astute financial wizard running the show at these firms. SPACs are marketed as an investment vehicle which lets the average person buy into the talent at the top of the pyramid. As a recent John Hancock piece put it, investing in SPACs is like “betting on the jockey rather than the horse.”

On its face, this seems like an intriguing concept. This facade crumbled—at least for us—when we found out that activist and lackluster former quarterback Colin Kaepernick started his own “social justice” SPAC. Then there was the king of financial engineering, Bill Ackman, creating his own SPAC: Pershing Square Tontine Holdings LtdPTSH $20, which is now floundering below its IPO price.

There are around 550 publicly-traded SPACs out there as of right now, investing in everything from commercial space travel to EVs to more nebulous themes such as “social justice,” as defined by Kaepernick. While the concept may make sense, here’s a question to keep in mind: why don’t the companies these blankcheck firms invest in simply go public?

Oftentimes, there may be a good reason; many times, however, they have some skeletons hiding in their closet which would present serious problems during the grueling IPO process.

How have the SPACs performed as a group? Taking a look at the chart on the right, which compares a basket of major SPACs to the S&P 500 since last September, the results have been lackluster.

Many investors are not even aware they have invested in a SPAC. For example, Virgin Gallactic HoldingsSPCE $33 is actually a SPAC which brought Richard Branson’s spaceflight company public, in a roundabout way. It is almost unfathomable that this company could have gone public via IPO. The lesson: Unless you have an intense level of trust in the leader who

will be doling out the money from these blank-check companies, avoid the risk by simply not investing in these marvels of financial engineering. Of the 500+ (and growing) list of SPACs available today, the vast majority will end up in the trash bin. The wealthy individuals at the top will come out relatively unscathed, while the trusting investors will get fleeced.

The meme stocks: revenge investing In our first Penn Wealth Report of 2020, published on 05 January of last year, we listed Leawood, Kansas-based AMC Entertainment HoldingsAMC $39 as a stock worth looking at. When we wrote the piece, AMC shares were selling for $8 and we listed our fair value at $12. Nobody could have foreseen the madness which would ensue one year later (shares got as high as $72.62), but that investment would have paid off in spades.

Great, right? Not really. AMC is not up five-fold because of fundamentals; it is up because a group of gamers decided they wanted to go after heavily-shorted stocks to bring pain to the short sellers.

What a silly reason to buy into a holding.

To be clear, we think about as much of the short sellers as we do the inevita-

ble knuckleheads who would walk up to the “Don’t Come” and “Don’t Pass” lines at our craps tables in Vegas. We would celebrate the winning rolls which would drive these unwelcome interlopers away.

We have the same affinity for short sellers who make bets against our positions.

But a desire to bring pain to the shorts is one of the dumbest investment strategies we have ever come across. The majority of those buying into an AMC, GameStop, or Blackberry have no idea about the fundamentals of the companies, or management’s strategic plans, or even what the multiples were on the stock price when they jumped in. A cutesy meme and a few silly emojis have been enough to

Copyright 2021. All Rights Reserved.

22 Aug 2021

get some people to part with their hardearned money. Even worse, many of these “investors” were applying for margin on their accounts, meaning they were playing with money they didn’t even have!

Stories of individual success, such as the one we referenced in the introduction, have lit up the social media sites, leading others to jump into stocks they know nothing about.

I once worked with a client who would buy a $10 stock in an instant, would barely consider a company whose shares were selling for $100, and would laugh off a stock priced in the thousands as “way too expensive.” After two decades of trying to explain that an actual share price, in and of itself, is absolutely irrelevant, I gave up. When hype trumps logic, trouble is sure to be close behind.

These meme stocks will, ultimately, come crashing back to earth. While companies like Bed Bath & Beyond (another one of our former Under the Radar darlings) should continue to remain viable enterprises, others—like GameStop—will simply go the route of Radio Shack and Sears. And those with “diamond hands” will lose it all. At that point, the glowing anectdotes of success will be replaced by tearful stories of the young couples who lost all of their savings. These stories will be followed by increased government regulation designed to protect us from ourselves. Thinking of some of the dunderheads on the financial committees in Congress, we do need protection— from them.

An antidote to the madness Despite some of our excoriating comments on the investment vehicles listed in this piece, investors can often make handsome profits on alternatives, which is why we always have an allocation—generally 5-10%—to this asset class within our various portfolios. but doing some basic research is essential.

For established companies, check the revenue and income trends. Look for EPS figures which are growing quarter/quarter and manageable debt loads. For newer vehicles, make sure you understand the growth story; if you don’t, steer clear and let others take the risk. As always, do the work and enjoy the journey!

Penn Wealth Report

volume

9 issue 03 13

P investment enn Wealth intelligence Report Airlines

United Embraces the Future of AirTravel Now that the hapless Oscar Munoz is gone, United can finally move forward.

...United just made a stunning deal to buy 15 Boom Supersonic Aircraft known as the overture.

UAL @ $44 The content of this report reflects the personal views, opinions, and research of Penn Wealth Publishing.

While measures are taken to

help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers. This is not a solicitation to buy. Always consult your investment professional before investing any money.

14 Penn Wealth Report

Not long ago, United AirlinesUAL $44 was probably the only leading carrier we wouldn’t touch. The major reason for our disdain was the company’s outrageously bad (in our opinion) CEO, Oscar Munoz. Sadly, many leaders of major US companies appear to be completely detached from reality with respect to the condition of their own firms; Munoz could have been the national spokesman for this group of hapless individuals.

Now that he has been replaced by the quite capable Scott Kirby, the outlook isn’t only brighter, it is getting—dare we say— rather exciting. Well, as exciting as things can be for an airline emerging from the throes of a global pandemic.

Munoz was a manager; and a poor one at that. Kirby appears to be a leader, as evidenced by the forward-looking strategic vision he has outlined for United. Instead of just throwing out pie-in-the-sky earnings estimates, he is making a bold bet on the future of air travel.

From getting booted off of a flight to more leg room For the past generation, United has been the butt of industry jokes about its horrible customer service. This crystallized a few years ago when a passenger was forcibly removed from a flight due to overbooking—hardly the poor passenger’s problem. The incident was bad PR, made worse by a CNBC interview with Munoz shortly after the trouble.

Before backtracking in a later statement, we watched Munoz essentially blame the paying customer who was treated so indignantly.

Munoz was tone deaf, but Kirby seemed to get understand what was happening. To help change the company’s image, management has announced a number of moves designed to improve the comfort of its travelers. There will be 75% more premium seating on flights with North American departures, legroom will increase, and the overhead bins will become larger There will volume

9 issue 03

22 Aug 2021

also be more seatback entertainment, and additional Wi-Fi access. To help foster these changes, United just announced its largest new aircraft order in history, with the company buying 200 new Boeing 737 MAX jets and 70 Airbus A320 NEOs. The $27 billion price tag for the shiny new jets represents the largest aircraft order made in over a decade—by any firm.

Embracing supersonic and electric air travel It is hard to believe it has been nearly two decades since the Concorde ceased operations following a nightmarish crash in 2000.

Technology has come a long way since the aircraft was designed in the 1960s, however, and the world is ready for supersonic flight once again.

To that end, United just made a stunning deal to buy 15 Boom Supersonic aircraft, known as the Overture, and an option to buy 35 more. United plans to start flying the Denver-based company’s aircraft on transatlantic and Pacific routes be the end of the decade.

While the deal is provisional on the Overture meeting the stringent safety, operating, and sustainability requirements of United, we expect to see this Mach 1.7 jet (1,304 MPH) ferrying passengers in the not too distant future.

As if the supersonic deal wasn’t enough, this past February the airline inked a $1 billion conditional order for Archer Aviation electric VTOL (vertical-take-off-and-landing) air taxis as well as 200, 19-passenger electric airliners from Heart Aerospace for regional routes.

Nothing like his predecessor, Scott Kirby is proving his leadership prowess at United. Fortunately for investors, too many are focused on the bad-old days of Munoz and the mountain of complaints. Now is the time for astute investors to look at the new United Airlines and consider getting in before takeoff.

Copyright 2021. All Rights Reserved.

investment Penn Wintelligence ealth Report

INVESTMENT PROFILE Symbol: UAL Class: Large-Cap Value Sector: Industrials Industry: Airlines Current Price*: $44 Penn Fair Value: $65.00

United Airlines is the world’s third-largest airline by scheduled revenue passenger miles.

The company operates a hub-and-spoke system which is more focused on international travel than its peers—one of the reasons it has been hit especially hard by the pandemic.

United, based out of the Willis Tower in Chicago, has a fleet of 812 aircraft serving 342 destinations.

Suitable for the

Global Leaders Club

*As of date/time written

United’s fleet of the future looks something like this (Image courtesy of Boom Supersonic)

After falling from $11.4 billion in the summer of 2019, United’s quarterly revenues plummeted to $1.5 billion the following summer—an 87% drop.

Sales in the second quarter of 2021 have risen back to $5.5 billion, and we expect that figure to double by next year.

See disclaimers on the back cover of The Report. This is not a solicitation to invest. Always consult your financial professional before making an investment.

Copyright 2021. All Rights Reserved.

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 15

P investment enn Wealth intelligence Report ETF Spotlight

The Materials Select Sector SPDR® It doesn’t always make sense to take a stand in materials; but when it does, this fund has always proven to be effective.

When we added the Materials Select Sector SPDR® ETFXLB $84 to the Penn Dynamic Growth Strategy last July, after years of underweighting the sector, one of the catalysts we mentioned in our notes was an expected reversion to the mean. After years of underperforming both in the domestic and global markets (see graph below), materials seemed ready to return to their place in the sun. After looking at the fund’s undervalued holdings, the decision became a relatively easy one.

While there are now a number of materials funds to choose from, we like XLB’s size ($8B AUM), concentrated holdings (29 as of this writing, as opposed to 117 in Vanguard’s peer fund), and an ultra-low expense ratio of just thirteen basis points. It is also one of the older materials ETFs, opening its doors to investors back in 1998.

According to its prospectus, this fund is designed to provide “precise exposure to companies in the chemical, construction material, containers and packaging, metals and mining, and paper and forest products industries.” Not only are we bullish on those industries going forward, the concentrated nature of the fund allows for the “cherry-picking” of the best companies within the respective segments.

Indeed, bulwarks make up the list of top holdings.

XLB @ $84 The contents of this report reflect the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers.

This is not a solicitation to buy.

Always consult your investment professional before investing any money.

16 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Courageous bets on deep value companies.

The fact that XLB holds just 29 names is a good indicator that the fund is willing to make bold bets, but drill down a little deeper and this becomes evident.

Were all 29 positions equal-weighted, they would each represent about 3.5% of the portfolio. The fund’s top holding, however, carries a hefty 15.83% weighting. That company is British specialty chemicals firm Linde PLCLIN $310, the largest industrial supplier of gas in the world, with operations in over 100 countries. A bullish play on a rebound in global economic activity, the $90 billion merger of equals between Linde and Praxair means the juggernaut will dominate the hydrogen power market. Hydrogenpowered vehicles emit zero emissions, and the market for these fuel cells is expected to mushroom by the mid-2020s.

American paint icon Sherwin-WilliamsSHW $305 is another hefty fund holding, at 7%. The largest provider of architectural paint in the United States, the continued housing rebound will keep this company firmly in the green. With a gross profit margin of 47% and an operating margin of 16% (TTM), the company’s financial health is on solid footing. Yet, a mention of Sherwin-Williams to a tech-chaser would be met with a yawn—another reason we like it.

A mere six positions in XLB command a whopping 50% of the fund’s weighting. In most cases, that would make us nervous. However, we have followed this fund from its inception 23 years ago, and it has proven to be a robust way to play the materials sector.

Note: that does not mean it has always been a good time to own the materials sector. Right now, however, the stars seem to be aligning for a sector comeback.

We added XLB to the Dynamic Growth Strategy (our ETF portfolio) as a satellite position on 16 Jul 2020 @ $60.67 per share.

Copyright 2021. All Rights Reserved.

investment Penn Wintelligence ealth Report

Under the Radar Four investments being ignored or missed by investors and the press Kratos Defense &

1

2

3

4

Security Solutions Aerospace & Defense

Accolade Inc Health Information Services

Kratos Defense & Security Solutions Inc (KTOS $22), despite its small size ($3.7B), is a key player in America’s defense and aerospace infrastructure. The company develops and fields advanced systems and platforms for national security and communications needs. Its Skyborg program is focused on expanding the envelope of unmanned aircraft use, especially as related to artificial intelligence; while its Defense and Rocket Support Services (DRSS) division develops hypersonic test vehicles for America’s missile defense initiative.

Civilian and government satellite operators, meanwhile, rely on Kratos as their strategic supplier of end-to-end enterprise products. We especially like the company’s size and financial health, and believe the company will continue along its strong growth trajectory.

There are many corners of the health care market with which investors are enamored, from big pharma to biotech to medical devices and testing, but one area which remains relatively ignored is the health information services arena. The industry made news this week with Microsoft’s announcement that it would buy Nuance in a nearly $20 billion deal, but a firm much deeper under the radar screen of investors is $2.8 billion Accolade Inc (ACCD $30-$43­-$65). Accolade is a tech-based firm which helps employers provide individualized health care “advocacy” for their employees, to include putting them in touch with nurses and specialists on demand, coordinating their care, and providing the best resources for their individual needs. Mention “company health care plan” to most employees and they will picture a byzantine system which includes long lines on hold and inexplicable bills arriving in the mail. Accolade turns that model on its head. We place a fair value of $60 on the shares. At $2.8 billion in size, the firm has room to grow.

POSCO (PKX $38-$66-$92) is the largest steel producer in South Korea and one of the top steel producers in the world. The company is exposed to the auto, shipbuilding, home appliance, engineering, and machinery industries. The firm controls 40% of the domestic market share and exports roughly 50% of its steel products overseas, primarily to Asian countries. POSCO netted $1.3 billion in profit on $48 billion in revenues last year, and we expect the firm to play a major role in Asia’s post-pandemic rebound. We believe the shares, which carry a 3.23% dividend yield and a P/E ratio of 11, could fetch $100 relatively soon.

POSCO Basic Materials

Kongsberg Gruppen ASA Aerospace & Defense

Kongsberg Gruppen (NSKFF $15-$25-$27) ASA is a $4.5 billion Norwegian mid-cap industrials firm (try and find one of those in your portfolio). The company operates primarily in the Maritime and the Aerospace & Defense industries. The company’s maritime unit makes navigation, automation, and positioning products for commercial ships and offshore industries. The aerospace unit provides an array of defense- and space-related products and services. Kongsberg has perennially-positive cash flow and a sound balance sheet. The company, which was founded in 1814, is based out of the Buskerud region of Norway.

Copyright 2021. All Rights Reserved.

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 17

P investment enn Wealth intelligence Report

Trading Desk Actions we have taken at the Penn Trading Desk, plus a look at what other Wall Street analysts have to say...

Penn: Open AMT in Global Leaders

To remain on top of all recommended trades as they happen, be sure and subscribe to our Twitter feed @ PennWealth. All trade details can be found at the Penn Wealth Trading Desk.

The content of this report reflects the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers. This is not a solicitation to buy. Always consult your investment professional before investing any money.

18 Penn Wealth Report

volume

We highlighted American Tower Corp in a Nov 2020 Penn Wealth Report cover story on The Changing REIT Landscape.

The company owns over 180,000 cell towers around the world, generating most of its revenue by leasing tower space to wireless carriers. A massive number of 5G antennas will be deployed over the coming decade, and AMT should be a major beneficiary of the 5G revolution. Opened in the Global Leaders Club at $221/sh with an intitial target price of $270/sh.

Penn: Open VIAC @ $43.50

Are we huge ViacomCBS fans? Nope. So why the addition? Shares of VIAC, which were grossly overvalued, have fallen 50% in just over a week. We added to the Intrepid Trading Platform (a short-term tactical trading account) because the shares have fallen too far too fast. Our target is the 200-day moving average, or $65.30, which would represent a 50% s/t gain.

Penn: Open INFL @ $29.93

We do not buy the notion that “inflation is transitory,” as so many so-called experts have espoused. Unfortunately, inflation hedges are not as prevalent as they once were. One new investment, however, is very intriguing: the Horizon Kinetics Inflation Beneficiaries ETF seeks out domestic and foreign securities that are expected to benefit from rising prices of real assets, i.e., inflation. We are impressed by the lineup of holdings in this rather unique fund. We added INFL as a satellite position within the DGS.

Winnebago. Winnebago Industries is not just about RVs any longer; thanks to a strategic acquisition plan, the company continues to gain market share in the larger “outdoor recreation” arena. Recent pick-ups include Grand Design and Newmar in the RV segment, Chris-Craft in the powerboats segment, and Barletta Pontoon Boats in that respective segment. Out first target price for the shares is $86, which would represent a 25% gain.

Penn: Open TEF @ $4.75

Telefonica SA is the “state” telephone operator in Spain, with its home country accounting for about one-third of revenues. Brazil, Germany, and the UK are also key markets. In a strategic move to embrace the future of communications, the company has created two new units: Telefonica Tech and Telefonica Infrastructure. The former will manage the Internet of Things, offer cybersecurity solutions, and have big data cloud solutions. The latter will manage the firm’s towers, antenna systems, and fiber projects. A steady business model with an eye on the future. Did we mention the 9.4% yield and our $10 price target?

Added to the Strategic Income Portfolio.

Penn: Open COIN @ $230

We have made the comparison between the Gold Rush in the mid-19th century and the crypto craze happening right now. We have urged investors to “invest in the companies supplying the tools rather than in the miners themselves.”

To that end, we have added the largest US cryptocurrency exchange—Coinbase Global—to the Intrepid Trading Platform.

Penn: Open WGO @ $68.90 With nearly 60 million verified users havWe believe the surging demand for recre- ing the ability to trade around 50 of the ational vehicles, or RVs, will remain top cryptocurrencies, we see Coinbase intact for some time, and the best way as the leading crypto infrastructure to play that bet is by picking up shares play. COIN is off nearly 50% from its IPOof the inexpensive (9 P/E) industry leader, induced euphoric high.

9 issue 03

22 Aug 2021

Copyright 2021. All Rights Reserved.

investment Penn Wintelligence ealth Report

Open VIAC in Intrepid

No love affair for Viacom, but the shares are now undervalued.

Closed T in Strategic Income Portfolio

Guess which color of line belongs to AT&T. We are done waiting.

Open Telefonica at $4.75 An established foreign play, a great dividend yield, and a smart growth strategy.

Open Coinbase Global in Intrepid

Coinbase dropped 50% and hit our target buy price.

Copyright 2021. All Rights Reserved.

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 19

investment W Penn eekly intelligence WBealth usiness Report Report

Weekly Business Report The content of this report reflects the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers. This is not a solicitation to buy. Always consult your investment professional before investing any money.

Media & Entertainment

Roblox is not just another gaming stock, but should you invest?

Admittedly, online gaming stocks don’t typically get us very excited from an investment standpoint. Roblox (RBLX $67), however, may just prove to be the exception. Granted, the company came out of the gate with a crazy valuation—it lost $253M on a paltry $924M in revenues in 2020, yet the GameStop crowd made it a $40 billion company by the end of its first day of trading. Want some perspective on that? Ford (F) has a market cap of $49 billion.

This particular online entertainment platform, however, has a very unique story. More than just a place to play around (over half of the company’s 33 million daily users are 13 or younger), users actually program games and play games created by other users. And it doesn’t take a degree in programming to participate: Roblox offers even the youngest of users online tutorials to teach them how to create. “We offer free resources to teach students of all ages real coding, game design, digital civility, and entrepreneurial skills,” reads a lead-in to one of their education pages.

Game developers on the platform earn “robux,” digital currency which can be converted to cold, hard cash. Over 1,250 developers/gamers earned at least $10,000 in robux last year, with several hundred earning over $100,000. Two British teens, who produced their first Roblox game when they were just 13, made a splash in the BBC when it was reported that they paid off their parents mortgage using converted robux.

It doesn’t take much to get a large percentage of the younger generation hooked on gaming; imagine what happens when potential to make money is added to the mix. We also appreciate the fact that these young developers are actually learning analytical skills along the way. The shares may seem pricey now (they have dropped back from a high of $79.10), but the company is for real, and it comes with a sound narrative for investors—unlike GameStop. ​There is going to be a substantial tech pullback this year, and we can expect the gaming stocks which are not generating a profit to get hit hard. Where would a decent buy point for RBLX shares reside? If they drop back to $60 or lower, and they fit the respective portfolio mix, it would be wise to take a deeper dive and considering picking some up. In the meantime, why not “sign up and start having fun?” You might even earn some robux while waiting for the shares to become more attractive.

Global Strategy: Southeast Asia

The new administration took a tough stance with China in first official meeting; now, let’s look for continuity Thankfully, John Kerry was nowhere near the Captain Cook Hotel in Anchorage for the event. The first official meeting between the Biden administration and the Communist Party of China was anything but a love-fest, and that gives us encouragement that the US won’t get rolled over the next four years.

In what was to be a brief photo-op, US Secretary of State Anthony Blinken and US National Security Advisor Jake Sullivan gave their Chinese counterparts an earful, expressing concern over 20 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

issues from Hong Kong to questionable trade practices to cybersecurity. Secretary Blinken: “...the US relationship with China will be competitive where it should be, collaborative where it can be, adversarial where it must be.”

He went on to express the concerns raised (about China) from allies such as Japan and South Korea: “I have to tell you what I’m hearing is very different from what you described.” Surprisingly stark language for an audience that wanted to hear sycophantic praise for the Chinese people and the ruling communist party. The frustration was revealed in a response by Chinese Director of the Central Foreign Affairs Commission, Yang Jiechi: “...the United States does not have the qualification to say that it wants to speak to China from a position of strength...this is not the way to deal with the Chinese people.” A nerve was touched, to put it mildly.

Of course, what really matters is how the Biden administration actually deals with the communist nation going forward.

Nonetheless, neither the spirit of Neville Chamberlain nor John Kerry seemed to be present in the room—which gives us quite a bit of comfort. ​One of our biggest beefs with the Trump administration was the lack of willingness to join with our allies in forming a united front against unacceptable Chinese behavior. We are virtually certain that will not be the case with the new administration. China also made a major miscalculation by unleashing the massive cyber strike against Microsoft so early in Biden’s term, leaving him almost no choice but to take a tough stance against our major global nemesis. Russia is trying to join forces with China against the US on several fronts, such as a planned SinoRussian moon base, but Russia remains a shell of its former self, with an economy fueled—no pun intended—overwhelmingly by fossil fuels.

The US must work to garner a true global coalition against the CCP’s nefarious ambitions, which include the eradication of dissent within its borders. We also need to continue building out our supply chain around the world to mitigate our over-dependence on the country. We can’t think of any more important strategic US focus over the coming years.

Business & Professional Services

Will GoPuff be the poster child for the coming post-pandemic market reality check?

For anyone not familiar with SoftBank, it is the Masayoshi Son-run business that tried to bring WeWork public with founder and walking nightmare Adam Neumann still at the helm (at least originally).

For anyone not familiar with GoPuff, it is yet another delivery service which brings products from the store to your home. The latter is being financially backed, in good measure, by the former. Why, you might ask, does America need another delivery service with established competitors such as Amazon, DoorDash, Uber Eats, GrubHub, Walmart, Drizly, Instacart, and an army of grocery stores which are getting into the game? We wish we had the answer, but we don’t.

As for their unique value proposition (UVP), the delivery service brings household items such as OTC medicines, snacks, and household essentials to your doorstep. In essence, you are saved that pesky trip to Walgreens. (Actually, don’t some of the listed competitors already do that?)

Copyright 2021. All Rights Reserved.

Weekly PennBW usiness ealth Report

Some of our favorite past stories from “Penn...After Hours”...

Forget the viability—or lack thereof—of the company’s UVP; we are more concerned about the valuation. In October of 2020, the company raised funds which valued the enterprise at just under $4 billion.

Now, fueled with a new round of funding, it is valued at just shy of $9 billion. Keep this in mind as well: GoPuff will probably go public this year, and we have all seen what happens to these novelty (our word) startups out of the gate—many see their shares double or even triple before the dust settles. So, we have a company that may be worth $4 billion (doubt it), it is now valued at $9 billion, and it may be at $20 billion after the IPO. Does that make sense?

We love DoorDash, but how many DASH investors even realize that the firm, which has never turned a profit, has a $64 billion market cap as of this writing? There is a house of cards being built, and every house of cards eventually comes crashing down. ​Forget the hype being pushed by the old media or on social media with respect to these companies. Do the research, figure out whether they actually do have a UVP, take a look at the numbers, consider the management team in place, and make wise investment decisions based on the easily-accessible research available to virtually everyone. Maybe it is FOMO, or maybe we were simply going stir-crazy in our homes, but there is a whole lot of gambling going on within the markets right now.

Global Strategy: Europe

Could an internecine battle in Germany help bring about a major regime change?

For some reason, it seems as though it has been about five years since Angela Merkel announced that she would be stepping down from her role as Chancellor of Germany—a position (stepping down, that is) rather forced upon her by the party she led between 2000 and 2018, the Christian Democratic Union (CDU). In what seems to be dragging on longer than Brexit, the battle for her successor just took a dramatic turn.

While there are roughly a dozen political parties in the country, the ruling alliance between the center-right CDU and the center-right Christian Social Union in Bavaria (CSU) has been a stabilizing factor in the country since nearly the end of World War II. Generally, the leader of the larger CDU, Merkel’s party, gets the nod to represent the alliance in the national election. And, indeed, Merkel has backed her party’s leader, Armin Laschet, to succeed her. However, the more charismatic Markus Söder, head of the CSU, believes that he is the right person for the job, and his party just sent a shocking snub to Merkel’s pick. Söder points out how far the CDU has fallen in the polls since the former journalist took the reins of the party from Merkel three years ago. He is correct on both counts: that the party has fallen from grace since 2018, and that he could energize the electorate more than Laschet.

Of course, this battle has the center-left Social Democratic Party of Germany (SPD) licking its chops. It sees its own nominee, Olaf Scholz, gaining from the disarray. To further complicate the matter, Scholz is not only Merkel’s deputy vice chancellor, he actually lost the race to be the leader of his own party. We won’t even get into the farleft Green Party, or the far-right Alternative for Germany (AfD), or even the Pirate Party, which opposes the EU’s data retention policies. It should be fun to watch (from across the ocean) as battles play out over the next five months—the country has set its official federal election date as 26 September 2021. ​The ugliness could spiral out of control, with a real possibility that Scholz could pull out a victory. Considering the gargantuan problems facing Germany right now, perhaps the real question should be why would anyone want to be chancellor?

Copyright 2021. All Rights Reserved.

Update: The CDU affirmed its support for the unpopular Laschet and, true to his word, Markus Söder stepped aside. The Green party candidate, Annalena Baerbock, has suddenly risen to the top of many polls. A fractured election could feasibly launch her into the chancellor’s role.

Economics: Work & Pay

Americans are quitting their jobs in record numbers According to the Bureau of Labor Statistics within the US Department of Labor, there have never been more jobs available in the United States than right now. The June JOLTS (Job Openings and Labor Turnover Survey), which was released on Monday the 9th of August, shows a staggering ten million job openings, reflecting the strength of the post-pandemic comeback in the US economy. There is another interesting aspect to the jobs report: a record number of Americans—3.9 million—also quit their jobs, indicating their confidence to find more lucrative positions. While employers added 943,000 new hires in the month of July, the BLS Survey shows just how tight the labor market really is. As the leisure and hospitality industry roars back, even historically lower-paid workers are flexing their muscle, demanding better pay and more perks. Average weekly wages in the sector rose 10.4% from the previous report, which was issued in February.

In addition to sweetening the pay benefits, companies are also adding other perks such as paying for higher education. Target (TGT $264) recently unveiled a new program which allows all US-based team members to have their college tuition costs—including books— paid for by the company. Even those team members seeking master’s degrees can receive up to $10,000 per year. Despite all of the sweetened perks, however, there are still nearly fifteen million capable Americans claiming unemployment insurance benefits. Nearly twelve million of that number are receiving enhanced benefits payments as part of the pandemic relief effort—a fact that many point to as part of the labor problem. With more and more states cutting off that emergency aid, however, we can expect the number of unemployed Americans to drop precipitously between now and the end of the year. We still have a ways to go before reclaiming the 3.5% unemployment rate reached before the pandemic struck, but we are headed in the right direction.

There is another major component of the employment story in the US—the transformational work-from-home movement brought about by the pandemic. Many Americans decided that they rather like the new order and have no desire to return to the office. Meanwhile, employers are embracing the reduced real estate costs required to operate at full capacity.

Ultimately, the massive disruptions of 2020 could lead to a win/win situation for both employers and their workforce under a new hybrid model.

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 21

W Penn eekly WBealth usiness Report Report Active copper mine.

Image licensed by Penn Wealth

Metals & Mining

Outcome of Peruvian national election highlights the country risk associated with precious metals and mining stocks

Trying to root out socialism from Latin America is a monumental challenge at best, an exercise in futility at worst. For evidence of this, just look to Venezuela. Despite the nightmarish economic situation for Venezuelans (like five hours in line for a few rolls of toilet paper), Hugo Chavez wannabe Nicolas Maduro remains in power, despite having the personality of a single-ply square of...Venezuelan toilet paper. Heading further down the South American continent we have the Republic of Peru: a relative bastion of free trade in the region—at least up until this point. The rather shocking results of the national elections held a few months ago placed socialist candidate Pedro Castillo into the presidency following a June runoff (he won 50.13% of votes over his opponent, the market-friendly Keiko Fujimori, who won 49.87%). Which leads us to mining companies in general, and Souther Copper (SCCO $62) specifically.

Thanks to the global rebound, the outlook for metals—especially those with heavy industrial usage such as copper—is bright.

Peru is the world’s second-largest source of copper, and a majority of Southern Copper’s mining operations reside within that country. While Castillo is trying to temper the harshness of his message leading into the runoff, his talk of nationalizing private companies operating inside the country has spooked investors. His party’s platform, in fact, talks of “taking control” of the nation’s natural resources. For $48 billion Southern Copper, which recently announced $8 billion in new Peruvian projects, there should be cause for concern. In fact, considering the remainder of their operations are in Mexico, which has been methodically moving left, there should be cause for extreme concern.

We remain very bullish on both precious metals/minerals as well as those used for industrial purposes. In fact, if the new Peruvian government were to nationalize the miners (not beyond the realms of possibility), copper prices would shoot even higher than they already are. Great for commodity investors; not so much for those who took a chance on individual miners like Southern Copper.

While we do own two gold miners in the Penn Global Leaders Club, it is a safer bet to own sector or thematic ETFs to take advantage of anticipated growth. A few worth looking at are the US Global GO Gold and Precious Metal Miners ETF (GOAU $18), and the SPDR Gold Shares ETF (GLD $165). We own the latter 22 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

in the Penn Dynamic Growth Strategy as a satellite position, and the current price of gold $1,777) makes it an attractive opportunity right now—in our opinion.

There are some excellent mining stocks in which to invest, and they are often in the small- to mid-cap sweet spot. However, investors need to perform their due diligence and understand exactly where the respective company’s mines are located, and what the geopolitical risks are within that country or region.

Media & Entertainment

Amazon poised to make its second-largest acquisition ever: a storied movie studio

Formed in 1924, MGM dominated Hollywood for over a generation. While the studio has had a number of interesting owners over the past century, none have been quite like its next probable owner: Internet retailer Amazon (AMZN $3,245). Back in 2017, when reports surfaced that Amazon was about to buy food retailer Whole Foods for $13.7 billion, there were many of doubters. We believed the move was brilliant, and that opinion has been borne out in an impressively short period of time (Whole Foods now delivers food to the doorstep of Prime members with Amazon-like efficiency).

The Whole Foods acquisition remains the company’s largest to date; but, with its reported $9 billion price tag, MGM will easily hold the second position.

Amazon has been investing heavily in its streaming service, recently inking a deal with the NFL to stream Thursday night games for around $1.2 billion per year. The recent merger of AT&T’s Warner Media with Discovery may well have been the catalyst for MGM and the retailer to get this deal inked. It is interesting to note that MGM’s former CEO, Gary Barber, was fired by the board after he reportedly engaged in talks with Apple surrounding a possible $6 billion deal. So, with a cost 50% higher than the purported range during the Apple talks, is Amazon overpaying for this asset? Probably. But in the end, they will make the premium look like chump change. ​Amazon is a long-standing member of the Penn Global Leaders Club, and we have a fair value on the shares of around $4,250. The most concerning aspect of the company’s growth trajectory revolves around government intervention. The company already had a target on its back from an antitrust standpoint; this will only add fuel to the fire of those who wish to see it forcibly broken up.

Copyright 2021. All Rights Reserved.

W Weekly eekly PennBBW usiness usiness ealth Report report Quotes of the Week (For more, visit our blog at PennWealth.wordpress.com)

Humility

“Some people will never learn anything for this reason: because they understand everything too soon.”

—Alexander Pope 1727, by Michael Dahl; Public Domain

Temptation

“Better to shun the bait than struggle in the snare.”

—John Dryden, England’s 1st Poet Laureate

by Sir Godfrey Kneller; Public Domain

Focus “The whole secret of life is to be interested in one thing profoundly and in a thousand things well.”

—Horace Walpole, 4th Earl of Orford

By Joshua Reynolds; Public Domain

Copyright 2021. All Rights Reserved.

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 23

P investment enn Wealth intelligence Report Penn Strategies

Penn Strategic Income Portfolio (th Asset Class Equity-Income Income Equities Government Bond - Treasury Equities Income Taxable Bond Equities Equities Equities Multisector Bond Income Growth and Income Worldwide Bond Growth and Income Income Taxable Bond Allocation Growth and Income Multisector Bond Growth and Income Government Bond - Treasury Taxable Bond Taxable Bond Corporate Bond - High Yield 24 Penn Wealth Report

volume

Classification Derivative Income Emerging Markets Bond Oil & Gas Midstream Inflation-Protected Bond Telecom Services Bank Loan Emerging Markets Bond Banks - Diversified Banks - Regional REIT - Office Multisector Bond Multisector Bond Intermediate Core-Plus Bond World Bond Allocation--50% to 70% Equity Intermediate Core-Plus Bond Corporate Bond Convertibles Short-Term Bond Intermediate Core Bond Intermediate Core-Plus Bond Intermediate Government Short Government Ultrashort Bond Ultrashort Bond

9 issue 03

22 Aug 2021

Sym JEPI PYEMX ENB TIP VZ SRLN EMB BNS UBSI OFC HSNIX NFLT TOTL DODLX FAYZX BOND LQD CWB IGSB TGCFX FIXD GOVT AGZ JPST FLRN

Copyright 2021. All Rights Reserved.

Yield 7.60% 6.53% 5.82% 5.50% 4.74% 4.57% 4.55% 4.43% 4.20% 4.02% 3.68% 3.60% 3.48% 3.13% 3.06% 2.84% 2.58% 2.19% 1.62% 1.64% 1.56% 1.10% 0.79% 0.61% 0.37%

Name JPMorgan Equi Payden Emergi Enbridge Inc iShares TIPS Bo Verizon Comm SPDR Blackston iShares JP Mor Bank of Nova S United Banksha Corporate Offic Hartford Strate Virtus Newflee SPDR® DoubleL Dodge & Cox G Fidelity Advisor PIMCO Active B iShares iBoxx $ SPDR® Blmbg C iShares 1-5 Yea TCW Core Fixed First Trust TCW iShares US Trea iShares Agency JPMorgan Ultra SPDR® Blmbg I

investment

intelligence

Penn Strategic Income Portfolio

he income generator; Risk Level 37)

ity Premium Income ETF ing Markets Bond

ond ETF munications Inc ne Senior Loan ETF rgan USD Em Mkts Bd ETF Scotia ares Inc ce Properties Trust egic Income I et Multi-Sect Bd ETF Line Total Return Tact ETF Global Bond r® Multi-Asset Income I Bond ETF $ Invmt Grade Corp Bd ETF Convert Secs ETF ar invmt Grd Corp Bd ETF d Income I WOpportunistic Fxd Inc ETF asury Bond ETF y Bond ETF a-Short Income ETF Inv Grd Flt Rt ETF

52 Wk Low $57.08 $11.08 $36.21 $120.90 $49.69 $43.83 $93.68 $59.05 $31.74 $23.89 $8.21 $23.54 $43.80 $10.75 $13.77 $99.10 $115.78 $70.60 $51.21 $10.49 $48.21 $24.31 $110.86 $50.20 $30.36

Price $61.35 $11.30 $46.32 $121.71 $53.70 $44.69 $94.47 $68.25 $33.80 $27.37 $8.23 $23.59 $43.96 $10.77 $14.15 $99.60 $116.49 $75.51 $51.41 $10.49 $48.48 $24.43 $111.29 $50.24 $30.51

Copyright 2021. All Rights Reserved.

52 Wk High 1-yr return $63.67 13.87% $13.67 -9.85% $47.42 33.68% $131.37 2.07% $59.85 -1.75% $46.34 1.50% $113.64 -10.73% $74.86 15.14% $42.50 -9.60% $30.51 5.15% $9.38 -6.74% $25.75 -3.31% $48.67 -6.31% $12.13 -5.44% $15.19 3.36% $112.27 -7.34% $136.78 -9.20% $89.78 -10.88% $55.00 -4.69% $11.75 -7.56% $54.42 -7.81% $27.05 -6.38% $119.50 -5.00% $50.77 -0.28% $30.68 -0.05% 22 Aug 2021

Stop

Penn Wealth Report

volume

Duration 7.71 7.71 N/A 7.44 N/A N/A 8.14 N/A N/A N/A 5.06 N/A 5.32 4.00 8.49 5.86 9.30 2.06 N/A 6.32 6.30 N/A 3.82 0.49 0.05 9 issue 03 25

P investment enn Wealth intelligence Report Penn Strategies

Penn Dynamic Growth St Specialty

Symbol

Aerospace & Defense

PPA

Commodities: Agriculture

Function

St

5% Invesco Aerospace & Defense ETF

Satellite

In

DBA

4% Invesco DB Agriculture

Satellite

Th

Commodities: General

BCI

4% abrdn Blmb AllCmdStrK1Fr ETF

Satellite

Co

Consumer Staples

RHS

4% Invesco S&P 500® Eql Wt Cnsm Stapl ETF

Satellite

Se

Cybersecurity

CIBR

4% First Trust NASDAQ Cybersecurity ETF

Satellite

Th

Health Care

XLV

4% Health Care Select Sector SPDR® ETF

Satellite

In

Health Care

XBI

4% SPDR® S&P Biotech ETF

Satellite

Se

Industrials

XLI

3% Industrial Select Sector SPDR® ETF

Satellite

In

Inflation

INFL

3% Horizon Kinetics Inflation Bnfcrs ETF

Satellite

Th

Information Technology

FTEC

3% Fidelity® MSCI Information Tech ETF

Satellite

Se

International Developed

IQLT

4% iShares MSCI Intl Quality Factor ETF

Satellite

Ge

International Emerging

IEMG

4% iShares Core MSCI Emerging Markets ETF

Satellite

Ge

Large-Cap Blend

MOAT

5% VanEck Morningstar Wide Moat ETF

Satellite

St

Large-Cap Growth

IUSG

5% iShares Core S&P US Growth ETF

Core

M

Large-Cap Value

USMV

7% iShares MSCI USA Min Vol Factor ETF

Core

St

Materials

XLB

2% Materials Select Sector SPDR® ETF

Satellite

Se

Mid-Cap Blend

SCHM

5% Schwab US Mid-Cap ETF™

Satellite

M

Mid-Cap Growth

VLIFX

5% Value Line Mid Cap Focused

Core

M

Mid-Cap Value

PAVE

3% Global X US Infrastructure Dev ETF

Satellite

Th

Natural Resources

GUNR

5% FlexShares Mstar Glbl Upstrm Nat Res ETF

Satellite

Se

Precious Metals

GLD

2% SPDR® Gold Shares

Satellite

Co

Real Estate

ICF

4% iShares Cohen & Steers REIT ETF

Satellite

Se

Small Cap Growth

IJT

4% iShares S&P Small-Cap 600 Growth ETF

Core

M

Technology

XLK

4% Technology Select Sector SPDR® ETF

Satellite

Se

3% Utilities Select Sector SPDR® ETF

Satellite

Se

Utilities 26 Penn Wealth Report

XLU volume

9 issue 03

% of Port Name

22 Aug 2021 100%

Copyright 2021. All Rights Reserved.

investment Penn Wintelligence ealth Report

Penn Dynamic Growth Strategy

trategy (the ETF portfolio)

tyle

52 wk Low

Price

52 wk High

1-year Return

RSI

Notes

ndustry

$67.46

$75.04

$78.75

6.17%

53

replaced ITA 25 Feb 2022

hematic

$16.57

$21.84

$22.64

26.17%

62

replaced ROBO 01 Mar 22

ommodity

$22.24

$29.01

$31.25

44.25%

62

ector

$153.08

$160.45

$173.86

7.11%

35

hematic

$40.66

$48.12

$56.58

12.35%

48

ndustry

$113.35

$128.94

$141.98

14.43%

46

ector

$81.71

$84.61

$149.24

-42.41%

40

ndustry

$93.40

$97.94

$107.88

3.93%

44

hematic

$26.21

$32.23

$33.00

19.41%

59

ector

$101.72

$110.88

$138.08

5.08%

38

eographic

$33.48

$34.34

$40.81

-3.17%

37

eographic

$52.44

$52.47

$68.18

-18.37%

30

trategy

$67.29

$70.18

$78.43

4.10%

38

$87.54

$96.05

$117.49

7.38%

39

trategy

$67.59

$73.23

$81.33

9.50%

44

ector

$75.83

$81.85

$92.31

6.19%

45

Market Cap

$69.78

$71.61

$83.73

-3.67%

42

Market Cap

$27.30

$27.85

$33.46

7.87%

44

hematic

$23.38

$26.88

$29.45

10.22%

52

ector

$34.65

$45.41

$46.34

24.95%

62

ommodity

$157.55

$185.09

$193.30

14.59%

62

ector

$56.09

$67.38

$76.57

22.64%

49

$116.25

$121.30

$144.69

-8.42%

44

ector

$127.72

$144.06

$177.04

9.67%

38

ector

$61.21

$70.43

$72.37

17.91%

Market Cap

Market Cap

Copyright 2021. All Rights Reserved.

Stop loss @ $60

100 least vol S&P stocks; rebal qtrly

replaced XLC 27 Jan 22 specialty REIT (cell towers, cloud, etc)

60 22 Aug 2021

Penn Wealth Report

volume

9 issue 03 27

P investment enn Wealth intelligence Report Penn Strategies

Penn Global Leaders Clu 52-Wk Low Sector Industry Symbol Company Basic Materials Chemicals DOW Dow Inc $52.07 Basic Materials Gold NEM Newmont Corp $52.60 Communication Services Internet Content & Information FB Meta Platforms Inc $186.11 Consumer Cyclical Auto Parts BWA BorgWarner Inc $34.85 Consumer Cyclical Home Improvement Retail HD The Home Depot Inc $266.76 Consumer Cyclical Internet Retail AMZN Amazon.com Inc $2,671.45 Consumer Cyclical Restaurants CMG Chipotle Mexican Grill Inc $1,277.41 Consumer Cyclical Specialty Retail TSCO Tractor Supply Co $165.10 Consumer Defensive Discount Stores DG Dollar General Corp $173.50 Consumer Defensive Discount Stores TGT Target Corp $176.68 Consumer Defensive Discount Stores WMT Walmart Inc $129.90 Consumer Defensive Packaged Foods GIS General Mills Inc $56.67 Energy Oil & Gas Integrated CVX Chevron Corp $92.86 Financial Services Banks - Diversified RY Royal Bank of Canada $91.14 Financial Services Credit Services PYPL PayPal Holdings Inc $92.25 Financial Services Credit Services V Visa Inc $186.67 Financial Services Financial Data & Stock Exchanges CBOE Cboe Global Markets Inc $96.27 Healthcare Drug Manufacturers - General AMGN Amgen Inc $198.64 Healthcare Drug Manufacturers - General BMY Bristol-Myers Squibb Co $53.22 Healthcare Drug Manufacturers - General GILD Gilead Sciences Inc $57.32 Healthcare Drug Manufacturers - General GSK GlaxoSmithKline PLC $35.32 Healthcare Drug Manufacturers - General PFE Pfizer Inc $34.51 Healthcare Medical Devices MDT Medtronic PLC $98.38 Healthcare Medical Devices STE Steris PLC $179.26 Industrials Aerospace & Defense LMT Lockheed Martin Corp $324.23 Industrials Aerospace & Defense RTX Raytheon Technologies Corp $74.63 Industrials Airlines UAL United Airlines Holdings Inc $30.54 Industrials Railroads UNP Union Pacific Corp $195.68 Industrials Specialty Industrial Machinery GNRC Generac Holdings Inc $251.74 Real Estate REIT - Office DLR Digital Realty Trust Inc $130.10 Real Estate REIT - Residential ESS Essex Property Trust Inc $271.51 Real Estate REIT - Specialty AMT American Tower Corp $212.28 Technology Consumer Electronics AAPL Apple Inc $118.86 Technology Electronic Components GLW Corning Inc $33.93 Technology Semiconductor Equipment & Materials AMAT Applied Materials Inc $112.14 Technology Software - Infrastructure ADBE Adobe Inc $415.43 Technology Software - Infrastructure MSFT Microsoft Corp $229.35 Utilities Utilities - Diversified EXC Exelon Corp $40.11 American Electric Power Co Inc $79.69 Utilities Utilities - Regulated Electric AEP Utilities Utilities - Regulated Electric SO Southern Co $58.53

28 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Copyright 2021. All Rights Reserved.

investment Penn Wintelligence ealth Report

Penn Global Leaders Club

ub (the stalwart portfolio) Price $60.91 $76.89 $187.61 $36.32 $316.79 $2,910.49 $1,475.41 $226.52 $205.55 $206.97 $142.07 $62.27 $170.90 $108.38 $96.57 $196.71 $114.00 $228.85 $68.87 $58.00 $40.56 $50.27 $103.82 $218.76 $439.04 $96.92 $34.87 $261.52 $281.64 $135.68 $336.02 $234.84 $154.73 $36.44 $123.64 $416.38 $280.07 $43.63 $95.54 $68.69

52-Wk High 71.38 80.75 384.33 55.55 420.61 3,773.08 1,958.55 239.86 240.14 268.98 152.57 69.95 174.76 119.41 310.16 252.67 139.00 261.00 69.75 74.12 46.86 61.71 135.89 248.30 479.99 104.34 63.70 270.14 524.31 178.22 359.49 303.72 182.94 46.82 167.06 699.54 349.67 58.21 98.15 69.77

1-Yr Ttl Rtn -0.95% 36.09% -31.50% -24.96% 20.26% -6.52% 0.91% 34.67% 9.22% 17.11% 9.23% 10.66% 61.32% 20.95% -61.95% -12.48% 12.31% 2.18% 17.84% -4.14% 20.31% 50.03% -10.23% 21.44% 33.01% 28.76% -35.50% 24.28% -15.11% 3.69% 24.54% 11.96% 27.62% -6.65% 6.25% -7.69% 19.07% 7.15% 23.65% 20.72%

Mkt Cap ($M) $44,814 $60,936 $510,664 $8,716 $330,805 $1,480,987 $41,359 $25,545 $47,627 $95,707 $394,085 $37,562 $332,837 $153,533 $112,505 $412,692 $12,153 $127,476 $150,117 $72,725 $103,100 $282,686 $139,279 $21,904 $119,562 $144,637 $11,320 $166,562 $17,964 $38,597 $21,925 $107,060 $2,525,107 $30,823 $109,223 $196,676 $2,099,647 $42,763 $48,172 $72,827

Copyright 2021. All Rights Reserved.

Rev TTM ($M) 54,968 12,222 117,929 14,838 151,157 469,822 7,547 12,731 33,984 106,005 572,754 18,608 155,606 36,840 25,371 25,477 3,495 25,979 46,385 27,305 46,894 81,288 31,785 4,248 67,044 64,388 24,634 21,804 3,737 4,428 1,441 9,357 378,323 14,082 24,172 15,785 184,903 36,347 16,792 23,113

22 Aug 2021

Prft Mgn TTM 11.48% 9.54% 33.38% 3.62% 10.87% 7.10% 8.65% 7.83% 7.19% 6.55% 2.39% 12.02% 10.04% 35.29% 16.43% 51.59% 15.14% 22.68% 15.08% 22.80% 12.90% 27.04% 15.46% 6.57% 9.42% 6.00% -7.97% 29.92% 14.27% 38.60% 33.91% 27.44% 26.58% 13.54% 27.10% 30.55% 38.50% 4.69% 14.82% 10.42%

Free $ Flow TTM ($M) $4,685 $2,626 $39,116 $638 $14,005 -$14,726 $840 $510 $1,610 $5,081 $11,075 $2,525 $21,131 $29,366 $5,432 $15,228 $1,507 $8,381 $15,234 $10,805 $6,908 $29,869 $5,678 $412 $7,699 $4,749 -$40 $6,096 $301 $1,702 $784 $3,443 $101,853 $1,775 $5,988 $6,882 $60,693 -$4,969 -$1,924 -$1,071

Penn Wealth Report

volume

PE Ratio 7 53 14 16 20 45 64 26 20 15 29 17 21 12 27 33 23 22 neg 12 17 13 29 76 19 38 neg 26 34 23 45 41 26 29 17 42 30 25 19 31

9 issue 03 29

P investment enn Wealth intelligence Report Penn Strategies

Penn Intrepid Trading Plat Position #

Entry

Exit

Symbol

Company

2 10/30/2020

RGR

Sturm Ruger & Co Inc

3

2/23/2021

MP

MP Materials Corp

5

3/4/2022

DOCU

DocuSign Inc

6

3/4/2022

ZM

Zoom Video Communications Inc

Closed

7/20/2021

3/7/2022

WGO

Winnebago Industries Inc

Closed

5/28/2020

3/7/2022

DAL

Delta Air Lines Inc

Closed

11/24/2021

3/2/2022

JWN

Nordstrom Inc

Closed

6/16/2021

2/7/2022

COIN

Coinbase Global Inc

Closed

6/26/2020

1/24/2022

PK

Park Hotels & Resorts Inc

Closed

5/27/2020

1/18/2022

MDY

SPDR® S&P MIDCAP 400 ETF Trust

Closed

7/27/2020

1/18/2022

XLY

Consumer Discret Sel Sect SPDR® ETF

Closed

10/6/2021

1/13/2022

MKC

McCormick & Co Inc

Closed

8/13/2020

2/10/2021

APHA

Aphria

Closed

5/18/2020

11/23/2020

M

Macy's Inc

Closed

7/9/2020

10/2/2020

BBBY

Bed Bath & Beyond Inc

Closed

6/25/2020

7/30/2020

SIX

Six Flags Entertainment Corp

Closed

7/7/2020

7/24/2020

REGN

Regeneron Pharmaceuticals Inc

Closed

5/27/2020

7/13/2020

CLX

Clorox Co

Closed

6/26/2020

7/7/2020

IPHI

ERR: INVALID COMPANY

Closed enn Wealth Report 6/3/2020 30 P volume 9 issue7/6/2020 03 22 AugSTAA 2021 Closed

6/19/2020

6/22/2020

PLAY

Staar2021.

Surgical Copyright All RightsCo Reserved.

Dave & Buster's Entertainment Inc

investment Penn Wintelligence ealth Report

Penn IntrepidTrading Platform The Penn Intrepid Trading Platform is precisely what the name implies. Up to eleven positions are held at any one time, though the number may be far less based on market conditions. The goal of the trades made within the ITP is to notch short-term, double-digit gains (10% would be considered a “win”), while protecting each position with a tight stop-loss order (perhaps 5-7% below purchase price). To calculate the size of a trade, the entire portfolio value is divided by 12, with the share price divided by that number. Note we hold a maximum of 11 positions: the other one-twelfth is always held in cash. On occasion, a half-position may be taken in a stock.

tform (the trading portfolio) Open Price

Current/Close Price

Stop

Gain/Loss

Notes

$66.72

$70.64

$59.29

5.88%

TP1 $81.40

$37.00

$43.73

$32.93

18.19%

TP1 $44.40

$100.00

$75.01

-24.99%

TP1 $123.68

$108.00

$98.12

-9.15%

TP1 $132.98

$68.66

$61.11

-11.00%

11% loss

$26.00

$34.00

30.77%

31% l/t gain

$22.75

$27.00

18.68%

19% gain, three months

$233.00

$207.37

-11.00%

11% loss on stop

$9.54

$17.50

83.44%

83% gain

$325.93

$500.00

53.41%

53% gain

$135.89

$190.00

39.82%

40% gain

$79.50

$95.40

20.00%

20% gain, three months

$4.63

$25.00

439.96%

440% gain, six months

$5.55

$10.09

81.80%

82% gain, 6 months

$7.75

$18.30

136.13%

136% gain, three months

$19.23

$17.47

-9.15%

9.15% loss; 1 month

$648.04

$602.59

-7.01%

7% loss; 3 weeks

$200.00

$229.00

14.50%

14.5% gain, six weeks

$110.70

$122.04

10.24%

10.24% gain, 2 weeks

$42.74

$59.00 Copyright 2021. All Rights Reserved.

$16.00

$14.47

$97.01 $34.00

22 Aug38.04% 2021

-9.56%

38% gain, one9 month Penn Wealth Report volume issue 03 31 9.56% loss, < 1 week

P investment enn Wealth intelligence Report Penn Strategies

Penn New Frontier Fund (the em Symbol AJRD ATRO TSLA BMRN JAZZ LGND VRTX BIIB GLW ARW RBLX CTSH EPAM UBER LRCX PLAB UCTT HIMX MU QCOM CVLT FTNT PLTR

Company Price Aerojet Rocketdyne Holdings Inc $38.78 Astronics Corp $12.78 Tesla Inc $795.35 Biomarin Pharmaceutical Inc $75.98 Jazz Pharmaceuticals PLC $154.68 Ligand Pharmaceuticals Inc $103.05 Vertex Pharmaceuticals Inc $236.48 Biogen Inc $197.67 Corning Inc $36.44 Arrow Electronics Inc $119.86 Roblox Corp $39.24 Cognizant Technology Solutions Corp $88.04 EPAM Systems Inc $200.14 Uber Technologies Inc $30.76 Lam Research Corp $483.39 Photronics Inc $17.07 Ultra Clean Holdings Inc $40.00 Himax Technologies Inc $10.54 Micron Technology Inc $72.82 Qualcomm Inc $152.34 CommVault Systems Inc $60.41 Fortinet Inc $279.13 Palantir Technologies Inc $11.39

32 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

Mkt Cap ($M) $3,124 $403 $822,000 $13,983 $9,550 $1,737 $60,202 $29,050 $30,823 $8,114 $23,064 $46,180 $11,384 $60,119 $67,433 $1,054 $1,798 $1,835 $81,542 $171,687 $2,692 $44,888 $23,123

Copyright 2021. All Rights Reserved.

Rev TTM ($M) $2,188 $445 $53,823 $1,846 $3,094 $277 $7,574 $10,982 $14,082 $34,477 $1,919 $18,507 $3,758 $17,455 $16,524 $702 $2,102 $1,547 $29,619 $36,036 $755 $3,342 N/A

Profit TT 6.5 -5.7 10.2 -3.4 -10.

20.6 30.9 14.1 13.5 3.2 -25.

11.5 12.8 -2.8 27.7 10.0 5.6 28.2 24.8 27.7 4.2 18.1 N/

investment Penn Wintelligence ealth Report

Penn New Frontier Fund

merging technologies portfolio)

t Mgn TM 57% 75% 25% 47% .65% 62% 92% 17% 54% 21% .62% 55% 82% 84% 78% 05% 69% 24% 86% 71% 22% 16% /A

Free $ Flow TTM ($M) $162 -$12 $3,483 $185 $733 $70 $2,409 $3,345 $1,775 $336 $558 $2,216 $461 -$743 $4,030 $73 $152 $380 $3,882 $7,416 $149 $1,204 N/A

PS Ratio 1 1 17 8 3 6 8 3 2 0 10 3 3 3 4 1 1 1 3 5 4 14 14

Copyright 2021. All Rights Reserved.

Industry Aerospace & Defense Aerospace & Defense Auto Manufacturers Biotechnology Biotechnology Biotechnology Biotechnology Drug Manufacturers - General Electronic Components Electronics & Computer Distribution Electronic Gaming & Multimedia Information Technology Services Information Technology Services Software - Application Semiconductor Equipment & Materials Semiconductor Equipment & Materials Semiconductor Equipment & Materials Semiconductors Semiconductors Semiconductors Software - Application Software - Infrastructure Software - Infrastructure

22 Aug 2021

Penn Wealth Report

volume

9 issue 03 33

investment

intelligence

Most Heavily-Sh Symbol PRLD BBBY CRTX FIBK HYMC IGMS STAR ISIG BIRD BRBR TIL IRBT ICPT HRTX FUV BLNK BYND CRSR SAVA LBC LMND BEEM INVA DDS CRK TTCF VLDR LESL BFRI BGFV CNK GTLB BIG AMCX BKE ARCH SDC OCGN

Company Prelude Therapeutics Inc Bed Bath & Beyond Inc Cortexyme Inc First Interstate BancSystem Inc Hycroft Mining Holding Corp IGM Biosciences Inc iStar Inc Insignia Systems Inc Allbirds Inc BellRing Brands Inc Instil Bio Inc iRobot Corp Intercept Pharmaceuticals Inc Heron Therapeutics Inc Arcimoto Inc Blink Charging Co Beyond Meat Inc Corsair Gaming Inc Cassava Sciences Inc Luther Burbank Corp Lemonade Inc Beam Global Innoviva Inc Dillard's Inc Comstock Resources Inc Tattooed Chef Inc Velodyne Lidar Inc Leslies Inc Biofrontera Inc Big 5 Sporting Goods Corp Cinemark Holdings Inc GitLab Inc Big Lots Inc AMC Networks Inc Buckle Inc Arch Resources Inc SmileDirectClub Inc Ocugen Inc

34 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

% of Float Short 69.71% 60.23% 51.33% 49.24% 49.22% 49.05% 48.55% 46.53% 45.45% 44.17% 44.14% 41.70% 41.16% 41.13% 38.81% 38.05% 37.63% 36.55% 35.89% 35.60% 34.93% 34.58% 34.56% 34.03% 33.30% 32.31% 31.66% 31.33% 30.66% 30.65% 30.20% 30.16% 29.54% 29.43% 29.41% 29.21% 28.95% 28.47% Copyright 2021. All Rights Reserved.

PE Ratio ERR: NO DATA ERR: NO DATA ERR: NO DATA 15 ERR: NO DATA ERR: NO DATA 26 ERR: NO DATA ERR: NO DATA 37 ERR: NO DATA 25 ERR: NO DATA ERR: NO DATA ERR: NO DATA ERR: NO DATA ERR: NO DATA 17 ERR: NO DATA 10 ERR: NO DATA ERR: NO DATA 5 9 ERR: NO DATA 292 ERR: NO DATA 34 ERR: NO DATA 4 ERR: NO DATA ERR: NO DATA 7 6 8 96 ERR: NO DATA ERR: NO DATA

Indu Biote Spec Biote Bank Gold Biote REIT Adve Appa Pack Biote Furn Biote Biote Recr Engi Pack Com Biote Bank Insu Sola Biote Depa Oil & Pack Scien Hom Drug Spec Ente Softw Disco Broa Appa Ther Med Biote

investment

intelligence

horted Stocks List

1-Yr Low ustry echnology $8.82 cialty Retail $12.51 echnology $10.15 ks - Regional $37.23 d $0.43 echnology $20.03 T - Diversified $14.75 ertising Agencies $4.80 arel Retail $12.56 kaged Foods $20.36 echnology $13.16 nishings, Fixtures & Appliances $63.37 echnology $11.60 echnology $8.09 reational Vehicles $7.02 ineering & Construction $22.52 kaged Foods $58.00 mputer Hardware $19.74 echnology $9.98 ks - Regional $9.18 urance - Property & Casualty $33.77 ar $13.95 echnology $10.92 artment Stores $63.55 & Gas E&P $4.37 kaged Foods $13.36 ntific & Technical Instruments $3.98 me Improvement Retail $19.80 g Manufacturers - Specialty & Generic $2.25 cialty Retail $10.76 ertainment $13.84 ware - Application $63.30 ount Stores $40.06 adcasting $32.96 arel Retail $32.08 rmal Coal $39.02 dical Instruments & Supplies $1.97 echnology $1.40 Copyright 2021. All Rights Reserved.

Price $9.52 $15.46 $10.68 $44.28 $0.45 $21.88 $25.21 $19.40 $13.92 $25.92 $13.85 $66.80 $17.76 $8.70 $7.30 $23.38 $66.58 $20.72 $45.88 $14.34 $35.22 $14.35 $16.77 $250.28 $8.89 $13.89 $4.15 $22.07 $4.95 $19.98 $17.38 $64.06 $43.41 $42.20 $36.29 $96.58 $2.25 $4.25 22 Aug 2021

1-Yr High 95.38 53.90 121.98 51.24 7.80 127.11 27.75 35.50 32.44 34.19 29.49 197.40 38.94 20.45 36.80 64.50 221.00 49.60 146.16 15.37 182.90 71.29 18.97 416.71 11.34 26.90 26.74 32.84 14.63 47.65 27.85 137.00 73.23 83.63 57.10 105.58 16.08 18.77 Penn Wealth Report

Mkt Cap ($B) 0.45 1.49 0.32 2.75 0.03 0.71 1.75 0.03 2.04 1.01 1.79 1.80 0.52 0.89 0.27 0.99 4.22 1.95 1.84 0.74 2.17 0.13 1.17 4.86 2.07 1.14 0.82 4.03 0.07 0.45 2.08 9.28 1.33 1.78 1.81 1.48 0.87 0.85 volume

9 issue 03 35

Penn Wealth Report

Penn Wealth Publishing

Your use of this report and the information in the products provided is subject to applicable copyright laws and regulations. You agree to use the products and services provided only for personal purposes. The services and the content provided are the property of Penn Wealth Publishing, LLC, and all content is protected by copyright and other intellectual property laws. You understand and agree that Penn Wealth Publishing owns all legal rights, titles, and interest in all content appearing in the report and in the products provided, including but not limited to the copyrighted content, trademarks, servicemarks, logos, and domain names.

Content in the report and within the products include the views, opinions, and recommendations of the individuals at Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers. The products and services offered provide information designed to educate the general public. This information does not take into account the unique circumstances which may affect an individual’s decisions and nothing within the information provided should be deemed as personalized advice tailored to an individual’s needs. Do not invest in any of the ideas or recommendations presented in this report without first consulting a financial professional familiar with your unique situation. All investments have risk, including the possible loss of the prinicipal invested. Penn Wealth Publishing is not responsible for the results of actions taken based on the information presented.

This report and its corresponding products may provide hyperlinks to websites. These links are provided only for your reference and convenience, and this does not imply that the firm endorses the operator of or the content within these sites. You are solely responsible for determining the extent to which you use any content on any website we may provide a link to, and you agree not to hold Penn Wealth Publishing responsible for the content or operation of such sites.

9393 West 110th Street, 51 Corporate Woods, Overland Park, KS 66210 913.538.7174

www.pennwealthreport.com

36 Penn Wealth Report

volume

9 issue 03

22 Aug 2021

member.services@pennwealth.com

Copyright 2021. All Rights Reserved.