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  • The Highs And Lows Of Drug Development Porter &#38 · Co.
    Issue#154, Volume#3Updates On Novartis And Roivant Sciences Inside Today’s Issue Essay: The Highs And Lows Of Drug Development Declining Treasury Returns Insider Buying At Uber Japan’s Yen Support Chart Of The Day… Roivant Sciences (ROIV) Today’s Mailbag We don’t normally update stock recommendations from our various services in the Daily Journal, but from time to time something happens that’s important enough to discuss with the entire audience. On Friday, Porter & Co. Biotechnology r
     

The Highs And Lows Of Drug Development

8 September 2026 at 13:00

Issue#154, Volume#3

Updates On Novartis And Roivant Sciences


We don’t normally update stock recommendations from our various services in the Daily Journal, but from time to time something happens that’s important enough to discuss with the entire audience.

On Friday, Porter & Co. Biotechnology recommendation Novartis (NVS) announced that its heart and cholesterol drug pelacarsen failed in a Food And Drug Administration (“FDA”) Phase III trial to reduce cardiovascular events despite lowering the harmful cholesterol Lp(a).

One of our main themes in Porter & Co Biotechnology is a technology called RNA interference. It can prevent harmful proteins from being produced inside cells, before they cause harm in your body. As this intervention occurs earlier in the pathology of disease and inside cells, it has a good safety profile and can be extremely effective. We believe it’s going to become a dominant new approach to treating chronic disease.

One of the biggest potential market opportunities for RNA interference is preventing the production of certain kinds of cholesterol that are linked to cardiovascular disease (heart attack, stroke). Cardiovascular disease is a leading cause of death, so there are potentially huge markets for these drugs – if they’re safe, and if they can prevent disease.

Novartis has been conducting a six-year-long, huge (8,323 people) clinical trial (“HORIZON”) using an older form of RNA interference (antisense) to target lipoprotein(a). Lp(a) is a cholesterol-carrying particle found in the blood. It resembles an LDL particle, the type commonly called “bad cholesterol,” with an additional protein called apolipoprotein(a) attached to it.

Your genes determine most of your Lp(a) level. Diet, exercise, and statins generally do little to change it. People born with high Lp(a) experience more heart attacks, strokes, and aortic-valve disease over their lifetimes. And currently there’s no FDA-approved treatment to reduce Lp(a), which makes it one of the most valuable potential drug targets in medicine.

Novartis’ Lp(a) drug is called pelacarsen. On Friday afternoon, Novartis announced that pelacarsen did not lower the risk of cardiovascular events in the treatment population of the clinical trial. We don’t have complete data from the trial, so we don’t know exactly how it failed. We do know that Pelacarsen did what an antisense drug is supposed to do: it lowered the protein it was designed to lower. The problem is that patients did not suffer fewer cardiovascular events as a result.

There’s a lot of controversy about cholesterol drugs (statins) already. Many people claim that LDL isn’t the cause of heart attacks. While cardiovascular disease is multi-faceted, there’s no question that lowering LDL, especially before cardiovascular disease has begun, can dramatically reduce the risk of heart attack and stroke. We know this because some people have natural mutations that result in much lower levels of LDL and they have much less (88% less, in one landmark study) incidence of heart disease. Likewise, some people have natural mutations that lead to much higher levels of LDL – they get heart disease when they’re still very young.

Using drugs to replicate lower levels of LDL improves cardiovascular health: The Cholesterol Treatment Trialists combined 26 randomized trials containing 170,000 participants. Each 38.7 milligram-per-deciliter (“mg/dL”) reduction in LDL produced a 22% reduction in major vascular events and a 10% reduction in overall mortality. A meta-analysis of patients beginning at very low LDL levels found a 21% reduction in major vascular events for every 38.7 mg/dL reduction, combining statins and nonstatin drugs.

I’m explaining all of this because I suspect there will be a lot of people (especially on the internet) who point to this clinical-trial failure and then claim that cholesterol isn’t a factor in heart disease. But that isn’t what this trial means. LDL has bidirectional genetic evidence and repeated outcome benefits from several mechanistically different drugs.

Still, if high Lp(a) leads to heart attack, then why didn’t lowering it reduce heart attacks?

Pelacarsen is an antisense oligonucleotide (“ASO”) – a short, manufactured strand of genetic material designed to bind to one specific messenger RNA. When pelacarsen binds to the message for apolipoprotein(a), the cell destroys that message. With fewer instructions available, the liver makes less apolipoprotein(a), and the patient’s Lp(a) level falls.

What The Trial Tested

This clinical trial enrolled 8,323 patients who already had cardiovascular disease and Lp(a) levels of at least 70 mg/dL. Patients received either an 80-milligram pelacarsen injection once a month or a placebo injection containing no active drug. Neither the patients nor their doctors knew which treatment they received (this was a “double-blind” clinical trial).

The trial measured a composite endpoint. A composite endpoint combines several medical outcomes into one score so that the trial can accumulate enough events to reach a conclusion. The Pelacarsen trial, Lp(a)HORIZON, counted the first occurrence of cardiovascular death, a nonfatal heart attack, a nonfatal stroke, or an urgent procedure to restore blood flow to the heart.

Researchers often call this collection of outcomes MACE – major adverse cardiovascular events. Pelacarsen did not significantly reduce these events in the overall trial population, even though it lowered Lp(a).

“Did not significantly reduce” has a precise meaning. The difference between pelacarsen and placebo was not large or consistent enough for the trial to rule out chance under its pre-specified statistical test. Novartis has not disclosed the actual difference, known as the hazard ratio, or the range of plausible values around it, known as the confidence interval.

We therefore do not yet know whether pelacarsen produced no benefit, a small benefit, or a benefit concentrated among patients with the highest Lp(a). Novartis also has not disclosed the separate event counts, the amount of Lp(a) lowering achieved during the study, or the complete results for patients who started at 90 milligrams per deciliter or higher.

Why Pelacarsen May Have Failed

  1. Lp(a) may identify cardiovascular risk without being a useful drug target. A marker can predict disease without causing enough of the disease to make its removal helpful. Medicine has seen this before: raising HDL cholesterol improved a laboratory number but did not reliably prevent heart attacks.
  2. Treatment may have started too late. Genetic studies measure the effects of high Lp(a) across an entire lifetime. Lp(a)HORIZON began treatment after patients already had cardiovascular disease. Lowering one source of damage for several years may not reverse decades of plaque formation and injury.
  3. Pelacarsen may not have lowered Lp(a) far enough. Its earlier trials produced reductions near 80%. Competing siRNA drugs have produced reductions above 90%. If cardiovascular benefit requires crossing a threshold rather than merely lowering the level, the deeper reduction could matter.
  4. The trial may have enrolled too many patients whose remaining risk came from something other than Lp(a). The median starting Lp(a) was 108 milligrams per deciliter, and 21.4% of patients entered below 90 milligrams per deciliter. About 77.5% received high-intensity statins, and roughly 11% received a PCSK9 inhibitor.

PCSK9 inhibitors are powerful LDL-lowering drugs. A 2025 analysis of 273,770 patients with established cardiovascular disease found that the connection between Lp(a) and recurring cardiovascular events weakened as LDL treatment intensified and disappeared statistically among patients receiving PCSK9 inhibitors. If modern treatment had already removed much of the risk attributable to Lp(a), pelacarsen had little left to prevent.

The missing results will distinguish these explanations. We need the actual event rates, the hazard ratio, the confidence interval, the achieved Lp(a) levels, and the results among patients starting at 90 mg / dL or higher. We also need to know whether the event curves moved apart late in the study, which would suggest that benefit requires more time.

What The Result Means For Lp(a)

Lp(a) remains a genetically established risk factor.

Genetic evidence tells us that people exposed to high Lp(a) for decades have more disease. A successful clinical trial must show that lowering Lp(a) with a drug, later in life, improves patient outcomes. Pelacarsen failed that test.

The next decisive Lp(a) study belongs to Amgen (AMGN). Its drug, olpasiran, is being tested in an ongoing large-scale trial called “OCEAN.” This trial required a higher starting Lp(a), uses an siRNA that produces deeper lowering, and excludes stroke from its three-part primary endpoint. Those differences address several possible weaknesses in Lp(a)HORIZON. But they do not guarantee success.

Eli Lilly’s (LLY) lepodisiran also uses siRNA to target Lp(a) and is being tested in a larger population that includes some patients without established cardiovascular disease. Lilly’s muvalaplin is a daily pill that prevents Lp(a) particles from assembling rather than silencing messenger RNA (“mRNA”).

What Does This Setback Cost Novartis…?

Ionis Pharmaceuticals (IONS) discovered pelacarsen. Novartis licensed it and became responsible for worldwide development, manufacturing, and commercialization.

The contract allowed Ionis to receive as much as $900 million. The amount included a $75 million upfront payment, a $150 million license payment, a $25 million development payment, up to $290 million tied to regulatory progress, and up to $360 million tied to sales. Ionis had received more than $275 million through the end of 2025. It would have received another $50 million if the FDA accepted a pelacarsen application.

Novartis has never disclosed the cost of Lp(a)HORIZON. Our reconstruction is $250 million to $700 million, with $450 million as the base estimate. The study operated for more than six years, enrolled 8,323 patients at 902 sites, administered monthly injections, and continued until independent reviewers confirmed 993 cardiovascular events.

Novartis paid Ionis more than $65 million for a separate next-generation Lp(a) ASO program that it terminated in 2025. Including that program, other pelacarsen studies, drug manufacturing, launch preparation, Lp(a) testing campaigns, and the original Ionis equity investment, our total Novartis Lp(a) spending estimate is $850 million to $1.55 billion.

Here’s what matters to shareholders: Novartis expensed the clinical work as it occurred. Pelacarsen has no current sales. Its failure therefore has almost no effect on 2026 earnings.

The pelacarsen call option from our August recommendation should be treated as lost. But Novartis is a broadly diversified, major pharmaceutical company. It does not depend on pelacarsen alone. Its LDL drug, Leqvio, is growing rapidly. It silences PCSK9 rather than apolipoprotein(a), lowers LDL cholesterol rather than Lp(a), and operates in a pathway already validated by successful outcomes trials using PCSK9 antibodies.

Our August valuation was $180 per Novartis share. We don’t believe the failure of this trial impacts that valuation by more than $2 to $4 per share. Our next evaluation will occur when we get the full Lp(a)HORIZON data set.

What’s actually driving the share price of Novartis down today was a different clinical trial failure. And it matters more because this was a major ($12 billion) acquisition, not just a licensing deal.

Earlier this year, Novartis bought Avidity Bioscience, which was a clinical-stage biotech company developing RNA medicines for inherited muscle diseases.

Avidity’s core technology is an antibody that can deliver RNA drugs into muscle cells. The company had three advanced programs, including a Del-desiran for myotonic dystrophy (type 1). This inherited muscle disease causes weakness and myotonia: the inability to relax a muscle normally after using it.

The drug uses small interfering RNA, or siRNA, to destroy the toxic genetic message that causes DM1. An antibody carries Avidity’s siRNA into muscle. Earlier biopsies proved that this delivery system worked: del-desiran reached human muscle and reduced its intended RNA target by 37% to 46%. Its Phase III clinical trial (“HARBOR”) enrolled 159 patients. Its primary test measured how quickly patients could open their hands after squeezing them. Del-desiran did not improve that measurement significantly versus placebo. Novartis said other measures showed some clinical activity, but it has not released the full data.

The failure does not prove that the drug missed its molecular target or that Avidity’s muscle-delivery system is broken. The trial may have used a noisy new measurement, enrolled too few patients for a variable disease, treated them for too little time, or failed because partial correction of the molecular defect cannot restore damaged muscle. The complete strength, walking, daily-activity, and biological results will distinguish those explanations.

But, a lot more money is at stake in these drugs. Novartis assigned $7.5 billion of the purchase price to Avidity’s muscular dystrophy programs. If del-desiran is abandoned, most or all of that accounting asset could be written off. Our base estimate is a $6.2 billion loss of equity value, or about $3.25 per Novartis share.

While failed clinical trials are never good news, these are normal costs. We see no reason to change our outlook on Novartis and continue to expect it to become the market’s leading RNA-interference company.

And… there’s a reason we take a portfolio approach to our biotech investing.

Roivant Sciences (ROIV) is up about 20% today on strong Phase II results for mosliciguat in pulmonary hypertension caused by interstitial lung disease. Mosliciguat is an inhaled medicine designed to relax the blood vessels in damaged lungs, making it easier for the heart to pump blood through them. The drug reduced resistance in the lung’s blood vessels by 56.3% versus placebo. Patients also walked 35.2 meters farther in six minutes, while NT-proBNP, a blood marker of cardiac strain, fell 53.2%. The result is persuasive because the drug improved three different things: blood flow through the lungs, patients’ physical ability, and stress on the heart. Roivant has begun Phase III (“PHrontier”).

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

F. Porter Stansberry
Stevenson, Maryland


Presented By: Katusa Research

The Scale Of What Is Coming

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This administration intends to quadruple America’s nuclear capacity to 400 gigawatts. That is more nuclear power than the United States, France, China, Russia and South Korea operate combined — those five countries being 71% of all capacity on earth.

● One gigawatt powers roughly 700,000 American homes

● Uranium has not been in surplus since 2016

● $80 billion partnership signed with Westinghouse Electric

Read the full analysis

Sponsored content from Katusa Research. Not investment advice. Speculative resource investing involves substantial risk of loss; past performance is not indicative of future results. Katusa Research is located in Vancouver, BC, Canada.

Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Katusa Research is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.


3 Things To Know Before We Go…

1. U.S. Treasury bonds have lost money over the past decade. U.S. government debt maturing in 15 years or more returned roughly -2% a year over the 10 years through August, according to BofA Global Investment Strategy. That is the worst 10-year stretch since 1936, and the only time the figure has dropped below zero. The math is simple: the 30-year Treasury yielded 2.23% in September 2016 and yields 5.25% today. Bond prices fall when yields rise, and the longer the bond’s duration, the further it falls. The iShares 20+ Year Treasury Bond ETF (TLT) has dropped 52% from its July 2020 peak – a deeper decline than the S&P 500 suffered in 2008.

2. A big insider buy at Uber. Uber Technologies (UBER) president and COO Andrew Macdonald bought 70,000 shares on the open market on September 4 at $75.83 – a $5.31 million purchase that boosted his holdings by 20%, to 426,320 shares. Macdonald sees the growth possibilities from the inside every day. After 14 years of equity compensation, he’s buying more with his own cash.

3. Japan sells Treasuries to fund currency intervention. Japan liquidated a record $88 billion of foreign securities in August, which includes U.S. Treasuries. The sales likely funded Japan’s $98.6 billion currency intervention in August, designed to shore up the yen after it fell near 40-year lows in July. As the largest foreign owner of U.S. Treasuries, any further pressure on the Japanese currency risks spilling over into additional weakness in the U.S. bond market.


Chart Of The Day… Roivant Sciences (ROIV) 

As Porter reported above, shares of Porter & Co. Biotechnology recommendation Roivant Sciences (ROIV) jumped 20% today to a new high after its Pulmovant subsidiary reported a record 56.3% reduction in pulmonary vascular resistance in a Phase II trial of mosliciguat – stacking a second catalyst on top of Lisraya’s early commercial launch.


Mailbag

On September 1, Porter & Co. released details of the latest buy signal for our Porter & Co. Systematic Crypto service, available to Partners.

“Very Informative”

Greg R. writes:

The article was very informative. Most especially, news of your Bitcoin (BTC) pricing model. Some time ago I became aware that the value of hard assets is correlated to economic liquidity, as opposed to market swings. Your writing has helped solidify that thesis for Bitcoin as well.

I have been purchasing small amounts for several years, and see no reason to stop, even as the price climbs. (Is there ever a reason not to buy good, quality assets if you have the means?)

I think that in my lifetime people who are late to find their way to BTC will speak of Satoshis as a unit of measure, not whole coins, because the price of a single BTC will be out of their reach. I’d back the truck up to it if I had the present means!


Schuler B. writes:

Fantastic – made Bitcoin so simply understood.


“Bitcoin?”

JM writes:

Bitcoin? I think I’ll stick with investing in insurance companies.


Porter & Co. Market Snapshot

Price Friday’s Return Year-to-Date Return
S&P 500 Index $7,718.60 -0.36% 13.6%
Gold per ounce $4,404.30 -0.51% 1.9%
Bitcoin $79,223 -0.87% -10.5%
Oil (West Texas Intermediate) per barrel $91.48 18.82% 61.8%
Berkshire Hathaway (BRK) $759,350 -0.48% 0.6%
Porter’s Permanent Portfolio – -0.87% 4.4%
The Better Than Berkshire Index – -1.05% 7.5%
Total Return Annual Return
Porter & Co’s Top Ranked* 35.6% 16.2%
Yield Friday’s Change Change
Year-to-Date
U.S Treasury 30-Year Yield 5.24% 0 bps 40 bps
Prices as of 4:00 pm ET September 4, 2026 | bps = basis points (or 0.01%)
*A Complete Investor risk rating of 1 is defined as a “low risk, high allocation” security, while positions rated closer to a 5 are higher risk. Porter & Co.’s top-ranked positions include those rated either 1 or 2 in Complete Investor portfolio.


Porter & Co. Top Positions

Publication Ticker Description Total Return
Biotechnology QURE uniQure 237%
Biotechnology SGMT Sagimet Biosciences 203%
Complete Investor BTC/USD Bitcoin 193%
Complete Investor BWXT BWX Technologies 178%
Biotechnology NUVB Nuvation Bio 168%
Biotechnology TGTX TG Therapeutics 158%
Biotechnology ROIV Roivant Sciences 155%
Complete Investor SKWD Skyward Specialty Insurance 133%
Biotechnology QURE uniQure 131%
Complete Investor PM Philip Morris 128%
Prices as of 4:00 pm ET September 4, 2026

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here| New Window. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

The post The Highs And Lows Of Drug Development appeared first on Porter & Co..

  • ✇Porter & Co
  • New Partner Benefit: Weekly Partner Monitor Porter &#38 · Co.
    Welcome to the Partner Monitor… one full week in one short email.  Recommended stocks, bonds, and funds: LLY, HALO, MSBT, ETH, BSOL, BHYP, COIN, GLXY, CRCL, FIGR, ASST, SBET, FWDI, PURR, SGOV… Porter & Co. Biotechnology: Porter recommended Big Pharma company Eli Lilly (LLY), which he calls the Nvidia of biotech… He also touts pharmaceutical royalty collector Halozyme Therapeutics (HALO). We sent this Porter & Co. Biotechnology report on Saturday, September 5. See a summary below or… R
     

New Partner Benefit: Weekly Partner Monitor

7 September 2026 at 05:00


Welcome to the Partner Monitor… one full week in one short email. 

Recommended stocks, bonds, and funds: LLY, HALO, MSBT, ETH, BSOL, BHYP, COIN, GLXY, CRCL, FIGR, ASST, SBET, FWDI, PURR, SGOV…

Porter & Co. Biotechnology: Porter recommended Big Pharma company Eli Lilly (LLY), which he calls the Nvidia of biotech… He also touts pharmaceutical royalty collector Halozyme Therapeutics (HALO). We sent this Porter & Co. Biotechnology report on Saturday, September 5. See a summary below or… Read it here now.

    Porter & Co. Systematic Crypto: Analyst Justin Brill unveiled this new service for Partners on Saturday, August 29, with a first buy alert on Tuesday, September 1. See a summary below or… Read it here now.

    The Trading Club: Ross Hendricks recommended covered-call trades on six positions of The Trading Club. He’s making new trades designed to generate income from several of our existing long positions to bring in upfront cash into the portfolio. Ross alerted members to this trade on Friday, September 4. See a summary below or… Read it here now.

    Sunday Selection: Sunday Selection focused on the high-growth loan and payment platform Affirm (AFRM). Our weekly Sunday Screener includes a biweekly “For Partners Only” Sunday Selection on a company we are watching. We emailed this Sunday Screener on September 6. See a summary below or… Read it here now.

          Daily Journal: Porter had two guest Journal writers this week in between his own fresh essays: the first of Porter’s was a critique of CoreWeave’s (CRWV) business model and the next explored the high cost in the shipping business. His guests this week included Tuttle Management CEO Matt Tuttle, writing about his ETF based on Porter’s Permanent Portfolio, and Marin Katusa sharing the latest news on gold. See a summary below or… Read the Daily Journal here now.

          Digging Deeper


          Porter & Co. Biotechnology

          Porter & Co. Biotechnology recommended Eli Lilly (LLY) and Halozyme Therapeutics (HALO). Porter made the following comparison: In 2010, the oil business turned from exploration to engineering – when drillers found new ways to dig. Output per rig in the Permian Basin went from 130 barrels a day in 2014 to 800 barrels a day by 2019… Nobody found more oil. They engineered more oil.

          Drug discovery is making that same turn right now. Artificial intelligence (“AI”) will play a growing role in testing new drug targets. AI will dramatically reduce the cost of discovery – figuring out more efficient, more effective, and cheaper ways of hitting the best targets.

          Our portfolio will be built around who owns the best engineering.

          Eli Lilly (LLY) is the best in the world at finding the best pharmaceutical companies to buy that have the leading drugs and delivery methods and it is also the best at building the best therapeutics itself.

          There’s no question, Porter writes, that Eli Lilly will be a leader in fields like gene silencing. And even though shares trade for more than $1,000 and the company’s enterprise value is more than $1 trillion, Porter says shares are cheap compared to what the company will earn over the next decade. On top of its smart acquisitions, Lilly is also a leader in innovation – and what it does with its weight-loss pill over the coming years could transform the entire industry.

          Action to Take: Buy Eli Lilly (NYSE: LLY) below $1,500 per share
          Porter recommends using an 80/20 allocation on this position, where you invest 80% of your capital into the equity and 20% of your capital into a long-dated call option with a strike price that is between 5% and 10% “out of the money.”

          He also recommended Halozyme Therapeutics (HALO). Most antibody drugs have to be dripped into a vein, which means the patient sits in an infusion chair for hours and the hospital bills for a nurse, a chair, and a bag. Halozyme owns an enzyme called rHuPH20 that temporarily loosens the mesh of tissue under the skin, so the same drug can be pushed in with a syringe in minutes. It licenses that enzyme to drug companies under the name ENHANZE and collects a royalty.

          Halozyme runs no trials, treats no patients, and files for no approvals. Roche Holding (SIX: ROG), Johnson & Johnson (JNJ), Takeda Pharmaceutical (TAK), Argenx (ARGX), and Bristol- Myers Squibb (BMY) do all of that. Halozyme cashes checks.

          In June royalty revenue rose 50% to $307.7 million, of which $152.2 million came from DARZALEX, the subcutaneous myeloma drug Johnson & Johnson sells.

          Management raised full-year guidance for the second time this year, to $1.84 billion to $1.91 billion of revenue and non-GAAP earnings of $8.65 to $9.00 a share, up from $7.75 to $8.25. And it bought 4.8 million of its own shares in the quarter for $332.8 million, at an average price of $69.30, under a $1 billion authorization that runs through 2028.

          Action to Take: Buy Halozyme Therapeutics (Nasdaq: HALO) up to $110 per share

          To read the full report, click here.


          Porter & Co. Systematic Crypto

          Porter & Co. Systematic Crypto analyst Justin Brill unveiled this new service for Partners on Saturday, August 29, with a first buy alert on Tuesday, September 1.

          Systematic Crypto offers two rules-based crypto portfolio strategies – Core and Frontier – built to beat Bitcoin where it matters: after taxes and across a full market cycle. As a Partner Pass member, you receive this service as part of your membership.

          We are launching Systematic Crypto sooner than we planned. Both strategies follow a single long-term trend measure on Bitcoin, evaluated at each month-end. Bitcoin, which traded near $62,000 in early August, is now over $77,000, and we realized that this measure was on pace to turn positive at Monday’s month-end close (August 31) – which would be the first new buy signal these rules have generated since the 2023 bull market began.

          Then on Tuesday, September 1, we confirmed its first real-time buy signal following the August 31 month-end close. What we explained is that the system is trend-following, not predictive; it identifies confirmations rather than attempting to call market bottoms. Historical backtesting suggests this type of signal, which follows months of bearish price action, often marks the beginning of an extended crypto rally.

          When we sent the alert on Tuesday, September 1, we advised subscribers to choose between two strategies:

          • Core: The flagship strategy, designed for the best risk-adjusted performance. It holds four crypto ETFs and a Treasury-bill reserve (five positions total).
          • Frontier: Builds on the Core foundation but adds exposure to emerging areas, such as businesses built on crypto and companies with tokenized balance sheets (13 positions total). It targets higher absolute returns while accepting greater volatility.

          The firm recommends allocating approximately 5% to 10% of investable assets to these strategies. Investors should use a U.S. brokerage account supporting commission-free trading and fractional shares to execute the target weights.

          Once positions are purchased, the system requires no daily monitoring. The rules operate in the background, with triggers for monthly trend checks, weekly circuit breakers, and quarterly rebalances. While these strategies may underperform the broad crypto market during certain periods to mitigate massive drawdowns, they are designed to outperform over a full market cycle. Here are the suggested investment allocations for each of the two strategies.

          To read the full report, click here.


          The Trading Club

          The Trading Club recommends covered calls on a number of existing positions

          In The Trading Club this week, Ross Hendricks shared new trades designed to generate income from several of existing long positions. These trades will bring in upfront cash into the portfolio while still leaving upside of 6% to 14% in additional capital gains over the next six weeks. Those trades include covered calls on Booz Allen Hamilton (BAH), Hims & Hers Health (HIMS), Figma (FIG), Novo Nordisk (NVO), Triple Flag Precious Metals (TFPM), and Turning Point Brands (TPB).

          The covered-call trades we recommended today are not about expressing a changing view on any of the underlying stocks. Instead, the goal is to reduce overall portfolio risk, but to do so in a way that still leaves significant upside on the table.

          As a reminder, when selling covered calls, we’re making the conscious choice to surrender the upside on the underlying stock at prices above the option strike price. By foregoing that upside to the call-option buyers, we generate a guaranteed return via the immediate cash proceeds collected upon the option sale, regardless of where the stock trades from here. So we’re locking in guaranteed income, while still retaining upside potential – in this case, between 6% and 14% across the various call strikes and the underlying stock prices for these trades. Over the relatively brief six-week time period until expiration, this upside potential works out to an average annualized return in the triple digits – which, of course, is very impressive.

          The value of The Trading Club tracking portfolio settled at $131,698 as of Thursday, September 3 – up 31.7% since the May 30, 2025, inception date. We made no trades this week.

          To read the full issue, click here.


          Sunday Selection

          The Sunday Selection on September 6 reported on loan and payment platform Affirm (AFRM) – a true “Emerging Lindy,” a young company possessing the traits of durable, long-lasting businesses like Visa or American Express. Founded in 2012 by Max Levchin (a co-founder of PayPal), Affirm was built to fix a credit system it views as predatory, replacing revolving debt and hidden fees with transparent, fixed-payment “buy now, pay later” (BNPL) loans.

          Affirm’s business model succeeds by underwriting transactions in real-time, aligning profit with consumer repayment rather than failure. The company overcame the “cold-start” problem of building a new payments network by proving it could increase merchant demand – driving conversion rates and larger carts – which attracted major partners like Amazon and Shopify.

          With the core e-commerce business reaching profitability, Affirm is currently pursuing three strategic “S-curves” for growth:

          • E-commerce: Already largely established with over 60% of U.S. e-commerce running through Affirm-enabled merchants
          • Affirm Card: Extending the BNPL model into the physical world, capturing everyday spending with significant growth potential
          • Banking Integration: Leveraging “Affirm Edge” to embed lending within bank apps and seeking a bank charter (“Affirm Bank”) to fund loans with insured deposits rather than capital markets.

          Ultimately, Affirm aims to build a modern, untouchable consumer finance franchise: a two-sided payments network attached to a deposit-funded bank. With Levchin free to focus on long-term innovation and the business now generating its own cash, we see Affirm as a high-conviction candidate to eventually join the ranks of iconic, multi-generational financial institutions.

          While we are not recommending Affirm yet, we are keeping a close eye on it for a future Complete Investor issue.

          To read the full issue, click here.


          This Week In The Daily Journal…

          In Monday’s Daily Journal, Porter explored the capital-intensive business model of data-center builder CoreWeave (CRWV)… and says “it’s a zero.” Read the Journal here.

          In Tuesday’s Daily Journal, Tuttle Capital’s Matt Tuttle explained the architecture of the Porter & Company Porter Portfolio Index ETF… Read the Journal here.

          On Wednesday, Porter reported on the shipping tanker market, gushing more cash than ever before – and what you can do about it. To see that Journal, click here.

          Porter turned Thursday’s Daily Journal over to his friend Marin Katusa, who shared the latest news and opportunities in the world of gold and precious metals. Read Marin’s Journal essay here.

          In Friday’s Daily Journal, Porter revisits the Journal essay about his Bitcoin pricing model following the news that the leading cryptocurrency rose sharply this week. Read the Journal here.


          What’s Up Next Week…

          Marty Fridson will be releasing a new stock/bond combo recommendation this Saturday, September 12, at 10 am. We will send that full report to your inbox and include a summary in next week’s Weekly Monitor.


          Sponsored by Paradigm Press

          Rickards: “I didn’t think the government would go this far”

          In the last few weeks, the White House has done something I’ve haven’t seen in 50 years of working alongside government institutions.

          This is BIGGER than opening federal land… or eliminating mining regulations.

          This is the “final trigger” to unleash America’s 50X mining boom.

          Three small companies are now at the epicenter of a resource boom that could create more wealth than the San Francisco Gold Rush… and the Texas Oil Boom… COMBINED.

          My research shows they could dominate a $100 billion market within 12 months.

          I want to give you a shot to get in before this accelerates further.

          Watch my urgent briefing here.

          Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Paradigm Press is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

          The post New Partner Benefit: Weekly Partner Monitor appeared first on Porter & Co..

          • ✇Porter & Co
          • The Next Lindy Payments Network Porter &#38 · Co.
            In a market obsessed with quarterly results and narratives that change by the week, today’s screen searches for the exact opposite – companies that are built to last for decades. The screen identifies the next generation of enduring businesses – before they’re widely recognized. The Emerging Lindy Screen is about finding future Lindys: businesses that combine invention with discipline, transforming broken industries through structural innovation, vertical integration, and cultural resilience. Th
             

          The Next Lindy Payments Network

          6 September 2026 at 07:00

          In a market obsessed with quarterly results and narratives that change by the week, today’s screen searches for the exact opposite – companies that are built to last for decades. The screen identifies the next generation of enduring businesses – before they’re widely recognized.

          The Emerging Lindy Screen is about finding future Lindys: businesses that combine invention with discipline, transforming broken industries through structural innovation, vertical integration, and cultural resilience. The screen is designed to uncover the next Amazon or Apple – the types of compounding machines we aim to own long before the world catches on.

          In today’s Sunday Selection, we report on a business that has quietly assembled the traits of an Emerging Lindy – the first company in 60 years to build both sides of a new payments network, where every merchant added makes it more useful to consumers, and every consumer added raises the cost of staying out for merchants. Its founder architected it from day one as a vertically integrated, software-defined, data-preserving network – a foundation built to carry product after product, from everyday financial services to advertising tools for merchants.

          To see the criteria used to create The Emerging Lindy Screen, go here.

          As of the close of trading on Thursday, September 3, the following 28 stocks met these criteria:

          Highs And Lows

          Each week, we also monitor any stocks in the market making 52-week highs. We do this because any stock on its way to generating 2x, 3x, or 10x returns will spend a lot of time making new 52-week highs along the way. Thus, the 52-week-high list provides an opportunity to flag these potential high performers before they really break out, with a particular emphasis on lower-profile, less widely-followed stocks that might have otherwise gone unnoticed.

          Notable stocks making a 52-week high this week:

          • JPMorgan Chase (JPM)
          • Visa (V)
          • Johnson & Johnson (JNJ)
          • Mastercard (MA)
          • AbbVie (ABBV)
          • Chevron (CVX)
          • Dell Technologies (DELL)
          • Amgen (AMGN)
          • Salesforce (CRM)
          • Verizon Communications (VZ)
          • Deere & Company (DE)
          • ConocoPhillips (COP)
          • Pfizer (PFE)
          • Vertex Pharmaceuticals (VRTX)
          • Bristol-Myers Squibb (BMY)
          • Marathon Petroleum (MPC)
          • The Bank of New York Mellon (BNY)
          • Valero Energy (VLO)
          • Phillips 66 (PSX)
          • Regeneron Pharmaceuticals (REGN)
          • MetLife (MET)
          • Corteva (CTVA)
          • State Street (STT)
          • Ameriprise Financial (AMP)
          • Atlassian (TEAM)

          Presented By MyWallSt


          We also monitor stocks on the 52-week-low list. In many cases, the names on this list are there for good reason – the market is often correctly pricing in weak fundamentals. However, once in a while, a great business with excellent long-term prospects finds itself on this list due to a temporary setback. This can create the rare opportunity to buy top-shelf merchandise at bargain-basement prices.

          Notable stocks making a 52-week low last week:

          • McDonald’s (MCD)
          • TJX (TJX)
          • Lowe’s (LOW)
          • TransDigm (TDG)
          • Nike (NKE)
          • Honeywell Aerospace (HONA)
          • L3Harris Technologies (LHX)
          • AutoZone (AZO)
          • IDEXX Laboratories (IDXX)
          • Public Service Enterprise (PEG)
          • Martin Marietta Materials (MLM)
          • Carnival (CCL)
          • Las Vegas Sands (LVS)
          • Otis Worldwide (OTIS)
          • Xylem (XYL)
          • CMS Energy (CMS)
          • Rollins (ROL)
          • Constellation Brands (STZ)
          • Textron (TXT)
          • Wynn Resorts (WYNN)
          • Builders FirstSource (BLDR)

          The Making Of The Next American Express

          This week’s Sunday Selection comes off today’s Emerging Lindy screen. Payment networks are some of the most Lindy businesses ever created.

          The oldest payments company in America – American Express (AXP) – has been operating since 1850. The technology behind the most widely used payment rails today – Visa (V) and Mastercard (MA) – was designed in the 1950s and 1960s. Once a financial network reaches critical mass, it almost never dies – it simply compounds. Which is why it is remarkable that no company has successfully built a new payments network at the scale of these behemoths. Today Visa and Mastercard are worth a combined $1.2 trillion, and American Express another $200 billion.

          The company featured in today’s Sunday Selection is a founder-led business that has quietly assembled both sides of a new payments network – tens of millions of consumers on one side and a large share of American commerce on the other. This year it crossed the threshold every young network must cross – from burning cash to generating it – and just reported the most profitable quarter in its history. Yet the stock trades almost exactly where it did one year ago.

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          (To become a Partner Pass member, contact our Customer Care team at 888-610-8895, internationally at +1 443-815-4447, or via email at support@porterandcompanyresearch.com.)

          Today’s Sunday Selection is Affirm Holdings (Nasdaq: AFRM). Its founder and CEO, Max Levchin, was the original engineer behind PayPal (PYPL). In 2002, freshly minted as a multimillionaire from PayPal’s IPO, Levchin was denied a car loan – a failed college startup had wrecked his credit score a decade earlier.

          The denial was a shock and an embarrassment – and it planted the question Affirm was founded to answer: why is the American credit system designed so that the lender wins when the borrower stumbles?

          A credit card is an open tab – the bank grants you a limit, the balance revolves, and interest compounds on whatever you carry. Affirm’s model – an improved version of buy now, pay later (“BNPL”) – flips that: each purchase is its own small loan, with a fixed number of payments, a fixed end date, and the total dollar cost shown before you buy.

          Underneath that simple product is the machinery that makes it possible. Every loan is underwritten individually, in real time, with full knowledge of what is being purchased. There are no late fees, no deferred interest, and no gimmicks. In an industry that collects roughly $15 billion per year in late fees alone, Affirm structured itself so that it only makes money when its borrowers succeed and repay their loans. That alignment is the backbone of Affirm’s moat, and the design principle the entire network is built on: underwrite every transaction, and never profit from a customer’s failure.

          There was one problem. No company had built a new payments network at scale in 60 years, because networks have a cold-start problem – merchants will not join without consumers, and consumers will not join without merchants. Affirm cracked the code by entering through the merchant’s income statement. It did not sell payment acceptance – Affirm sold demand. Merchants who added Affirm’s BNPL at checkout saw conversion rates rise 28%, and roughly 70% saw larger average carts. That gave merchants a reason to join on day one, and merchants delivered consumers for free – it is why Amazon (AMZN), Walmart (WMT), and Shopify (SHOP) all partnered so deeply with Affirm. Every repayment then sharpened the underwriting models, and the models turned into the moat: Affirm’s 30-day-plus delinquencies run below 3% – 100 to 300 basis points better than large consumer lenders like Capital One and Synchrony – despite a loan book that is roughly 44% non-prime, a higher share than any of those lenders carry.

          Over the past year, the business model has gained momentum. As Levchin described in the latest shareholder letter, in a well-designed network, the cost of not participating rises as the network itself scales. With roughly 28 million active consumers now expecting Affirm at checkout, the merchant without it is the one with the conversion problem – which is why Crate & Barrel, Backcountry, and Bed, Bath & Beyond’s brands all signed on just this summer.

          And once merchants join, they do not leave – they process more and more transactions. Well-managed networks see very little churn at scale, and Affirm’s numbers prove that it belongs in the upper echelon of this class: merchants already offering Affirm have expanded their volume at a dollar-based net expansion rate averaging 120% over the past three years. That means even if Affirm never signed another merchant, the existing base alone would grow the network 20% per year.

          Affirm processed $50.2 billion of gross merchandise volume (“GMV”) in fiscal 2026, up 37% – adding roughly $13.5 billion of incremental volume in a single year, nearly as much as the entire network processed in all of fiscal 2022.

          For perspective, Visa and Mastercard grow volume 8% to 10% per year. And Affirm’s growth is not the same as that of the payments companies it gets lumped in with. Stripe processes enormous volume, but for one side only – it has no consumer relationship. PayPal owns consumers, but moves money above through Visa. The difference shows up in the economics: Affirm keeps more than 4% of every dollar that crosses its network after funding costs and credit losses – what the company calls revenue less transaction costs (“RLTC”) – versus the 2% to 3% the card ecosystem collects for simply moving money.

          Affirm is the only company at scale that owns both sides of the network, underwrites every transaction in-house, and does so profitably. Meanwhile, Affirm is still live on only 75 of the top 250 U.S. e-commerce sites, and roughly 10% of e-commerce merchants overall – leaving plenty of share to grab.

          Affirm’s largest operating loss came in fiscal 2023 at $1.2 billion when interest rates surged. But Affirm’s loans are short-duration assets, so the company repriced its entire book within a few quarters – producing a $1.6 billion swing to $417 million of operating profit in fiscal 2026, on the same business model the market had written off.

          From fiscal 2024 to fiscal 2026, roughly 53 cents of every incremental revenue dollar fell straight to the operating bottom line. That is the signature of a network, not a lender – the ledger, the risk models, and the merchant integrations are already built and paid for, so each new dollar of volume carries very little cost beyond funding and credit.

          What separates Affirm from a typical growth company is that the network keeps manufacturing new growth verticals. Each of Affirm’s businesses has followed an S-curve – slow adoption while the product finds its footing, then a steep run of growth as it catches on, then a plateau as the market matures.

          The first S-curve – online checkout – is largely won. More than 60% of U.S. e-commerce already runs through merchants that offer Affirm. The second S-curve is live right now: the Affirm Card, which brings per-transaction underwriting to the physical world, where roughly six times more spending happens than online. The card works like a debit card for everyday purchases – but any transaction over $50 can be converted into an installment plan from the Affirm app within 48 hours, putting pay-over-time in the consumer’s pocket instead of at a merchant’s checkout page.

          Card GMV grew 124% last quarter to an annualized run rate above $11 billion, active cardholders doubled to 5.2 million, and cardholders spend about twice as much as typical Affirm users. Yet only 19% of Affirm’s consumers carry the card – the steep, profitable part of this curve is ahead. Management’s long-term vision of 20 million cardholders spending $7,500 per year implies roughly $150 billion of GMV from the card alone.

          The clearest tell that more S-curves are coming is how the founder spends his time. Levchin has always framed Affirm as a 30-year mission to do what PayPal never did – own both sides of the ecosystem, merchant and consumer alike. And with Michael Linford promoted to president to run daily operations, Levchin is freed up to chase the next S-curve full time, at the exact moment the core business has started printing the cash to fund it.

          That next S-curve is already visible – and it runs through the banks themselves. Affirm spent a decade winning online checkout. It is now three years into putting a card in consumers’ wallets. And it is now encroaching on the banking system.

          It’s looking at two options – becoming its own standalone chartered bank or creating a product (Affirm Edge) that embeds Affirms installment lending inside bank and credit-union apps. If the banking application succeeds, the near-term upside is modest – the bank would originate roughly half of Affirm’s loans but hold only a fraction on the balance sheet, reclaiming the fees and interest currently shared with partner banks, worth perhaps 15 to 30 basis points on that volume. The long-term math is what matters: once the bank is allowed to keep what it originates, insured deposits replace capital-markets funding at roughly 100 to 150 basis points less – every $10 billion moved on-balance-sheet is worth about $100 million of pre-tax income – and that balance sheet grows with Affirm’s own retained earnings. Nobody is modeling that yet, including Affirm. The application is pending in the friendliest charter environment in two decades, with GM and Ford both winning conditional approvals days before Affirm filed.

          The end state is the only architecture that has ever produced an untouchable consumer finance franchise – a payments network attached to a deposit-funded bank.

          We are not formally recommending Affirm – but it is one of our highest-conviction Emerging Lindys. The brand promise, the world-class partnerships, and the two-sided network make it the closest thing we have seen to a young American Express – a Porter classic, and an all-time Lindy. Amex has compounded for 176 years. Visa’s rails have run for nearly 70. Affirm has what took them generations to build – both sides of the network, a brand built on trust, and a founder 14 years into a 30-year mission.

          Levchin remains the largest individual shareholder, and his compensation is almost entirely a multi-year award of performance options that vest only at stock price hurdles climbing as high as $372 per share. And with the network finally paying for itself, he is free to finish what he started – reorienting the entire credit ecosystem around the people who actually use it.

          Porter & Co.
          Stevenson, Maryland

          The post The Next Lindy Payments Network appeared first on Porter & Co..

          • ✇Porter & Co
          • The Age Of Discovery Porter &#38 · Co.
            Understanding Last Month’s Nobel-Worthy Breakthroughs Edit Delete Edit Delete This is Porter & Co. Biotechnology – where Porter Stansberry presents a revamped portfolio to capitalize on the next biotech bull market. The details of the recommendations – and the specific name of the companies and buy prices – are for paid-up subscribers only. To learn more about subscribing to Porter & Co. Biotechnology, click here. We’ve forgotten how hard it was to build modern hea
             

          The Age Of Discovery

          5 September 2026 at 07:00

          Understanding Last Month’s Nobel-Worthy Breakthroughs

          ⚙ Edit 🗑 Delete
          ⚙ Edit 🗑 Delete

          This is Porter & Co. Biotechnology – where Porter Stansberry presents a revamped portfolio to capitalize on the next biotech bull market. The details of the recommendations – and the specific name of the companies and buy prices – are for paid-up subscribers only. To learn more about subscribing to Porter & Co. Biotechnology, click here.


          We’ve forgotten how hard it was to build modern healthcare.

          In 1900, pneumonia, tuberculosis, and diarrheal diseases were the three leading causes of death in America. Staphylococcus aureus in the bloodstream killed 82% of the people who got it and most of them were young and healthy. Even as late as 1935, maternal mortality was still 600 per 10,000 live births.

          Then, penicillin emerged – as an accident. A mold spore drifted onto a culture plate in Alexander Fleming’s London laboratory in 1928. It killed the bacteria growing there. And, unbelievably, it was safe enough to be dosed into humans. Out of all the world’s innovations and technologies, only synthetic nitrogen fertilizer has enabled more human life than the discovery of antibiotics.

          By 1950, maternal mortality had fallen to 100 women per 10,000 live births. Today, it’s between 10 and 20.

          In 1900, 40% of the deaths from pneumonia were children under five. Today, only the very old and the very sick die from pneumonia. And, overall, less than 3% of all deaths in America are attributable to the leading causes of death in 1900.

          But these innovations were not easy.

          Modern drug discovery began at Rutgers University in the late 1930s. Professor Selman Waksman (pictured right, below) set out to discover new antibiotics with a systematic approach. His method was witchcraft crude by today’s standards. He dug up soil samples, cultured whatever was growing in it, and then painstakingly tested every culture against live bacteria, until something worked. It was like a blind man searching for a needle in 10,000 haystacks.

          But it was foolproof. A student streaked a soil microbe in a line down the middle of a plate. Then he streaked a disease bacterium across that line at a right angle. If the microbes in the soil were producing something effective at killing bacteria, it left a clear band through the bacterial streak. About 1,000 of Waksman’s 10,000 soil cultures produced a clear band. But that didn’t mean he discovered 1,000 new antibiotics. This was only the first hurdle.

          Nearly every antibiotic he discovered came out of actinomycetes: the thread-like soil bacteria that produce the smell of fresh-turned dirt. One actinomycete in 10 makes the same compound, streptothricin. Waksman isolated it, tested it, and discovered it was toxic.

          And then there was another problem: many of the compounds he discovered killed the wrong type of bacteria. As you probably know, bacteria come in two forms: gram-positive and gram-negative. Gram-positive bacteria have a thick cell wall that’s “naked.” Gram-negative bacteria have a thin cell wall that’s protected by a membrane.

          Penicillin works by jamming the enzyme that builds the cell wall, which causes the cell to burst as it grows. Against bacteria with a thick bare wall (gram-positive) the drug is devastating. But against a gram-negative bacterium, it never reaches the wall at all: the outer membrane protects it. Plague, cholera, and typhoid are gram-negative – penicillin did nothing to them. What Waksman needed was a compound that could kill what penicillin couldn’t. He needed to find a compound that could destroy gram-negative bacteria.

          And then there was a final problem. Some of the gram-negative killing compounds could not be manufactured. Producing an antibiotic in quantity means growing the microbe in thousands of gallons of liquid inside a steel tank. Plenty of microbes that secrete freely across a solid plate will not secrete anything once they are submerged.

          Out of 10,000 cultures, roughly 100 survived all of these challenges. Then they all had to be isolated. That meant separating the one active molecule out of the soup the microbe grew in, purifying it, and then making enough of it to inject into an animal. That took the sorting from 100 down to only 10.

          Then the animals they were testing these new antibiotics on kept dying. In 1940, actinomycin, the first antibiotic the program found, was the most powerful anyone had ever measured. But just one milligram of it killed a full-grown chicken. Streptothricin passed its early animal tests and then destroyed kidneys weeks after the dose. Clavacin and fumigacin failed the same way.

          Waksman discovered that, relatively speaking, killing bacteria wasn’t that hard. Killing bacteria at a dose the patient can survive was vastly harder. But finally, one of Waksman’s researchers found one.

          Albert Schatz, a 23-year-old graduate student working alone in the basement at Rutgers, isolated streptomycin on the afternoon of October 19, 1943. It cured tuberculosis, a deadly disease that had killed millions. The discovery won Waksman the Nobel Prize in 1952.

          Diminishing Returns On Drug Research

          Over the following decade, researchers in his laboratory worked through more than 100,000 more cultures. But instead of improving with time, his lab discovered fewer new compounds, even as it spent more money on discovery. Economists call the problem Eroom’s Law, which is Moore’s Law spelled backward. Just as Moore’s Law held that computer chip speed doubled every two years, Eroom’s Law holds that the number of new drugs approved per billion dollars of research spending has been cut in half roughly every nine years since 1950. In the early 1950s, an inflation-adjusted billion dollars of research bought 40 to 50 approved medicines. By 2018, that same billion bought 0.7.

          Today, the Tufts Center For The Study Of Drug Development puts the all-in cost of one approved drug at $2.6 billion. Where does all the money go? It goes toward the overwhelming percentage of drugs that fail.

          That’s why the drug business has always been organized around diversifying the risks as much as possible. But that’s finally changing.

          In much the same way that technology converted the oil-and-gas industry from a discovery challenge to an engineering challenge, with enormous horizontal wells, technology is changing the essential challenge of medicine from discovery to manufacturing.

          For a century, the oil business ran on the same odds as when Waksman’s antibiotics were discovered. Until the late 1970s, the industry considered a 10% wildcat success rate attractive: one successful well for every nine dry holes. The American Association of Petroleum Geologists tracked it by decade. New-field wildcat success ran 11.3% from 1946 to 1955, 10.8% from 1956 to 1965, and 11.2% from 1966 to 1975.

          Thirty years, and no improvement at all.

          Then, the industry discovered three-dimensional seismic surveying. This technology bounces sound waves off rock layers and reconstructs the subsurface inside a computer. It first emerged in the 1980s and became standard practice by the 1990s. Amoco measured the difference. Between 1990 and 1996, wells drilled with 3D seismic hit 49% of the time, against 14% for wells drilled without it. Over those same years, the share of Amoco’s prospects covered by 3D rose from 1% to 65%, and its cost of finding a barrel of oil fell dramatically – from $8 to less than $1.

          And what came next made it virtually impossible to drill a dry hole.

          Texas real estate developer George Mitchell spent 17 years and roughly a quarter of a billion dollars drilling the Barnett Shale in North Texas without turning a profit. In 1997, one of his engineers, Nick Steinsberger, replaced the expensive gel in the well’s fracturing fluid with water slickened by a trace of chemicals. The following year that well, S.H. Griffin No. 3, out-produced every well the company had ever drilled.

          Mitchell did not discover where the gas was. Everybody already knew where the shale was: it covered thousands of square miles. What Mitchell proved was, with the right chemistry, gas could be manufactured out of that rock.

          That’s what I mean when I say that drilling stopped being exploration and became engineering. Today the challenge isn’t finding oil and gas. Development wells in proven shale succeed 85% to 95% of the time. Today the challenge is purely engineering: how efficiently can you drill a given area of shale?

          In 2010, the horizontal section of the average new Permian Basin well ran 3,870 feet. By 2025, it ran 10,867 feet and 15% of new wells now stretch past three miles. Occidental Petroleum (OXY) cut its drilling time in the Wolfcamp shale (within the Permian in West Texas) from 43 days per well in 2014 to 26 days in 2015, and the best operators now drill these wells in 13 days. Output per Permian rig went from 130 barrels a day in 2014 to 800 barrels a day by 2019.

          Nobody found more oil. They engineered more oil.

          Drug discovery is making that same turn right now. Artificial intelligence (“AI”) will play a growing role in testing new drug targets. Much like 3D seismic, AI will dramatically reduce the cost of discovery. The key to success in the drug business will be engineering – figuring out more efficient, more effective, and cheaper ways of hitting the best targets.

          Our portfolio will be built around who owns the best engineering.

          Chronicling The Remarkable Breakthroughs

          As you know, our strategy in Porter & Co. Biotechnology is always to follow the science.

          In the month of August, there were two Nobel Prize-worthy technological breakthroughs that I’d like to share with you.

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          Porter further expands on the portfolio that he developed last month – with two of his newest recommendations up more than 30%. To see the remainder of this issue, new recommendations, and full access to the Porter & Co. Biotechnology portfolio, click here.

          The most important breakthrough was on August 19. Merck (MRK) and Moderna (MRNA) announced a seminal breakthrough in the treatment of solid cancer tumors, the first successful Phase III trial of an individualized mRNA cancer vaccine. This new class of medicine holds the promise of stopping solid tumors from metastasizing following surgical removal.

          Six days earlier, the New England Journal of Medicine published the details of a successful application of gene editing, in which a single infusion permanently rewrote the genetic code of human liver cells. The result dropped patient LDL levels by 62%, permanently.

          The point made by highlighting these discoveries – which you’ll see me driving home in Biotechnology – is that we are living through a period of profound medical innovation. We’re getting closer to delivering cures at the cellular level by simply rewriting DNA – stopping disease before it can even begin.

          And today, no one in the world understands the engineering behind drug discovery and optimization better than Eli Lilly (NYSE: LLY).

          Yes, I know that’s a major pharmaceutical company. But we follow the science. Here’s what I mean.

          The successful gene-editing program that I described above, the one that permanently reduced LDL in patients, is owned by Verve Therapeutics. Harvard cardiologist and human geneticist Skar Kathiresan founded Verve because his brother died of a heart attack at 42. Kathiresan founded the company to stop treating heart disease as a chronic condition by installing the natural protective mutations that nature already gives some people. In other words, rewrite the code of life inside your cells to give you nature’s best protection from heart disease. Obviously, the potential value of this technology is enormous, and it could have many applications beyond cardiology.

          Verve’s initial funding came from Alphabet (GOOG) in May 2019. It went public in June 2021, during the massive post-COVID tech stock boom. On its first day, it gained 68%.

          The company has three main programs. The breakthrough program that just published its results is VERVE-102, which is targeting PCSK9 for LDL cholesterol. It has Food And Drug Administration (“FDA”) Fast Track designation and is very promising.

          The company’s next program is called VERVE-201. It’s targeting another gene in the liver (ANGPTL3) that makes a protein whose job is to put the brakes on fat clearance. It inhibits two enzymes (lipoprotein lipase and endothelial lipase) that pull triglycerides and cholesterol out of the bloodstream. Silence that gene, the brakes come off, and blood fats clear faster. It is unusual in that it moves all three lipid measures (LDL, triglycerides, and HDL).

          Again, the company knew to target this particular gene because people who naturally have one broken copy of ANGPTL3 have 17% lower triglycerides, 12% lower LDL, and 34% lower odds of coronary artery disease. People with two broken copies of this gene have a recessive condition called familial combined hypolipidemia – very low triglycerides, LDL, and HDL – and they are healthy. Losing this gene entirely costs you nothing but gives you much better cardio health.

          And then there’s VERVE-301, which targets lipoprotein(a) – Lp(a) – which I wrote about last month. This is the largest potential target in all of cardiology.

          So what does this have to do with Eli Lilly? Lilly is the best in the world at finding the best targets and building the best therapeutics. In June 2023, Lilly signed a global research collaboration with Verve on its pre-clinical Lp(a) gene-editing program, paying $60 million upfront. After the results of VERVE-102 (targeting PCSK9) were first published last spring, Lilly bought Verve Therapeutics for $1 billion. That was $10.50 per share, which was less than the initial public offering (“IPO”) price and about 86% below the stock’s all-time closing high of $73.99 (set September 10, 2021).

          Ruth Gimeno, Lilly’s group vice president for diabetes and metabolic research and development, described the deal as a chance to “shift the treatment paradigm for cardiovascular disease from chronic care to one-and-done treatment.”

          This is more than just another modality. This is the difference between a treatment and a cure, and it could profoundly reshape the entire drug industry. I’ve told you that I believe gene silencing will be the best-performing modality over the next 20 years. But what if there aren’t any genes to silence because they’ve all been edited away?

          Here are three points about that…

          1. Gene silencing will be used for a long time because changing your DNA permanently carries a lot of unknowns, and it may be irreversible. An edited genome has no off switch and no antidote. There will be a lot of people who are more comfortable taking a therapy once or twice a year – knowing that if something changes, they can always change therapies.
          2. Dosing has value too. A physician titrates silencing: more drug suppresses more protein, less drug suppresses less, and the dose can be adjusted as the patient changes. An edit delivers whatever suppression the editing efficiency achieved, forever. Where the safe range is narrow, or where medicine wants to reduce a protein rather than eliminate it, the adjustable drug wins.
          3. And then there’s the financial question. Insurers know how to pay for a twice-yearly injection, because they pay for thousands of chronic drugs that way. A one-time cure demands a single enormous payment with no established mechanism for spreading that cost across the decades of benefit it delivers. That is precisely why gene therapy has been such a commercial disappointment so far. BioMarin Pharmaceutical (BMRN) pulled a hemophilia gene therapy off the market entirely, despite the drug working because nobody would pay for it.

          And regulators discriminate too. An irreversible intervention requires longer follow-up, mandatory patient registries, and restrictions confining early use to the sickest patients. For a 45-year-old managing a chronic condition, the reversible drug clears approval faster and reaches the prescription pad sooner.

          Cholesterol treatment already works exactly this way. Statins come as daily pills. Antibodies against PCSK9 are injected twice monthly. Alnylam Pharmaceuticals (Nasdaq: ALNY) and Novartis’ (NYSE: NVS) Inclisiran (Leqvio) silences PCSK9 twice a year. And Verve’s gene-editing technology can rewrite it away once. Four technologies, one disease, and the market will determine who gets these drugs by how sick the patient is, how old, how reliably they take medication, and who is paying.

          In other words, I don’t think gene editing is as big a risk to gene silencing as gene silencing is a risk to other modalities. I believe, going forward, more disease is going to be treated at the cellular level by silencing genes or editing them.

          There’s no question that Lilly will be a leader in this field. And yes, I know its shares trade for more than $1,000 and the company’s enterprise value is more than $1 trillion. But that’s cheap compared to what the company will earn over the next decade.

          Specifically, today you’re paying 25.5x what analysts expect Lilly to earn next year. Consensus estimates put earnings at $36.39 per share this year and $46.62 next year, on revenue climbing from $88.3 billion to $101.8 billion. And I believe revenue growth will far surpass these estimates.

          The reason isn’t gene editing. Or even the company’s weight loss shots. The reason is a pill that’s going to transform human health.

          Eli Lilly Is Medicine’s Nvidia

          Novo Nordisk’s (NVO) Ozempic and Wegovy and Lilly’s Mounjaro and Zepbound are the current best-selling weight-loss shots. These therapies are peptides: a short chain of amino acids. Chemists build them the way a jeweler strings a necklace together. They anchor the first amino acid to a plastic bead, couple the second amino acid onto it, chemically unmask the new end so a third can attach, wash the bead in solvent, and repeat.

          Tirzepatide, the molecule inside Mounjaro and Zepbound, runs 39 amino acids long. Every link demands its own coupling, unmasking, and washing cycle. Then there’s a purification process, which pushes dilute liquid through columns the size of oil drums for days. It’s a chemical engineering marvel. It is also expensive.

          But orforglipron, Eli Lilly’s weight-loss pill, isn’t a peptide. It’s a small molecule.

          Chemists make this drug the way they make aspirin or the cholesterol drug Lipitor: a handful of reactions, solid crystals you can filter and weigh at each stage, and purification by crystallization instead of chromatography. Thus, small molecule drugs are vastly cheaper to make than peptide chains.

          The industry measures what a process costs to run using process mass intensity (“PMI”). Weigh everything you feed into the manufacturing line, the reagents, solvents, water, all of it, and divide by the weight of finished drug that comes out the other end. PMI captures manufacturing cost better than any other single number because solvent purchase and solvent disposal, not raw ingredients, dominate the bill. The American Chemical Society’s Green Chemistry Institute collected real production data from 14 pharmaceutical companies across 40 peptide manufacturing processes. Peptides consume 13,063 kilograms of input for every kilogram of drug delivered. Small molecules consume roughly 200.

          Solvent accounts for roughly 44% of that mass. It’s expensive and frequently toxic. One solvent, dimethylformamide, generates 39% of all the waste. European regulators classified dimethylformamide as a Substance of Very High Concern and restricted it in December 2021 over reproductive toxicity. Piperidine, the reagent that unmasks each link on a peptide chain, sits on the Drug Enforcement Administration’s controlled-chemical list. Peptide plants have enormous compliance costs.

          Over time, chemical engineers can drive costs out of small-molecule production. That’s why generic pills cost pennies. But peptide manufacturing shows no such expense-curve improvement between early development and commercial scale. It doesn’t get easier to make at scale.

          The weight-loss market won’t be won by finding a better target. Incretins (GLP-1s) are incredibly safe and effective. The weight-loss market will be won by producing and marketing enormous quantities of these drugs at vastly lower costs. Much like a shale field, this market is not about discovery. It is an engineering battle. And Lilly has won.

          I predict that Eli Lilly’s pill won’t just garner a lot of the market. I expect it will garner virtually all the market, better than 90% share over the next decade, for one simple reason: it’s vastly cheaper to produce and to distribute.

          But wait a minute, Porter, wasn’t Novo Nordisk first to market with a GLP-1 pill?

          Yes, Novo got there first. But it did it by manufacturing its peptide into a pill. That isn’t easy to do. It’s also very expensive because, in pill form, it requires vastly more of the GLP-1 peptide, semaglutide. And that’s an important point.

          Bioavailability measures the fraction of a swallowed dose that survives the stomach and intestine and arrives in the bloodstream intact. Stomach acid and digestive enzymes exist specifically to dismantle proteins into their component amino acids, and a peptide is a small protein. Thus, your stomach treats oral semaglutide as lunch.

          The FDA measured oral semaglutide’s bioavailability two separate ways during its review and got 0.471% and 0.795%. Swallow 1,000 units of oral semaglutide, and only five to eight of them reach your bloodstream, while the gut destroys or expels the other 992. In other words, Novo’s pill is an extremely inefficient delivery vehicle.

          Novo tried to engineer a solution. Every tablet of Rybelsus, Novo’s original semaglutide pill, carries 300 milligrams of an absorption enhancer called salcaprozate sodium, which raises the pH immediately around the tablet so the peptide slips across the stomach lining before enzymes reach it. But there’s a problem: absorption still collapses under ordinary conditions. In the food-effect study Novo filed with the FDA, 14 of 26 subjects who swallowed the tablet after a meal showed no measurable semaglutide in their blood at all. None. The label therefore instructs patients to dose on an empty stomach, with no more than 120 milliliters of plain water, and to eat, drink, or take nothing else for at least 30 minutes.

          Good luck in the real world.

          Injected Wegovy delivers 2.4 milligrams once weekly, which is about 10.3 milligrams of semaglutide per patient per month. The approved Wegovy pill delivers 25 milligrams every day. Call it 750 milligrams a month. Switch a patient from the Wegovy injection to the Wegovy pill, and that patient consumes 73x more semaglutide than they did on the shot, whether any of it reaches their bloodstream or not. Every additional milligram must come out of the same peptide plants that took Novo five years and $10 billion a year to build. Now think about trying to serve a billion people that pill every day. That’s not going to scale.

          Researchers priced generic semaglutide across formulations using 33 active ingredients. A year of the injection can be produced for well under $150, and most of that isn’t the drug at all: it’s the disposable injector pen. A year of the 14-milligram pill costs about $360 to produce. And Novo’s weight-loss pill isn’t 14 milligrams. It’s 25 milligrams. Our estimate is that Novo’s pill costs the company 4x to 5x as much as its injection costs to make.

          Now, perhaps some people would pay more for a pill – but not many. And especially not when there’s a pill that’s cheaper and vastly more effective in real-world dosing.

          Lilly’s orforglipron, approved April 1 and sold as Foundayo, is a small molecule that delivers 30% to 40% of a swallowed dose into the bloodstream. It needs no absorption enhancer and imposes no food restriction. It absorbs 40x to 100x more efficiently than oral semaglutide, and it belongs to a chemical family that costs one-50th as much to produce.

          The cost of making enough semaglutide to enable pill production shows up in Novo’s financial statements. Novo’s gross profit margin fell from 84.9% in Q2 of 2024 to 78.2% in Q2 of 2026. Its capital spending has climbed from 6 billion kroner in 2021 to 60 billion kroner in 2025 (or US$935 million rising to US$9.4 billion), a 10-fold increase in four years. Novo also paid $16.5 billion in cash to buy the contract manufacturer Catalent (formerly CTLT) outright, purely to get its hands on more pen-filling capacity.

          You can see how Novo is dealing with the threat from Lilly’s superior chemistry by watching Novo’s mergers-and-acquisitions activity. In May 2025, Novo Nordisk agreed to pay Septerna (SEPN) more than $200 million up front as part of a $2.2 billion deal for access to a platform that discovers small molecules acting on the same receptors Novo’s drugs target. Novo funds all the research. In February, it committed up to $2.1 billion to Vivtex, an MIT spinout, for a robotic screening system that tests thousands of formulations a day looking for ones that let a peptide survive the gut.

          The battle isn’t about discovery anymore. The battle is engineering. When Lilly begins to compete on price, how will Novo recoup the cost of these massive investments? My bet: it won’t.

          Lilly told investors a year ago that it expected to launch Foundayo worldwide without supply constraints. No peptide manufacturer can make that promise. Novo spent 2022 through 2024 rationing semaglutide, restricting starter doses and warning patients of shortages, because it could not make the peptide fast enough. Lilly, meanwhile, manufactured its pill before the FDA had even approved it. Its 2025 annual report disclosed $1.5 billion of pre-launch inventory sitting on the balance sheet as of December 31. Billions of tablets, ready to be sold.

          Foundayo launched on April 1 at $149 a month for the starting dose through Lilly’s own pharmacy, rising to $349 per month at the maintenance dose. Patients with commercial insurance pay as little as $25 a month. Eligible Medicare patients pay $50 a month beginning July 1. Novo is competing with a list price near $1,349 for its semaglutide pill. Who is going to buy it?

          Lilly launched Foundayo in Britain on August 23. Private providers there sell it at £100 to £120 a month ($136 to $163). Mounjaro, Lilly’s own injection, lists at £133 a month for the starting dose and £330 for the highest. So Lilly priced its pill below the cheapest injection it sells.

          Lilly has filed orforglipron for approval in more than 40 countries. It filed with China’s National Medical Products Administration at the end of 2025, for both obesity and type 2 diabetes. In March, it committed another $3 billion over 10 years, adding tablet production in Beijing and expanding injection capacity at the plant it has run in Suzhou since 1996. That takes Lilly’s total investment in China to nearly $6 billion.

          In total, Lilly has committed more than $50 billion to manufacturing since 2020. It’s building a $6.5 billion chemical plant in Houston to keep ramping Foundayo. It’s building a $3.5 billion injectables factory in Lehigh Valley, Pennsylvania, for its forthcoming new peptide, retatrutide. The plant won’t open until 2031 – so clearly Lilly believes there’s a vast amount of future demand for metabolic health products. And I believe they’re right.

          Apple (AAPL) has shipped 2.64 billion iPhones as of March 31, 2026. Cumulative iPhone revenue since 2007 runs well past $2 trillion. The iPhone is, by far, the best-selling consumer product of all time. But I believe Lilly’s portfolio of metabolic health products will surpass Apple’s iPhone revenue. Do other analysts see this kind of potential? Morgan Stanley puts the combined diabetes and obesity market at $190 billion a year by 2035.

          And with its next drug (retatrutide), Lilly will show the world what’s truly possible with this class of drugs.

          Lilly’s current GLP-1 product, tirzepatide, activates two gut-hormone receptors. GLP-1 tells the pancreas to release insulin after a meal, slows how quickly the stomach empties, and signals the brain that eating can stop.

          GIP is the second receptor, and it is the reason Lilly’s shot outperforms Novo’s. GIP stands for glucose-dependent insulinotropic polypeptide. Like GLP-1, it is a hormone your gut releases within minutes of food arriving, and like GLP-1, it tells the pancreas to make insulin. But GIP is different from GLP-1 in two critical ways. First, it acts directly on fat tissue, improving how efficiently fat cells absorb and store energy instead of leaving that energy to circulate in the blood. Second, and commercially more important, GIP appears to raise the threshold at which the brain triggers nausea. That means a drug hitting both receptors can be pushed to a higher dose before patients quit. Most of tirzepatide’s advantage over semaglutide comes from that headroom.

          Hitting both receptors produced $9.9 billion of Mounjaro sales and $4.9 billion of Zepbound sales in Q2 of this year alone. The molecule’s composition-of-matter patent, the patent covering the substance itself and the hardest kind to work around, runs in the United States until January 5, 2036. But long before this patent expires, Lilly will have innovated much better drugs. And sold billions of pills.

          The next innovation is retatrutide, which is a GLP-1 peptide that adds a third receptor. Glucagon is insulin’s mirror image. When your blood sugar falls, the pancreas releases glucagon, and the liver answers by breaking down stored glycogen and pushing glucose back into the blood. Adding a glucagon receptor to a weight-loss drug sounds backwards, since you are deliberately stimulating the hormone that raises blood sugar. What you buy is energy expenditure. Glucagon signaling raises the rate at which the liver burns fat and lifts resting metabolic rate.

          So tirzepatide works the intake side of the equation: it reduces how much a patient eats and improves how well the body handles what does get eaten. Retatrutide adds the output side. The patient eats less and burns more. Lilly expects to file for approval in Q1 2027. Retatrutide gives Lilly an edge that many customers will pay up to receive.

          Meanwhile, today Eli Lilly trades at 28x next year’s consensus earnings, which is only a small premium to the market.

          Action to Take: Buy Eli Lilly (NYSE: LLY) below $1,500 per share

          As with our other major pharma recommendation – Novartis (NYSE: NVS) – we recommend using an 80/20 allocation on this position, where you invest 80% of your capital into the equity and 20% of your capital into a long-dated call option with a strike price that is between 5% and 10% “out of the money.”

          Moderna’s New Personalized Cancer Vaccine

          In 1891, a New York surgeon named William Coley began injecting live streptococcal bacteria directly into tumors he could not cut out. He had noticed that patients who developed raging post-surgical infections sometimes watched their cancers shrink. He treated more than 1,000 patients and documented cures above 10% in cancers that otherwise killed everyone. Parke-Davis, later absorbed into Pfizer (PFE), sold a version of his toxin from 1899 until 1951.

          The logic never changed: the immune system can kill cancer, and it will do so if you show it the right target.

          Researchers identified the first usable molecular target on tumor cells in 1991. Dozens of companies then spent 20 years and billions of dollars building vaccines against targets like it. Nearly all of them failed for the same reason. Those targets were the patient’s own proteins, present at low levels in healthy tissue and merely overproduced by the tumor. Your immune system spends enormous effort learning not to attack your own proteins, because attacking them causes autoimmune disease. Training it to break that rule means overriding a safety system, and the safety system usually wins.

          Subscribers who followed my work in the mid-2000s will remember Antigenics, which trades today as Agenus (AGEN). Antigenics manufactured a vaccine called Oncophage individually from each patient’s own surgically removed tumor. Genuine personalized medicine, 20 years too early. Its Phase III trial in kidney cancer randomized 818 patients. The hazard ratio for recurrence came in at 0.923, with a confidence interval running from 0.729 to 1.169 and a p-value of 0.506.

          (Editor’s note: There are three critical numbers to know from any clinical trial. First, the hazard ratio compares how fast bad events happen in the treated group against how fast they happen in the control group. Read it like this: 1.0 means both groups suffered at identical rates and the drug did nothing at all. A 0.51 hazard ratio means the treated patients relapsed at roughly half the rate. Lower is better. A confidence interval brackets the range the true answer probably falls inside, given how few events the trial actually observed. If that range crosses 1.0, the drug might have done nothing, and the headline number could be noise. The p-value estimates the odds of seeing a result that large by pure chance if the drug were inert. Regulators generally want it below 0.05.)


          The point estimate suggested 8% fewer recurrences. The confidence interval crossed 1.0 in both directions, meaning the vaccine might have helped by 27% or harmed by 17%. The p-value said a coin flip explains the whole result. Antigenics collapsed, renamed itself Agenus in January 2011, and built a business around the adjuvant Antigenics used to provoke an immune response (QS-21).

          Dendreon (formerly DNDN) came next. Its personalized cancer vaccine, Provenge, was grown from each patient’s own immune cells. It won its Phase III trial, extending survival in prostate cancer by 4.1 months at a hazard ratio of 0.78. The FDA approved it in 2010. It showed no effect whatsoever on how fast the cancer progressed.

          Then Dendreon priced it at $93,000 a course and… no one bought it. The company filed for bankruptcy in November 2014, and on May 6, 2015, the European Commission withdrew Provenge’s marketing authorization across the entire European Union. Not for safety. Not for efficacy. Dendreon requested the withdrawal itself, because it could not get European payers to reimburse for the drug.

          In 2007, Genitope ran 287 patients through a lymphoma vaccine trial and delivered 19 months of progression-free survival versus 23 months on control. Worse than nothing. The stock halved the day the results came out. It delisted it nine months later.

          After all these failures, most people assumed that personalized cancer vaccines would never work. But then three things changed.

          First, the targets changed. Instead of vaccinating against the patient’s own normal proteins, laboratories now sequence the tumor’s DNA alongside the patient’s healthy DNA, subtract one from the other, and isolate the mutations that exist only inside the cancer. Those mutated proteins are genuinely foreign. These proteins are called neoantigens.

          Second, checkpoint inhibitors arrived. Tumors survive by displaying molecular signals that switch off immune cells as they approach. Checkpoint inhibitors like Merck’s Keytruda block those signals. The old vaccines were pushing immune responses into a system the tumor could turn off at will, which is precisely why they generated beautiful laboratory data but didn’t save patients. Now that switch gets disabled.

          Third, as we’ll be discussing for years, the engineering has gotten much better. mRNA (messenger RNA) solved the delivery problem: it carries the instructions directly into a cell, so the patient can make precisely the right antibodies. Encode dozens of neoantigens and the patient’s own body will manufacture all of them. Moderna’s product encodes up to 34 antigens, matched to that individual’s specific cancer. Production time fell from 50 or 60 days to about six weeks.

          The individualized product cut recurrence at a hazard ratio of 0.51, with a confidence interval of 0.294 to 0.887 and a p-value of 0.0075.

          In other words, the vaccine reduced cancer’s recurrence by about 50% – an outcome that was almost impossible by chance alone.

          While the intellectual property around these vaccines and their delivery systems is, of course, complicated (like all IP in biotechnology) Moderna’s durable advantage rests on two assets that offer a moat beyond patents.

          The first is the algorithm that picks which mutations go into the vaccine. In the largest published benchmark, ranking candidate neoantigens by how tightly they stick to the immune system’s display molecules identified genuinely useful targets less than 20% of the time. Filtering instead for whether the fragment actually appears on the cell surface, and whether a T-cell can recognize it, lifted accuracy above 70%. The clinical numbers are harsher still. Only 2% of computationally predicted neoantigens provoke a response in the laboratory. And in a pancreatic trial run by BioNTech SE (BNTX), only 11% of the selected targets produced a detectable immune response in patients.

          Moderna’s vaccine holds 34 slots. At an 11% hit rate, four of them are doing something; at 70%, 24 are. Moderna’s algorithm is producing a better vaccine. And that advantage widens with every patient Moderna treats and learns from.

          The second asset is Moderna’s factory. Every manufacturing batch treats exactly one patient. Moderna’s annual report states that the process scales out in parallel rather than up: you cannot build a bigger vessel and serve more people; you have to replicate the entire line. Moderna’s total dedicated capacity consists of one building: 140,000 square feet in Marlborough, Massachusetts. It cost around $400 million to build. Across the 10 solid tumors where this approach could work, American surgeons treat roughly 815,000 operable cases every year. Virtually every patient would want a personalized cancer vaccine, if having one meant a 50% better chance of extending cancer-free remission over a meaningful period (years). So, for now, it’s Moderna’s one building, against 815,000 American patients a year.

          Currently, Moderna has no close competitor at all. BioNTech runs the only comparable program at scale and expects no pancreatic results before 2031. Genentech, the Roche Holding AG (SWX: ROG) subsidiary, abandoned its cancer vaccine partnership with the Norwegian developer Nykode Therapeutics.

          Over the trailing 12 months through June 30, Moderna revenue was $2.23 billion and gross profit was $521 million, a gross margin of 23.4%. Research spending consumed $2.88 billion, 5.5x gross profit. The operating loss was $3.32 billion, or $7.99 a share. Moderna holds $6.91 billion of cash and investments with no reported debt, and it burns $1.24 billion a year, leaving 5.6 years of runway.

          Analysts expect Moderna to lose $4.93 a share next year on $2.40 billion of revenue. Consensus is modeling almost no cancer-vaccine revenue at all through the end of 2027. Strip out the cash, and the market is valuing this business at $51 billion.

          Moderna’s partner in this pivotal trial was Merck, which is seeking ways to extend the patent life of its best-selling checkpoint inhibitor, Keytruda. Merck books the sales and the two companies split the profits equally. Sell-side analysts put peak melanoma sales at $5.4 billion per year. Our base case assumes the vaccine reaches melanoma and lung cancer, which gets us to $11.4 billion in peak franchise revenue per year. Assuming 38% operating margin, that throws off $4.3 billion of profit per year. Moderna keeps half. As an estimate (we don’t know how long it will be before competitors emerge), we’ll use a 13-multiple on these earnings. That gets us to a future total value of $28 billion. But this market could easily grow much larger. Broad adoption across solid tumors at costs below $45,000 gets us to $92 billion.

          Discounting those future values back to today yields a potential present value of $11 billion to $36 billion. On a Moderna per-share basis, that’s $27.56 or $90.42. That’s a very wide range of potential value for an investor to estimate today – welcome to biotech investing! And it’s even more difficult in this case because this entire approach is new, is extremely expensive, and doesn’t scale easily.

          Manufacturing costs more than $100,000 per patient today. And this drug gets given to people whose cancer has already been cut out, who show no detectable disease anywhere in their bodies, and who feel completely fine. That’s a lot of money for an insurance company to approve… to someone who is currently healthy.

          Provenge worked. It won its trial, and the FDA approved it. Then it was pulled out of Europe entirely, because payers would not shell out $93,000 for a drug given to patients who were not visibly, terminally ill. Moderna and Merck are proposing a six-figure therapy for patients who, while at great risk for further disease, are not currently sick. Who will pay that much?

          One more thing. After Merck and Moderna announced that the trial met both of its endpoints, the market added $36 billion to Moderna’s value. That’s the present value of my most aggressive forecast for this product. I estimate that fair value on Moderna’s other business lines (an approved COVID vaccine, an approved RSV vaccine, a late-stage flu program) and its associated intellectual property is worth something around $15 per share. Add this to my estimates on the present value of the cancer vaccine, and you get something between $45 and $110. But the stock is trading above that – at $140 per share! Too expensive to recommend right now.

          I suspect we will see a major pullback in Moderna’s shares at some point as the difficult economic reality of a $100,000 cancer vaccine plays out.

          But what about Merck? Merck collects the other half of the vaccine profits; it sells the Keytruda that the vaccine must be given alongside, and it trades at only 16.1x what analysts expect it to earn in 2027. Keytruda generated 48.7% of Merck’s 2025 revenue. And Keytruda loses United States exclusivity in 2028. The stock has been trading very cheaply because of the risks Merck faces with the Keytruda patent cliff. I bought it personally earlier this year primarily because of its dividend and because it’s a very high-quality, low-volatility stock that fits with my “Honeycomb Strategy.” I didn’t buy it because of the cancer vaccine – in fact, before I took up this work in July, I didn’t know anything about Moderna’s cancer vaccine. But the shares jumped on that news and are now up 40% year-to-date. No, it’s not an expensive stock. But it’s not cheap anymore. I’m going to pass for now. If there’s a big drawdown, I’ll do a complete review of it.

          Portfolio Review And Actions

          Present value is our estimate of what a share is worth today on the evidence in hand. It’s not a price target, as we believe in letting our winners run. We don’t want to sell a great business when we have a good entry price. Buy below is the highest price at which we would put new money to work.

          Eli Lilly enters at our 14% cap for integrated and tollbooth businesses, sized by inverse volatility alongside Novartis (NVS). Moderna would enter under our 10% cap for companies with marketed products, once it trades below $110.

          Big Month Of News For uniQure

          uniQure (Nasdaq: QURE) is a Hold.

          Its AMT-130 is a gene therapy for Huntington’s disease. Huntington’s is caused by a single inherited defect that makes a mutant protein which slowly kills neurons in a part of the brain called the striatum. Patients lose motor control, then cognition, then everything, over 15 to 20 years. There is no treatment that changes the course of the disease.

          AMT-130 is delivered by a neurosurgeon, through the skull, guided by MRI, directly into the striatum, in a single procedure. A viral vector carries instructions that make neurons produce a small RNA that silences the mutant gene.

          Two things will happen this month. uniQure will present four-year data with a June 30 cutoff, covering 12 high-dose and 12 low-dose patients. The three-year data (previously published) is why the stock has tripled. On the primary measure – a composite score built from motor, cognitive, and functional tests – treated patients declined 0.38 points against 1.52 for an external control group, a 75% slowing, at p equal to 0.003. Functional capacity slowed 60% at p equal to 0.033. That is the most convincing result anyone has produced in Huntington’s disease.

          September’s presentation is evidence about durability, and we suspect it will report data that’s stronger than the three-year data. We also believe this drug will receive approval this year, despite the very small number of patients and the lack of a real control group.

          There’s a lot of history here. On November 3, 2025, FDA’s pre-submission feedback said it no longer agreed the Phase I/II data were adequate as primary evidence and the data were “currently unlikely” to support a filing. The shares fell from $67.49 to roughly $26. In June 2026, after a follow-up meeting, the agency reversed and agreed that the three-year analysis is acceptable as the primary basis for accelerated approval.

          Here’s the real problem: uniQure has no placebo arm. These trials compared treated patients against a matched set drawn from Enroll-HD, an observational registry, selected by a statistical technique that pairs patients on baseline characteristics.

          In February 2026, the FDA rejected a gene therapy for Hunter syndrome under similar circumstances: uncertainty in the eligibility criteria, comparability of the natural-history control, and the appropriateness of the biomarker. The agency noted that the control group was mismatched on age and baseline cognition.

          uniQure’s filing rests on the same architecture: a small, treated cohort against a matched external control.

          In addition, this division of the FDA has spent 2026 tightening the screws on gene therapy delivered to the brain. In January, it halted two REGENXBIO trials after a tumor appeared in an asymptomatic five-year-old dosed four years earlier, and the resected tumor showed viral genetic material integrated next to a cancer-causing gene called PLAG1. Causality was never established, and no other patient in either trial had a tumor. In August, the agency halted the same program again after spine imaging in five patients turned up small nodules, all judged benign. And in November 2025 the FDA put a boxed warning on Sarepta’s Duchenne gene therapy for fatal liver injury and pulled the indication for non-ambulatory patients.

          The FDA is very worried about using viral vectors for gene therapy… and it’s easy to understand why.

          But we think it’s likely that uniQure will get approval because there’s no other possible therapy and these results look strong. In 2023, the FDA granted accelerated approval to Qalsody for a form of ALS on the strength of a reduction in neurofilament light, a protein that leaks out of dying nerve cells, in 108 randomized patients. uniQure’s neurofilament data was 8.2% below baseline at three years on the high dose. We think there’s enough proof that the therapy is slowing the disease to warrant approval.

          And so, we’ll hold.

          Silence Therapeutics Closer To Divesiran Approval

          Silence Therapeutics (Nasdaq: SLN) remains a Speculative Buy with a raised buy price.

          Polycythemia vera is a blood cancer in which the bone marrow makes too many red cells, the blood thickens, and thick blood clots. The standard treatment has not fundamentally changed in a century: a nurse drains blood out of the patient, therapeutic phlebotomy. The body already has an off switch for making red blood cells. It’s a hormone called hepcidin that controls how much iron is available to the marrow. Iron is the raw material for red cells, so turning hepcidin up starves the marrow of what it needs and fewer red cells get made.

          There are two ways to raise hepcidin. You can inject synthetic hepcidin, or you can help the patient produce more of his own. Protagonist Therapeutics (PTGX) and Takeda Pharmaceutical (TAK) took the first route with a peptide called rusfertide, and on August 28 the FDA approved it as Mimrylo.

          Silence is taking the second approach. Divesiran is a small interfering RNA that silences a gene called TMPRSS6, whose protein is the brake on the body’s own hepcidin production. Release the brake, and the patient makes more of their own hepcidin.

          Until August 28, the case for divesiran rested on a theory: that raising hepcidin controls polycythemia vera. The FDA has now approved a drug that does exactly that, on the strength of a randomized Phase III trial in 293 patients. The mechanism is no longer a hypothesis but a labeled indication. Mimrylo won approval on a single endpoint: the share of patients who did not become eligible for phlebotomy between weeks 20 and 32. Eligibility was defined precisely, as a confirmed hematocrit at or above 45% that also ran at least three points above the patient’s own baseline, or a hematocrit at or above 48%. Silence now knows the endpoint, its exact definition, and the trial size it will require to gain approval.

          This new drug also begins to build the market for this kind of therapy. Somebody has to persuade hematologists to stop draining blood and start writing a prescription, and somebody has to get insurers to pay for it. Takeda has both the sales force and every incentive to do that work. Silence arrives after the category exists… but it will be second to market. What does that mean? Mimrylo is a once-weekly injection. Divesiran is one injection every twelve weeks. That’s fifty-two injections a year against four.

          Regarding efficacy, Silence’s Phase II produced 88% clinical responders against 19% on placebo, at p below 0.0001, in 48 phlebotomy-dependent patients. Mimrylo produced 76.9% responders against 32.9% on placebo.

          Silence sold $175 million of stock at $13.50 (right above our buy-up-to price) on the strength of the divesiran data.

          We are raising our buy-below price from $13 to $16 and our present value estimate to $22.

          Keeping A Watch On Arrowhead Pharmaceuticals

          Arrowhead Pharmaceuticals (Nasdaq: ARWR) remains on the watchlist..

          Plozasiran is a small interfering RNA (siRNA) that silences APOC3, a gene whose protein blocks the body from clearing fat out of the blood. Silence it, and triglycerides fall. It is injected under the skin once every three months. The FDA approved it on November 18, 2025, as REDEMPLO, for familial chylomicronemia syndrome, a genetic disorder affecting roughly 6,500 Americans. Arrowhead’s management has set the wholesale price at $45,000 per patient per year. In the June quarter, REDEMPLO produced about $2.4 million of revenue across more than 400 prescribers, roughly double the prior quarter.

          Expanding the label is the company’s strategy. Roughly 2.3 million American adults carry triglycerides above 500 milligrams/deciliter (“mg/dL”), based on two decades of federal health survey data. Arrowhead will file for that population before the end of this year. And, on August 30, at the European Society of Cardiology congress in Munich, the company presented the trial data to support the filing. SHASTA-3 and SHASTA-4 randomized 757 adults to four quarterly doses or placebo. Triglycerides fell 79% and 81% at 12 months, both at p below 0.0001, and 85% in patients who started above 880 mg/dL.

          Very high triglycerides cause acute pancreatitis, a sudden inflammation of the pancreas that hospitalizes patients and sometimes kills them. Pooled across both trials, pancreatitis events fell 78%, In patients who had already survived one attack, events fell 91%. Safety was clean: serious adverse events were 8.3% on drug against 10% on placebo, and 1.4% of patients discontinued against 0.8% on placebo.

          Arrowhead isn’t the first to market here. On June 24, the FDA approved Ionis Pharma’s olezarsen as Tryngolza for the same population. Arrowhead’s competitive answer is dosing and depth: olezarsen is a monthly autoinjector, and plozasiran is quarterly. Olezarsen cites a 66% triglyceride reduction against Arrowhead’s 79% to 81%, and an 85% pancreatitis reduction against Arrowhead’s 78%.

          Arrowhead carries roughly $1.22 billion of debt against $1.57 billion of cash and investments. The largest piece is a $400 million senior secured loan from Sixth Street. Interest runs at 15%, payable in kind rather than in cash, secured by a first lien on substantially all assets including the intellectual property itself. The company also has $700 million of zero-coupon convertible notes due January 2032 with a conversion price near $87.07.

          Our $85 present value is built in four steps. We start with Morgan Stanley’s $3.2 billion peak plozasiran estimate, which that firm doubled from $1.7 billion in April, and value it at three times peak sales. We add $2 billion for the partnered royalty streams on olpasiran with Amgen and fazirsiran with Takeda, plus the obesity programs. Then we add the cash and subtract the debt. At $81.38, you are paying 3.5x Morgan Stanley’s peak-sales estimate for the whole enterprise, on a drug that is second to market with an interest bill that compounds at 15%.

          We are keeping a watch on Arrowhead Pharmaceuticals until we see a price decline. We hope there’s a pullback in biotech this fall that allows us a good entry price.

          Halozyme: Adding Another Tollbooth

          Halozyme Therapeutics (Nasdaq: HALO) joins the recommended list with a Buy Below of $110, with a present value of $124.

          Most antibody drugs have to be dripped into a vein, which means the patient sits in an infusion chair for hours and the hospital bills for a nurse, a chair, and a bag. Halozyme owns an enzyme called rHuPH20 that temporarily loosens the mesh of tissue under the skin, so the same drug can be pushed in with a syringe in minutes. It licenses that enzyme to drug companies under the name ENHANZE and collects a royalty.

          Halozyme runs no trials, treats no patients, and files for no approvals. Roche Holding (SIX: ROG), Johnson & Johnson (JNJ), Takeda Pharmaceutical (TAK), Argenx (ARGX), and Bristol-Myers Squibb (BMY) do all of that. Halozyme cashes checks.

          In June, royalty revenue rose 50% to $307.7 million, of which $152.2 million came from DARZALEX, the subcutaneous myeloma drug Johnson & Johnson sells.

          Management raised full-year guidance for the second time this year, to $1.835 billion to $1.910 billion of revenue and non-GAAP earnings of $8.65 to $9.00 a share, up from $7.75 to $8.25. And it bought 4.8 million of its own shares in the quarter for $332.8 million, at an average price of $69.30, under a $1 billion authorization that runs through 2028.

          One U.S. patent covers the composition of rHuPH20, which is licensed in every ENHANZE agreement. And it expires on September 23, 2027. That’s why Goldman Sachs rates the stock a Sell with a $58 target. But the royalty steps down, it does not stop. Halozyme’s filings reveal that when the rHuPH20 patent expires in a country, the royalty rate is reduced rather than terminated, and the company says the reduction never exceeds 50%. Apply the worst case to the exposed share of the royalty base, and we get a hit of roughly $1.85 a share against consensus 2027 earnings of $10.31. Halozyme guides DARZALEX royalties as secure through 2032.

          And there is a second platform that is not in any existing license. MDASE is a separate family of modified hyaluronidases with 99 patents and applications, exclusive through 2032 outside the United States and 2034 inside it. Every new agreement Halozyme signs can be written on MDASE rather than ENHANZE. The company has signed five new agreements this year against a goal of three, including a global oncology collaboration with GSK (GSK) in May.

          And there’s a potential kicker – a big one. Halozyme sued Merck in April 2025, claiming that subcutaneous Keytruda infringes 15 MDASE patents. A German court granted a preliminary injunction against subcutaneous Keytruda in December 2025.

          If you’ve watched Veeva Systems (NYSE: VEEV) over the last month – up more than 40% – you’ll understand why I prefer to own biotech’s tollbooths.

          Action to Take: Buy Halozyme Therapeutics (Nasdaq: HALO) up to $110 per share

          BioNTech’s Failure

          On August 28, BioNTech SE (BNTX) terminated the Phase II trial of autogene cevumeran, its individualized mRNA cancer vaccine partnered with Genentech, the Roche Holding subsidiary. The shares fell 8%. We do not own BioNTech, but what happened in this failed trial is important.

          The independent Data Safety Monitoring Board found a numerical imbalance in overall survival between the two arms and concluded that continuing would not change the efficacy result. Reuters reported that analysts read that imbalance as more deaths in the vaccine group than in the control group.

          BioNTech enrolled patients with high-risk stage II or stage III colorectal cancer who had already had surgery, then three months of chemotherapy, and who still had circulating tumor DNA in the blood afterward. Circulating tumor DNA is what it sounds like: fragments of cancer genome floating in the bloodstream. Finding it after surgery means the surgeon did not get everything.

          But the vaccine was given as monotherapy, without a checkpoint inhibitor. Moderna’s product is given with Keytruda, Merck’s checkpoint inhibitor.

          Bicycle: You Are Being Paid To Own The Pipeline

          Bicycle Therapeutics (Nasdaq: BCYC) is our most uncomfortable Buy.

          Bicycle holds $510.1 million of cash against $96.3 million of total liabilities and no debt at all, leaving $413.7 million of net cash, or $5.96 a share. So you are paying $4.14 for $5.96 of cash, which puts the enterprise value at negative $127 million. The market is paying you $1.83 a share to buy the stock.

          Bicycle makes bicyclic peptides: short chains of amino acids chemically stapled into two rigid loops, which lets a very small molecule bind a target with the precision of an antibody and then clear the body in hours rather than weeks. Attach a chemotherapy payload, and you get a tumor-seeking missile that does not linger in healthy tissue. The lead drug, zelenectide pevedotin, targets a protein called Nectin-4 that sits on the surface of bladder-cancer cells.

          There is already a Nectin-4 drug, and it is a good one. Padcev, from Pfizer (PFE) and Astellas, produced a confirmed response rate of 67.7% with pembrolizumab in first-line advanced bladder cancer and did more than $1.9 billion of sales in 2025. Zelenectide’s confirmed response rate in the equivalent setting was 58% to 62% in 26 patients.

          Padcev’s label carries a boxed warning for severe and fatal skin reactions. Skin reactions occurred in 70% of patients on the combination, 17% at grade 3 or 4, with fatal bullous dermatitis in 0.2%. Peripheral nerve damage occurred in 67%, and 87% of those patients still had it at last evaluation. Zelenectide, at its selected dose, produced skin reactions in 17% and neuropathy in 33%, with no severe skin reactions at any grade.

          On March 17, regulators told Bicycle that its pivotal trial design would not support accelerated approval in metastatic bladder cancer. The company converted the trial to a randomized Phase II, cut 30% of its staff, and set out to reduce operating expenses by half.

          Its partners left. Genentech gave notice in July 2025, and Novartis followed later that year. Bayer terminated one target program in November 2025 and the entire agreement in July 2026, effective this month. Those three deals carried $45 million to $50 million of upfront money each and up to $1.7 billion of milestones apiece. Bicycle had collected $240.2 million of partner cash across its history and now has only one active collaboration, with Ionis.

          In short, the outlook looks dark. But that’s why the stock is cheap. And we believe the underlying technology holds a lot of promise. The drug is not dead, and neither is the differentiation. Bicycle is still running the randomized Phase II and expects data in the second half of this year. In the Phase I first-line study, in patients too sick for cisplatin, zelenectide plus pembrolizumab produced a 59% response rate and median progression-free survival of 13.0 months. In late-line monotherapy, 38% responded with a median duration of response of 10.0 months. Those are not failing numbers.

          Meanwhile, Bicycle is moving its resources to radioconjugates: the same targeting peptide carrying a radioactive isotope instead of a chemotherapy payload. It has locked up the hard part of that business, which is not the chemistry but the fuel. Bicycle signed a 15-year contract with the UK Nuclear Decommissioning Authority for access to up to 400 tonnes of reprocessed uranium, and it is working with the UK National Nuclear Laboratory to extract thorium-228 from it. It has exclusive lead-212 generators from SpectronRx and a supply agreement with Eckert & Ziegler. Novartis built a $2 billion drug in Pluvicto and an $816 million drug in Lutathera on this idea, and the constraint on the whole field is isotope supply. Bicycle’s first company-sponsored radioligand trial starts in 2027.

          Bicycle Therapeutics is a Speculative Buy, below $5.00, with a present value of $7.50.

          Good investing,

          F. Porter Stansberry
          Stevenson, Maryland

          For important disclosures and disclaimers, please visit our Legal Disclosures page.

          The post The Age Of Discovery appeared first on Porter & Co..

          • ✇Porter & Co
          • You Probably Don’t Own Bitcoin And That’s A HUGE Mistake Porter &#38 · Co.
            Issue#153, Volume#3Most Investors Still Don’t Understand Bitcoin – Here’s What They’re Missing Inside Today’s Issue Essay: You Probably Don’t Own Bitcoin And That’s A Huge Mistake Strong GDP Growth Job Growth = Rate Hike Diesel Rises Again Chart Of The Day… Morgan Stanley Bitcoin Trust (MSBT) Today’s Mailbag Editor’s note: The Porter & Co. editorial and Customer Care teams will be off on Monday because of Labor Day. We will all be back on Tuesday. Nobody invented money. It was not des
             

          You Probably Don’t Own Bitcoin And That’s A HUGE Mistake

          4 September 2026 at 14:00

          Issue#153, Volume#3

          Most Investors Still Don’t Understand Bitcoin – Here’s What They’re Missing


          Editor’s note: The Porter & Co. editorial and Customer Care teams will be off on Monday because of Labor Day. We will all be back on Tuesday.


          Nobody invented money.

          It was not designed, chartered, decreed, or granted. It was discovered, slowly, in trade. A man takes salt in exchange for his labor because he knows he can exchange it for other goods. Cattle, hides, shells, iron bars, bricks of tea, cakes of salt, strings of beads: each of these served as money at different times in history.

          Carl Menger, one of the founders of the Austrian School of economics, first theorized how money evolved through trade. Men were led, he wrote,

          each by his own economic interests, without convention, without legal compulsion, nay, even without any regard to the common interest, to exchange goods destined for exchange (their ‘wares’) for other goods equally destined for exchange, but more saleable.

          The most important takeaway is that money predates all government. Governments don’t create money – in fact, as you’ll see, governments constantly corrupt money.

          The second most important takeaway is that the market – through the choices of millions of individuals each pursuing their own economic interests – will always trend toward the best and most reliable form of money. That’s why, over time, more people favored metals, particularly gold and silver. And it’s why more and more people are choosing Bitcoin (BTC), today.

          And what did governments add to money? Fraud, of course.

          The denarius, the benchmark coin of the Roman Empire, was 90% silver (3.9 grams) under Julius Caesar. By AD 200, the coin was less than 60% pure, and by AD 300, it contained 5% silver. The Empire disintegrated alongside its money – something Americans would be wise to remember.

          The same thing has happened to every empire.

          Between 1544 and 1551, in a program historians call the Great Debasement, England’s silver coinage went from the old sterling standard of 92.5% fine to 75%, then 50%, then 33.33%, and finally to 25% in April 1551. Measured in metal, a pound sterling fell from 153.4 grams of pure silver to 25.9. Roughly 83% of the silver content was removed in only eight years.

          It happens, over and over again. As sure as the sun rises in the East, every government, if it gains enough power, will attempt to control money by creating a currency. And they will devalue that currency to steal. That’s exactly what’s been happening in America since 2010. It’s why people under the age of 40 can’t afford to buy a house, get married, or have a family. It is what’s driving the collapse of our culture and our society. It’s what’s leading more and more people into lives of desperation: gambling, prostitution, and substance abuse. It’s leading people to become politically radicalized. And, if it continues, it will lead America to socialism, a financial collapse, and even a civil war.

          But this doesn’t have to happen to you. You are still free to choose what you save. And you should save money, not the government’s currency. What is money? Money is what people voluntarily save. It is discovered, in markets, over long periods, by people making their own self-interested choices. Currency is what a government issues and debases and requires you to use as legal tender for debts and taxes. Money doesn’t require any coercion. It’s chosen freely, in the market.

          Unless you understand this background, Bitcoin will never make sense to you.

          Beyond this basic distinction between money and currency, the other misunderstanding that’s common even among people like financial commentators Peter Schiff and Jim Grant, who have an Austrian orientation, is that because Bitcoin is inert – it’s just code – it doesn’t have any intrinsic value.

          As the Austrians proved, value is relative. And, in the modern world, code can have enormous value. Look at Microsoft (MSFT). What is it, other than code?

          Every technology that Bitcoin has combined into its code has tremendous real-world value. Public-key cryptography verifies bank wires, military traffic, software distribution, and every other encrypted commercial transaction. Cryptographic hash functions compress huge files into a short fingerprint, which is how password databases and software integrity have been protected for decades. Distributed consensus protocols (blockchains) keep databases organized for mission-critical infrastructure around the world.

          Saying that these things have no value because they are only code is profoundly ignorant.

          Bitcoin combined these technologies to create something extraordinary: a way to send a fixed amount of value (a proof of work) to anyone around the world using only the public internet. Bitcoin allows two strangers, who do not trust each other, to exchange a form of money, with final settlement, without asking a bank, a clearinghouse, a corporation, or a government for permission. It also allows individuals to save an unlimited amount of money using only their minds: a seed phrase.

          Gold’s weakness is its physical presence. It requires custody. To use gold, people ultimately must hand it to someone: a bank, a treasury, a depository institution. Or else… they risk having it seized (see 1933) or stolen. Bitcoin removes this risk. And that is a revolutionary monetary characteristic. Over time, I believe this will transform the relationship between people and governments. It creates a defense against debasement and coercion.

          How To Value Bitcoin

          Like gold, Bitcoin is inert. It has no earnings. It pays no coupons. And, like gold, its supply only grows slowly, and the costs to mine Bitcoin continue to increase. To value Bitcoin, you must understand the other side of the scale: the currency you’re measuring it against. Bitcoin’s price, like gold’s, is driven by monetary aggregates.

          The Porter & Co. Bitcoin Liquidity Model uses least squares regression analysis, which is a statistical method for understanding the historical relationship between global currencies and Bitcoin, using about 500 weekly observations beginning in January 2015.

          The monetary aggregates we use include:

          • Federal Reserve net liquidity, which is the Fed’s balance sheet minus the Treasury’s cash account minus money parked in the reverse repo facility. It is what the Fed is actually leaving in the banking system.
          • Global M2 in dollars. M2 is broad money: currency, checking accounts, savings deposits and close equivalents. We sum the United States, the euro area, Japan, China and the United Kingdom, converted to dollars.
          • Total circulating supply of the two large dollar stablecoins, USDT (Tether) and USDC (Circle Internet).

          Statistics show our model explains 89% of the variation in Bitcoin’s price. Most Bitcoin enthusiasts claim Bitcoin’s price is driven by its halving cycle. But it isn’t. Once global liquidity is measured properly, the four-year halving cycle adds nothing to Bitcoin’s price. Bitcoin’s code was designed to keep the price of Bitcoin stable against the growth in compute. It’s working. What’s driving its price higher is debasement by governments.

          On May 21, I posted this on X.com (@porterstansb):

          I expect Bitcoin will continue to be highly correlated with liquidity in the global financial system. My model says each 1% rise in Global M2 YOY adds ~4.5% to fair-value BTC. Model fair value is $136,050.

          On May 26, on Anthony Pompliano’s podcast, I said,

          The mispricing today in Bitcoin is as large as I’ve ever seen before in the model.” And I explained why: “I think that’s because the tech stocks have been so strong that all of the risk capital has fled into tech stocks, and it had to come out of somewhere.

          My conclusion:

          I think we’re seeing a great opportunity today in Bitcoin, certainly the best opportunity I’ve seen in Bitcoin in a decade.

          On June 20, we published an entire issue of my newsletter, Complete Investor, about Bitcoin:

          In this issue, we’re re-recommending Bitcoin (BTC). And we believe buying it now, before the next halving, will prove to be the single best financial decision of the next decade.

          By June 30, Bitcoin had fallen to $58,524. It recovered through August, and today is trading above $79,000. But… despite the rebound… Bitcoin is still trading below the lower 1-sigma band of around $94,000 of our pricing model.

          Nero shaved the denarius. And every empire since then has destroyed itself and most of its people through debasement. But nobody can shave a Bitcoin.

          If you use their money, you’ll be their slave. Free yourself with Bitcoin.

          Tell me what you think of today’s Daily Journal: porterstansberrydirect@gmail.com

          Good investing,

          F. Porter Stansberry
          Stevenson, Maryland


          Presented By: TradeSmith

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          Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. TradeSmith is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.


          3 Things To Know Before We Go…

          1. The Atlanta Fed says the economy is growing at a 4.7% annual rate this quarter. That September 3 reading from GDPNow is a “real” figure, meaning it has already subtracted inflation. Add prices back, and nominal growth is running near 8%. The gap with Wall Street is wide: when GDPNow touched 6.2% in early August, economists’ consensus was just 2.2%. At this pace, the October 29 GDP release could show real growth of 6.5% to 7%, five days before the midterms.

          2. August hiring puts a September rate hike back in play. U.S. employers added 162,000 workers to payrolls, roughly three times the 53,000 economists had forecast, and the Labor Department revised June and July up by a combined 55,000, turning a reported July job loss into a gain. Unemployment held at 4.1%. With inflation still above the Fed’s 2% target, Chair Kevin Warsh might push to raise rates. Futures pricing for a quarter-point hike on September 16 moved to 59% from 52% before the release. The two-year Treasury yield, the maturity most sensitive to Fed policy, hit its highest level since January 2025.

          3. Diesel shortage sends prices to new high. The U.S. national average price of diesel fuel has reached a record $5.62 per gallon, surpassing the prior high of June 2022. The market is grappling with an unprecedented shortage driven by the supply-chain disruptions from the war with Iran, with inventories at the lowest seasonal levels on record. Given diesel’s role as a critical transportation fuel, this will likely push prices higher throughout the economy, leading to sticky inflation in the months ahead.


          Chart Of The Day… Morgan Stanley Bitcoin Trust (MSBT)

          The Morgan Stanley Bitcoin Trust (MSBT) has rallied nearly 27% since we re-recommended Bitcoin in the June 20 issue of Complete Investor.


          Mailbag

          “Impossible To Lose Money”

          Bill C. writes:

          Reading through your original product description of Porter’s Permanent Portfolio, it states: “The portfolio is structured in a way that makes it difficult – essentially impossible – to lose money, no matter what happens to the economy, or to individual stocks.

          Well, apparently I have achieved the impossible! My portfolio is DOWN 2.4% YTD. The one-year at 3.8% is positive but lower than target. When I first built the portfolio in late December 2024 I followed the recommendations exactly as well as investment % of each asset.

          Earlier this year, I followed your recommendation and sold all of the P&C assets. That 25% now is a cash from 12.5% recommended to 4%. And moved most of that into FNV and GLD. Gold and Bitcoin are 22% of the portfolio.

          I would appreciate any comment you have as the portfolio is clearly not meeting any of it’s performance expectations.

          Porter Comment: I appreciate you reaching out.

          But I’ve got bad news for you: you’re not following Porter’s Permanent Portfolio.

          It did not sell property-and-casualty (P&C) stock. As I made very clear, the recommended allocation for the Permanent Portfolio would not change until the 10-year yield went to 5% or higher. It has not yet reached that level, and I have not changed any of the allocations on the recommended portfolio.

          Please see the website for the actual current allocations.

          Now, what you’re going to say is, yeah, but you said, x,y, and z.

          And yes, I did. I said if you couldn’t tolerate a drawdown, then you could go to a bigger cash allocation and reduce your volatility.

          If you did that, you’re doing fine.

          But I said, repeatedly, that Porter’s Permanent Portfolio is a “permanent” allocation strategy. It only rebalances once a year. And that strategy hasn’t – and won’t – change unless there is a dramatic change to the market’s fundamentals, like the 10-year moving over 5% yield.

          Here’s the good news: there’s now an ETF that invests exactly in Porter’s Permanent Portfolio – called the Porter & Company Porter Portfolio Index (PCPP).

          Regards,
          Porter


          “Numbers R Us”

          William C. writes:

          Years ago, when we were on the way to do something on Saturday (Daddy day), my youngest (probably eight or nine) exclaimed, “Daddy, look, Toys R Us.”

          I said, “Daddy is Numbers R Us.”

          She is now 31, but her daddy still pays attention to numbers.

          I bought Complete Investor a few years ago, and just watched and kept track of your recommendations for most of a year. I groan every time I see the growth of BWX Technologies (BWXT), which I thought might be good, but it was still early in my watching stage.

          I’ve taken positions in monthly Best Buys.

          Although many won’t put money into investments outside the U.S., when your team presents a case for investing outside our borders, I’ll give it strong consideration. Simply because you and your team provide strong cases with detailed analysis (with lots of numbers) of every recommendation.

          And, they work. I took the leap to become a Partner and have made enough to pay for that in the past year.

          So whether the recommendation is in Arizona, Hell, or thousands or miles outside our border, making money is always good.

          Sincerely

          Porter Comment: Brilliant note – thank you!


          Porter & Co. Market Snapshot

          Price Yesterday’s Return Year-to-Date Return
          S&P 500 Index $7,747.71 1.07% 14%
          Gold per ounce $4,472.92 2.08% 1.3%
          Bitcoin $81,271.74 5.27% -9.2%
          Oil (West Texas Intermediate) per barrel $91.30 0.66% 57.1%
          Berkshire Hathaway (BRK) $763,022.00 0.60% 1.1%
          Porter’s Permanent Portfolio – 1.66% 5.3%
          The Better Than Berkshire Index – 0.73% 8.6%
          Total Return Annual Return
          Porter & Co’s Top Ranked* 36.8% 16.8%
          Yield Yesterday’s Change Change
          Year-to-Date
          U.S Treasury 30-Year Yield 5.25% -1 bps 40 bps
          Prices as of 4:00 pm ET September 3, 2026 | bps = basis points (or 0.01%)
          *A Complete Investor risk rating of 1 is defined as a “low risk, high allocation” security, while positions rated closer to a 5 are higher risk. Porter & Co.’s top-ranked positions include those rated either 1 or 2 in Complete Investor portfolio.



          Porter & Co. Top Positions

          Publication Ticker Description Total Return
          Biotechnology QURE uniQure 237%
          Biotechnology SGMT Sagimet Biosciences 203%
          Complete Investor BTC/USD Bitcoin 201%
          Complete Investor BWXT BWX Technologies 182%
          Biotechnology NUVB Nuvation Bio 167%
          Biotechnology TGTX TG Therapeutics 159%
          Biotechnology ROIV Roivant Sciences 152%
          Complete Investor SKWD Skyward Specialty Insurance 136%
          Complete Investor PM Philip Morris 132%
          Biotechnology QURE uniQure 131%
          Prices as of 4:00 pm ET September 3, 2026

          Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here| New Window. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

          The post You Probably Don’t Own Bitcoin And That’s A HUGE Mistake appeared first on Porter & Co..

          • ✇Porter & Co
          • Trading Club Pro Trade Alert And Update – Week Of August 31, 2026 Porter &#38 · Co.
            Before getting into this week’s update, we are recommending the following new covered-call trades: Sell to open one Booz Allen Hamilton (NYSE: BAH) $80 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.25 per share Sell to open one Hims & Hers Health (NYSE: HIMS) $33 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.15 per share Sell to open one Figma (NYSE: FIG) $25 call, expiring October 16, 2026, down to $1.50 per share –
             

          Trading Club Pro Trade Alert And Update – Week Of August 31, 2026

          4 September 2026 at 09:00

          Before getting into this week’s update, we are recommending the following new covered-call trades:

          1. Sell to open one Booz Allen Hamilton (NYSE: BAH) $80 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.25 per share
          2. Sell to open one Hims & Hers Health (NYSE: HIMS) $33 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.15 per share
          3. Sell to open one Figma (NYSE: FIG) $25 call, expiring October 16, 2026, down to $1.50 per share – the recent price was $2.00 per share
          4. Sell to open one Novo Nordisk (NYSE: NVO) $47.50 call, expiring October 16, 2026, down to $1.00 per share – the recent price was $1.65 per share
          5. Sell to open two Triple Flag Precious Metals (NYSE: TFPM) $35 calls, expiring October 16, 2026, down to $1.00 per share – the recent price was $1.55 per share
          6. Sell to open one Turning Point Brands (NYSE: TPB) $85 call, expiring October 16, 2026, down to $1.00 per share – the recent price was $2.10 per share

          The value of The Trading Club Pro tracking portfolio settled at $111,679 as of Thursday, September 3 – up 11.7% since the June 22, 2026, inception date (see the detailed portfolio snapshot below). We made no trades this week.

          In this issue, we explain the rationale behind the covered-call sale recommendations.

          Reducing Risk As AI Financing Risk Looms

          The covered-call trades we’re recommending today are not about expressing a changing view on any of the underlying stocks. Instead, the goal is to reduce overall portfolio risk, but to do so in a way that still leaves significant upside on the table.

          As a reminder, when selling covered calls, we’re making the conscious choice to surrender the upside on the underlying stock at prices above the option strike price. By foregoing that upside to the call-option buyers, we generate a guaranteed return via the immediate cash proceeds collected upon the option sale, regardless of where the stock trades from here. So we’re locking in guaranteed income, while still retaining upside potential – in this case, between 6% and 14% across the various call strikes and the underlying stock prices. Over the relatively brief six-week time period until expiration, this works out to an average annualized return in the triple digits – which, of course, is significant upside.

          The advantage of this strategy is it lets us take a more defensive stance in the portfolio, without making an outright bearish bet on the market, which to avoid losing money generally requires impeccable timing.

          And that brings us to the current dichotomy in today’s stock market. On the one hand, we’re in the midst of one of the greatest earnings booms in the history of the U.S. stock market, which is fueling upward momentum in stock prices that makes it difficult to become too bearish in the short-term. But the problem is, this earnings growth is almost entirely fueled by a capex boom focused on one single area of the economy: data-center construction for the artificial intelligence (“AI”) revolution. Capital spending on every other area of the economy aside from data centers – housing, commercial and industrial, office buildings, etc. – has fallen $120 billion since 2024.

          Every prior capex boom throughout history has ended the same way: when the money runs out. And we’re officially reaching that point, as the companies behind this capex mania are exhausting their access to cheap capital.

          Alphabet (GOOG) just posted negative free cash flow for the first time since going public in 2004. One of the most profitable ad businesses ever built, plus YouTube, Android, and a growing cloud arm – all of which used to produce mountains of cash. But now with capex doubling to nearly $45 billion in a single quarter, the company burned through $6 billion in cash for the quarter. And this trend shows no sign of reversing, with management guiding to $200 billion in capex this year, more than doubling from $91 billion last year.

          Likewise, Amazon (AMZN) burned through $8 billion in Q2 2026, a stunning reversal from the $18 billion in positive free cash flow for the same quarter last year. This trend will only accelerate as the company plans to spend $220 billion on capex this year, up from $132 billion last year.

          It’s the same story across the entire hyperscaler complex, with the group’s free cash flow flipping from hundreds of billions annually into negative territory:

          With free cash flow evaporating, America’s tech giants have become some of the world’s largest issuers of debt.

          In 2025, the group raised a record $200 billion in debt, including the off-balance sheet obligations issued through special purpose vehicles (“SPV”). That’s 4x more than any previous year in history. And in the first eight months of 2026, they’ve already blown this number out of the water with more than $300 billion in debt issuance so far:

          This flood of bond issuance is so large that it’s beginning to crowd out demand for U.S. Treasuries. The 30-year Treasury yield jumped above 5.3% to its highest level in 20 years last month, before a bond-buying intervention from U.S. Treasury Secretary Scott Bessent caused a brief respite. Still, with the volume of tech debt now reaching 70% of U.S. Treasury bond issuance, there’s every reason to expect more upward pressure on borrowing costs across both corporate and government bonds.

          The market is showing signs of stress across multiple indicators. Order books covering hyperscaler bond offerings have dropped from nearly 5x oversubscribed in early 2026 to below 2x.

          A recent report from Goldman Sachs bond trader Jeffrey Papai noted that the $75 billion of AI-related bond issuance in a single month had left the market “struggling to absorb” the supply, sending the credit spread on Goldman Sachs’ AI bond basket higher by 22 basis points in a single week. Papai also described how the market’s absorption capacity is rapidly deteriorating. It previously required over $75 billion in new issuance to feel pressure, but that number has now dropped to $25 billion as the threshold for putting the market “on the defensive.”

          Hyperscalers are now scouring the globe in search of cheaper financing. Alphabet has gone shopping across every major foreign bond market, seeking new offerings denominated in the euro, sterling, Swiss franc, yen, and Canadian dollars. Its recent $8.5 billion Canadian bond issuance was the largest Canadian bond offering in history… that was, until Amazon set a new record weeks later with a $14 billion Canadian bond sale.

          With the world’s largest, strongest balance sheets exhausting their borrowing capacity from all corners of the globe, this is a giant warning sign that capital is becoming increasingly scarce. And that’s a big problem for an economy and stock market reliant on raising endless amounts of capital to keep a capex boom humming.

          For now, the bulls have momentum on their side. And they point toward the rising backlogs and earnings outlooks from the major suppliers of today’s capex boom – like Nvidia (NVDA) and the hyperscalers – as evidence that this capex cycle is just getting started. But in reality, it’s a financial time bomb just waiting to go off. And all signs indicate that 2027 is when the detonation event occurs.

          The Catalyst: OpenAI’s Liability Wall Hits In 2027

          The stress point in the AI capex boom lies specifically with OpenAI – owner of ChatGPT – which makes up the largest source of compute commitments supporting the data center buildout.

          At this time last year, OpenAI reigned supreme over the AI revolution, with over 70% market share and growing at triple digit rates. On the back of that momentum, between June and December of 2025, OpenAI engaged in the most aggressive debt origination spree in the history of capitalism. The climax occurred over a three-week frenzy in October 2025, when OpenAI signed over half a trillion of future purchase agreements with Oracle (ORCL), Nvidia (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVGO).

          In total, this single company has accumulated $750 billion in purchase agreements for data-center capacity and chip sales through 2030. And next year, it begins climbing the steepest part of this contract obligation wall, with $132 billion in bills coming due.

          Now here’s the thing: OpenAI’s financials are already a trainwreck before this mountain of additional liabilities hits. In 2025, the company generated $21 billion in losses on $13 billion in revenue, meaning the business lost $2 for every $1 in revenue. And these losses have only accelerated in 2026.

          From Q1 to Q2 of this year, OpenAI’s revenue increased by $1 billion from $5.7 billion to $6.7 billion. Over the same period, its losses grew by $3 billion from $9.3 billion to $12.3 billion. The company generated an incremental $3 in losses for every $1 of revenue growth.

          In other words, OpenAI loses money on every sale and is trying to make it up in volume. Its own internal financial projections don’t even show the company reaching positive free cash flow until 2030.

          But as bad as the Q2 financial results were, this was before the biggest blow yet: a flood of competition from lower-cost, open-source Chinese AI models hit the market.

          Early on in the AI revolution, OpenAI’s ChatGPT and Anthropic’s Claude enjoyed a wide gap in performance against all other AI models. But more recently, open-source AI models from China have closed the performance gap with their U.S. counterparts:

          Here’s the kicker: these Chinese models have closed this intelligence gap while consuming much less computing power than their U.S. counterparts. As a result, they now offer the same basic AI functionality at a small fraction of the cost, which has crushed pricing across the industry.

          The key metric for monitoring the pricing power among the sellers of AI services is the price per million tokens, where a token is the basic unit of text that a language model processes, generates, and is measured by. After reaching a peak of just over $2 per million tokens in June, prices have collapsed to below $1 per million tokens given the rise of fierce competition from low-cost Chinese AI models:

          OpenAI has responded by slashing prices in order to stoke demand, including an 80% price reduction for one of its latest models, GPT-5.6 Luna.

          History is littered with the ashes of western companies that entered into price wars with China on commoditized products. Steel, rare earth metals, solar panels, electric-vehicle batteries… and now, the same is happening with AI.

          This presents an existential risk for OpenAI, and by extension, America’s AI infrastructure boom.

          OpenAI needs to raise $750 billion by 2030 just to avoid defaulting on its signed-compute and chip-purchase agreements, not to mention hundreds of billions more to cover overhead.

          Our bet is simple: that won’t happen. OpenAI will need a financial miracle just to survive through 2027.

          Here again, the fundamental problem is that the cheap capital fueling the AI bubble is running out. And OpenAI is among the most vulnerable companies in this new era of scarce capital.

          The biggest tell that OpenAI’s funding window is closing came from the company’s latest capital raise in Q1 of this year. On the surface, it looked like a smashing success: the company pulled off the single largest private capital raise of all time – bringing in $122 billion at an $852 billion valuation. But the real story was in who actually wrote the checks.

          Traditional venture capital investors provided only $12 billion, or about 10% of the $122 billion raise. The remaining $110 billion came from the following entities:

          1. $50 billion from Amazon
          2. $30 billion from Nvidia
          3. $30 billion from SoftBank

          In other words, the anchor money – two-thirds of the total – came from OpenAI’s cloud-compute provider and chip supplier. This is the same style of vendor-financing that helped inflate demand during the late stages of the dot-com bubble, and also provided the catalyst that led to the bust.

          Back then, when venture capital began drying up, companies like Lucent and Nortel juiced demand by lending to dozens of privately held startups. It only delayed the day of reckoning. When those private companies began going bust, it led to massive asset impairments and an evaporation of demand that ultimately ended with Lucent and Nortel disappearing into the dustbin of financial history.

          This time, the vendor-financing is concentrated on a single, large entity: OpenAI. But the fundamental mechanics are the same: the lack of demand from venture capital investors for OpenAI shares is currently being propped up by its own suppliers. Companies like Amazon and Nvidia funnel investment capital into OpenAI, which returns that money right back into cloud computing and chip sales to the very same companies.

          But now, with hyperscalers like Amazon looking at negative free cash flow and tapping out the debt market, we see no world where these companies can continue sinking hundreds of billions of dollars into an unprofitable startup company. Even Nvidia – previously having pristine credit – is reaching the limits of using its balance sheet to prop up demand from its own customers. Nvidia now has over $500 billion of off-balance-sheet liabilities across its various backstops, investments, and purchase agreements across the AI ecosystem:

          We can see growing signs of investor concern about Nvidia’s balance sheet through the company’s credit default swaps (“CDS”) – derivative instruments that protect against debt default – which have recently spiked to record highs following a wave of new circular financing deals:

          NVIDIA's five-year CDS soars to record highs—has concern over AI-driven circular financing fully erupted?

          Given this backdrop, we see limited future availability for OpenAI to tap into circular, vendor-financed capital from Nvidia and the hyperscalers.

          But the real weak point in OpenAI’s funding spigot lies with SoftBank (SFTBY), the Japanese holding company that has become a giant, leveraged bet on the AI start up.

          In order to fund its latest $30 billion investment into OpenAI, SoftBank took out one of the world’s largest bridge loans – a $40 billion line of credit that matures in March 2027. This at a time when OpenAI was gearing up for a 2026 IPO. According to various media reports, OpenAI CEO Sam Altman was adamant that the company needed to secure at least a $1 trillion valuation for the IPO to proceed.

          But after bankers and financial advisors poured over OpenAI’s financials, they balked at the $1 trillion valuation target. Instead, they offered Altman two choices: accept a lower valuation to get the IPO out the door, or delay until 2027 and hope the business improves enough to fulfill a $1 trillion valuation. Altman chose to “hope and wait”… but hope, as they say, is not a strategy.

          And it’s already presenting problems for SoftBank, which desperately needed an IPO in order to liquidate its OpenAI stake and repay the $40 billion bridge loan maturing in March. After the IPO progress stalled, in May SoftBank sought out a $10 billion margin loan secured by its OpenAI stake. Something that would have been a routine funding arrangement in the easy-money days was suddenly met with resistance from bankers. Even after scaling down the loan size by 40% to $6 billion, the effort failed. That’s another tell that the financing window for OpenAI is closing: lenders wouldn’t extend a $6 billion margin loan against SoftBank’s stake, valued at $110 billion on the last funding round.

          Ultimately, SoftBank was only able to secure the loan by adding a sweetener: guaranteeing repayment itself so lenders would have recourse to SoftBank directly if the pledged OpenAI shares lost value. Still, the conglomerate faces a liquidity crunch without an ability to monetize its OpenAI stake.

          SoftBank’s stretched balance sheet made it a junk-rated credit even before this borrowing binge. And absent an IPO that allows it to monetize its OpenAI stake, the company could ultimately become a forced seller of OpenAI shares in the private market. This could crush OpenAI’s private market valuation, and make it all the more difficult to continue raising capital.

          Meanwhile, just as SoftBank’s bridge loan comes due in Q1 of next year, OpenAI will be running on fumes. The chart below from Bridgewater Associates projects that OpenAI will run out of cash by Q1 2027, a remarkably short timeline considering the company raised $122 billion just six months ago. And it will need to come up with over $100 billion in new funding next year just to keep the lights on:

          Thus, it’s easy to see how the entire system of leverage begins breaking down, absent an OpenAI IPO in the immediate future. But if the executive behavior inside the company is any indicator, the odds of this happening look increasingly remote. Over the past several months, OpenAI has suffered from a continuous raft of departures from key executives, including:

          • Brad Lightcap (Chief Operating Officer)
          • Denise Dresser (Chief Revenue Officer)
          • Fidji Simo (CEO of Applications)
          • Kaylin Voss (VP of Sales, Americas)
          • Kate Rouch (Chief Marketing Officer)
          • Chris Malone (Head of Data Centers)
          • Caitlin Kalinowski (Head of Robotics & Hardware)
          • Srinivas Narayanan (VP & CTO for Business Applications)
          • Kevin Weil (VP of OpenAI for Science / Former Chief Product Officer)
          • Bill Peebles (Head of Sora Video Generation Team)
          • Barret Zoph (Senior AI Researcher)
          • Johannes Heidecke (Head of Safety Systems)
          • Chloé Bakalar (Head of Ethics)
          • Joshua Achiam (Chief Futurist)

          If OpenAI had any reasonable chance of going public, these executives would be forfeiting the opportunity for generational wealth from their stock grants. The fact that we’re seeing a mass exodus is perhaps the clearest indicator that something has gone horribly wrong inside the business, and that this company will never go public.

          The bottom line: we see OpenAI as the weak link that could cause today’s AI capex boom to break apart as soon as Q1 2027. Of course, the market hasn’t come close to pricing in this scenario. Maybe the market is seeing something we’re not, or it’s simply caught up in a speculative mania that still has legs left before reality sets in.

          In either case, we’re not willing to fight the tide and become outright bearish just yet. But we are shifting to an increasingly defensive stance, and willing to forego upside at this point in the cycle given the risks we see ahead. In the future, we may begin taking outright bearish positions. And we wanted to lay out the rationale now so that we’ll be prepared to act quickly when the time comes.

          Next, we’ll show each position in the portfolio broken down by trade type.

          Portfolio Review

          The table below shows all current holdings as of the close of trading on Thursday, September 3:

          A few notes on how to read and interpret this portfolio table.

          Please pay special attention to the “Action” column, where we specify whether each trade is a “buy” or “sell to open” transaction.

          Next, the position size for each trade is equal to the current value of the position, with the exception of the cash-secured puts. In the case of the cash-secured puts, we define the position size as the total value of our future commitment to purchase 100 shares for each contract. This number is calculated as follows:

          Position size = number of contracts x 100 x put strike price

          We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade.

          For example, in the case of the WaterBridge Infrastructure (NYSE: WBI) $30 puts, the position size equals 2 x 100 x $30 = $6,000. We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade. It’s commonly referred to as the “notional value” of the trade.

          To see the current profit/loss across each open position and other details, please see the live snapshot of our tracking portfolio at the end of this update.

          We have compiled a summary overview of the latest quarterly trades released on June 22, which you can find here. Since then, we have recommended the additional trades listed below:

          1. On July 17, we recommended purchasing shares of Novo Nordisk (NYSE: NVO), which you can find here

          2. On July 21, we recommended purchasing shares of Hims & Hers Health (NYSE: HIMS), and we provided the analysis for the company on July 24, which you can find here

          As a reminder, we calculate the leverage ratio using the following formula:

          Leverage ratio = total long exposure/portfolio equity value

          We define total long exposure as the sum of all long positions, including uncovered stocks, covered stocks, cash-secured puts, and option purchases. In the current portfolio, as of Wednesday’s close, these values were as follows (note: we show each value in our portfolio table below):

          • Uncovered stocks: $76,112
          • Covered stocks: $19,921 (netting out the underlying stock value against the covered-call value)
          • Put sales: $41,500 (this “notional value” is the value of stock we’ve committed to purchasing)
          • Long options positions: $308

          Adding up all of these values gives us $137,841 of total long exposure in our current tracking portfolio. We then divide this number into our account equity of $111,659 to arrive at a 123% leverage ratio – well within our self-prescribed limit of 150%.

          If you have any questions or feedback, The Trading Club Forum is the best chance to get a quick response from our team.

          Alternatively, you can always email us at mailbag@porterandcompanyresearch.com.

          Good investing,

          Ross Hendricks
          Porter & Co.

          The post Trading Club Pro Trade Alert And Update – Week Of August 31, 2026 appeared first on Porter & Co..

          • ✇Porter & Co
          • Trade Alert And Update – Week Of August 31, 2026 Porter &#38 · Co.
            Before getting into this week’s update, we are recommending the following new covered-call trades: Sell to open one Booz Allen Hamilton (NYSE: BAH) $80 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.25 per share Sell to open one Hims & Hers Health (NYSE: HIMS) $33 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.15 per share Sell to open one Figma (NYSE: FIG) $25 call, expiring October 16, 2026, down to $1.50 per share –
             

          Trade Alert And Update – Week Of August 31, 2026

          4 September 2026 at 09:00

          Before getting into this week’s update, we are recommending the following new covered-call trades:

          1. Sell to open one Booz Allen Hamilton (NYSE: BAH) $80 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.25 per share
          2. Sell to open one Hims & Hers Health (NYSE: HIMS) $33 call, expiring October 16, 2026, down to $0.75 per share – the recent price was $1.15 per share
          3. Sell to open one Figma (NYSE: FIG) $25 call, expiring October 16, 2026, down to $1.50 per share – the recent price was $2.00 per share
          4. Sell to open one Novo Nordisk (NYSE: NVO) $47.50 call, expiring October 16, 2026, down to $1.00 per share – the recent price was $1.65 per share
          5. Sell to open two Triple Flag Precious Metals (NYSE: TFPM) $35 calls, expiring October 16, 2026, down to $1.00 per share – the recent price was $1.55 per share
          6. Sell to open one Turning Point Brands (NYSE: TPB) $85 call, expiring October 16, 2026, down to $1.00 per share – the recent price was $2.10 per share

          The value of The Trading Club tracking portfolio settled at $131,698 as of Thursday, September 3 – up 31.7% since the May 30, 2025, inception date (see the detailed portfolio snapshot below). We made no trades this week.

          In this issue, we explain the rationale behind the covered-call sale recommendations.

          Reducing Risk As AI Financing Risk Looms

          The covered-call trades we’re recommending today are not about expressing a changing view on any of the underlying stocks. Instead, the goal is to reduce overall portfolio risk, but to do so in a way that still leaves significant upside on the table.

          As a reminder, when selling covered calls, we’re making the conscious choice to surrender the upside on the underlying stock at prices above the option strike price. By foregoing that upside to the call-option buyers, we generate a guaranteed return via the immediate cash proceeds collected upon the option sale, regardless of where the stock trades from here. So we’re locking in guaranteed income, while still retaining upside potential – in this case, between 6% and 14% across the various call strikes and the underlying stock prices. Over the relatively brief six-week time period until expiration, this works out to an average annualized return in the triple digits – which, of course, is significant upside.

          The advantage of this strategy is it lets us take a more defensive stance in the portfolio, without making an outright bearish bet on the market, which to avoid losing money generally requires impeccable timing.

          And that brings us to the current dichotomy in today’s stock market. On the one hand, we’re in the midst of one of the greatest earnings booms in the history of the U.S. stock market, which is fueling upward momentum in stock prices that makes it difficult to become too bearish in the short-term. But the problem is, this earnings growth is almost entirely fueled by a capex boom focused on one single area of the economy: data-center construction for the artificial intelligence (“AI”) revolution. Capital spending on every other area of the economy aside from data centers – housing, commercial and industrial, office buildings, etc. – has fallen $120 billion since 2024.

          Every prior capex boom throughout history has ended the same way: when the money runs out. And we’re officially reaching that point, as the companies behind this capex mania are exhausting their access to cheap capital.

          Alphabet (GOOG) just posted negative free cash flow for the first time since going public in 2004. One of the most profitable ad businesses ever built, plus YouTube, Android, and a growing cloud arm – all of which used to produce mountains of cash. But now with capex doubling to nearly $45 billion in a single quarter, the company burned through $6 billion in cash for the quarter. And this trend shows no sign of reversing, with management guiding to $200 billion in capex this year, more than doubling from $91 billion last year.

          Likewise, Amazon (AMZN) burned through $8 billion in Q2 2026, a stunning reversal from the $18 billion in positive free cash flow for the same quarter last year. This trend will only accelerate as the company plans to spend $220 billion on capex this year, up from $132 billion last year.

          It’s the same story across the entire hyperscaler complex, with the group’s free cash flow flipping from hundreds of billions annually into negative territory:

          With free cash flow evaporating, America’s tech giants have become some of the world’s largest issuers of debt.

          In 2025, the group raised a record $200 billion in debt, including the off-balance sheet obligations issued through special purpose vehicles (“SPV”). That’s 4x more than any previous year in history. And in the first eight months of 2026, they’ve already blown this number out of the water with more than $300 billion in debt issuance so far:

          This flood of bond issuance is so large that it’s beginning to crowd out demand for U.S. Treasuries. The 30-year Treasury yield jumped above 5.3% to its highest level in 20 years last month, before a bond-buying intervention from U.S. Treasury Secretary Scott Bessent caused a brief respite. Still, with the volume of tech debt now reaching 70% of U.S. Treasury bond issuance, there’s every reason to expect more upward pressure on borrowing costs across both corporate and government bonds.

          The market is showing signs of stress across multiple indicators. Order books covering hyperscaler bond offerings have dropped from nearly 5x oversubscribed in early 2026 to below 2x.

          A recent report from Goldman Sachs bond trader Jeffrey Papai noted that the $75 billion of AI-related bond issuance in a single month had left the market “struggling to absorb” the supply, sending the credit spread on Goldman Sachs’ AI bond basket higher by 22 basis points in a single week. Papai also described how the market’s absorption capacity is rapidly deteriorating. It previously required over $75 billion in new issuance to feel pressure, but that number has now dropped to $25 billion as the threshold for putting the market “on the defensive.”

          Hyperscalers are now scouring the globe in search of cheaper financing. Alphabet has gone shopping across every major foreign bond market, seeking new offerings denominated in the euro, sterling, Swiss franc, yen, and Canadian dollars. Its recent $8.5 billion Canadian bond issuance was the largest Canadian bond offering in history… that was, until Amazon set a new record weeks later with a $14 billion Canadian bond sale.

          With the world’s largest, strongest balance sheets exhausting their borrowing capacity from all corners of the globe, this is a giant warning sign that capital is becoming increasingly scarce. And that’s a big problem for an economy and stock market reliant on raising endless amounts of capital to keep a capex boom humming.

          For now, the bulls have momentum on their side. And they point toward the rising backlogs and earnings outlooks from the major suppliers of today’s capex boom – like Nvidia (NVDA) and the hyperscalers – as evidence that this capex cycle is just getting started. But in reality, it’s a financial time bomb just waiting to go off. And all signs indicate that 2027 is when the detonation event occurs.

          The Catalyst: OpenAI’s Liability Wall Hits In 2027

          The stress point in the AI capex boom lies specifically with OpenAI – owner of ChatGPT – which makes up the largest source of compute commitments supporting the data center buildout.

          At this time last year, OpenAI reigned supreme over the AI revolution, with over 70% market share and growing at triple digit rates. On the back of that momentum, between June and December of 2025, OpenAI engaged in the most aggressive debt origination spree in the history of capitalism. The climax occurred over a three-week frenzy in October 2025, when OpenAI signed over half a trillion of future purchase agreements with Oracle (ORCL), Nvidia (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVGO).

          In total, this single company has accumulated $750 billion in purchase agreements for data-center capacity and chip sales through 2030. And next year, it begins climbing the steepest part of this contract obligation wall, with $132 billion in bills coming due.

          Now here’s the thing: OpenAI’s financials are already a trainwreck before this mountain of additional liabilities hits. In 2025, the company generated $21 billion in losses on $13 billion in revenue, meaning the business lost $2 for every $1 in revenue. And these losses have only accelerated in 2026.

          From Q1 to Q2 of this year, OpenAI’s revenue increased by $1 billion from $5.7 billion to $6.7 billion. Over the same period, its losses grew by $3 billion from $9.3 billion to $12.3 billion. The company generated an incremental $3 in losses for every $1 of revenue growth.

          In other words, OpenAI loses money on every sale and is trying to make it up in volume. Its own internal financial projections don’t even show the company reaching positive free cash flow until 2030.

          But as bad as the Q2 financial results were, this was before the biggest blow yet: a flood of competition from lower-cost, open-source Chinese AI models hit the market.

          Early on in the AI revolution, OpenAI’s ChatGPT and Anthropic’s Claude enjoyed a wide gap in performance against all other AI models. But more recently, open-source AI models from China have closed the performance gap with their U.S. counterparts:

          Here’s the kicker: these Chinese models have closed this intelligence gap while consuming much less computing power than their U.S. counterparts. As a result, they now offer the same basic AI functionality at a small fraction of the cost, which has crushed pricing across the industry.

          The key metric for monitoring the pricing power among the sellers of AI services is the price per million tokens, where a token is the basic unit of text that a language model processes, generates, and is measured by. After reaching a peak of just over $2 per million tokens in June, prices have collapsed to below $1 per million tokens given the rise of fierce competition from low-cost Chinese AI models:

          OpenAI has responded by slashing prices in order to stoke demand, including an 80% price reduction for one of its latest models, GPT-5.6 Luna.

          History is littered with the ashes of western companies that entered into price wars with China on commoditized products. Steel, rare earth metals, solar panels, electric-vehicle batteries… and now, the same is happening with AI.

          This presents an existential risk for OpenAI, and by extension, America’s AI infrastructure boom.

          OpenAI needs to raise $750 billion by 2030 just to avoid defaulting on its signed-compute and chip-purchase agreements, not to mention hundreds of billions more to cover overhead.

          Our bet is simple: that won’t happen. OpenAI will need a financial miracle just to survive through 2027.

          Here again, the fundamental problem is that the cheap capital fueling the AI bubble is running out. And OpenAI is among the most vulnerable companies in this new era of scarce capital.

          The biggest tell that OpenAI’s funding window is closing came from the company’s latest capital raise in Q1 of this year. On the surface, it looked like a smashing success: the company pulled off the single largest private capital raise of all time – bringing in $122 billion at an $852 billion valuation. But the real story was in who actually wrote the checks.

          Traditional venture capital investors provided only $12 billion, or about 10% of the $122 billion raise. The remaining $110 billion came from the following entities:

          1. $50 billion from Amazon
          2. $30 billion from Nvidia
          3. $30 billion from SoftBank

          In other words, the anchor money – two-thirds of the total – came from OpenAI’s cloud-compute provider and chip supplier. This is the same style of vendor-financing that helped inflate demand during the late stages of the dot-com bubble, and also provided the catalyst that led to the bust.

          Back then, when venture capital began drying up, companies like Lucent and Nortel juiced demand by lending to dozens of privately held startups. It only delayed the day of reckoning. When those private companies began going bust, it led to massive asset impairments and an evaporation of demand that ultimately ended with Lucent and Nortel disappearing into the dustbin of financial history.

          This time, the vendor-financing is concentrated on a single, large entity: OpenAI. But the fundamental mechanics are the same: the lack of demand from venture capital investors for OpenAI shares is currently being propped up by its own suppliers. Companies like Amazon and Nvidia funnel investment capital into OpenAI, which returns that money right back into cloud computing and chip sales to the very same companies.

          But now, with hyperscalers like Amazon looking at negative free cash flow and tapping out the debt market, we see no world where these companies can continue sinking hundreds of billions of dollars into an unprofitable startup company. Even Nvidia – previously having pristine credit – is reaching the limits of using its balance sheet to prop up demand from its own customers. Nvidia now has over $500 billion of off-balance-sheet liabilities across its various backstops, investments, and purchase agreements across the AI ecosystem:

          We can see growing signs of investor concern about Nvidia’s balance sheet through the company’s credit default swaps (“CDS”) – derivative instruments that protect against debt default – which have recently spiked to record highs following a wave of new circular financing deals:

          NVIDIA's five-year CDS soars to record highs—has concern over AI-driven circular financing fully erupted?

          Given this backdrop, we see limited future availability for OpenAI to tap into circular, vendor-financed capital from Nvidia and the hyperscalers.

          But the real weak point in OpenAI’s funding spigot lies with SoftBank (SFTBY), the Japanese holding company that has become a giant, leveraged bet on the AI start up.

          In order to fund its latest $30 billion investment into OpenAI, SoftBank took out one of the world’s largest bridge loans – a $40 billion line of credit that matures in March 2027. This at a time when OpenAI was gearing up for a 2026 IPO. According to various media reports, OpenAI CEO Sam Altman was adamant that the company needed to secure at least a $1 trillion valuation for the IPO to proceed.

          But after bankers and financial advisors poured over OpenAI’s financials, they balked at the $1 trillion valuation target. Instead, they offered Altman two choices: accept a lower valuation to get the IPO out the door, or delay until 2027 and hope the business improves enough to fulfill a $1 trillion valuation. Altman chose to “hope and wait”… but hope, as they say, is not a strategy.

          And it’s already presenting problems for SoftBank, which desperately needed an IPO in order to liquidate its OpenAI stake and repay the $40 billion bridge loan maturing in March. After the IPO progress stalled, in May SoftBank sought out a $10 billion margin loan secured by its OpenAI stake. Something that would have been a routine funding arrangement in the easy-money days was suddenly met with resistance from bankers. Even after scaling down the loan size by 40% to $6 billion, the effort failed. That’s another tell that the financing window for OpenAI is closing: lenders wouldn’t extend a $6 billion margin loan against SoftBank’s stake, valued at $110 billion on the last funding round.

          Ultimately, SoftBank was only able to secure the loan by adding a sweetener: guaranteeing repayment itself so lenders would have recourse to SoftBank directly if the pledged OpenAI shares lost value. Still, the conglomerate faces a liquidity crunch without an ability to monetize its OpenAI stake.

          SoftBank’s stretched balance sheet made it a junk-rated credit even before this borrowing binge. And absent an IPO that allows it to monetize its OpenAI stake, the company could ultimately become a forced seller of OpenAI shares in the private market. This could crush OpenAI’s private market valuation, and make it all the more difficult to continue raising capital.

          Meanwhile, just as SoftBank’s bridge loan comes due in Q1 of next year, OpenAI will be running on fumes. The chart below from Bridgewater Associates projects that OpenAI will run out of cash by Q1 2027, a remarkably short timeline considering the company raised $122 billion just six months ago. And it will need to come up with over $100 billion in new funding next year just to keep the lights on:

          Thus, it’s easy to see how the entire system of leverage begins breaking down, absent an OpenAI IPO in the immediate future. But if the executive behavior inside the company is any indicator, the odds of this happening look increasingly remote. Over the past several months, OpenAI has suffered from a continuous raft of departures from key executives, including:

          • Brad Lightcap (Chief Operating Officer)
          • Denise Dresser (Chief Revenue Officer)
          • Fidji Simo (CEO of Applications)
          • Kaylin Voss (VP of Sales, Americas)
          • Kate Rouch (Chief Marketing Officer)
          • Chris Malone (Head of Data Centers)
          • Caitlin Kalinowski (Head of Robotics & Hardware)
          • Srinivas Narayanan (VP & CTO for Business Applications)
          • Kevin Weil (VP of OpenAI for Science / Former Chief Product Officer)
          • Bill Peebles (Head of Sora Video Generation Team)
          • Barret Zoph (Senior AI Researcher)
          • Johannes Heidecke (Head of Safety Systems)
          • Chloé Bakalar (Head of Ethics)
          • Joshua Achiam (Chief Futurist)

          If OpenAI had any reasonable chance of going public, these executives would be forfeiting the opportunity for generational wealth from their stock grants. The fact that we’re seeing a mass exodus is perhaps the clearest indicator that something has gone horribly wrong inside the business, and that this company will never go public.

          The bottom line: we see OpenAI as the weak link that could cause today’s AI capex boom to break apart as soon as Q1 2027. Of course, the market hasn’t come close to pricing in this scenario. Maybe the market is seeing something we’re not, or it’s simply caught up in a speculative mania that still has legs left before reality sets in.

          In either case, we’re not willing to fight the tide and become outright bearish just yet. But we are shifting to an increasingly defensive stance, and willing to forego upside at this point in the cycle given the risks we see ahead. In the future, we may begin taking outright bearish positions. And we wanted to lay out the rationale now so that we’ll be prepared to act quickly when the time comes.

          Next, we’ll show each position in the portfolio broken down by trade type.

          Portfolio Review

          The table below shows all current holdings as of the close of trading on Thursday, September 3:

          A few notes on how to read and interpret this portfolio table.

          Please pay special attention to the “Action” column, where we specify whether each trade is a “buy” or “sell to open” transaction.

          Next, the position size for each trade is equal to the current value of the position, with the exception of the cash-secured puts. In the case of the cash-secured puts, we define the position size as the total value of our future commitment to purchase 100 shares for each contract. This number is calculated as follows:

          Position size = number of contracts x 100 x put strike price

          We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade.

          For example, in the case of the Celsius Holdings (Nasdaq: CELH) $30 puts, the position size equals 2 x 100 x $30 = $6,000. We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade.

          To see the current profit/loss across each open position and other details, please see the live snapshot of our tracking portfolio at the end of this update.

          We have compiled a summary overview of the latest quarterly trades released on June 22, which you can find here. Since then, we have recommended the additional trades listed below:

          1. On July 17, we recommended purchasing shares of Novo Nordisk (NYSE: NVO), which you can find here
          2. On July 21, we recommended purchasing shares of Hims & Hers Health (NYSE: HIMS), and we provided the analysis for the company on July 24, which you can find here

          If you have any questions or feedback, The Trading Club Forum is the best chance to get a quick response from our team.

          Alternatively, you can always email us at mailbag@porterandcompanyresearch.com.

          Good investing,

          Ross Hendricks
          Porter & Co.


          The post Trade Alert And Update – Week Of August 31, 2026 appeared first on Porter & Co..

          • ✇Porter & Co
          • The Perpetual Money Machine Porter &#38 · Co.
            To get a copy of this special report, just click the image on the left or click the button below that says “Download.” Then, the special report will be put on your computer into a folder called “Download.” The Perpetual Money MachineDownload The post The Perpetual Money Machine appeared first on Porter & Co..
             

          The Perpetual Money Machine

          3 September 2026 at 13:24

          To get a copy of this special report, just click the image on the left or click the button below that says “Download.” Then, the special report will be put on your computer into a folder called “Download.”

          The post The Perpetual Money Machine appeared first on Porter & Co..

          • ✇Porter & Co
          • The Most Famous Gold Chart This Year Porter &#38 · Co.
            Issue#152, Volume#3Follow The Cash – It’s Called Checkbook QE Inside Today’s Issue Essay: The Most Famous Gold Chart This Year The Crowd-Out Of Data-Center Spending Another Nvidia Circular Funding Deal AI Has Not Yet Reduced Inflation Chart Of The Day… Gold Today’s Mailbag Editor’s note: Today, Porter turns the Journal over to his friend Marin Katusa, of Katusa’s Resource Opportunities – who shares the latest opportunities related to gold. The Fed didn’t print a dollar, and gold had its be
             

          The Most Famous Gold Chart This Year

          3 September 2026 at 13:01

          Issue#152, Volume#3

          Follow The Cash – It’s Called Checkbook QE

          Editor’s note: Today, Porter turns the Journal over to his friend Marin Katusa, of Katusa’s Resource Opportunities – who shares the latest opportunities related to gold.


          The Fed didn’t print a dollar, and gold had its best month in 27 years.

          The Federal Reserve’s balance sheet didn’t move an inch this month, and gold still had its best month since 1999.

          If that sounds backwards, you’ve been watching the wrong building.

          On August 19, the U.S. Treasury announced it would double its buybacks of long-dated government debt, from $2 billion an operation to at least $4 billion. Treasury Secretary Scott Bessent calls it a “Treasury Twist.”

          Then on Monday, August 24, two senior Treasury officials told CNBC where the money could come from: the government’s own checking account at the Fed. Bessent has built it to roughly $950 billion. The last Treasury ran it at $550 billion to $600 billion.

          Follow the cash…

          The Treasury buys long bonds from the banks, its balance at the Fed goes down, and the banks’ reserves go up by the same amount. Money that sat frozen in a government account starts moving, and the Fed’s balance sheet never does.

          Nobody has to call it quantitative easing (“QE”), so I’ll call it what it is: Checkbook QE.

          It’s the same liquidity, in a different building, with no press conference.

          Why The Treasury Is Doing The Fed’s Job

          Because the Fed won’t do it. Federal Reserve Chair Kevin Warsh took the helm wanting a smaller central bank, and futures give better than one-in-three odds his Fed hikes this month.

          Meanwhile, the 30-year yield hit its highest since 2007 this month and federal debt crossed $40 trillion. Somebody has to be the buyer of last resort for the long bond. The Fed declined. The Treasury volunteered, and told you where it keeps the money.

          Gold answered inside a week.

          Bullion started August near $4,000 an ounce and traded above $4,700 to end the month, up about 14% on the month. The last time it moved that fast was September 1999, when 15 European central banks agreed to sell less gold. This time a government showed you its checkbook.

          The Most Famous Chart In The Gold Market

          Gold is a great way to be right about Checkbook QE. It’s a slow way to get paid for it.

          M2 hit a record $23.2 trillion this summer. Hold gold at the ratio to the money supply it reached in 1980, and the price lands near $10,000 an ounce.

          Now run the same arithmetic on a miner. The big producers pull an ounce out of the ground for roughly $1,600 all-in, so at $4,000-an-ounce gold, they clear $2,400 an ounce, and at $4,700 they clear $3,100. The metal moved 17%. The margin moved 29%.

          At $10,000, the number is on the chart below, because if I say it out loud you’ll think I’m selling something.

          I am. Just not that.

          Ten Years Of Doing This

          My flagship service, Katusa’s Resource Opportunities, turns 10 this year.

          I started it to show readers the names I own, the price I paid, and why, and to bring them into the private financings I write my own check into first, at the same price and terms.

          • That’s how a $0.90 unit in Artemis Gold’s 2019 financing became a $45 stock.

          The losers are in the letter next to the winners, with what I got wrong.

          The correction left a list of gold producers priced at margins I haven’t seen in my career.

          Some have repriced. Most haven’t.

          The three I’d own first are in a report every new member gets on day one.

          For the anniversary, for 10 days, I’ve reopened the price our charter members paid the day we launched: $1,499 instead of $3,500, with a full refund inside 30 days if it isn’t for you.

          I’ve never reopened that price in 10 years and I won’t again.

          Claim the charter price: $1,499 instead of $3,500.

          The Treasury has $950 billion and just told the market it’s willing to use it. Gold had its best month since 1999 on the announcement alone. The spending hasn’t started.

          Join Katusa’s Resource Opportunities at the 10-year charter price

          Marin Katusa

          Keep in mind, we at Porter & Co. only publish guest essays from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Katusa’s Resource Opportunities is one such partner. We do not, however, under any circumstances, make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

          Tell us what you think of today’s Daily Journal: porterstansberrydirect@gmail.com

          Presented By: Katusa Research 

          An Important Personal Invitation From Marin Something I’ve Never Done in 10 Years — And Will Never Do Again…

          Marin Katusa is different from the people who just send you stock tips.

          He doesn’t only talk about mines and projects.

          He finances them.

          He’s in the room when the deal is struck, often with millions of his own dollars committed, at the very same price his readers get.

          When he tells you to buy something, his money is already in it.

          And right now, you can join his research service for the lowest price in a decade.

          Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Katusa Research is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

          3 Things To Know Before We Go…

          1. The AI economy is eating the real economy’s lunch. New Commerce Department data shows that spending on data-center construction dwarfs that on all other private construction. Since December 2023, data-center construction spending is up roughly $45 billion, while everything else – housing, retail, warehouses, manufacturing plants – is down $120 billion and declining. The private economy is being crowded out of capital, labor, and power by one single sector.

          2. The latest circular financing deal. Nvidia (NVDA) and Anthropic have signed a $35 billion cloud-compute deal with Nvidia-backed cloud provider Lambda. In this deal, Lambda will buy the much-in-demand GPU processing chips from Nvidia and then rent them to AI platform Anthropic through a data center site that Nvidia holds the lease on. Yes, that’s right, Nvidia performs three roles in this deal: underwriting the data center, providing equity-backing for the cloud tenant, and supplying the silicon that generates the rental revenue flowing back through the chain. It’s the latest example of the vendor-financing boost Nvidia is providing to stoke demand throughout the AI ecosystem.

          3. Erasing six years of falling software prices. The PCE Price Index for computer software and accessories – a measure inside the Fed’s preferred inflation gauge – has risen at a 39% annualized rate year to date, wiping out roughly six years of decline in just eight months. The broader information processing category – which covers computers, tablets, accessories, and software – rose 15.5% over the past year, and 1.4% in July alone. We’ve been told that AI will push prices down, but we aren’t seeing it yet.


          Chart Of The Day… Gold

          The declining dollar and a turbulent U.S. Treasury market have sent global investors and central banks back to where they feel safe… gold is up 12% over the last month.


          Mailbag

          In yesterday’s Journal, Porter explained the history of oil-tanker pricing to provide insight into the recent surge in shipping costs.

          “Better Reader Than Investor”

          Mike J. writes:

          Really enjoyed your story today, thank you. I owned 2,000 shares of Frontline (FRO) from 2000 to 2009 (approx.). When Jon Frederickson publicly stated the tanker market was going to collapse, soon, around 2009, I didn’t act. My 2,000 shares quickly became 200 with a 10-1 split. I had accumulated just enough dividends over that nine-year period so I was even. I never sold.

          I also remember you pounding your fist during that same period that Microsoft (MSFT) had over $1 billion in cash, and the stock was a steal at $21 per share. I didn’t act on that, either.

          I’m a better reader than I am an investor, so I’ve got that going for me. You’re an excellent writer.

          Thanks again.


          “I’m Older Than You”

          Dom B. writes:

          Porter, A good wake-up call and some perspective. I’m older than you and recall these events well. A word to the wise. Thanks.


          “And One More”

          Jim H. writes:

          You left out NAT, Nordic American Tankers, with the largest fleet of suezmax tankers. They too will post huge profits this quarter.


          Porter & Co. Market Snapshot

          Price Yesterday’s Return Year-to-Date Return
          S&P 500 Index $7,666.60 0.46% 12.8%
          Gold per ounce $4,381.68 1.22% 3.7%
          Bitcoin $77,394 -0.03% -10.4%
          Oil (West Texas Intermediate) per barrel $91.01 0.40% 59.7%
          Berkshire Hathaway (BRK) $758,500.00 0.85% 0.5%
          Porter’s Permanent Portfolio – 0.33% 3.6%
          The Better Than Berkshire Index – 0.09% 7.8%
          Total Return Annual Return
          Porter & Co’s Top Ranked* 35.9% 16.5%
          Yield Yesterday’s Change Change
          Year-to-Date
          U.S Treasury 30-Year Yield 5.26% -2 bps 41 bps
          Prices as of 4:00 pm ET September 2, 2026 | bps = basis points (or 0.01%)
          *A Complete Investor risk rating of 1 is defined as a “low risk, high allocation” security, while positions rated closer to a 5 are higher risk. Porter & Co.’s top-ranked positions include those rated either 1 or 2 in Complete Investor portfolio.


          Porter & Co. Top Positions

          Publication Ticker Description Total Return
          Biotechnology QURE uniQure 237%
          Biotechnology SGMT Sagimet Biosciences 204%
          Complete Investor BTC/USD Bitcoin 186%
          Complete Investor BWXT BWX Technologies 175%
          Biotechnology NUVB Nuvation Bio 173%
          Biotechnology TGTX TG Therapeutics 160%
          Biotechnology ROIV Roivant Sciences 151%
          Complete Investor PM Philip Morris 134%
          Biotechnology QURE uniQure 131%
          Complete Investor SKWD Skyward Specialty Insurance 128%
          Prices as of 4:00 pm ET September 2, 2026

          Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here| New Window. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

          The post The Most Famous Gold Chart This Year appeared first on Porter & Co..

          • ✇Porter & Co
          • How’s A 30% Annual Dividend Sound? Porter &#38 · Co.
            Issue#151, Volume#3There’s Big Money In Boats Right Now – But Careful, It Won’t Last Inside Today’s Issue Essay: How’s A 30% Annual Dividend Sound? Tax Money Keeps Rolling In… And Out Money Supply Grows Bigger And Bigger Tech Goes From Cap-Light To Cap-Heavy Chart Of The Day… Deere & Co. Today’s Mailbag It’s like trying to drive a car at night without any lights… Many years ago, one of my mentors was explaining the real purpose of prices. Prices convey information across a complex ec
             

          How’s A 30% Annual Dividend Sound?

          2 September 2026 at 13:05

          Issue#151, Volume#3

          There’s Big Money In Boats Right Now – But Careful, It Won’t Last


          It’s like trying to drive a car at night without any lights…

          Many years ago, one of my mentors was explaining the real purpose of prices. Prices convey information across a complex economy. But when the money is “broken” – when it’s constantly inflated by the Federal Reserve – that information in those price signals is corrupted. The feedback mechanism breaks down. As a result, it’s like trying to drive a car at night without any lights – accidents are bound to happen.

          We’re about to see an enormous accident in global tankers. But you’d never know it…

          The shipping tanker market is gushing more cash than I’ve ever seen before. By the time the 3Q dividends land, the six largest tanker companies will have paid out over $3 billion in cash to shareholders this year. The indicated annual yields on some of these stocks is over 30%.

          Should you grab some of this historical cash windfall…? Maybe – but only if you know when the music is going to stop.

          How To Bet On The Boats

          Tankers are the most cyclical, mega-capital industry in the world. Tankers’ depreciation schedules make data centers look like a safe long-term investment! A supertanker costs well over $100 million, takes two to three years to build, starts rusting the day it launches, and always dies young – it’s typically scrapped after two decades.

          Why would anyone want to be in this business? Because the world cannot function without these ships. Roughly a third of the oil consumed on Earth reaches its refinery by ship.

          The cost of the shipping is a tiny fraction of the value of the cargo. So when shipping gets disrupted or when demand for imported oil grows suddenly, there will be enormous increases to shipping rates because demand doesn’t change. A refinery that cannot get crude stocks has to shut down. Shut-in costs more than any freight bill, so refiners bid against each other for the last available vessel. The daily rate to hire very large crude carriers (“VLCC”) does not rise 20% or 40% in a tight market. It increases 500% or 1,000% – usually within days.

          Prices can remain elevated for years because it takes a lot of time to build more ships and because ships are rusting out of the fleet all the time. The gap between when a shortage emerges and the delivery of a new fleet is “the window” – it comes along once every decade or so. And truly immense amounts of money can be made. But you must know when it’s time to leave the party.

          I’ve written previously that the current market cycle reminds me of the 1973-1974 bear market. Energy prices spiked because of a war in the Middle East. U.S. politics were coming unraveled because of Watergate. And stocks were coming off huge highs in 1972, as the Nifty-Fifty – a group of high-quality stocks – were trading at higher multiples than anyone had ever seen before.

          That market also featured a huge tanker cycle – almost exactly like the one we see today.

          Leasing rates on the largest tankers quadrupled between May and September of 1973. Egypt and Syria attacked Israel on October 6 of that year. The Arab oil producers cut supply and embargoed shipments to the United States. The rush to find crude anywhere in the world and to ship it to America was on. The freight market went vertical.

          Then it broke.

          On October 24, spot rates for large tankers fell 75% in only three days. By November they were down 90%. Why did rates collapse so fast and so completely? The embargo cut the volume of oil so completely that there was nothing left to carry.

          But the oil supply crash wasn’t the real disaster. The disaster was what happened next.

          By January 1, 1974, the world’s shipyards had orders for 193 million tons of new tanker capacity – 90% of the entire existing fleet. In other words, the fleet owners ordered themselves an entire second fleet. The new ships came. And kept coming. World tanker capacity – the supply – went from 440 million tons in 1973 to 494 million in 1974, 544 million in 1975, and 633 million by 1978, while the demand didn’t grow at all.

          By Q2 1976, almost 20% of the entire world tanker fleet was moored and out of service. But idling a ship is not free: keeping a supertanker anchored costs as much as $75,000 a month. Plus, it costs roughly $700,000 to prepare it and secure a berth.

          By February 1979, the rate index for the largest tankers had fallen to a level roughly 95% below the 1973 peak. In April 1983, a full 10 years after the peak, the world had 310 million tons of tanker capacity available but it still only needed 137 million. There was a surplus of 173 million tons, meaning more idle oil-carrying capacity than the entire industry could employ!

          It Happened Again In 2008

          I wasn’t in the markets during the 1970s, but I watched the same cycle happen again in the mid-2000s.

          As China’s economy boomed following its entry into the World Trade Organization (“WTO”), demand for crude carriers surged amidst a broad commodities mania. Oil surged from $30 to $147.50 a barrel by July 11, 2008. Demand for tankers followed crude higher. Rates for the largest tankers averaged $53,000 a day in January of 2008 and peaked above $169,000 a day by July.

          What happened next? Global tanker building contracts, which had been running $30 billion a year, jumped to $91 billion in 2004, $104 billion in 2005, and $135 billion in 2006. The price of a new supertanker went from $63.5 million in 2002 to $129 million by the end of 2006. But owners kept ordering. By January 2007, Clarkson’s (the world’s largest shipbroker) put the global orderbook at 300 million tons – roughly 31% of the existing fleet.

          The bust took five years to work through. And not everyone survived. Overseas Shipholding Group, then the largest American tanker operator, filed for bankruptcy in November 2012 with $4.15 billion of assets against $2.67 billion of debt.

          Today, we’re sitting in “the window” – supplies for tankers are super tight. Leasing rates have soared. And a whole new fleet is on order. The clock is ticking… but how long will “the window” stay open?

          With the war in Iran this spring, the Strait of Hormuz was effectively closed. That left a huge number of tankers stranded in the Persian Gulf. Rates for the largest tankers touched $436,000 a day. Traffic has been resuming gradually, though ships are still sitting idle around the strait waiting to move. Every ship stuck at anchor is a ship not competing for cargo. Veson Nautical (whose software handles booking and payment for the fleet) does not expect full normalization before the end of this year.

          The other factor pushing leasing rates higher isn’t transitory. Oil production keeps rising in the United States, Guyana, Brazil, and Argentina while consumption growth is highest in Asia. A barrel shipped from Guyana to China occupies a vessel far longer than a barrel shipped from the Persian Gulf to Japan. The industry counts demand in ton-miles. The longer the voyage, the higher the transportation cost, and the more demand for ships grows.

          Finally, there is the age of the fleet. Nearly half the world’s tanker capacity is more than 15 years old. Roughly 130 supertankers aged 20 or more are still trading today against fewer than 20 of them five years ago. Old ships sail slower, sit longer in port, and carry less.

          But… the new ships are coming. Through the end of July, fleet owners contracted 96.4 million tons of new tankers, against a previous annual record of 81.3 million tons set in 2006. This year’s new ship contracting will surpass 100 million tons. So far, shipping companies have ordered 197 supertankers and 103 Suezmaxes (the largest ships that can transit the Suez Canal), records in both classes.

          But they aren’t on the market – yet. In a “normal” year, something around 40 supertankers are delivered. But only one supertanker was delivered in 2024. And only five in 2025. Owners only scrapped 2.16 million tons in 2026. The order book delivers in 2027 and 2028.

          Until the new boats come online, there’s a lot of money to be made in shipping.

          Frontline (FRO) earned $659.2 million in Q2, $2.96 a share, on revenue of $943.3 million. Its supertankers earned $152,700 a day against the $23,800 a day Frontline needs to cover cash costs. It declared a $2.61 a share dividend, which is 100% of adjusted profit, and an annualized yield of 23.6%.

          International Seaways (INSW) earned $294.9 million in adjusted profit, $5.91 a share, and generated $261 million of free cash flow, a company record by roughly $100 million. Its fleet averaged $79,000 a day against $27,500 a year earlier, its supertankers cleared $150,000. The board declared $5.05 a share on August 7. That’s 20.2% annualized.

          DHT Holdings (DHT) earned $198.3 million, $1.23 a share, with its spot vessels earning $162,600 a day against cash costs of $22,600. DHT made more money in the first half of 2026, $362.9 million, than in any full year in its history. It declared a quarterly of $1.22, which is 100% of ordinary profit and annualizes to 24.8%.

          Okeanis Eco Tankers (ECO) earned $230.3 million against $26.9 million a year earlier. It paid $5.25 a share on August 21, which annualizes to 30.9%.

          So… the question is… how long will “the window” remain open?

          We can see the next two quarters clearly, because the ships are already booked.

          • Frontline has 86% of its Q3 supertanker days fixed at $156,900 a day, above the $152,700 it just earned, and 79% of Suezmax days at $117,400 against $111,500
          • DHT has 1,020 days chartered out at $75,900 and 58% of its spot days booked at $152,700
          • International Seaways has 48% of its days at $61,000 blended across crude and refined product against cash costs running between $14,500 and $25,700, those bookings pay the dividends through the end of the year

          How much longer can it run after that…? Maybe another one or two quarters, with risk growing substantially after June of next year.

          What will the crash look like?

          The tanker orderbook today stands just over 31% of the fleet, where in January 1974 it stood above 90%. Owners cannot flood this market the way their grandfathers did. And the fleet is old. There are a lot of boats that need to be replaced.

          But investors should remember: After the last boom in 2008, Frontline’s dividend went from $3.00 to $0.02 in 11 quarters.

          Tell me what you think of today’s Daily Journal: porterstansberrydirect@gmail.com

          Good investing,

          Porter Stansberry
          Stevenson, Maryland

          Presented By: TradeSmith

          cbttninethtradingfour.png

          What Happens on the 9th Trading Day?

          Coming up on the 9th trading day of this month, you buy five specific blue-chip stocks. Then you could potentially watch your money grow like clockwork — all without using leverage or options. Click here to see why just five stocks, and why this one day each month is the only day that really matters.

          Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. TradeSmith is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.


          3 Things To Know Before We Go…

          1. Federal tax revenue keeps rising, but spending is rising faster. The U.S. Treasury collected a record $5.23 trillion in fiscal 2025, up 6.4% from the prior year. Yet it spent $7.01 trillion, leaving a $1.78 trillion deficit. Through the first 10 months of fiscal 2026, revenue is up $139 billion, or 3%, while outlays are up $309 billion, or 5%. Taxes aren’t the problem… spending is.

          2. Money supply keeps climbing. Global money supply reached a new high of $150 trillion in June, up $10.7 trillion (8%) over the past year. Since the COVID-19 outbreak in 2020, global money supply has expanded by $50 trillion, driving consumer prices and interest rates higher with it. With no end in sight to the monetary expansion from global central banks, inflation and interest rates will likely remain stuck in a “higher for longer” regime for the foreseeable future.

          3. Big Tech is now more capital-intensive than mining. Alphabet’s (GOOG) capital spending reached $44.9 billion last quarter versus $39.1 billion of cash generated by operations – 115% – producing its first negative free cash flow since its 2004 IPO. Meta (META) spent 98% of its operating cash. Amazon (AMZN) also spent more than it generated in cash over the past year. Meanwhile, the largest gold and silver miners spend less than 50% of operating cash on capex. The AI buildout has turned the most capital efficient businesses in history into mining companies with worse assets. At least a gold deposit produces for decades. A rack of AI chips is written off in five years.


          Chart Of The Day… Deere & Co. (DE)

          Strong demand for its agricultural and manufacturing equipment has sent shares of Deere & Co. considerably higher over the last month – up 18% in August and 71% since we recommended them to Complete Investor subscribers.


          Mailbag

          Yesterday, Tuttle Capital CEO Matt Tuttle explained to Journal readers the logic behind the Porter & Company Porter Portfolio Index ETF (PCPP), based on Porter’s Permanent Portfolio.

          “Don’t Play FOMO”

          Linda T. writes:

          I totally agree with Porter and Tuttle. Playing FOMO does not work for investors with a longer-term view. CNBC’s Jim Cramer is just a “quacker” quack, quack, for audience clicks. Thanks for the good information.


          “How Long Can It Be Maintained?”

          Tony G. writes:

          I think PCPP is an awesome concept and hope that it gets the traction it deserves. The risk is identified within the article itself though – being early, and even right, is not necessarily a recipe for success. The anti-Cramer fund shut down after a year…How long is something maintained if it’s not making money?

          Best wishes for all your endeavours!


          Porter & Co. Market Snapshot

          Price Yesterday’s Return Year-to-Date Return
          S&P 500 Index $7,631.47 -0.71% 12.3%
          Gold per ounce $4,328.82 -2.41% 0.3%
          Bitcoin $77,414 -1.83% -12.4%
          Oil (West Texas Intermediate) per barrel $90.22 4.53% 55.7%
          Berkshire Hathaway (BRK) $752,091 -0.60% -0.4%
          Porter’s Permanent Portfolio – -0.73% 3.2%
          The Better Than Berkshire Index – -0.76% 7.7%
          Total Return Annual Return
          Porter & Co’s Top Ranked* 35.3% 16.2%
          Yield Yesterday’s Change Change
          Year-to-Date
          U.S Treasury 30-Year Yield 5.27% 3 bps 43 bps
          Prices as of 4:00 pm ET September 1, 2026 | bps = basis points (or 0.01%)
          *A Complete Investor risk rating of 1 is defined as a “low risk, high allocation” security, while positions rated closer to a 5 are higher risk. Porter & Co.’s top-ranked positions include those rated either 1 or 2 in Complete Investor portfolio.


          Porter & Co. Top Positions

          Publication Ticker Description Total Return
          Biotechnology QURE uniQure 237%
          Biotechnology SGMT Sagimet Biosciences 195%
          Complete Investor BTC/USD Bitcoin 187%
          Complete Investor BWXT BWX Technologies 185%
          Biotechnology NUVB Nuvation Bio 161%
          Biotechnology TGTX TG Therapeutics 158%
          Biotechnology ROIV Roivant Sciences 153%
          Complete Investor PM Philip Morris 133%
          Complete Investor SKWD Skyward Specialty Insurance 133%
          Biotechnology QURE uniQure 131%
          Prices as of 4:00 pm ET September 1, 2026

          Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here| New Window. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

          The post How’s A 30% Annual Dividend Sound? appeared first on Porter & Co..

          • ✇Porter & Co
          • The Long-Legged Leader Of Biotech Porter &#38 · Co.
            This Is Why We Love Big Pharma Porter & Co. High Conviction does not follow a regular schedule. We only publish it when we believe the recommendation is so certain to be a long-term winner that we’d be prepared to invest 100% of our capital into it. To be clear, a high-conviction opportunity isn’t necessarily about how much a share price might appreciate – but rather, the probability that a share price will rise steadily over time. Sometimes, these situations may only result in a modest aver
             

          The Long-Legged Leader Of Biotech

          2 September 2026 at 07:03

          This Is Why We Love Big Pharma

          Porter & Co. High Conviction does not follow a regular schedule. We only publish it when we believe the recommendation is so certain to be a long-term winner that we’d be prepared to invest 100% of our capital into it.

          To be clear, a high-conviction opportunity isn’t necessarily about how much a share price might appreciate – but rather, the probability that a share price will rise steadily over time. Sometimes, these situations may only result in a modest average annual gain… but it comes with far less risk than your average investment.

          That’s the opportunity we’re presenting in this issue, with one of the pharmaceutical world’s most well-known and established brands. The company was founded in 1758. But over the last few years, the company has emerged as a Big Pharma leader while at the same time becoming an exciting growth story in the biotech world.


          Talk about a Lindy business – which Porter describes as a company with excellent economics and long track records in the marketplace, of at least 20 years… This biotech firm has been at it for 268 years. And it continues to crush it.

          Novartis (NYSE: NVS) traces its roots to a Basel, Switzerland, dye-works founded in 1758. The $300 billion market-cap company now sells medicines in around 80 countries, earned a 41.2% operating margin on $14.4 billion of sales in the most recent quarter, and converted $5.6 billion of that quarter’s revenue into cash. It paid shareholders a remarkable $7.8 billion in dividends last year.

          Novartis has produced a first-in-class medicine in nearly every modern modality.

          • Approved in 2001, Gleevec was the first drug designed to jam the single enzyme that drives chronic myeloid leukemia
          • Approved in 2017, Kymriah was the first approved therapy that reprograms a patient’s own immune cells to hunt cancer
          • Approved in 2017, Zolgensma delivers a working gene inside a virus to infants born without it
          • Approved in 2018, Lutathera (and later Pluvicto) attach radiation to molecules that seek out tumors
          • Approved in 2026, Fabhalta slows kidney function decline in IgA nephropathy, blocks part of the immune system’s complement cascade with a twice-daily capsule

          The management still guides to 5% to 6% sales growth a year through 2030 because innovation in the pharma industry continues to produce new, higher-quality, patent-protected medicines. Novartis has re-stocked its patent portfolio with gene-silencing drugs. It is currently ramping sales of Leqvio – developed by Alnylam Pharmaceuticals (ALNY) – a twice-yearly cholesterol injection, which sold $1.2 billion in 2025 and $480 million in the June quarter alone, both up 59% year-over-year.

          Plus – and this is the big one – we believe Novartis is going to win the race to the first Lipoprotein(a) target. Lp(a) is a cholesterol-carrying particle set almost entirely by the genes a person is born with. Diet does not move it. Exercise does not move it. Statins barely touch it. It causes heart attacks, strokes, and a narrowing of the aortic valve, and no approved drug lowers it.

          Novartis enrolled 8,323 patients with established heart disease in Lp(a)HORIZON, the first trial ever run to prove that lowering Lp(a) prevents cardiovascular events rather than merely moving a laboratory number. Results arrive in the second half of this year. Novartis intends to file with the Food And Drug Administration (“FDA”) this year.

          Novartis licensed its Lp(a) gene-silencing drug, called pelacarsen, from Ionis Pharmaceuticals (IONS) in February 2019, took worldwide responsibility for developing, manufacturing, and selling it, and has funded the 8,323-patient trial since.

          An estimated 18.7 million American adults have established cardiovascular disease, and roughly 21% of them carry Lp(a) above the level Novartis used to enroll its trial – 3.9 million people in the U.S. alone. Only 2% of American cardiovascular patients have ever been tested for it.

          In March 2026, the American College of Cardiology and the American Heart Association began recommending that every adult have Lp(a) measured at least once, and that the relatives of anyone with a high reading be tested too.

          The three lead Lp(a) drugs are estimated to generate $5.6 billion combined by 2032. One estimate models pelacarsen above $3 billion at its peak. Our own model, built from the diagnosed population upward, produces $4 billion in 2032 annually and $13 billion annually by 2036.

          Why Novartis Is High Conviction

          If pelacarsen sells on the low side, $3 billion a year, Novartis collects about $2.4 billion of it. Ionis gets roughly $450 million. Royalty Pharma (RPRX) takes the remaining $150 million. Novartis keeps $4 out of every $5. The company that discovered this molecule, that spent three decades learning how to build it, will keep about 15 cents of every dollar it earns. That’s the power of Big Pharma.

          And it gets better… Novartis trades at 18x trailing earnings and pays a 3% dividend. The huge opportunity in Lp(a) isn’t priced into the stock.

          That’s why Porter will continue to recommend Big Pharma in our Porter & Co Biotechnology portfolio – and that’s why we are making Novartis part of High Conviction now. Novartis is likely to be one of the single biggest growth companies in the world over the next 20 years, despite its current (large) size.

          Action to Take: Buy Novartis (NYSE: NVS) up to $165 per share

          Porter & Co. Stevenson, Maryland

          The post The Long-Legged Leader Of Biotech appeared first on Porter & Co..

          • ✇Porter & Co
          • Why Good Investment Ideas Might Start Out Unpopular Porter &#38 · Co.
            Issue#150, Volume#3And Quite Often Don’t Get You Invited To Appear On CNBC Inside Today’s Issue Essay: Why Good Investment Ideas Might Start Out Unpopular El Niño And Commodity Prices More On Bessent And Bonds A September To Remember… Or Not Chart Of The Day… Veeva Systems (VEEV) Today’s Mailbag Editor’s note: Today, Porter turns the Journal over to Matt Tuttle, CEO of Tuttle Capital Management and portfolio manager of the Porter & Company Porter Portfolio Index ETF (PCPP). In late 20
             

          Why Good Investment Ideas Might Start Out Unpopular

          1 September 2026 at 13:00

          Issue#150, Volume#3

          And Quite Often Don’t Get You Invited To Appear On CNBC


          Editor’s note: Today, Porter turns the Journal over to Matt Tuttle, CEO of Tuttle Capital Management and portfolio manager of the Porter & Company Porter Portfolio Index ETF (PCPP).


          In late 2021, betting against Cathie Wood felt about as smart as betting on rain in San Diego.

          Wood’s ARK Innovation ETF (ARKK) had returned 153% in 2020, against roughly 18% for the S&P 500, and the press had decided that she was the next Warren Buffett.

          But the returns were the story, not the holdings. In my view, ARKK held the opposite of what I look for in an investment: the fund was full of richly valued companies with limited cash generation, and its shareholder base had mostly bought after the sharp runup in prices.

          So I built a fund, the Tuttle Capital Short Innovation ETF (SARK), which sought the inverse of ARKK’s daily return through a swap agreement. That is – as ARKK fell (which I was pretty sure would happen before long), SARK would rise.

          My fund found an audience quickly. Wood had a loyal following that took the fund personally – and I heard from a lot of them. Their catcalls, though, didn’t change what was in her portfolio.

          In a similar vein… Porter Stansberry had spent years making an unpopular argument of his own: that the dollar was being eroded, that the deficit arithmetic didn’t work, and that the “safe” asset sitting in every retirement account had quietly become one of the riskiest things a person could own.

          He’d built a portfolio around it. What he needed was someone who could turn that into an index and then leave it alone, even if it might look foolish in any given quarter.

          And that’s how our fund, the Porter & Company Porter Portfolio Index ETF (ticker symbol PCPP), came about.

          The index holds not one, but four generally unfashionable positions:

          1. Cash-generating businesses, instead of the hot story
          2. Insurance companies, instead of government bonds
          3. Gold and Bitcoin, and
          4. Short-dated bonds, instead of reaching for yield

          I’ll come back to how those fit together. First, though… why I think being unpopular is worth something.

          The Receipts

          About 16 months after building SARK, I built a fund that took the other side of the on-air stock picks of CNBC shouting-head Jim Cramer.

          I loved the idea, but the fund didn’t work. I shut it down inside a year, at a loss.

          The point, though, was never the return.

          My aim was to highlight how – and ask why – a man can go on television every weekday for two decades, tell a national television audience what stocks to buy, be wrong repeatedly and at scale, and face no formal accountability. He said Bear Stearns was just fine – days before it went under. He called Silicon Valley Bank a “buy” on air one month before regulators closed the bank. He compared Sam Bankman-Fried to J.P. Morgan.

          The fund closed, but the point remains. And, incidentally, I haven’t been back on CNBC since.

          My firm’s tagline is “The antidote to Wall Street.” We mean it, and it has cost us.

          Why Being Early Might Look Like Being Wrong

          Here’s what I learned building those funds in public.

          Financial TV isn’t lying to you. From my point of view, it’s doing something more subtle. I see the real problem is that it needs characters – not analysts.

          The easiest way to stay on the guest list is to be a “perma-something.” Always bullish, always bearish, it doesn’t much matter which. Repeat the same forecast for long enough, and the market eventually obliges.

          Then you’re the person who called it. The dozen wrong calls before that disappear.

          What doesn’t get you booked is being right early – and downright inconvenient in the meantime.

          Years ago, I made a simple observation to a reporter about a large brokerage and one of its analysts. He told me he couldn’t print it. His editor would kill him.

          Let me guess, I said. It’s a major advertiser for the paper?

          He nodded. Yep. And that, I’d argue, is how the system works. Who loses? I think it’s the guy who takes what the talking heads are saying at face value.

          Porter Got The Same Treatment

          Porter spent years saying the U.S. dollar wouldn’t stay dominant forever, that the deficit arithmetic didn’t add up, and that long-term government bonds, the very thing investors are told is safe, had quietly become one of the riskiest assets you could own.

          For most of those years, that made him sound like a crank to the institutions selling the old playbook. Then 2022 happened. Then April 2025 happened. Some of the same institutions now make a version of the same argument.

          Which brings me to the thing I actually believe: Being unpopular with the crowd isn’t by itself a flaw in an investment thesis. Plenty of unpopular ideas are simply wrong. But an idea that everyone already holds has no advantage left in it.

          Four Positions, Not One

          So here is how those four positions inside PCPP actually work. It’s worth stating plainly up front that the fund is passively managed, and these four positions reflect the methodology of the underlying rules-based index rather than a manager’s view.

          The stock sleeve screens on historical cash conversion and shareholder distributions. Consensus says buy the index and own everything in it. This owns a screened subset rather than the whole index.

          The “bond” sleeve isn’t bonds. It’s property and casualty insurers – the companies that write home, auto, and business policies, chosen for underwriting quality. They stand in for the government debt that did not hedge equity losses in 2022 or in April 2025.

          The hard-assets sleeve pairs gold and Bitcoin. Gold is the 5,000-year store of value everyone knows. Bitcoin is the newer digital asset built to be scarce and is maintained by network consensus rather than a central issuer.

          The fixed-income sleeve is short-dated bonds and Treasury funds that mature in a few years rather than a few decades. Consensus calls that a drag on returns. The intent is to hold assets that can be sold without a large loss of principal, so the annual rebuild has something to draw on.

          And none of it runs on judgment. Fixed targets, a published methodology, an annual rebuild.

          Four uncomfortable positions in one ticker. Porter & Co. creates the index. As the adviser, I can’t override it. Which is the point.

          Why The Rules Matter

          Most investors can hold one contrarian view. That’s uncomfortable but survivable. Almost nobody can hold four of those views – at once.

          Experience tells me there tends to be one you talk yourself out of, usually not long before it turns. Sometimes it never does.

          And while a rules-based structure doesn’t make that discipline easier, it removes the discretion. It does not remove the risk that the rules produce poor results.

          Early Isn’t Always Wrong

          Early can just feel wrong for an uncomfortable length of time.

          I’ve been shouted down for the Cathie Wood ARK Innovation trade and mocked for the Cramer one. I’d take both again.

          Porter spent his career researching how to hold a portfolio through different market environments.

          The index attempts to express that view in a single set of rules.

          You can see the whole thing at porterandcofunds.com.

          Matt Tuttle, CEO/CIO
          Tuttle Capital Management

          P.S. Every morning before the open, I publish The Daily H.E.A.T., my framework applied to whatever the market is doing that day. It’s free. Sign up here.

          Tell us what you think of today’s Daily Journal: porterstansberrydirect@gmail.com


          Presented By: Tuttle Capital Management


          3 Things To Know Before We Go…

          1. Barclays expects a record El Niño to push commodity prices sharply higher. The National Oceanic and Atmospheric Administration (“NOAA”), the U.S. government’s weather and ocean agency, puts the odds of the strongest El Niño ocean-warming event on record since 1950 at 69% for October through December. Analyst Craig Rye sees commodities including coal, coconut oil, copper, rice, and rubber rising up to 50% over 24 months. Prices are already moving: the S&P GSCI commodity index has gained roughly 50% this year, and copper already trades near a record.

          2. The bond market has stopped listening to the Treasury. Thirteen days ago, Treasury Secretary Scott Bessent announced he would at least double the government’s bond buybacks – purchases of older long-term debt meant to push yields down – to at least $4 billion per operation. Long yields dropped for a few hours, then gave it all back. The 30-year sits at 5.25% today versus 5.26% just before the announcement. The 10-year touched 4.79%, its highest since January 2025, after Fed Chair Kevin Warsh’s hawkish Jackson Hole remarks on Friday pushed the odds of a September rate hike above 65%. The composition of that move matters more than the level: of the 76-basis-point rise in the 10-year yield since the Iran War began on February 28, 70 basis points came from real yields – the return investors demand above expected inflation – and just six from inflation expectations. A rate hike will not fix that. Investors are simply demanding more yield to hold $40 trillion of federal debt.

          3. September has the weakest S&P 500 average return of any month going back 75 years. But averages hide the distribution – a handful of ugly Septembers (2001, 2008, 2022) drag the number down, while plenty were positive. More relevant for 2026 is the election cycle. In midterm years, September has historically been breakeven, and the two months after it have been among the strongest stretches of the entire four-year cycle. We’ll see if this year is any different.


          Chart Of The Day… Veeva Systems (VEEV)

          Veeva Systems (VEEV) is a software platform that supports the biotech industry – one of Porter’s tollbooth section of Biotechnology. Veeva shares are up 41% since the August 1 recommendation.

          ⚙ Edit 🗑 Delete

          The next Porter & Co. Biotechnology issue – with new recommendations from Porter – reaches paid-up subscribers on Saturday, September 5. Click here to learn how to get on that list.


          Mailbag

          Yesterday, Porter reported that Amazon founder Jeff Bezos once described to shareholders a hypothetical future business that developed teleportation machines. And just like CoreWeave’s incredible data centers of today, Porter explains, these machines were revolutionary, consumer demand was endless – and the business was unsustainable.

          “A Bezos Teleportation Machine”

          Randy M writes:

          Where can I get one of Jeff Bezos’ teleportation machines and teleport back in time and purchase more Amazon? ….and a Partner Pass?


          “Refreshing To Read”

          Guy S. writes:

          Your contrast between CoreWeave and Amazon is an analysis of rare quality – far superior to the typical financial newsletter drivel. Debt-to-revenue is among the many metrics, along with debt growth-to-revenue growth, I have employed in my stock analysis (profitably) for many years.

          Refreshing to read – thank you.


          “Too Long”

          Mario R. writes:

          You had a very good point and detailed explanation on why CoreWeave will go out of business.

          My only comment is that you had made the point loud and clear in the first half of your article – the rest, you went on and on, which was overkill and a waste of reader’s time.

          It’s best to just go right to the point and then stop.

          Porter & Co. Comment: Ok.


          Porter & Co. Market Snapshot

          Price Yesterday’s Return Year-to-Date Return
          S&P 500 Index $7,686.14 -0.33% 13.1%
          Gold per ounce $4,431.10 0.00% 0.8%
          Bitcoin $78,548.63 0.34% -11.5%
          Oil (West Texas Intermediate) per barrel $85.76 1.26% 53.3%
          Berkshire Hathaway (BRK) $756,650.01 -0.18% 0.2%
          Porter’s Permanent Portfolio – -0.56% 4.0%
          The Better Than Berkshire Index – -0.90% 8.6%
          Total Return Annual Return
          Porter & Co’s Top Ranked* 35.4% 16.3%
          Yield Yesterday’s Change Change
          Year-to-Date
          U.S Treasury 30-Year Yield 5.24% 4 bps 40 bps
          Prices as of 4:00 pm ET August 31, 2026 | bps = basis points (or 0.01%)
          *A Complete Investor risk rating of 1 is defined as a “low risk, high allocation” security, while positions rated closer to a 5 are higher risk. Porter & Co.’s top-ranked positions include those rated either 1 or 2 in Complete Investor portfolio.


          Porter & Co. Top Positions

          Publication Ticker Description Total Return
          Biotechnology QURE uniQure 237%
          Complete Investor BTC/USD Bitcoin 191%
          Biotechnology SGMT Sagimet Biosciences 191%
          Complete Investor BWXT BWX Technologies 169%
          Biotechnology NUVB Nuvation Bio 162%
          Biotechnology ROIV Roivant Sciences 153%
          Biotechnology TGTX TG Therapeutics 153%
          Complete Investor PM Philip Morris 133%
          Complete Investor SKWD Skyward Specialty Insurance 133%
          Biotechnology QURE uniQure 131%
          Prices as of 4:00 pm ET August 31, 2026


          Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here| New Window. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

          The post Why Good Investment Ideas Might Start Out Unpopular appeared first on Porter & Co..

          • ✇Porter & Co
          • Leopold’s Software Glitch Porter &#38 · Co.
            Issue#147, Volume#3He Thought AI Would Eat These Application – But He Had It Backwards Inside Today’s Issue Essay: Leopold’s Software Glitch Leopold Tops This List All Presidents Run Up Debt All-In On Tech Stocks Chart Of The Day… uniQure (QURE) Editor’s note: Today, Porter delivers part two of a three-part series on the implosion of Leopold Aschenbrenner’s Situational Awareness fund – and the key reason behind its failure that everyone seems to be missing… The final installment of this th
             

          Leopold’s Software Glitch

          26 August 2026 at 13:00

          Issue#147, Volume#3

          He Thought AI Would Eat These Application – But He Had It Backwards

          Inside Today’s Issue

          • Essay: Leopold’s Software Glitch
          • Leopold Tops This List
          • All Presidents Run Up Debt
          • All-In On Tech Stocks
          • Chart Of The Day… uniQure (QURE)


          Editor’s note: Today, Porter delivers part two of a three-part series on the implosion of Leopold Aschenbrenner’s Situational Awareness fund – and the key reason behind its failure that everyone seems to be missing… The final installment of this three-part series will appear in the next Journal, on Friday.

          Also note this brief update to Monday’s essay, when we reported that Intuit (INTU) was a stock that Leopold Aschenbrenner’s Situational Awareness fund had shorted. Yesterday, Intuit reported fiscal Q4 results and guided fiscal 2027 non-GAAP earnings to $22.88–$23.12 per share against a Wall Street consensus of $27.31. Some people on Wall Street believe (like Leopold) that this is more evidence of the “death of software.” We disagree.

          What actually happened is far more banal: effective August 1, Intuit stopped stripping out share-based compensation from these adjusted numbers. CFO Sandeep Aujla said the 2027 guidance carries a $5.81 impact from stock-based compensation expenses. Ergo, when you add $5.81 back, the guidance midpoint is $28.81 per share, 5% above the $27.31 estimate.

          Here’s another way to look at it. Intuit’s GAAP accounting requires no reconstruction. Aujla guided fiscal 2027 GAAP earnings per share to $20.12-$20.36, (growth of 22%-24%) against a $19.94 consensus. Those are not the numbers of a dying business.

          Fiscal 2026 revenue grew 14% to $21.4 billion. Non-GAAP operating margin expanded 1.5 points to 41.7%. Q4 adjusted earnings came in at $4.03 per share against a $3.58 estimate. Mid-market revenue grew 39% with customers up 28%, and Intuit Enterprise Suite – the accounting and payroll package sold to companies too large for QuickBooks Online – passed $145 million in annualized revenue, 4x the prior year.


          Microsoft (MSFT) passed 30 million paid Copilot seats in the June quarter, up from 15 million in January. Tech wizards like Leo Aschenbrenner hate Copilot – Microsoft’s artificial intelligence (“AI”) assistant. Just like they hated Windows ’97. And everything else Microsoft has ever built.

          So what?

          Accenture alone bought 740,000 Copilot seats. Bayer, Johnson & Johnson, Mercedes-Benz, and Roche have each deployed more than 90,000. Microsoft’s commercial remaining performance obligation – contracted revenue not yet recognized, which is the closest thing software has to a railroad’s signed freight contracts – stands at $678 billion, up 84% year over year!

          Annual recurring revenue for Adobe’s (ADBE) AI-first passed $500 million in the quarter ended May 2026 and tripled year over year. Salesforce’s (CRM) Agentforce went from $800 million of annual recurring revenue in the January quarter to $1.2 billion by April, up 205%. Veeva Systems (VEEV) is giving its AI agents away free inside Vault CRM through 2030, which is the single most revealing data point in the set: Veeva does not need to monetize AI, because Veeva’s moat is the validated record, not the intelligence applied to it.

          Aschenbrenner thought AI would eat the applications. Instead, the applications are selling AI as an upsell on top of a subscription the customer cannot afford to cancel – because it costs nothing compared to the value it delivers.

          These software companies are computing tollbooths: they’re what enterprises pay to implement compute. And as compute gets cheaper, they will generate vastly more revenue, not less. The proof is sitting there in their earnings and cash flow: they’re riding on lower and lower cost of compute, which makes their business more and more efficient.

          • Adobe: 36.6% operating margin, 35.6% return on invested capital (“ROIC”), capital expenditure of $179 million on $23.8 billion of revenue – 0.75% – and $9.85 billion of free cash flow (“FCF”)
          • Veeva: 28.7% operating margin, 68.5% ROIC, a 44.3% FCF margin, and effectively no capex at all
          • Salesforce: $41.5 billion of revenue, roughly $14.4 billion of FCF, capex of about 1.4% of revenue, and $72.4 billion of contracted backlog
          • Intuit (INTU): $18.8 billion of revenue, roughly $6.1 billion of FCF, $124 million of capex

          Veeva earns 68 cents a year on the dollar. And invests nothing in growing its business.

          Adobe currently trades at about 11x trailing earnings. Salesforce at about 13x. Intuit at about 14x. These are the multiples of a dying industry applied to businesses converting a third to nearly half of every revenue dollar into free cash.

          This enormous mispricing was manufactured by people who, like Aschenbrenner, believed these businesses were doomed. But they aren’t.

          And that’s not all.

          Aschenbrenner assumed that because a technology is transformative, the capital that builds it will earn its cost.

          There is no relationship between those two things. In fact, it’s more likely not to be true.

          Leo’s own essay contains the tell:

          Over the past year, the talk of the town has shifted from $10 billion compute clusters to $100 billion clusters to trillion-dollar clusters. Every six months another zero is added to the boardroom plans.

          He wrote that as a bull case. But it isn’t. That is a recipe for a financial disaster.

          • Amazon (AMZN) spent $131.8 billion of capex in 2025 against $139.5 billion of operating cash flow. That is 94.5% of everything the business generated poured back into the ground, in a single year. Its 2026 capex guidance is $220 billion.
          • Alphabet (GOOGL) spent $91.4 billion in 2025, 55.5% of operating cash flow, and guides to $195 billion to $205 billion this year
          • Meta Platforms (META) spent $72.2 billion, 62.4% of operating cash flow, and guides to $125 billion to $145 billion
          • Microsoft spent $115.9 billion in the fiscal year that just ended, against $182.9 billion of operating cash flow. Capex was 34.9% of revenue, up from 18.1% two years earlier. FCF fell to $67.0 billion from $74.1 billion in fiscal 2024, on revenue that grew by more than a third over the same span. Microsoft is running harder and generating less cash. That is what a huge capital cycle does even to the best business in the world.
          • Moody’s (MCO) projects hyperscaler capex of $785 billion in 2026 and close to $1 trillion in 2027, funded in part by roughly $175 billion of debt issuance this year. Where will the money come from?
          • Oracle (ORCL) had fiscal 2026 capex of $55.7 billion, FCF of negative $23.7 billion, capex at 82.6% of revenue, long-term debt up from $76.3 billion to $124.7 billion, and $248 billion of future data-center lease obligations not yet on the balance sheet
          • CoreWeave (CRWV) had $5.13 billion of 2025 revenue, $14.9 billion of capex, negative $7.25 billion of FCF, net debt at 8.1x EBITDA, term loans at 11% to 15%, a weighted-average short-term borrowing rate of 12.3%, and a $1 billion private placement in April 2026 at 9.75%.

          Meta’s Hyperion campus in Louisiana is financed through a special purpose vehicle in which Blue Owl Capital (OWL) holds 80% and Meta holds 20%, funded by $27.294 billion of senior secured notes at a 6.581% coupon maturing in 2049. The noteholders have no pledge on the physical data center. Their credit is Meta’s promise to pay rent starting in 2029, plus a residual value guarantee – that’s $27 billion of debt, secured by a lease, sitting off the balance sheet.

          And like the EU’s finance minister explained two decades ago…

          When it gets serious, you have to lie.

          Microsoft extended server useful lives from three years to four, then to six, adding about $3.7 billion to fiscal 2023 operating income. Alphabet did the same, adding about $3.0 billion. Amazon added about $2.5 billion in 2024. Meta added $2.59 billion in 2025. Oracle added $573 million. Every one of those is a non-cash increase in reported profit produced by an assumption about how long a chip stays useful.

          It’s a lie.

          But not everyone is lying. Effective January 1, 2025, Amazon shortened the useful life of a subset of its servers and networking equipment from six years back to five, citing, in its own 10-K, “the increased pace of technology development, particularly in the area of artificial intelligence and machine learning.” That cost it $1.4 billion of additional depreciation and $1.0 billion of net income.

          Amazon is the operator with the longest and hardest-won experience running data centers at scale, and Amazon is the one telling you the hardware wears out faster than the schedules assume.

          Tell me what you think of today’s Daily Journal: porterstansberrydirect@gmail.com

          Good investing,

          F. Porter Stansberry
          Stevenson, Maryland

          Presented By: The Golden Portfolio


          3 Things To Know Before We Go…

          1. Leopold Aschenbrenner now sits atop the all-time list of trading losses. The Financial Times ranked the 25 largest trading losses in history. Situational Awareness – the AI-focused hedge fund featured above – takes first place with a $35 billion loss in July, roughly 2.5x the next name on the list, Morgan Stanley’s 2007 subprime mortgage blowup. Archegos, Long-Term Capital Management, and JPMorgan’s “London Whale” all rank further down. The fund held $45 billion at the start of July and about $10 billion by the end, after margin calls – lenders demanding more collateral against borrowed money – forced it to sell its entire public stock portfolio to Ken Griffin’s Citadel at below-market prices.

          2. Different presidents, same printing press. M2 money supply has grown from $1.6 trillion at the end of President Jimmy Carter’s term to $23.2 trillion today – a 14x increase across nine administrations of both parties. National debt tells the same story: $1.2 trillion to $39.9 trillion, with $3.7 trillion added in just the first 19 months of the current term. Hard assets like gold, energy, and irreplaceable infrastructure are insurance against the one trend Washington has never broken.

          3. A record year for technology stocks. Rampant enthusiasm for the AI revolution has sparked a record year of fund inflows into technology stocks. So far this year, investors are on track to pour a record $216 billion into technology funds, blowing away all previous records by over $100 billion. This has now become one of Wall Street’s most crowded trades.


          Chart Of The Day… uniQure (QURE)

          Shares of biotech firm uniQure (QURE) have risen more than 100% since being recommended in Porter & Co. Biotechnology for a second time in January – Porter will release his second report since revamping the newsletter on September 5.


          Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here| New Window. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

          The post Leopold’s Software Glitch appeared first on Porter & Co..

          • ✇Porter & Co
          • Leopold Was Wrong Porter &#38 · Co.
            Issue#146, Volume#3 His 4-To-1 Leverage Just Made His Convictions Worse Inside Today’s Issue Essay: Leopold Was Wrong GenZ “Invests” In Sports Consumers Tap Out Uncle Sam Keeps Spending Chart Of The Day… BWX Technologies (BWXT) Editor’s note: Today, Porter begins part one of a three-part series on the implosion of Leopold Aschenbrenner’s Situational Awareness fund – and the key reason behind its failure that everyone seems to be missing… We will publish the next Journal this week on Wedne
             

          Leopold Was Wrong

          24 August 2026 at 13:00

          Issue#146, Volume#3

          His 4-To-1 Leverage Just Made His Convictions Worse


          Editor’s note: Today, Porter begins part one of a three-part series on the implosion of Leopold Aschenbrenner’s Situational Awareness fund – and the key reason behind its failure that everyone seems to be missing… We will publish the next Journal this week on Wednesday.


          Leopold Aschenbrenner lost $30 billion (67%) in a month.

          The consensus post-mortem – from The Wall Street Journal to comments on X – is that the young man who ran the Situational Awareness fund used 4-to-1 leverage on concentrated positions and got carried out. While that is true, it does not convey any useful information. Leverage is certainly the reason Leopold lost so much, so quickly. But it is not the reason he lost. Leverage is merely a magnifying glass. It doesn’t pass judgment.

          The reason his fund was doomed was because he’s wrong. And no one, anywhere, has explained why Leopold Aschenbrenner was wrong.

          On the morning of Thursday, July 30, before the opening bell, Aschenbrenner’s Situational Awareness sold its entire public stock portfolio – the long side and the short side together, roughly $16 billion of it – to Ken Griffin’s Citadel in a single block trade.

          That night, Aschenbrenner wrote to his limited partners. Net performance for the month, unaudited: down 67%. Net performance for the year: still up 80%.

          We let you down this month. We came closer to permanent capital impairment than is acceptable to us.

          Six days earlier, on July 24, he had written a different letter. That one reported a 439% net return for the first half of 2026, described the selloff in artificial intelligence (“AI”) stocks as one of the best buying opportunities since early 2025, and invited his investors to wire more money starting August 1. It closed with a postscript:

          At times we call out opportunities that seem like a particularly good time to add funds, if you have been waiting for one.

          Assets that stood near $45 billion at the start of July finished the month around $10 billion, and roughly half of what remains is a single illiquid private stake in Anthropic.

          Leopold is 25 years old. He graduated from Columbia University at 19, as valedictorian. He worked at the FTX Future Fund from February to November of 2022, then joined OpenAI’s Superalignment team, then was fired in April 2024. Two months after the firing, he published a 165-page essay called “Situational Awareness: The Decade Ahead,” raised $225 million from Patrick and John Collison, Nat Friedman and Daniel Gross, and started a hedge fund. He had never managed money before.

          Situational Awareness was constructed to express exactly two convictions.

          1. The physical build-out of AI – the chips, the memory, the power, the data centers, the neoclouds – was the trade of the decade. The fund’s disclosed long positions read like an inventory of the second derivative of the AI boom. Bloom Energy (BE), fuel cells for data centers. Sandisk (SNDK) and Micron Technology (MU), memory. CoreWeave (CRWV) and Nebius Group (NBIS), rented compute. IREN (IREN), Core Scientific, Applied Digital, Riot Platforms, CleanSpark, Bitfarms, Bitdeer – Bitcoin miners converting their substations into AI compute.

          2. Application software was going to be destroyed by AI. Not disrupted. Obliterated.

          Leo explained why on Dwarkesh Patel’s podcast, in June 2024:

          I’m so bearish on the wrapper companies because they’re betting on stagnation. They’re betting that you have these intermediate models and it takes so much schlep to integrate them. I’m really bearish because we’re just going to sonic boom you. We’re going to get the unhobblings. We’re going to get the drop-in remote worker. Your stuff is not going to matter.

          That was the whole thesis. Buy the compute. Short the stuff that runs on the compute.

          By CNBC’s reporting, the short leg included Adobe (ADBE). A 13F does not disclose short stock. It does not disclose swaps. We only know about Adobe because reporters were told… but you can look at the tape and, when you do, it’s clear that Leo was short software in a major way.

          Between the June 30 close and the July 29 close – the last session before the block trade cleared his shorts – the two sides of his portfolio did this.

          The longs:

          • Sandisk: down 55.32%
          • Nebius: down 46.33%
          • Bloom Energy: down 45.90%
          • CoreWeave: down 38.90%
          • Micron: down 35.98%
          • IREN: down 35.91%

          The shorts, over the same 20 sessions:

          • Workday (WDAY): up 37.24%
          • Adobe (ADBE): up 28.49%
          • Intuit (INTU): up 27.64%
          • Salesforce (CRM): up 20.25%
          • Veeva Systems (VEEV): up 17.15%

          Over that same window, the Invesco QQQ Trust fell 10.14% and the SPDR S&P 500 ETF Trust fell 2.32%. Nvidia – the supposed epicenter of the AI trade – fell 5.04%, and finished the full month of July up 0.33%.

          This was not an AI crash.

          The S&P 500 stayed near its record throughout. This was a violent rotation out of the leveraged, capital-hungry, second-derivative end of the AI complex and into the profitable, cash-generating, asset-light end of it. Which is to say: the market rotated out of exactly what he owned and into exactly what he was short.

          Then there is Microsoft (MSFT).

          Microsoft closed at $390.54 on Wednesday, July 29. It closed at $451.10 on Thursday, July 30 – that is a gain of 15.51% in a single session on 110.2 million shares, against a July average of 37.1 million. Yes, Microsoft reported its fiscal Q4 after the close on July 29. But the results were nothing out of the ordinary. Revenue came in at $90.00 billion against an $87.62 billion consensus – a small 2.7% beat. Earnings were $4.74 per share against $4.21. It was a good quarter. Not a historic one. A 2.7% revenue beat does not add roughly $450 billion of market value to the most widely owned company on Earth in six and a half hours.

          The reason Microsoft was up 15% is extremely important. Leo blew up quickly because of leverage. But he failed because he is simply wrong.

          Aschenbrenner’s software thesis rests on a single premise: that a company selling enterprise software is selling the work the software performs. If a model can perform that work, the company is worth nothing.

          That premise is what a very smart 25-year-old engineer believes. It is not what anyone who has ever run a business believes.

          Nobody buys Microsoft because Microsoft writes the best code. They buy Microsoft because Microsoft is the rail everything else runs on. Active Directory is where your employee identities live. Excel is where your board deck’s numbers come from. Teams is where the compliance-recorded conversation happens. Azure holds a FedRAMP High authorization and Department of Defense Impact Level 5 clearance, which means a defense contractor cannot casually swap it out for something cheaper without re-clearing the entire stack with the government.

          Veeva Systems runs the customer relationship management and regulatory document systems of the pharmaceutical industry. Nineteen of the top 20 biopharmaceutical companies use Veeva’s regulatory information management platform. Those systems are validated under GxP – the good-practice quality regulations that govern anything touching a drug – and 21 CFR Part 11, the Food And Drug Administration’s (“FDA”) rule for electronic records and signatures. Every major release is formally qualified. When an FDA inspector arrives, the audit trail in that system is the company’s defense.

          You cannot replace that with a model that is very good at writing code. You would have to re-validate a decade of regulated records, in front of a regulator, on a system with no track record, to save a fee that rounds to nothing compared with the cost of building a new drug.

          How small a fee? Veeva’s licensing runs somewhere between roughly $1,800 and $6,600 per sales representative per year. A fully loaded pharmaceutical sales rep costs the employer between $134,000 and $219,000 a year. The software is 1% to 5% of the cost of the person using it.

          Microsoft raised the price of a Microsoft 365 E3 seat from $36 to $39 per user per month on July 1 of this year, and E5 from $57 to $60. Add Copilot at $30 and a fully loaded E5 seat costs $1,080 a year. Against a knowledge worker costing $120,000 all-in, that is roughly 1% of the employee.

          This is the part the compute maximalists cannot see. These companies are not selling labor. They are selling the rails on which labor runs, at a price so far below the value created that the buyer never bothers to negotiate hard, and with switching costs so high that the buyer could not leave even if he wanted to.

          Do people try to leave? Constantly. And they almost always fail. (Ask me how I know!)

          Panorama Consulting Group tracked studies of enterprise resource planning replacements and found average cost overruns at 189% across industries. Gartner projects that by 2027, more than 70% of recently implemented ERP (enterprise resource planning) initiatives will fail to fully meet their original business goals. Ripping out a core enterprise system is one of the most reliably disastrous things a large company can attempt, and it was true before anyone had heard of a transformer model.

          The incumbents are not being disintermediated by artificial intelligence. They are selling it!

          Next, I’ll explain how Aschenbrenner went terribly wrong. He thought AI would eat the applications. Instead, the applications are selling AI as an upsell on top of a subscription the customer cannot afford to cancel.

          Tell me what you think of today’s Daily Journal: porterstansberrydirect@gmail.com

          Good investing,

          F. Porter Stansberry
          Stevenson, Maryland

          Presented By: Tuttle Capital Management


          3 Things To Know Before We Go…

          1. More than half of young investors have pulled money out of their portfolios to bet on sports. Betterment, an automated investing platform, surveyed 1,000 American retail investors in the spring. Among Gen Z respondents – born between 1997 and 2007 – 52% said they redirected money originally earmarked for investing into sports wagers over the past year, and 26% called sports betting a deliberate part of their long-term financial plan. What could go wrong?

          2. American consumers are tapping the brakes. July retail sales fell 0.6% – the steepest monthly drop since May 2025 and well below the +0.1% consensus. The weakness was broad across non-store retailers, including Amazon (AMZN) where sales fell 2.2%, the second-largest decline since July 2021, while auto and parts sales dropped 1.8%. Most telling, control-group sales – the cleanest read on underlying demand that feeds directly into GDP – plunged 0.4%, the worst since January 2025. A stretched consumer is starting to show up in the data.

          3. The federal government just posted its largest July deficit on record. The U.S. Treasury reported a $432 billion shortfall for the month – $334 billion of revenue versus $766 billion of spending. Interest on the debt cost $118 billion in July alone, $26 billion more than a year earlier, bringing the fiscal-year total to $1.17 trillion. That is more than the government spends on the entire military, and it is now running even with Medicare. Ten months into fiscal 2026, the deficit stands at $1.8 trillion. Every quarter-point move higher in Treasury yields adds tens of billions to that interest bill as old low-rate debt matures and gets refinanced. Washington cannot afford higher rates.


          Chart Of The Day… BWX Technologies (BWXT)

          Nuclear-parts provider BWX Technologies (BWXT) has tripled from our 2022 recommendation in Complete Investor – providing the power that powers the AI buildout.



          The post Leopold Was Wrong appeared first on Porter & Co..

          • ✇Porter & Co
          • Trade Alert: Adding To Cellebrite Position Porter &#38 · Co.
            Today we’re recommending buying additional shares of digital-forensics software platform Cellebrite (Nasdaq: CLBT) via the following trade recommendation: Action To Take: Buy 200 shares of Cellebrite (Nasdaq: CLBT) up to $13 per share – the recent price was $11.26 Note that this recommendation comes on top of the existing 400 shares of Cellebrite we’ve previously recommended buying, bringing our total recommended position size to 600 shares. As mentioned in last week’s update, we believe Ce
             

          Trade Alert: Adding To Cellebrite Position

          24 August 2026 at 10:12

          Today we’re recommending buying additional shares of digital-forensics software platform Cellebrite (Nasdaq: CLBT) via the following trade recommendation:

          Action To Take: Buy 200 shares of Cellebrite (Nasdaq: CLBT) up to $13 per share – the recent price was $11.26

          Note that this recommendation comes on top of the existing 400 shares of Cellebrite we’ve previously recommended buying, bringing our total recommended position size to 600 shares.

          As mentioned in last week’s update, we believe Cellebrite shares are deeply undervalued. We view the 30% drop following its Q2 earnings report as an extreme overreaction to a minor hiccup in its sales growth rate. And after last week’s expiration of our covered-call position on shares of LandBridge (NYSE: LB), which resulted in an additional $7,500 in available cash, we’re recommending reinvesting a portion of this freed-up cash into today’s new trade.

          Good investing,

          Ross Hendricks
          Porter & Co.

          The post Trade Alert: Adding To Cellebrite Position appeared first on Porter & Co..

          • ✇Porter & Co
          • Following The Smart Money In Q2 Porter &#38 · Co.
            In today’s Sunday Stock Screen, we’re “Following The Smart Money” by looking closely at the 13F filings from Wall Street’s top money managers. And in today’s Sunday Selection, we report on a dominant retail company whose margins are vanishing – the crowd sees deterioration, but the world’s top fund managers see an empire spending today’s profits to own the next decade In the tables below, we show the latest (Q2 2026) new stock buys – as reported in their most recent 13F filings with the Securiti
             

          Following The Smart Money In Q2

          23 August 2026 at 07:00

          In today’s Sunday Stock Screen, we’re “Following The Smart Money” by looking closely at the 13F filings from Wall Street’s top money managers.

          And in today’s Sunday Selection, we report on a dominant retail company whose margins are vanishing – the crowd sees deterioration, but the world’s top fund managers see an empire spending today’s profits to own the next decade

          In the tables below, we show the latest (Q2 2026) new stock buys – as reported in their most recent 13F filings with the Securities And Exchange Commission – of some of our favorite fund managers. We also show what percentage each stock makes up within each fund’s investment portfolio.

          In addition to tracking new purchases, we pay attention to any “big bets” these asset managers make – comprising at least 5% of the portfolio.

          ⚙ Edit 🗑 Delete

          (Several of the companies on the two lists above are also recommended stocks in Porter Stansberry’s Complete Investor… to learn more about joining Complete Investor – and find out which stock those are, and why we recommended them – go here.)

          Highs And Lows

          Each week, we also monitor any stocks in the market making a new 52-week high. We do this because any stock on its way to generating 2x, 3x, or 10x returns will spend a lot of time making 52-week highs along the way. Thus the new 52-week-high list provides an opportunity to flag these potential high performers before they really break out, with a particular emphasis on lower-profile, less widely-followed stocks that might have otherwise gone unnoticed.

          Notable stocks making a new 52-week high this week:

          • Eli Lilly (LLY)

          • JP Morgan Chase (JPM)

          • Visa (V)

          • Johnson & Johnson (JNJ)

          • AbbVie (ABBV)

          • Coca-Cola (KO)

          • Merck (MRK)

          • Amgen (AMGN)

          • Thermo Fisher Scientific (TMO)

          • Charles Schwab (SCHW)

          • Union Pacific (UNP)

          • ConocoPhillips (COP)

          • Pfizer (PFE)

          • Vertex Pharmaceuticals (VRTX)

          • Bristol-Myers Squibb (BMY)

          • Airbnb (ABNB)

          • General Dynamics (GD)

          • Marathon Petroleum (MPC)

          • Valero Energy (VLO)

          • Phillips 66 (PSX)

          • 3M Company (MMM)

          • Regeneron Pharmaceuticals (REGN)


          How to Profit From”The SpaceX Supercycle”

          Act Before August 26

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          Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Brownstone is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.


          We also monitor stocks on the new 52-week-low list. In many cases, the names on this list are there for good reason – the market is often correctly pricing in their weak fundamentals. However, once in a while, a great business with excellent long-term prospects finds itself on this list due to a temporary setback. This can create the rare opportunity to buy top-shelf merchandise at bargain-basement prices.

          Notable stocks making a new 52-week low last week:

          • AppLovin (APP)

          • CRH plc (CRH)

          • AutoZone (AZO)

          • Medline (MDLN)

          • Public Service Enterprise Group (PEG)

          • Kroger (KR)

          • Martin Marietta Materials (MLM)

          • FedEx Freight Holding (FDXF)

          • Rollins (ROL)

          • Lennox International (LII)

          • JBT Marel (JBTM)

          • Brookfield Business (BBUC)

          • Icahn Enterprises (IEP)

          • Liftoff Mobile (LFTO)

          • PagSeguro Digital (PAGS)

          • StoneCo (STNE)

          Today’s Sunday Selection comes off one of our “Following The Smart Money” screens – and it is one of the most dominant online retailers in the world. Two weeks ago, it reported its fastest quarterly revenue growth in four years – crossing $10 billion for the first time in its history, up 50% year over year (“YOY”), while adding 18 million new customers in 12 months.

          Yet the shares sit roughly 25% below their 52-week high as the market is fixated on margins. The company is in the middle of a deliberate investment cycle – spending today’s profits to extend its lead across an entire continent – and the market is punishing the stock for it. Yet the world’s top fund managers were buying while the market complained. We have seen this movie before, from this company: the last time it invested this heavily, the bears insisted it would never earn consistent profits, its margins went on to set record after record, and the stock compounded several times over for investors who bought at the trough.

          We believe a similar moment is approaching, making this a strong candidate for the Complete Investor recommendation list.

          ⚙ Edit 🗑 Delete

          (To become a Partner Pass member, contact our Customer Care team at 888-610-8895, internationally at +1 443-815-4447, or via email at support@porterandcompanyresearch.com.)

          The company is MercadoLibre (Nasdaq: MELI) – the Amazon (AMZN), PayPal (PYPL), and Shopify (SHOP) of Latin America rolled into a single business. Calling MercadoLibre an online retailer understates it the way calling Amazon a bookstore did in 2005. Founded in Buenos Aires in 1999 and listed on Nasdaq since 2007, the company operates across 18 countries through three interlocking businesses.

          The marketplace, MercadoLibre, is the dominant e-commerce platform in Latin America – roughly 35% share in Brazil (more than double Amazon), 68% in home-market Argentina, and a strong second position in Mexico. It served 89 million unique buyers last quarter, with gross merchandise volume (“GMV”) up 36% YOY on a currency-neutral basis, and generated $16.3 billion of revenue in 2025 – 56% of the total.

          The fintech arm, Mercado Pago, began as a checkout tool and is now one of Latin America’s largest financial platforms – digital wallet, merchant acquiring, asset management, and, increasingly, credit. Total payment volume passed $100 billion last quarter, 88 million people use Pago monthly, and in Brazil it is the most-used wallet after the government’s own Pix system. This fintech arm generated $12.6 billion of revenue in 2025, or 44% of the total. Within it, credit revenue reached $5.9 billion, up 63% in a year, on a $16.4 billion loan book growing 75% with non-performing loans near historical lows and net interest margins widening.

          The logistics network, Mercado Envios, is what makes the marketplace credible: fulfillment centers, more than 10,000 drop-off points, and the fastest delivery network in the region, moving roughly three-quarters of fast shipments within 48 hours. Unit shipping costs in Brazil fell 17% last year even as volumes surged – scale economics working as designed.

          Each business feeds the others. Shoppers adopt the wallet, wallet users get offered credit, credit makes shoppers buy more, and sellers fund advertising to reach them. Users active in both commerce and fintech grew 37% last quarter – faster than either side alone – and management says these dual-ecosystem users are multiples more profitable than single-platform users. That is the MercadoLibre flywheel.

          The flywheel has driven revenue nearly vertical: $15.1 billion in 2023, $20.8 billion in 2024, and $28.9 billion in 2025. The profit line tells a different story, and it is the part the market keeps focusing on. MercadoLibre runs in deliberate investment cycles. When management sees an opening, it spends through the income statement to seize it – growth accelerates and margins compress. Then the investments mature and the profits arrive.

          The company has completed this loop once at full scale. From 2016 to 2019, it transformed from a high-margin marketplace into an integrated commerce, logistics, and payments ecosystem – and paid for it with profits. Operating margin went from 21.4% in 2016 to negative 6.7% in 2019 while bears insisted the company would never earn consistent profits. Then margins recovered to a record 14.6% – on revenue that had grown 10-fold from its 2018 level – and the market capitalization went from $13 billion at the end of 2018 to $84 billion by the end of 2020, a more than six-fold increase in two years.

          Here is the detail that matters most for timing: the stock rose 92% in 2019 – nearly 3x the Nasdaq’s gain in a year when falling rates lifted everything. The market did not wait for the margin inflection to appear in the headlines. It re-rated the stock as soon as the evidence showed the spending was changing customer behavior and would eventually monetize. By the time reported margins recovered, the easy money had been made.

          The 2021-2022 drawdown is the counterexample that sharpens the rule: margins improved steadily and the stock still fell more than 65% peak-to-trough as rising rates crushed growth multiples. The market prices the expected return on MercadoLibre’s investments – margins are one signal within that judgment, and often a lagging one.

          Today’s cycle is the broadest yet, and the result is the paradox in last quarter’s report – revenue up 50%, operating margin down about 50% (at 6.7% versus 12.2% a year ago). And the early evidence looks like 2019: conversion, purchase frequency, retention, and category breadth are all rising.

          What has not happened yet is the payoff. By our math, the realized incremental return on the roughly $9 billion to$13 billion deployed in this cycle so far is only about 2% to 3% – versus the mid-teens-to-30%-plus returns the prior cycles eventually earned. That gap is the current opportunity.

          The segment data makes the strategy legible: Argentina is the fortress that funds the wars, Brazil is the battleground, Mexico is the contested frontier, and everything else is seed corn for the next cycle.

          Argentina generated $6.0 billion of 2025 revenue (21% of the total), up 56%, and more than $2.5 billion of direct contribution profit – more than Brazil, on 40% of Brazil’s revenue. With 68% market share and a fintech-heavy mix, it is a monopoly tollbooth earning a contribution margin above 40%, with enormous macro torque as credit strengthens under Argentina’s normalization.

          Brazil, at $15.2 billion of revenue (53%), up 33%, is where the money is going. Direct contribution profit fell from $2.3 billion to $2.1 billion in 2025 even as revenue grew by $3.8 billion – each incremental dollar of Brazil revenue arrived with slightly more than a dollar of direct costs attached. The engagement response has been immediate: items sold up 56% last quarter, items per buyer up 19%, and conversion up 1.1 points.

          Mexico, at $6.5 billion of revenue (22%), up 39%, is the one major market where Amazon leads – roughly 40% to 30% share – and the capital allocation shows how seriously it believes in this opportunity. Mexico’s gross property and equipment now nearly equals Brazil’s on only 40% of the revenue, while the segment still earns an 18% contribution margin.

          The remaining markets – Chile, Colombia, Peru, and Uruguay – produced $1.3 billion of revenue (4%), up 41%.

          Three levers drive the next leg of growth. Credit is the largest and MercadoLibre is well positioned with years of granular purchase data no bank can see, formal credit penetration in Latin America still a fraction of developed-market levels, and mature non-card lending that is highly profitable today. Advertising is the highest-margin opportunity: Mercado Ads grew 62% last quarter and now exceeds 10% of Latin American digital advertising. And AI is quietly deflating the cost base: the majority of the company’s code is now AI-written, product development fell from 8.4% to 7.2% of revenue, and customer service headcount dropped from 10,000 to 7,000 while the business tripled.

          The credit book is the real risk. This cycle is far more credit- and balance-sheet-intensive than 2016–2019, and credit metrics always look best right before they do not. Competition is intensifying, currency remains a permanent tax on reported results, and the valuation – nearly 50x trailing earnings – is cheap only against the stock’s own history. And unlike 2019, there is no help from lower rates – long yields are moving higher globally, so the re-rating must be carried by the operating evidence alone.

          The stock sits roughly 25% below its June 2025 high while revenue grows 50%. And the multiple is measured against earnings the company is deliberately suppressing – so the 50x trailing earnings overstates what investors are paying for the underlying earning power. If revenue reaches $50 billion and margins recover merely to 10% to 12%, operating profit climbs toward $5 billion – meaning today’s roughly $95 billion market capitalization is paying about 20x that earning power, for a business still compounding revenue at more than 20% a year.

          Management has spent 27 years proving it knows how to allocate capital across a reinvestment runway that is nowhere near exhausted. History says the stock will not wait for the evidence to be complete – which is what makes MercadoLibre a strong candidate for the Complete Investor recommendation list… but not yet.

          Porter & Co.
          Stevenson, Maryland

          The post Following The Smart Money In Q2 appeared first on Porter & Co..

          • ✇Porter & Co
          • August 2026 Best Buys Porter &#38 · Co.
            A Business That’s More Efficient Than Japanese Efficiency Edit Delete Editor’s note: This is Porter & Co.’s Best Buys, which we release to paid subscribers on the fourth Saturday of each month… If you’re not yet a subscriber to Best Buys, to access the full paid issue and our previous Best Buys, please click here. Still, 81 years later, the last of the Pumpkin Bombs is still missing. You wouldn’t think they’d be hard to find – 10,000 pounds of bright orangey-yellow metal packed w
             

          August 2026 Best Buys

          22 August 2026 at 07:00

          A Business That’s More Efficient Than Japanese Efficiency

          ⚙ Edit 🗑 Delete

          Editor’s note: This is Porter & Co.’s Best Buys, which we release to paid subscribers on the fourth Saturday of each month… If you’re not yet a subscriber to Best Buys, to access the full paid issue and our previous Best Buys, please click here.

          Still, 81 years later, the last of the Pumpkin Bombs is still missing.

          You wouldn’t think they’d be hard to find – 10,000 pounds of bright orangey-yellow metal packed with 5,500 pounds of explosive, each 10-foot-long, blimp-shaped Pumpkin was practically visible from space…

          They were also a top-secret tactic hiding in plain sight.

          Starting in 1944, Manhattan Project scientists built a pile of Pumpkins to exacting specs: they were the same size and weight as Fat Man, the nuclear bomb that would ultimately help end World War II when it fell on Hiroshima.

          During the final weeks of the war, American bombers dropped 49 of the rotund Pumpkins throughout the Japanese countryside, as a dress rehearsal for the real thing. The pilots of Enola Gay and Bockscar – the planes that would release Fat Man and its twin, Little Boy – got practice handling the massive weapons, and the Japanese got used to dodging big, fat, oblong bombs. They’d be less likely to notice Fat Man until it was too late.

          The Pumpkins weren’t nuclear, but they packed a powerful wallop. During July and August 1945, the pilots of the 509th Composite Group – a specially-trained Air Force unit who’d trained at a classified base in Utah – strafed Japan with Pumpkins, killing around 400 people and wounding a thousand more.

          As the 509th honed their aim, they flattened schools, shopping districts, random mountainsides, and the moat of the Imperial Palace.

          Not to mention a little car company called Toyota…

          By 1945, Toyota – founded in 1926 as an automatic loom factory – was already off to a rocky start. After president Kiichiro Toyoda (who changed the company name slightly for good fortune) started building cars in 1937, the Japanese government had quickly commandeered the assembly lines to make war vehicles.

          With Emperor Hirohito calling the shots, Toyoda shuttered production on his Model AA passenger car and focused on assembling military trucks. The government offered one-fifth of the payment upfront and the rest of the cash on delivery. It wasn’t the best business model, but it kept the lights on.

          Until the Pumpkin fell, anyway.

          By August 14, Fat Man and Little Boy had dropped, but Japan was still embroiled in tense surrender negotiations. Bockscar – the Boeing B-29 that had delivered Fat Man on August 9 – had time to kill and Pumpkins to spare.

          So one day before the war officially ended, the plane swerved over the main Toyota plant in Koromo and released one of the last Pumpkins of World War II. A quarter of the facility went up in flames and the whole production line shut down, while two-thirds of the workers went AWOL and never came back.

          The next day, Emperor Hirohito formally surrendered via radio broadcast.

          The U.S. had 66 leftover Pumpkins, but not for long. Air Force crews quietly escorted the remaining orange bombs 10 miles into the Pacific and tipped the barges into uncharted water.

          Of the 49 Pumpkins that were deployed, 48 are accounted for. Japanese researcher Koki Nishioka thinks the final missing Pumpkin is nose-down somewhere in the Kobe region, and he’s still walking the hills with his metal detector, searching.

          As the smoke cleared, Toyoda – fearing he’d never build cars again – scraped together a few warehouses and repurposed equipment to assemble radios and grind flour. It took two years to rebuild the squashed Koromo factory. In 1947, American occupying forces finally gave Kiichiro Toyoda the green light to start stamping out automobiles once more.

          This did not go so well.

          Toyota’s production process was clunky at the best of times, and post-Pumpkin, it devolved into chaos. Foremen scrapped huge batches of parts whenever engineers goofed up – which meant it often took up to a year to make minor design updates. On the floor, workmen clashed over whether to use inches, meters, or the traditional Japanese measuring system, while an ongoing steel shortage and violent labor disputes gummed the works up further.

          Toyota was routinely losing up to 300 yen on every 3,500-yen vehicle that rolled off the assembly line, which translated to 8% losses per year.

          Staggering under the disapproval of his ancestors, Kiichiro Toyoda moaned,

          It was hard for me to bear the fact that Toyota was complacently producing such low-quality vehicles. I felt guilty for many years and lived the difficult life of an outcast.

          During the late 1940s – as Japan struggled through the continued humiliation of American occupation – Toyota’s ancestors continued to frown. By 1949, the company was unable to pay its wages, heavily in debt and facing possible bankruptcy. A visit overseas to Ford – which was then producing 80,000 units to Toyota’s 40 – did nothing to improve morale.

          In 1950, Toyoda resigned as president, washing his hands of the mess he’d created. He took his unluckily-spelled last name with him, which was maybe a good thing…

          That June, the flailing Toyota factory received an unexpected rush order from the Pentagon… for 4,679 Model BM trucks. The Korean War had just broken out, and the U.S. needed a close cross-border supplier for army vehicles.

          At 3.66 billion yen, the contract was, in the words of the Bank of Japan, “divine aid.” It also posed some problems, such as, how the hell would they get all this done by October?

          Enter W. Edwards Deming, the American efficiency expert that everyone would rather forget…

          I Don’t Get No Respect

          “Japanese efficiency” is a perennial buzzword in corporate culture, but frankly, Japanese industry started out as a hot mess. Japan’s famed efficiency culture comes straight from a Wyoming quality-control expert.

          W. Edwards Deming traveled to Japan in 1947 to help conduct a census, and stayed to lecture on statistics. By 1950, he was drawing crowds of business leaders to seminars on his PDCA Cycle, a continuous, rolling checklist of Plan-Do-Check-Act.

          The Check part of the cycle was where Toyota kept screwing up. Deming explained that it was counterproductive to inspect products for flaws after they rolled off the assembly line – it was much more efficient to troubleshoot while they were still being built.

          Deming hadn’t had much luck suggesting these ideas to hard-headed American car manufacturers – but the Toyota team was eager for any help they could get. Toyota’s new president, Taizo Ishida, and chief production engineer Taiichi Ohno quickly implemented Deming’s ideas. They also added some Japanese flourishes: Kaizen (continuous improvement), Jidoka (automation with a human touch), and Kanban boards, a visual way to streamline production.

          Conveniently erasing Deming from the picture (and from their promotional materials), they dubbed the new method the Toyota Way.

          The turnaround was instant. Armed with Deming’s quality-control magic, Toyota successfully fulfilled its Korean War truck contract and went on to double its book value and crush production goals over the next five years. (By then, surprise, Kiichiro Toyoda wanted to come back on board as CEO, but he died of a cerebral hemorrhage before he could rejoin.)

          As the decades rolled on, the Toyota Way (really, the Deming Way) transformed a pumpkin-flavored pancake into America’s number-one import car, a business that would outperform both Ford Motor and General Motors during the 1970s gas crisis. By the mid-1980s, Toyota was building its own factories on American soil and producing 4 million vehicles a year, a close second to Ford.

          By then, Ford and other American companies were reaching out to W. Edwards Deming, begging him to re-design their own assembly lines. Too little, too late…

          After a lifetime of snubs from American companies – and watching Japanese companies take credit for his ideas – Deming was too worn out to do much more consulting. He died in the early 1990s, efficient to the end: he left behind a refrigerator full of eggs with penciled expiration dates, arranged oldest to newest.

          His quality-control system had a far longer shelf life.

          Poached!

          In 1986, after becoming the first foreign company to sell 1 million cars in America, Toyota realized it had another valuable commodity to export: good advice.

          Hand-picking several of his top efficiency experts, CEO Taiichi Ohno sent them out with his blessing to form a consulting company called Shingijutsu, which would teach all sorts of companies how to implement the mystical Toyota Way.

          They were quick to point out that if you really wanted to put the Way into practice, you had to come work at Toyota – but they were happy to teach you how to personalize a version for your own factory… for a hefty fee, of course.

          Shingijutsu’s experts traveled to large industrial companies to tutor them in Japanese efficiency, also known as “lean” manufacturing, and by various cult-y sounding buzz phrases like Just In Time and “Six Sigma.” Underneath all the window dressing, it was the same old PDCA Cycle from poor, forgotten W. Edwards Deming.

          And cult-y sounding or not, it worked like a charm. During the 1990s, a rash of high-profile companies adopted “lean” principles with spectacular results: Motorola saved $16 billion and eliminated 90% of its semiconductor defects, General Electric reduced production time on its engines by 30% and moved 50% more inventory off the floor, and on and on. Today versions of the Toyota Way are still maximizing efficiency at some of the largest Fortune 500 companies, including Boeing, Caterpillar, and Deere & Co.

          The 40-year-old company we are recommending in this issue of Best Buys is one of them…

          A $150 billion science and tech juggernaut, this company credits its success largely to a personalized version of the Toyota Way that its CEO learned from Shingijutsu’s traveling experts. Happily for us, its performance has been unfairly overlooked, making it a world-class business at an ideal entry point.

          ⚙ Edit 🗑 Delete

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          1. Danaher (NYSE: DHR)

          Danaher (NYSE: DHR) is a science, medicine, and technology firm that owns and operates dozens of specialized companies.

          Why We Recommended Danaher

          With a market cap of $150 billion, Danaher owns nearly 20 companies across three industry segments, generating close to $25 billion in annual revenue.

          Growing through acquisition is a fairly common practice – in fact, there are more than $2 trillion in mergers and acquisitions (M&A) every year. But three-quarters of these M&A transactions fail, and wind up destroying shareholder value.

          Danaher defies these odds because it doesn’t just “buy” a business. It ensures its money is put to good use. To do this, inspired by Japanese efficiency, it created a playbook for transforming good companies into great ones – it is part of the company’s guiding philosophy called the Danaher Business System. It is a systematic way to build efficiencies for supercharging profit margins and returns on capital, regardless of the business model or industry.

          Since its founding in 1984, Danaher’s success following this approach is reflected in its financial performance. Over its 40 years, the company has compounded shareholder capital at an incredible 21% per year. That’s nearly twice the S&P 500’s compounded annual return of 11.6% over the same period.

          Why Danaher Is A Best Buy

          Danaher has fallen out of favor after a post-COVID hangover from the boom and subsequent bust in sales of respiratory testing equipment. But now, after two years of destocking excess inventories, Q1 2026 bioprocessing equipment orders grew more than 30% year-over-year (“YOY”) for the first positive order growth in nearly two years.

          The recovery that began in Q1 continued into Q2, with Danaher’s net income up 60% YOY to $1.23 per share. Importantly, the company’s measure of core revenue, which excludes respiratory testing, increased by 4.5%, indicating that the core demand for bioprocessing equipment and services is returning to growth after the multi-year post-COVID slump.

          Management raised its full-year 2026 outlook for earnings per share to $8.53, up from a prior forecast of $8.45. Meanwhile, the business continues to generate a healthy amount of cash, with free cash flow up 15% YOY to $1.3 billion in Q2.

          With 80% of revenue coming from a stable source of recurring orders of consumables, reagents, and service, the core business remains stable and recession-resistant. Trading at around $200, we’re getting a chance to buy into this long-term compounder at 23x earnings, just as the business reaches an inflection back to consistent earnings growth.

          Action to Take: Buy Danaher (NYSE: DHR) up to $250 per share

          2. Versamet Royalties (Nasdaq: VMET)

          Versamet Royalties (Nasdaq: VMET) is a fast-growing precious metal royalty company.

          Why We Recommended Versamet Royalties

          Versamet Royalties (Nasdaq: VMET) is one of the fastest growing precious metals royalty companies in the world. Since 2022, it has increased royalty production volumes from zero to 10,000 gold-equivalent-ounces (“GEOs”) and is on track to double in size this year to 20,000–23,000 GEOs.

          Royalty and streaming companies are the tollbooths of the mining world. Rather than operating mines – with all the capital expenditures, labor, and operating risks that entails – royalty companies provide upfront financing to miners in exchange for a percentage of future production (royalties) or the right to purchase metal at a fixed, below-market price (streams).

          Led by CEO Daniel O’Flaherty, who holds one of the greatest track records in the industry, Versamet has been compounding at 50% annually across every meaningful metric – revenue, cash flow, production – without issuing equity or having to invest in mine development. Since the company began trading on the Nasdaq just six months ago, on March 6, most investors have not heard of it, so the stock is still cheap. At around $10 per share, the business trades at a market cap of $1.1 billion. And based on current gold prices of $4,500 per ounce, we expect the business will generate close to $100 million in revenue this year, with staggeringly high operating margins above 90%.

          We see several catalysts ahead that will unlock significant shareholder value, including a major acquisition of a royalty stream on one of Canada’s most promising new gold mines. As more catalysts begin to unfold, and as more analysts begin covering Versamet and it becomes eligible for index inclusion, this will likely lead to a significant re-valuation of its shares.

          Why Versamet Royalties Is A Best Buy

          On August 13, Versamet reported its fourth consecutive record quarter since going public. Revenue of $23.7 million was up nearly fivefold YOY, GEOs hit a record 5,255, and the cash cost margin reached 93%. Management reaffirmed 2026 guidance of 20,000 to 23,000 GEOs. And by 2028, once Skeena Resources’ Eskay Creek open-pit, gold/silver mine in British Columbia reaches production, Versamet’s output climbs past 30,000 GEOs on our conservative base case, with analyst consensus near 40,000. That’s a quadrupling in four years – without operating a single mine or spending an additional dollar of capital on expansion.

          Eskay Creek is Versamet’s cornerstone acquisition and is the reason we’re elevating VMET shares now. In April, Versamet paid $360 million for a 3.52% life-of-mine gold stream on Eskay Creek – the restart of what was historically one of the highest-grade precious metals mines on Earth, producing 3.3 million ounces at 45 grams per tonne during its 1994–2008 run in British Columbia’s Golden Triangle. Operator Skeena Resources has construction 62% complete, fully permitted, with first production targeted for Q2 2027. Once running, Eskay Creek sends Versamet more than 10,000 ounces of gold per year – roughly $45 million in annual revenue at current gold prices – and Versamet funded 94% of the purchase with debt, issuing just 2% in new shares.

          Versamet trades at 10x 2027 estimated cash flow. Its royalty peers – Franco-Nevada (FNV), Wheaton Precious Metals (WPM), Triple Flag Precious Metals (TFPM), and the rest – average 18x to 20x. A re-rate to the bottom of the peer range roughly doubles the stock – and that’s before any credit for rising gold prices, which flow almost entirely to the bottom line at a 90% margin.

          The mechanical buyers are already arriving. Daily trading volume has risen roughly tenfold since late 2025. MSCI added VMET to its Small Cap Index in May. And the company expects to meet inclusion criteria for GDXJ – the most widely held junior gold exchange-traded fund (“ETF”) – in the second half of this year. Index inclusion forces buying, regardless of price.

          Action to Take: Buy Versamet Royalties (Nasdaq: VMET) up to $24 per share

          3. Salesforce (NYSE: CRM)

          Salesforce (NYSE: CRM) is the world’s leading cloud-based customer relationship management platform.

          Why We Recommended Salesforce

          Salesforce (NYSE: CRM) is a global leader in cloud-based software, specializing in customer relationship management solutions. With a $140 billion market cap, it generates just over $40 billion in annual revenue. Salesforce empowers businesses of all sizes to connect with customers in innovative ways through its integrated online software platform. The company’s core offerings include tools for sales, customer service, marketing automation, analytics, and application development. These products are all designed to enhance customer engagement and streamline business processes. With a strong focus on digital transformation, Salesforce serves industries ranging from small startups to Fortune 500 enterprises.

          Salesforce has 72,000 employees worldwide, serving 150,000 customers. Company revenue has increased at a compound annual growth rate of 24% since 2004, when shares went public. In fact, its revenue has never been down YOY – even during the 2008 Global Financial Crisis or the COVID pandemic.

          Why Salesforce Is A Best Buy

          In a single trading session in February, $285 billion in market cap evaporated from enterprise software stocks like Salesforce. At its April 10 low, the iShares Expanded Tech-Software ETF (IGV) had fallen 35% from its 2025 high.

          The consensus explanation was that artificial intelligence (“AI”) is eating software – and that software companies’ days are numbered. But it’s not as simple as that: not all software companies are dying, and the companies that survive this paradigm shift will be more valuable than the old ones ever were.

          Salesforce has seen its stock hit heavily recently – down 22% year-to-date – largely driven by this investor anxiety regarding how its traditional user-based licensing model will survive as AI replaces human roles. In response, Salesforce has pivoted its pricing structure toward consumption-based billing, charging per automated task completed rather than per human worker.

          Its plan seems to be working, as Salesforce is performing strongly: for fiscal Q1 2027, released on May 27, revenue rose 13% YOY to $11.1 billion, and EPS of $3.88 beat consensus estimates by 24%, signaling that the company’s past cost-cutting efforts are heavily falling to the bottom line. Crucially, its critical growth catalyst, Agentforce, crossed the $1 billion annualized recurring revenue (“ARR”) milestone, proving real enterprise adoption. ARR is up roughly 205% YOY, proving the enterprise adoption thesis.

          Management returned $27.5 billion to shareholders during the quarter, highlighted by a $25 billion accelerated share-repurchase program. While the enterprise software landscape remains sluggish, Salesforce’s aggressive buybacks and embrace of AI will continue to drive its growth.

          Salesforce reports Q2 2027 earnings on August 26, with guidance for revenue around $11.3 billion (up about 10% YOY) and consensus estimates for EPS near $3.10.

          At roughly $200 per share, Salesforce trades at less than 15x forward earnings. While shares have rallied roughly 25% since we recommended Salesforce as a Best Buy in July, it’s still trading at a multiple that prices it as a disruption victim. That discount will shrink as Salesforce continues to execute.

          Action to Take: Buy Salesforce (NYSE: CRM) up to $251 per share

          Every month, we highlight three current recommendations that are at an attractive buy point, and we include those with the best buying opportunity as our Best Buys. While we sometimes alternate which companies we list as our Best Buys, removing a stock from the list does not necessarily mean we no longer recommend it – nor does it imply a recommendation to sell shares in that company once it is no longer a Best Buys. It’s only that the new picks present an even more compelling investment opportunity.

          Important: Porter & Co. intends to invest $500,000 of its own capital in securities in our Best Buys, including several of the recommendations written about above. Porter & Co.’s decision to purchase these stocks should not be considered personalized financial advice. Probably not surprising to you, but if we like a stock or bond, we buy it. Some people don’t like that, while others think it’s a good sign if the analyst has skin in the game. It’s also a good idea to consult with an investment professional before purchasing any securities – maybe even run it by your mother or golfing buddies. And there’s more… Porter & Co. does not recommend positions in unregulated securities because there are plenty of good ones that are regulated.

          Porter & Co.
          Stevenson, Maryland

          The post August 2026 Best Buys appeared first on Porter & Co..

          • ✇Porter & Co
          • The Day “Safe” Stopped Feeling Safe Porter &#38 · Co.
            Issue#145, Volume#3 What’s Replacing The Traditional 60/40 Stocks/Bonds Portfolio Inside Today’s Issue Essay: The Day “Safe” Stopped Feeling Safe An Important Market Warning Sign Gets Louder Axon’s New Deals Trouble At Broadcom Chart Of The Day… Franco-Nevada (FNV) Today’s Mailbag Editor’s note: Today, Porter turns the Daily Journal over to Matt Tuttle, CEO of Tuttle Capital Management and portfolio manager of the Porter & Company Porter Portfolio Index ETF (PCPP). It was April 8, 20
             

          The Day “Safe” Stopped Feeling Safe

          21 August 2026 at 13:00

          Issue#145, Volume#3

          What’s Replacing The Traditional 60/40 Stocks/Bonds Portfolio


          Editor’s note: Today, Porter turns the Daily Journal over to Matt Tuttle, CEO of Tuttle Capital Management and portfolio manager of the Porter & Company Porter Portfolio Index ETF (PCPP).


          It was April 8, 2025, about 20 minutes after the market open.

          I’d already made my peace with the equity screen on my desk. The S&P 500 had given up 10.5% in the two sessions after U.S. President Donald Trump’s “Liberation Day” tariff announcement, bad enough to be the fifth-worst two-day stretch in 75 years.

          And then there was the other screen.

          The long bond was falling too. Not holding… not lagging… but plummeting. According to the conventions of portfolio management sold by Wall Street, a free-falling long bond while stocks were collapsing was precisely what was not supposed to happen.

          By the end of what was a very long week, the 30-year Treasury closed at 4.85%, the sharpest weekly jump in long-dated yields since 1982. (The way a bond works is that when its yield rises, the price falls.)

          This was big trouble for anyone with a classic 60/40 stocks/bonds portfolio. The airbag didn’t deploy because bonds – the asset that’s generally supposed to go up, when stocks go down – was going down too.

          Three Times Is Not Bad Luck

          I’d seen this movie before.

          Three times in 17 years, the hedge – the asset that was supposed to be the ballast – didn’t hedge.

          In 2008, during the Global Financial Crisis, Treasuries held. Stocks lost 37%, long Treasuries returned more than 20%. What failed, though, was everything else that had sold as diversification: corporate bonds, mortgages, credit funds, alternatives. They fell together at the exact moment managers expected they would provide a cushion for stocks by not marching to the same drummer.

          In 2022, the hedge itself failed. Pandemic supply shocks, stimulus spending and the energy spike after Russia invaded Ukraine drove inflation to a 40-year high of 9.1%. The Fed raised rates 425 basis points in nine months. (A basis point is one hundredth of a percentage point, so that’s a 4.25-point increase.) Few things are more challenging for a long bond than rising rates.

          The standard 60/40 portfolio – for decades the default recipe in retirement planning – lost roughly 17.5% for the 2022 calendar year, as measured by Morgan Stanley Investment Management using a blend of 60% U.S. equities and 40% U.S. Treasury bonds. It was the worst year since 1937. And stocks weren’t doing the damage alone: long Treasuries fell harder that year than at any point in the recorded data.

          Then came, as I mentioned, April 2025, when both equity and bond screens went red at once.

          Each time the classic hedges failed, we were told it was an anomaly.

          But three anomalies in 17 years starts to look less like bad luck, and more like a design flaw.

          Porter Had Been Saying It Already

          I reached that conclusion the expensive way, one drawdown at a time. Porter reached it years earlier, and he published his thoughts for the world to read.

          He talked about the erosion of the dollar, and the dark and inevitable arithmetic of a government that has not stopped borrowing. He called it the bond trap: the “safe” asset had quietly become one of the riskiest things you could own. He’d been writing that years before the charts made it obvious.

          That’s why, when Porter’s team called late last year about turning those ideas into an exchange-traded fund – an ETF – it was a quick and easy answer.

          Why The Long Bond Breaks

          So how does the asset that the industry treats as its safest… become one of its riskiest?

          How the 30-year Treasury works: Hand the government $1,000 for 30 years. You get a fixed coupon (that’s the interest) every six months, and then you get your principal back 30 years later.

          Two things decide what that promise is worth: What those dollars will buy in 2056, and what rate other buyers demand for the same promise in the meantime. Because if they demand a higher return, the bond that you own will be worth less.

          So let’s look at the borrower. The United States government ran a federal deficit of roughly $1.8 trillion in its 2025 fiscal year – 5.9% of GDP, against a 50-year average of 3.8% – plus trillions more in unfunded Social Security and Medicare promises.

          In my view, there is no politically viable tax increase, and no realistic spending cut, that could close a gap that size. Historically, gaps of this kind have often been narrowed by inflation.

          In other words, dollars get created, each buys a little less, and the debt gets repaid in money worth a whole lot less in real terms than the money borrowed.

          That isn’t a hedge. A hedge is supposed to pay when your stocks don’t. Inflation, though, takes both.

          Underwriters, Not Treasuries

          So if the long bond isn’t reliably the defensive part of a portfolio, what else might do that job?

          Porter’s answer, and the part of his framework I had the hardest time arguing with, is to hand that job to property and casualty (P&C) insurance stocks. Those are the snoozefest (for anyone who’s not an investor, at least) companies that write your home and auto coverage, and pay out when a tree lands on a roof or you get in a fender bender.

          A savvy insurer who knows how to price risk could be paid to hold its bonds. Premiums arrive today, claims are paid out years later – and the insurer can retain what it earns on the money in between. For example, Warren Buffett’s Berkshire Hathaway (BRK) ran roughly $176 billion of other people’s money that way in 2025.

          Insurance companies also choose what to own and, for example, shorten maturities (to reduce volatility and downward price movement) when the rate environment is dangerous. A bond fund, though, holds whatever its index dictates, all the way down.

          Of course, an insurance company that isn’t good at understanding the risks it’s taking on will wind up paying out more than it takes in, which doesn’t do investors any good. That’s why in the “bond” slice of the new fund I’ve created with Porter, we screen for underwriting quality before anything else.

          How It Works Inside The Fund

          PCPP is a passive fund. It seeks to track the investment results, before fees and expenses, of the Porter & Co. Porter Portfolio Index — a rules-based, multi-asset index. In the Porter & Company Porter Portfolio Index ETF (ticker symbol: PCPP), no holding is chosen by discretion on the day. The rules are written in advance.

          A quarter of the portfolio goes to P&C insurance stocks, drawn from Porter & Co.’s analysis that’s screened for size, business mix, and historical return consistency. The top 20 that clear those bars go in, weighted so that historically stronger underwriters receive larger weights. No name accounts for more than 10%, and the index is rebuilt once a year.

          Nobody gets to fall in love with a name. Porter & Co. builds the index. As the adviser, we can’t change it.

          The other three sleeves of the fund operate the same way. You can read the full framework and the prospectus at porterandcofunds.com.

          A Better Definition Of Safe?

          In my opinion, “safe” doesn’t suggest an investment that doesn’t move.

          The question worth asking is whether the thing you bought as a hedge behaves the way you expected – during a week that the equity side is down double digits, and you’re looking at two red screens.

          By that definition, the long bond may have stopped being safe some time ago.

          From what I’m seeing, most portfolios haven’t gotten the memo.

          Matt Tuttle, CEO/CIO
          Tuttle Capital Management

          P.S. Every morning before the open, I publish The Daily HEAT, my framework applied to whatever the market is doing that day. It’s free. Sign up here.

          Tell us what you think of today’s Daily Journal: porterstansberrydirect@gmail.com

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          3 Things To Know Before We Go…

          1. The riskiest junk bonds have stopped following the stock market. CCC-rated debt – the lowest tier of junk – is the corner of the bond market that normally tracks stocks most closely, moving about twice as much per point of S&P move as safer BB-rated paper. Since January, the extra yield investors demand to hold CCC debt instead of Treasuries has widened dramatically as the S&P 500 has continued to rise to new highs. The last time the two diverged like this preceded the 2022 bear market in stocks.

          2. Axon lands three new deals in three new channels. In one week, Complete Investor recommendation Axon Enterprise (AXON) earned a 10-year, $40 million deal to put body cameras on every correctional officer in Maryland’s state prisons, then the Transportation Security Administration (“TSA”) announced that Axon will supply counter-drone sensors at U.S. airports, and the company also delivered an anti-drone system to Bulgaria – its first to a European military. Correctional facilities, federal civilian aviation, and European defense are all channels Axon didn’t serve two years ago. Shares are up 20% since our July 18 recommendation.

          3. Broadcom adds to debt-fueled AI vendor financing woes. Custom chipmaker Broadcom (AVGO) announced yesterday talks with a group of lenders to raise up to $100 billion in debt for the purchase of its chips. The credit will be extended to Anthropic and other companies investing in AI computing power, with Broadcom potentially guaranteeing up to $70 billion of the debt, according to Bloomberg. The credit market reacted by sending Broadcom’s credit default swap – an insurance contract that pays out in the event of a default – to a new high of 80 basis points, up from just 10 basis points in June. The bond market is becoming increasingly concerned about the growing use of debt and circular financing arrangements fueling the AI boom.


          Chart Of The Day… Franco-Nevada (FNV)

          Franco-Nevada (FNV) has long been Porter’s favorite gold royalty company – the most capital efficient business model in the sector, with the best capital allocators – and since we originally added it as a Best Buy in late 2023, shares have gained 142%.

          ⚙ Edit 🗑 Delete

          Every month we select three Porter & Co. recommendations that we think are at a particularly attractive buy price. Our next batch of Best Buys goes to paid-up subscribers tomorrow, August 22. To see what the team has selected, click here to learn more.


          Mailbag

          Yesterday, Porter defended his thesis that retailer Target is a fading business, despite the recent strong performance in TGT shares.

          “Spot On”

          Anne P. writes:

          Porter your assessment regarding more affluent shoppers no longer being Target customers is spot on. The stores are no longer clean, the clerks know nothing, if you can find one. Merchandise quality has degraded while becoming aggressively political. The result of their choices of products, political statements, and employees has ruined their business.


          “Woke”

          James C. writes:

          Porter, your in-depth analysis is impressive except for missing one element. That being the fallout of the store going in the extreme by bowing to the woke, thru endorsing and providing an abundance of gay community merchandise.

          That offended and lost a customer base.


          “Case Study In What Not To Do”

          Marc Z. writes:

          I have always considered Target’s business judgment as nonsensical. I used their foray into Canada in my business class as an object lesson in what not to do.


          “Virtually Empty”

          Michael H. writes:

          I am a 27-year subscriber. This recent comment on Target is really interesting. In the last year, I have been inside Target stores in Phoenix, Arizona, Colorado Springs, Colorado, and Casper, Wyoming. To my surprise they have been virtually empty of customers. There are maybe 2-3-4 customers in the whole store. This really surprises me. And so yes, their foot traffic is woefully absent. And yes, as a customer I am wondering how they are staying open.

          Thank you for your comments, and a very informative and interesting read.


          “Surprised At Ernst & Young”

          Tom W. writes:

          I am a CPA and I am surprised that Ernst & Young signed-off on this accounting treatment!


          Porter & Co. Market Snapshot

          Price Yesterday’s Return Year-to-Date Return
          S&P 500 Index $7,641.16 -0.86% 12.4%
          Gold per ounce $4,516.58 0.02% 6.1%
          Bitcoin $72,664 5.25% -12.1%
          Oil (West Texas Intermediate) per barrel $86.83 2.88% 51.2%
          Berkshire Hathaway (BRK) $744,600 -0.74% -1.4%
          Porter’s Permanent Portfolio – 0.46% 4.0%
          The Better Than Berkshire Index – -0.93% 10.6%
          Total Return Annual Return
          Porter & Co’s Top Ranked* 36.5% 16.9%
          Yield Yesterday’s Change Change
          Year-to-Date
          U.S Treasury 30-Year Yield 5.24% 6 bps 40 bps
          Prices as of 4:00 pm ET August 20, 2026 | bps = basis points (or 0.01%)
          *A Complete Investor risk rating of 1 is defined as a “low risk, high allocation” security, while positions rated closer to a 5 are higher risk. Porter & Co.’s top-ranked positions include those rated either 1 or 2 in Complete Investor portfolio.


          Porter & Co. Top Positions

          Publication Ticker Description Total Return
          Biotechnology QURE uniQure 237%
          Biotechnology SGMT Sagimet Biosciences 189%
          Complete Investor BWXT BWX Technologies 176%
          Complete Investor BTC/USD Bitcoin 170%
          Biotechnology NUVB Nuvation Bio 169%
          Biotechnology ROIV Roivant Sciences 163%
          Biotechnology TGTX TG Therapeutics 143%
          Complete Investor PM Philip Morris 138%
          Biotechnology QURE uniQure 131%
          Complete Investor SKWD Skyward Specialty Insurance 127%
          Prices as of 4:00 pm ET August 20, 2026


          Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here| New Window. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

          The post The Day “Safe” Stopped Feeling Safe appeared first on Porter & Co..

          • ✇Porter & Co
          • Trading Club Pro Update – Week Of August 17, 2026 Porter &#38 · Co.
            Editor’s note: For the month of August, we’re shifting the publication schedule for The Trading Club to bi-weekly updates. We will post our next update on September 4, after which we’ll return to our regular weekly publishing schedule. The value of The Trading Club Pro tracking portfolio settled at $114,290 as of Thursday, August 20 – up 14.3% since the June 22, 2026, inception date (see the detailed portfolio snapshot below). We made no trades this week. In this issue we provide an update on a
             

          Trading Club Pro Update – Week Of August 17, 2026

          21 August 2026 at 09:08

          Editor’s note: For the month of August, we’re shifting the publication schedule for The Trading Club to bi-weekly updates. We will post our next update on September 4, after which we’ll return to our regular weekly publishing schedule.


          The value of The Trading Club Pro tracking portfolio settled at $114,290 as of Thursday, August 20 – up 14.3% since the June 22, 2026, inception date (see the detailed portfolio snapshot below). We made no trades this week.

          In this issue we provide an update on a covered-call position expiring today, review the latest earnings report from one of our software holdings, and address a recent subscriber question in the “Mailbag.”

          Update On LandBridge Covered Call Expiring Today

          The following covered-call contract on our 100-share position in West Texas land leasing company LandBridge (NYSE: LB) is set to expire at the close of trading today:

          One LandBridge (NYSE: LB) $75 covered call, expiring August 21, 2026

          No action is needed as we plan to continue holding the position through today’s expiration date.

          With shares of LandBridge trading just under $90, the option is likely to expire in-the-money at the close of trading today. In this scenario, our shares will get called away, meaning our broker will automatically sell our 100-share position at the $75 strike price after the close of trading today.

          Conversely, if shares fall below the $75 strike price by the close of trading today, the option will expire out-of-the-money and we will retain our 100-share position.

          Either scenario is an acceptable outcome for us. Let’s briefly review the latest quarterly results and the valuation of the business that leads us to this conclusion.

          LandBridge reported excellent Q2 results on August 5, including revenue of $67 million, up 41% year-on-year (“YOY”), while net income increased 68% YOY to $31 million. The company is benefitting from the resumption of drilling activity across the Permian basin, as the major drillers like ExxonMobil (XOM) and Chevron (CVX) add new drilling rigs in response to higher oil prices. And with oil production on the rise across the Permian, this is leading to greater volumes of produced water, translating into higher royalty payments for LandBridge.

          Based on the steady growth in drilling activity, the company reiterated its 2026 outlook for EBITDA (earnings before interest, taxes, depreciation, and amortization) to reach $220 million. It also announced advanced discussions with seven counterparties representing over 10 gigawatts of power and data center capacity for land leasing deals. LandBridge CFO Scott McNeely characterized these as projects with signed documents undergoing diligence or agreements currently under negotiation, rather than preliminary outreach. He also noted that the counterparties include a mix of hyperscalers, engineering, and procurement companies, as well as power generation businesses.

          Management expects that “multiple” of these negotiations could convert into firm leases with revenue beginning to flow in by the end of next year, although no formal deals have yet been announced. But that hasn’t stopped the market from beginning to price in this potential future upside, as the shares have enjoyed a significant valuation re-rating in recent weeks.

          At just under $90 per share, LandBridge trades with a $7.9 billion enterprise value (“EV”), putting its valuation at a relatively rich 36x EV/EBITDA ratio. That’s a 15% premium to Texas Pacific Land (TPL), currently trading at 31x EV/EBITDA, with both companies growing at similar rates.

          While the business is performing well, we are ok with taking profits on the stock. At today’s stretched valuation, we believe investors are paying up for shares based on the promise of future data center deals that have yet to come to fruition. That presents a risk of a valuation de-rating in the event that these deals fail to materialize, or take longer to begin generating revenue than the market is currently pricing in. For now, we’ll continue monitoring the story and may re-enter the position should the opportunity present itself.

          In the meantime, we plan on reinvesting a portion of the freed-up cash we expect to receive if the shares close above the covered-call option strike price today.

          And for that, we turn to the latest opportunity provided by what we view as an over-reaction to a minor hiccup in the quarterly report from one of our favorite software stocks.

          Cellebrite’s Minor Sales Hiccup Creates Buying Opportunity

          Digital forensics platform Cellebrite (Nasdaq: CLBT) delivered modestly disappointing Q2 results on August 13. The company generated $131 million in Q2 revenue, or just shy of the $132 million analysts estimated, while earnings per share of $0.11 was in line with expectations. Management also reduced its forecasted revenue for the full year down by 3% to $555 (at the midpoint of the guidance range). However, despite the revenue downgrade, management increased its forecast for adjusted EBITDA up by 3% to $156 million for 2026.

          The primary cause of the sales weakness was attributed to a slower pace of deal closing for the company’s cloud-based software offerings, which were stymied by unexpected regulatory steps. This resulted in a slightly elongated sales cycle, although no deals in the company’s sales pipeline were lost, as we’ll discuss in greater detail below.

          In isolation, we viewed the revenue weakness in Q2 and downgrade in management’s outlook as modest disappointments. But the company also announced the unexpected retirement of CEO Tom Hogan, to be replaced by the former President of Products and Technology, Shiv Ramji, effective immediately.

          While it’s never good to see an earnings miss followed by a guidance cut, it’s even worse when accompanied by a sudden shakeup in leadership. We suspect it was this confluence of negative bits of news that drove the stock down 30% following the report, with some investors likely viewing the sudden CEO change as evidence of deeper problems within the company. However, after looking closely through the numbers and the management commentary from the earnings call, we believe the share price sell off was an extreme over-reaction.

          Let’s start by setting the stage for the regulatory obstacles the company is facing. As we’ve written about previously, in order to legally sell cloud-based software to any agency of the U.S. federal government, the vendor must first secure approval from the Federal Risk and Authorization Management Program (“FedRAMP”).

          Cellebrite secured FedRAMP approval on May 6, and management expected an immediate boost in sales from a healthy backlog of customer demand for its new cloud-based offerings starting in Q2. However, even after securing this approval, the company faced a new and evolving set of requirements that involved “multiple waivers, security reviews, and other other administrative approvals” in finalizing several of its large-scale cloud deals in Q2. CFO David Barter provided the following commentary on the earnings call that put the scope of these delayed deals into perspective:

          When you put the quarter in context, we signed and took down orders probably well north of 1,000. In the end, it kind of came down to four, and it was four that crossed the line, and it was four that involved cloud. One in particular involved a platform. You might recall one of these deals we alluded to last time where they actually called us before we had FedRAMP approval. Even they were a little bit surprised about the changing procurement requirements when you get into cloud and AI and the approvals that we had to secure.

          In other words, we’re talking about just four deals that contributed to the unexpected weakness in Q2. And importantly, none of these deals were lost, but merely delayed. Chief Revenue Officer Marcus Jewell noted on the call that $4 million worth of sales that were delayed in Q2 have since been closed as of the day of the conference call.

          Now admittedly, a slower pace of deal closings will act as a modest drag on the rate of revenue growth over the next couple of quarters. However, the impact here should also be relatively muted over the long-run, with management estimating that the sales cycle was elongated by approximately six weeks for its cloud-based software sales.

          Even with this slower sales cycle, the 3% decline in full year revenue for 2026 is far from a thesis-killer, with the company still on track to increase revenue by 17% this year at the midpoint of its updated guidance.

          The bottom line is that we saw nothing in the report or in management commentary that should lead to any meaningful impairment to the long-term outlook for the business. Conversely, we saw signs of ongoing strength in the core business from the improving net revenue retention rate, which increased by two percentage points over Q1 to 117%. This tells us that the retention and expansion within the existing customer base actually improved sequentially, even as the growth rate from new sales slowed down from an elongated sales cycle.

          We’ll also point out that there’s a flipside to the stringent regulatory requirements Cellebrite faces in selling cloud-based software to government agencies: it further widens the competitive moat around the business. Cellebrite is the only company among its peers that has achieved FedRAMP approval, which management described as a “long and tortuous process” on the Q2 earnings call. So as difficult as it is for the incumbent (Cellebrite) to navigate this complex regulatory environment, this also creates an incredibly high barrier to entry for smaller rivals that have fewer resources, and less of a track record in working with regulators, to overcome.

          Meanwhile, the final thing we’ll point out is that ultimately its earnings and free cash flow (“FCF”) that determine the worth of a business, not the top-line revenue growth rate. And on this last point, we actually saw an improving outlook from the Q2 report, as management upped its earnings outlook by 3% for the full year while reiterating its 30% FCF margin target. This is a result of the company successfully scaling up the business while keeping its costs stable, including headcount – which remained unchanged through Q2 relative to the end of 2025, even as the business grows at mid-teens rates. Looking ahead, management noted that it is “increasingly optimistic about our potential to deliver the next step-up in our profitability and FCF in 2027 as we demonstrate that we can operate the business without material expansion of the headcount.”

          Putting it all together, we see a business on track to increase revenue at a healthy mid-teens annual rate while generating approximately $167 million in FCF this year. At a recent price of around $11, the business trades at a market capitalization of $2.8 billion, with a pristine balance sheet that contains just over $500 million in net cash. That translates into an EV of $2.3 billion, and a valuation ratio of just under 14x EV-to-FCF compared with over 33x for the S&P 500.

          Given Cellebrite’s dominant competitive position, wide structural moat, and high cash flow margins, we see no reason why this business should trade at a market discount. We suspect investors have grown frustrated with the shares after a year and a half of setbacks, starting with DOGE-related fears in early 2025, the perceived AI threat to all things software earlier this year, and now a guidance cut and CEO reshuffling. But simply looking at the objective business fundamentals, we see a deeply discounted stock where the underlying customer base remains sticky and a solid growth outlook.

          Assuming the worst is behind it and the company achieves the latest guidance set out by management, we see no reason why the shares won’t compound in line with revenue growth going forward, at a high-teens rate. Plus, we also see significant upside potential from the valuation re-rating higher towards a market multiple, which would more than double the share price alone.

          Our plan is to take advantage of this opportunity to increase our position in Cellebrite, using a portion of the freed-up cash from the LandBridge option expiration, assuming the option expires in-the-money at the close of trading today. That cash will be available for investment on Monday morning, at which point we’ll issue a new trade alert.

          Next, we’ll show each position in the portfolio broken down by trade type.

          Portfolio Review

          The table below shows all current holdings as of the close of trading on Thursday, August 20:

          A few notes on how to read and interpret this portfolio table.

          Please pay special attention to the “Action” column, where we specify whether each trade is a “buy” or “sell to open” transaction.

          Next, the position size for each trade is equal to the current value of the position, with the exception of the cash-secured puts. In the case of the cash-secured puts, we define the position size as the total value of our future commitment to purchase 100 shares for each contract. This number is calculated as follows:

          Position size = number of contracts x 100 x put strike price

          We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade.

          For example, in the case of the WaterBridge Infrastructure (NYSE: WBI) $30 puts, the position size equals 2 x 100 x $30 = $6,000. We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade. It’s commonly referred to as the “notional value” of the trade.

          To see the current profit/loss across each open position and other details, please see the live snapshot of our tracking portfolio at the end of this update.

          We have compiled a summary overview of the latest quarterly trades released on June 22, which you can find here. Since then, we have recommended the additional trades listed below:

          1. On July 17, we recommended purchasing shares of Novo Nordisk (NYSE: NVO), which you can find here
          2. On July 21, we recommended purchasing shares of Hims & Hers Health (NYSE: HIMS), and we provided the analysis for the company on July 24, which you can find here

          As a reminder, we calculate the leverage ratio using the following formula:

          Leverage ratio = total long exposure/portfolio equity value

          We define total long exposure as the sum of all long positions, including uncovered stocks, covered stocks, cash-secured puts, and option purchases. In the current portfolio, as of Wednesday’s close, these values were as follows (note: we show each value in our portfolio table below):

          • Uncovered stocks: $75,855
          • Covered stocks: $27,345 (netting out the underlying stock value against the covered-call value)
          • Put sales: $41,500 (this “notional value” is the value of stock we’ve committed to purchasing)
          • Long options positions: $942

          Adding up all of these values gives us $145,642 of total long exposure in our current tracking portfolio. We then divide this number into our account equity of $114,290 to arrive at a 127% leverage ratio – well within our self-prescribed limit of 150%.

          Next, we address a recent question from the “Mailbag”


          Mailbag

          Please note that nothing we write should ever be considered individual investment advice, as we are not licensed to provide such guidance. This material is for educational purposes only, and we recommend consulting with a licensed financial advisor for individual investment advice.

          Today’s “Mailbag” letter comes from a subscriber with a question about our position in Celsius in the context of the recent sell recommendation of the stock in the Porter & Co. flagship advisory, Complete Investor.

          I received the alert to sell Celsius Holdings (CELH) in Complete Investor, but there was no recommendation for the holdings in The Trading Club. Is Celsius still a recommended hold in The Trading Club, and if not, is the recommendation to close the options positions?

          Ross Comment: Yes, we continue recommending holding the existing positions in Celsius Holdings (Nasdaq: CELH) in The Trading Club for the reasons described in our prior update on August 7.

          With different analysts running the different publications at Porter & Co, we will sometimes have differing opinions on the same stocks. Plus, the option trading strategies in The Trading Club means we will sometimes have slightly different objectives versus a publication like Complete Investor that’s catered toward a buy-and-hold strategy.

          For now, we’re happy to stick with our current strategy of selling options on Celsius, as we believe the downside risk is limited at current prices, while the elevated option premiums offer an attractive source of steady income potential.

          If you have any questions or feedback, The Trading Club Forum is the best chance to get a quick response from our team.

          Alternatively, you can always email us at mailbag@porterandcompanyresearch.com.

          Good investing,

          Ross Hendricks
          Porter & Co.

          The post Trading Club Pro Update – Week Of August 17, 2026 appeared first on Porter & Co..

          • ✇Porter & Co
          • Trading Club Update – Week Of August 17, 2026 Porter &#38 · Co.
            Editor’s note: For the month of August, we’re shifting the publication schedule for The Trading Club to bi-weekly updates. We will post our next update on September 4, after which we’ll return to our regular weekly publishing schedule. The value of The Trading Club tracking portfolio settled at $134,153 as of Thursday, August 20 – up 34.2% since the May 30, 2025, inception date (see the detailed portfolio snapshot below). We made no trades this week. In this issue we provide an update on a cove
             

          Trading Club Update – Week Of August 17, 2026

          21 August 2026 at 09:07

          Editor’s note: For the month of August, we’re shifting the publication schedule for The Trading Club to bi-weekly updates. We will post our next update on September 4, after which we’ll return to our regular weekly publishing schedule.


          The value of The Trading Club tracking portfolio settled at $134,153 as of Thursday, August 20 – up 34.2% since the May 30, 2025, inception date (see the detailed portfolio snapshot below). We made no trades this week.

          In this issue we provide an update on a covered-call position expiring today, review the latest earnings report from one of our software holdings, and address a recent subscriber question in the “Mailbag.”

          Update On LandBridge Covered Call Expiring Today

          The following covered-call contract on our 100-share position in West Texas land leasing company LandBridge (NYSE: LB) is set to expire at the close of trading today:

          One LandBridge (NYSE: LB) $75 covered call, expiring August 21, 2026

          No action is needed as we plan to continue holding the position through today’s expiration date.

          With shares of LandBridge trading just under $90, the option is likely to expire in-the-money at the close of trading today. In this scenario, our shares will get called away, meaning our broker will automatically sell our 100-share position at the $75 strike price after the close of trading today.

          Conversely, if shares fall below the $75 strike price by the close of trading today, the option will expire out-of-the-money and we will retain our 100-share position.

          Either scenario is an acceptable outcome for us. Let’s briefly review the latest quarterly results and the valuation of the business that leads us to this conclusion.

          LandBridge reported excellent Q2 results on August 5, including revenue of $67 million, up 41% year-on-year (“YOY”), while net income increased 68% YOY to $31 million. The company is benefitting from the resumption of drilling activity across the Permian basin, as the major drillers like ExxonMobil (XOM) and Chevron (CVX) add new drilling rigs in response to higher oil prices. And with oil production on the rise across the Permian, this is leading to greater volumes of produced water, translating into higher royalty payments for LandBridge.

          Based on the steady growth in drilling activity, the company reiterated its 2026 outlook for EBITDA (earnings before interest, taxes, depreciation, and amortization) to reach $220 million. It also announced advanced discussions with seven counterparties representing over 10 gigawatts of power and data center capacity for land leasing deals. LandBridge CFO Scott McNeely characterized these as projects with signed documents undergoing diligence or agreements currently under negotiation, rather than preliminary outreach. He also noted that the counterparties include a mix of hyperscalers, engineering, and procurement companies, as well as power generation businesses.

          Management expects that “multiple” of these negotiations could convert into firm leases with revenue beginning to flow in by the end of next year, although no formal deals have yet been announced. But that hasn’t stopped the market from beginning to price in this potential future upside, as the shares have enjoyed a significant valuation re-rating in recent weeks.

          At just under $90 per share, LandBridge trades with a $7.9 billion enterprise value (“EV”), putting its valuation at a relatively rich 36x EV/EBITDA ratio. That’s a 15% premium to Texas Pacific Land (TPL), currently trading at 31x EV/EBITDA, with both companies growing at similar rates.

          While the business is performing well, we are ok with taking profits on the stock. At today’s stretched valuation, we believe investors are paying up for shares based on the promise of future data center deals that have yet to come to fruition. That presents a risk of a valuation de-rating in the event that these deals fail to materialize, or take longer to begin generating revenue than the market is currently pricing in. For now, we’ll continue monitoring the story and may re-enter the position should the opportunity present itself.

          In the meantime, we plan on reinvesting a portion of the freed-up cash we expect to receive if the shares close above the covered-call option strike price today.

          And for that, we turn to the latest opportunity provided by what we view as an over-reaction to a minor hiccup in the quarterly report from one of our favorite software stocks.

          Cellebrite’s Minor Sales Hiccup Creates Buying Opportunity

          Digital forensics platform Cellebrite (Nasdaq: CLBT) delivered modestly disappointing Q2 results on August 13. The company generated $131 million in Q2 revenue, or just shy of the $132 million analysts estimated, while earnings per share of $0.11 was in line with expectations. Management also reduced its forecasted revenue for the full year down by 3% to $555 (at the midpoint of the guidance range). However, despite the revenue downgrade, management increased its forecast for adjusted EBITDA up by 3% to $156 million for 2026.

          The primary cause of the sales weakness was attributed to a slower pace of deal closing for the company’s cloud-based software offerings, which were stymied by unexpected regulatory steps. This resulted in a slightly elongated sales cycle, although no deals in the company’s sales pipeline were lost, as we’ll discuss in greater detail below.

          In isolation, we viewed the revenue weakness in Q2 and downgrade in management’s outlook as modest disappointments. But the company also announced the unexpected retirement of CEO Tom Hogan, to be replaced by the former President of Products and Technology, Shiv Ramji, effective immediately.

          While it’s never good to see an earnings miss followed by a guidance cut, it’s even worse when accompanied by a sudden shakeup in leadership. We suspect it was this confluence of negative bits of news that drove the stock down 30% following the report, with some investors likely viewing the sudden CEO change as evidence of deeper problems within the company. However, after looking closely through the numbers and the management commentary from the earnings call, we believe the share price sell off was an extreme over-reaction.

          Let’s start by setting the stage for the regulatory obstacles the company is facing. As we’ve written about previously, in order to legally sell cloud-based software to any agency of the U.S. federal government, the vendor must first secure approval from the Federal Risk and Authorization Management Program (“FedRAMP”).

          Cellebrite secured FedRAMP approval on May 6, and management expected an immediate boost in sales from a healthy backlog of customer demand for its new cloud-based offerings starting in Q2. However, even after securing this approval, the company faced a new and evolving set of requirements that involved “multiple waivers, security reviews, and other other administrative approvals” in finalizing several of its large-scale cloud deals in Q2. CFO David Barter provided the following commentary on the earnings call that put the scope of these delayed deals into perspective:

          When you put the quarter in context, we signed and took down orders probably well north of 1,000. In the end, it kind of came down to four, and it was four that crossed the line, and it was four that involved cloud. One in particular involved a platform. You might recall one of these deals we alluded to last time where they actually called us before we had FedRAMP approval. Even they were a little bit surprised about the changing procurement requirements when you get into cloud and AI and the approvals that we had to secure.

          In other words, we’re talking about just four deals that contributed to the unexpected weakness in Q2. And importantly, none of these deals were lost, but merely delayed. Chief Revenue Officer Marcus Jewell noted on the call that $4 million worth of sales that were delayed in Q2 have since been closed as of the day of the conference call.

          Now admittedly, a slower pace of deal closings will act as a modest drag on the rate of revenue growth over the next couple of quarters. However, the impact here should also be relatively muted over the long-run, with management estimating that the sales cycle was elongated by approximately six weeks for its cloud-based software sales.

          Even with this slower sales cycle, the 3% decline in full year revenue for 2026 is far from a thesis-killer, with the company still on track to increase revenue by 17% this year at the midpoint of its updated guidance.

          The bottom line is that we saw nothing in the report or in management commentary that should lead to any meaningful impairment to the long-term outlook for the business. Conversely, we saw signs of ongoing strength in the core business from the improving net revenue retention rate, which increased by two percentage points over Q1 to 117%. This tells us that the retention and expansion within the existing customer base actually improved sequentially, even as the growth rate from new sales slowed down from an elongated sales cycle.

          We’ll also point out that there’s a flipside to the stringent regulatory requirements Cellebrite faces in selling cloud-based software to government agencies: it further widens the competitive moat around the business. Cellebrite is the only company among its peers that has achieved FedRAMP approval, which management described as a “long and tortuous process” on the Q2 earnings call. So as difficult as it is for the incumbent (Cellebrite) to navigate this complex regulatory environment, this also creates an incredibly high barrier to entry for smaller rivals that have fewer resources, and less of a track record in working with regulators, to overcome.

          Meanwhile, the final thing we’ll point out is that ultimately its earnings and free cash flow (“FCF”) that determine the worth of a business, not the top-line revenue growth rate. And on this last point, we actually saw an improving outlook from the Q2 report, as management upped its earnings outlook by 3% for the full year while reiterating its 30% FCF margin target. This is a result of the company successfully scaling up the business while keeping its costs stable, including headcount – which remained unchanged through Q2 relative to the end of 2025, even as the business grows at mid-teens rates. Looking ahead, management noted that it is “increasingly optimistic about our potential to deliver the next step-up in our profitability and FCF in 2027 as we demonstrate that we can operate the business without material expansion of the headcount.”

          Putting it all together, we see a business on track to increase revenue at a healthy mid-teens annual rate while generating approximately $167 million in FCF this year. At a recent price of around $11, the business trades at a market capitalization of $2.8 billion, with a pristine balance sheet that contains just over $500 million in net cash. That translates into an EV of $2.3 billion, and a valuation ratio of just under 14x EV-to-FCF compared with over 33x for the S&P 500.

          Given Cellebrite’s dominant competitive position, wide structural moat, and high cash flow margins, we see no reason why this business should trade at a market discount. We suspect investors have grown frustrated with the shares after a year and a half of setbacks, starting with DOGE-related fears in early 2025, the perceived AI threat to all things software earlier this year, and now a guidance cut and CEO reshuffling. But simply looking at the objective business fundamentals, we see a deeply discounted stock where the underlying customer base remains sticky and a solid growth outlook.

          Assuming the worst is behind it and the company achieves the latest guidance set out by management, we see no reason why the shares won’t compound in line with revenue growth going forward, at a high-teens rate. Plus, we also see significant upside potential from the valuation re-rating higher towards a market multiple, which would more than double the share price alone.

          Our plan is to take advantage of this opportunity to increase our position in Cellebrite, using a portion of the freed-up cash from the LandBridge option expiration, assuming the option expires in-the-money at the close of trading today. That cash will be available for investment on Monday morning, at which point we’ll issue a new trade alert.

          Next, we’ll show each position in the portfolio broken down by trade type.

          Portfolio Review

          The table below shows all current holdings as of the close of trading on Thursday, August 20:

          A few notes on how to read and interpret this portfolio table.

          Please pay special attention to the “Action” column, where we specify whether each trade is a “buy” or “sell to open” transaction.

          Next, the position size for each trade is equal to the current value of the position, with the exception of the cash-secured puts. In the case of the cash-secured puts, we define the position size as the total value of our future commitment to purchase 100 shares for each contract. This number is calculated as follows:

          Position size = number of contracts x 100 x put strike price

          We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade.

          For example, in the case of the Celsius Holdings (Nasdaq: CELH) $30 puts, the position size equals 2 x 100 x $30 = $6,000. We use this number because it accurately reflects our total capital commitment, and thus our total risk exposure on the trade.

          To see the current profit/loss across each open position and other details, please see the live snapshot of our tracking portfolio at the end of this update.

          We have compiled a summary overview of the latest quarterly trades released on June 22, which you can find here. Since then, we have recommended the additional trades listed below:

          1. On July 17, we recommended purchasing shares of Novo Nordisk (NYSE: NVO), which you can find here
          2. On July 21, we recommended purchasing shares of Hims & Hers Health (NYSE: HIMS), and we provided the analysis for the company on July 24, which you can find here

          Next, we address a recent question from the “Mailbag”


          Mailbag

          Please note that nothing we write should ever be considered individual investment advice, as we are not licensed to provide such guidance. This material is for educational purposes only, and we recommend consulting with a licensed financial advisor for individual investment advice.

          Today’s “Mailbag” letter comes from a subscriber with a question about our position in Celsius in the context of the recent sell recommendation of the stock in the Porter & Co. flagship advisory, Complete Investor.

          I received the alert to sell Celsius Holdings (CELH) in Complete Investor, but there was no recommendation for the holdings in The Trading Club. Is Celsius still a recommended hold in The Trading Club, and if not, is the recommendation to close the options positions?

          Ross Comment: Yes, we continue recommending holding the existing positions in Celsius Holdings (Nasdaq: CELH) in The Trading Club for the reasons described in our prior update on August 7.

          With different analysts running the different publications at Porter & Co, we will sometimes have differing opinions on the same stocks. Plus, the option trading strategies in The Trading Club means we will sometimes have slightly different objectives versus a publication like Complete Investor that’s catered toward a buy-and-hold strategy.

          For now, we’re happy to stick with our current strategy of selling options on Celsius, as we believe the downside risk is limited at current prices, while the elevated option premiums offer an attractive source of steady income potential.

          If you have any questions or feedback, The Trading Club Forum is the best chance to get a quick response from our team.

          Alternatively, you can always email us at mailbag@porterandcompanyresearch.com.

          Good investing,

          Ross Hendricks
          Porter & Co.


          The post Trading Club Update – Week Of August 17, 2026 appeared first on Porter & Co..

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