Weekly Reads
Weekly Reads - July 5, 2023

Please read the Unison Asset Management Social Media Disclaimer


The global threat of climate change is pushing countries to secure the necessary earth minerals supply to support megatrends like electrification and renewable energy as demand for these minerals is currently expected to outpace production.

The shift toward electrification is expected to grow exponentially over the next decade compared to the previous few decades. The International Energy Agency (IEA) estimates that the world will add as much renewable energy in the upcoming 5 years as it did in the past 20 years. This exponential growth is being driven by the aggressive global push toward energy alternatives to oil and gas. Britain, France, and Norway are among a group of countries that are planning to ban the sale of ICE vehicles in favor of EVs in the upcoming decade. The U.S. recently passed the Inflation Act that allocated a $430 billion energy subsidy package for renewable energy technologies that are made domestically. These laws have moved up the timeline of renewable energy products rapidly increasing the demand for electric batteries and the corresponding minerals that go into these batteries. One of these key minerals is nickel which the IEA forecasts the world will need 19x more of by 2024. Solving this problem is complicated with land-based reservoirs often located in sensitive environmental biomes such as rainforests. To help prevent deforestation companies are looking at a patch of the Pacific Ocean called the Clarion-Clipperton Zone (CCZ) that is estimated to hold 340 tonnes of nickel which could be 3x more than the world’s land-based reserves. The mining of this reserve will be far more environmentally friendly than land-based production and offer decades of nickel supply to the exploding renewable energy sector.

Microsoft Copilot is the company’s biggest and most in your face integration of ChatGPT tools as the company attempts to push AI tools downstream for the general computer user.  

Microsoft Copilot is bringing the ChatGPT suite of tools to Windows 11. Microsoft has already added generative AI to Microsoft Edge and to the Bing-powered taskbar search field, but Copilot is expected to push these tools more aggressively. Copilot will offer three different conversation styles for users to ask questions offering the option of keeping answers straightforward and factual or allowing the AI assistant to be more creative but be more prone to errors. Copilot is also bringing support for AI images integrating OpenAI’s DALL-E into the Windows operating system. These features are not new (previously offered through Bing) but having them on the Windows operating system will make them more visible to pc users. Google remains the dominant search engine in the U.S. so many users do not interact with Bing or its AI features very often so porting these features to Windows potentially increases the time spent on these features. One of the most interesting Copilot features is the ability for it to change some Windows settings and execute some commands, saving time for less-tech-savvy users who currently must dig through the Settings app. With a significant portion of general PC users’ time focused on solving technical issues, Copilot could be an important step in reducing troubleshooting time allowing users to allocate more time to Microsoft’s AI tools.

The meme stock phenomenon is seeing a second wind as retail investors flock to bankruptcies of low quality businesses; this is another great example of how markets are often inefficient with stock prices moved by speculation rather than fundamentals.

Investor interest in Bed Bath & Beyond has spiked even as shares become increasingly worthless as the company proceeds with its bankruptcy. Investors have spent nearly $200 million trading Bed Bath &Beyond shares as retail investors and have grouped up to push share prices far above what most professional investors believe is the company's true value. In May it was revealed that Bed Bath & Beyond had debts of over $5.2 billion with total assets of just $4.4 billion. With equity shareholders as the last in line to receive any payout from the liquidation of the business it makes no sense to invest in a doomed business-like Bed Bath & Beyond. The bond market seems to agree with company bonds trading at less than 2 cents on the dollar. Retail investors are unfazed about the reality of the situation sending shares 300% higher since the company delisted. This trading frenzy is far different than the previous meme stock phenomenon which saw retail investors attempt to destabilize hedge funds by betting against heavily shorted stocks. Today retail investors are betting against themselves with little institutional interest in shorting or trading in Bed Bath & Beyond.