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Funny to see this finally making mainstream news and the front page of HN. I worked as a research analyst at a long/short equities fund and one of the biggest b

Funny to see this finally making mainstream news and the front page of HN. I worked as a research analyst at a long/short equities fund and one of the biggest bets we placed was based on ASF. The sell side was completely complacent about this, but we were tracking the disease closely and the math was undeniable - this was going to be a major, major disruption in global protein markets. Bullets of the thesis were: - African Swine Fever in China is putting half the global supply of hogs at risk. - It will take years for China to get a handle on the disease. - This will cause prices of pork in China to rise. China will have to import pork to fill the hole in order to avoid a political crisis. - As a result, global proteins will enter a multi-year up-cycle. All proteins (beef, chicken, pork) will benefit. This structural thesis could be played many, many ways.

dman 7y ago
Any examples of how a retail investor would play this?
- davidw 7y ago
  Buy an index fund. Do you think you can compete with that big investment outfit that has people working on this stuff full time?
  - tempsy 7y ago
    everyone says this but so long as you aren't day trading this is mostly untrue buying individual stocks is not akin to gambling.
    - et2o 7y ago
      A substantial amount of evidence disagrees with you. Active traders (day traders or not) almost always underperform the market in the long run.
      - tempsy 7y ago
        ok. underperforming does not mean "gambling". i buy what i personally like and use and have made substantially more than the market on Apple, Amazon, Starbucks, PayPal, etc. am I a professional equity analyst? no. but is this "gambling"? I don't think so.
        et2o 7y ago
        Tech has done very well the past few years. In the long run, who knows. Gambling is taking on excess risk for excess profit, especially when the odds are against you (expected value is negative). This could be poker or active trading. It's gambling.
        tempsy 7y ago
        Buy and hold long term is not active trading. You’re conflating two completely different things. It’s odd when I find HN to be so risk adverse when working in tech is all about risk. Fortunes are made with risk. Then as an industry we’re apparently all just degenerate gamblers if buying and holding Apple stock is akin to playing roulette.
        et2o 7y ago
        Yes, that is the definition of active trading. I suggest you do more research. Active trading is contrasted to passive trading (index funds). It’s akin to roulette in that it’s statistically non-optimal, not that the level of risk is the same. HN readers tend to be focused upon evidence and mathematically inclined.
        tempsy 7y ago
        If that were true literally no HN reader would work at a startup, but we know that isn't the case. Or take any compensation in the form of equity in one company, even at a large one.
        7y ago
  - bluGill 7y ago
    Sure I can compete. I don't have so much money under my control that my act of buying/selling changes the market. Thus I can afford to make trades that are worth a lot of money on my scale, but not worth it for the big guys because compared to the total amount they must work with means they don't have the time. Note I said can. Reading the 10k and 8q and other such forms to find those opportunities is boring. I get paid very well to write software instead and just let an index fund grow my money. I can't live off my investments yet, but when they grow enough I'll be able to [substitute any of a number of hobbies I might get interested in], and it won't be a full time job moving money around.
    - davidw 7y ago
      "not worth it for the big guys" Sounds like a legit strategy, but it also sounds like part of it is actively not competing with them.
      - tomrod 7y ago
        Differentiated market.
      - nothrabannosir 7y ago
        If that's how you define it, then it was never the question to begin with. Someone just asked how to move on this info, which, we now all agree, is possible. Nobody said anything about competing until it was brought up as a glib dismissal of the original question. Which, we now agree, wasn't warranted.
        davidw 7y ago
        From the OP "Buy TSN, SAFM, HRL...but it's probably too late at this point. We were placing bets on this 18 months ago." Emphasis mine.
        deleted 7y ago
        [deleted]
        7y ago
  - toohotatopic 7y ago
    Aren't we already in an index fund bubble? How can the stock market stomach all of that liquidity? Don't the share prices go up beyond the value of the companies?
    - pm90 7y ago
      There is a large amount of wealth invested in index funds but that doesn’t mean it’s a bubble. By its definition index funds are amortizing their investments to mitigate risk, this is opposite of a bubble.
      - toohotatopic 7y ago
        I don't understand what you mean with 'amortize'. Doesn't it mean writing off the value of something? Why would you write off the value of an index fund investment? And how does that mitigate risk? I guess you mean that they spread their investment among all companies that belong to an index. But that doesn't solve the problem of too much liquidity.
      - ethbro 7y ago
        Depends on the index fund. Weighting seems surprisingly important, yet almost never mentioned by index proponents. Especially as their total cap comes to represent a broader proportion of the total market.
  - ves 7y ago
    You absolutely can, because you have much less capital to deploy and no strings attached. The sorts of opportunities you’re looking for and they’re looking for can be totally disjoint. Some friends and I made a bit of easy money in college on very good derivatives trades that only existed at tiny volumes (low thousands). There’s lots of good reasons to invest passively but being unable to compete with big funds isn’t necessarily one of them.
    - davidw 7y ago
      "Quarter of the world's supply..." doesn't sound like the world of "tiny volumes", but something that moves pretty big markets, which is hardly an under-the-radar trade.
- shadow-banned 7y ago
  2x
- xwowsersx 7y ago
  Buy TSN, SAFM, HRL...but it's probably too late at this point. We were placing bets on this 18 months ago.
  - dman 7y ago
    Fair enough - thanks for the pointers.
    - thedudeabides5 7y ago
      HOGS Wisdomtree ETF which tries to track US hog futures prices (with some drag)
      - xwowsersx 7y ago
        Not to be confused with HOG which is Harley-Davidson haha
  - skidd0 7y ago
    I have a few questions about the kind of work you do. Mostly just about how you got started and what sort of activities you perform. If you have the time, could you please contact me at skidd0 [at] skidd0 [dot] com?
    - xwowsersx 7y ago
      Sure thing, will do later. FYI I transitioned back to software engineering so I'm no longer doing this professionally, but happy to answer any questions I can. Talk soon.
- bluejay2 7y ago
  One way would be to buy protein producers (e.g. Tyson) . The hard part is figuring out how much of the expected benefit is already factored into current stock prices though. As another user mentioned, this is not exactly breaking news to the investment community. Tyson for example was up 72% in 2019 (vs 32% for the SP500 and 27% for an index of consumer staples companies, of which Tyson is one)
  - xwowsersx 7y ago
    That's exactly right.
  - mikorym 7y ago
    The irony is that an increase in stock price is supposed to reflect future value (of dividends). In this case, the 72% does not accurately reflect the increase in value, unless they almost double their dividend for quite a few years after the whole Chinese pork fiasco. Market effect are exaggerated by investors and speculators. (Read: amplified, not fabricated [usually].)
    - nradov 7y ago
      Why should we believe that you're right and the rest of the market is wrong?
      - mikorym 7y ago
        The rest of the market knows this and uses it to make money. I am not sure what you mean in terms of someone being right and someone being wrong. Edit: The point about future value of dividends is a common approach. My personal addition was that 72% is probably an exaggerated effect, but these kind of swings are to be expected, with later corrections. The point about irony is that when people buy shares, they follow the price of sale of one share, they don't usually try to calculate the future value of dividends. A case in point would be Amazon. However, with Amazon, people expect dividends at some unspecified point in the future.
        7y ago
- ww520 7y ago
  I've bought and maintained holding on LW, which is in the worldwide market of potato products (french fries, etc). Reason being people would be looking for fat substitute when meat price goes up. Restaurants will increase their fries portion to account for the decreasing meat portion. The trend toward plant based food also helps.
  - xwowsersx 7y ago
    Interesting thesis! We looked at the name, but never had that thesis. Maybe same could be said for CVGW (the avocado guys)?
    - ww520 7y ago
      When you look at the components of a fast food burger meal, you got: burger, bun, drink, and fries. Meat and drink stocks have been well analyzed and well brought. Bun has high substitutability and too diverse sourcing. That leaves fries. There're just a few players supplying the potato products. LW is the biggest one. Not sure about CVGW. Might be too small a market.
- mc3 7y ago
  Probably too hard to analyze. How do you know what the demand for meat is like? Will people just switch to other foods if it becomes too expensive? If pork is costing me $50/kg, maybe I start eating potatoes and nuts? Maybe other factors force the price down anyway. I don't know - I wouldn't. Just buy shares that are good for the long term.
- elfexec 7y ago
  I wouldn't take investment advice from strangers on the internet. Especially one so uninformed to claim "Funny to see this finally making mainstream news" or someone so shady that he'd lie on HN to get people interested in his scheme. The ASF and china's pig issue has been known for since 2018. Unless the economist, bloomberg, washingtonpost, etc are not mainstream. https://www.economist.com/china/2018/09/06/african-swine-flu-is-causing-alarm-in-china-and-beyond https://www.economist.com/china/2018/09/06/african-swine-flu... https://www.bloomberg.com/graphics/2019-eliminating-african-swine-fever/ https://www.bloomberg.com/graphics/2019-eliminating-african-... https://www.washingtonpost.com/world/china-races-to-corral-a-deadly-outbreak-of-african-swine-fever-before-it-spreads/2018/08/29/defbf39a-aad9-11e8-b1da-ff7faa680710_story.html https://www.washingtonpost.com/world/china-races-to-corral-a... https://www.vox.com/2019/6/6/18655460/china-african-swine-fever-pig-ebola https://www.vox.com/2019/6/6/18655460/china-african-swine-fe...
kickout 7y ago
This would be incredibly bearish for soybean futures, no? (or at least Brazlian ones, as the US tariffs have already cratered Chinese soy imports)
- xwowsersx 7y ago
  You mean because it would reduce demand for feed? I think that's right. As far as I can remember, China has to wait until ASF is completely eradicated before beginning to rebuild the herd so it's not like the lost demand from the diseased hogs is being replaced by the new herd. Also, piglets probably require less feed than the mature ones.
  - kickout 7y ago
    Yea, that's the logic. Not place for all the world's soybean based protein to go (most of it goes to pigs and chickens). Which is surprising because soybeans are way up in the past month (people hoping for tariff relief). Other shoe waiting to drop, lol.
    - im3w1l 7y ago
      Would you mind explaining how tariffs interact with futures prices? Naively I would think that tariff relief -> more and cheaper imports -> lower price. What am I missing?
      - dhsuywej 7y ago
        Think of farmers in this instance as refineries that use soybean feed to convert Piglettes into Pork-Pigs. Tariff relief on USA brand soybean feed means that Chinese Piglette refineries will probably demand more of the USA brand feed than before because of the now lower price relative to other feed brands. However, at the same time, the refineries are experiencing a shortage of Piglette to mix with the imported soybean feed due to ASF and so they simply have lower feed needs/demands than before. You could make it more complicated by adding nuance like whether this will drive an increase in demand for imported pork as well which could, over time, stimulate USA/Worldwide feed demand as non-Chinese Piglette refineries expand and compete to fill the heightened demand for foreign pork (assuming things play out this way) but the overall gist is simply that there's pressure in two directions but probably not equal pressure.
mschuster91 7y ago
> - As a result, global proteins will enter a multi-year up-cycle. All proteins (beef, chicken, pork) will benefit. I am not so optimistic. Climate change discussions, a couple notable exceptions (Trump, Bolsonaro, Morrison) aside, generally has recognized that animal protein and the efforts required to create it (deforestation for growing food, over-nitration due to feces used as fertilizer) are no longer sustainable. I can very well imagine massive bans or quotas as a result, the Dutch government is actually forced to do something to reduce their CO2 contributions by their Supreme Court.
- bluejay2 7y ago
  Protein prices would likely benefit still under that scenario, at least in the short run, as you are talking about drastically limiting supply. Presumably the demand would still be there.
- xwowsersx 7y ago
  Multi-year could be just 2-5 years. You're talking a much longer-term structural thing. China has to deal with soaring pork prices. I don't think they care about environmental impact.
- jessaustin 7y ago
  Don't base your investments on wishful thinking.
- moosey 7y ago
  All of your suggestions will also cause the prices of animal-based foods to rise. I hope those price increases are substantial.
- perl4ever 7y ago
  If priced accurately, why do you think the externalities of CO2 are anywhere near enough to destroy demand for meat? I only perennially bring this up, because one time I was interested in what the numbers might be, and I looked up the National Resources Defense Council estimates were for the economic impact of global warming in ~a half century. The rather startling figures were only a few dollars per gallon of gas. Not to be at all precise, by "a few" I mean 1-10. Not, it seems to me, qualitatively different that the difference between US and European gas prices. Obviously people still eat meat in the EU and haven't radically changed their lifestyle. I'm not saying that therefore we should not stop climate change, just that as far as I know, the NRDC is reasonably reputable, not a nest of deniers, and they didn't seem to be supporting an economic case for major changes to everyone's lifestyle. That should be shocking, or at least require some resolution. Some people do have the opinion that mainstream sources downplay the consequences of global warming so as not to be too alarmist, and in fact we can't be too alarmist because it really is too late. Maybe that is correct, but when there is such a disconnect and people just don't talk about it most of the time, it deeply worries me. Not just the idea that the world might be ending and we aren't resolving how to prevent it, but that maybe nobody who is talking about these things is serious at all.
Havoc 7y ago
How do you place a bet on something so as you say undeniable though? Ie how are you in front of the priced in wave
- dahfizz 7y ago
  In another comment, OP says he was betting on this 18 months ago. They key is to detect big events like this before they become undeniable common knowledge.
  - xwowsersx 7y ago
    Exactly
  - Havoc 7y ago
    >They key is to detect big events like this before they become undeniable common knowledge. Indeed. It's quite hit miss though.e.g. I called the supermicro stuff right. Made money. Tried same on amd spectre and got burned. Each time relying on hn being ahead of the knowledge curve
  - majos 7y ago
    > key is to detect big events like this before they become undeniable common knowledge But it’s not even enough to know before it’s common knowledge, don’t you have to know before investors with big pockets know (and buy, and drive up the price)? That’s a taller order since those investors have people whose job it is to know this stuff well before it becomes common knowledge.
- xwowsersx 7y ago
  I don't know if you can at this point. People were complacent and dismissed the concerns. Sell side only started writing about it 6 months or more after we caught wind of it. You just have to be ahead of the curve. Many reasons why sell side was complacent, including 1) analysts, especially US-based ones, are very focused on leading indicators of supply from USDA data and 2) they don't want to think about China that much bc they feel it's hard to rely on the data from there, etc
uhtred 7y ago
Beef, chicken and pork are not protein.
noir_lord 7y ago
Partner works in export for a massive pork producer. From what they are saying internally this is/will continue to be a huge shift in the market, the Chinese importers are paying way more generally and even for the parts that the European market doesn't use directly for human consumption.
- ksec 7y ago
  >Massive Pork Producer I am going to guess Danish Crown? Chinese has always been buying in qualities that exceeds any supply capacity. And that was before ASF, after that they try to contain it, as well as opening up more Brazilian Pork Import. While xwowsersx was genius in placing the bet 18 months ago, the price / tonne wasn't so clear* until close to mid 2019 when everything went out of hand. * It wasn't clear because despite raising prices, pork prices ( Brazilian ) has been trading at a ridiculously low level since ~2015.
  - bryanrasmussen 7y ago
    Profile says North of England, does Danish Crown have anything in Britain?
    - rad_gruchalski 7y ago
      Yes: Danish Crown Ltd 57 Stanley Rd, Whitefield, Manchester M45 8GZ, United Kingdom +44 161 766 1144 https://goo.gl/maps/Bj3XfG6vZN7iELSr5 https://goo.gl/maps/Bj3XfG6vZN7iELSr5 https://www.danishcrown.com/en/contact/our-locations/danish-crown-pork-kontorer/england-manchester https://www.danishcrown.com/en/contact/our-locations/danish-... Danish Crown UK Ltd Activities: Sales to retailers, meat processors, wholesalers, foodservice, independent retailers and butcher shops. Production of premium hand salted Danish bacon and bespoke foodservice pork and beef. Nationwide distribution. Products: Cured pork (gammon and bacon), pork, beef, chicken, lamb, burgers and sausages.
      - bryanrasmussen 7y ago
        thanks, couldn't find anything from their website.
gowld 7y ago
Does this mean no McRib for a few years? McRib is how McDonald's plays the pork futures market.
- jandrese 7y ago
  Quite possibly. Although the trade war may distort the US markets enough to allow McDonalds to offer it again. It's hard to predict with Trump is going to do with the tariffs and how China responds.
philshem 7y ago
Are pigs still a source of pharmaceutical insulin? Edit: > Insulin can be made from the pancreas of pigs or cows. Human versions can be made either by modifying pig versions or recombinant technology. https://en.wikipedia.org/wiki/Insulin_(medication) https://en.wikipedia.org/wiki/Insulin_(medication)
- hanniabu 7y ago
  Interesting, I always thought it was a drug produced in a lab from other chemicals.
  - lightedman 7y ago
    It used to be horse-derived humulin.
  - khuey 7y ago
    Insulin is an enormous and complex molecule. Biological syntheses (originally from animals, now from GMO bacteria) are preferred.
- sjg007 7y ago
  It’s made in a bioreactor these days using ecoli or yeast.
- galangalalgol 7y ago
  They are still the source of some thyroid medications. The synthetics are preferred but not everyone responds well.
delegate 7y ago
> All proteins (beef, chicken, pork) will benefit. To paraphrase: Some people will make a profit from the mass slaughter of billions of living beings born and raised in hellish conditions. Once we abstract away the details with custom language, we can safely play with numbers and actually make a profit from it, moral implications just a distant afterthought. That being said, I'll go back to browsing around or maybe watch a movie; I've had protein just an hour ago, I feel full and satisfied.
bryanlarsen 7y ago
The price of pork is still crazy cheap. https://www.indexmundi.com/commodities/?commodity=pork&months=360 https://www.indexmundi.com/commodities/?commodity=pork&month...
- xwowsersx 7y ago
  I don't think you can just look at the futures, have to see price series for pork prices in China, e.g. https://www.pig333.com/markets_and_prices/china_106/ https://www.pig333.com/markets_and_prices/china_106/
  - TaylorSwift 7y ago
    Do you have an alternative link for hog prices? The graph and prices are blocked by adblock or noscript. I'm looking at this for hog prices: https://tradingeconomics.com/commodity/lean-hogs https://tradingeconomics.com/commodity/lean-hogs - does this reflect the pork prices you are describing about?
    - xwowsersx 7y ago
      Let me look around, but I remember it being hard to find good price series for pork in China. Don't think the LH1 ticker is the one to look at, but maybe it's a reasonable proxy directionally...I'm not sure it's been a while since I charted the series against each other.
throwaway5752 7y ago
What structural theses do you have on global warming, out of curiosity? Or anything else of interest that can be shared?
- xwowsersx 7y ago
  Haven't thought about it. It's hard to find theses that have all the elements that makes it investable. Need 1. Something people don't know which 2. They will soon know which means 3. Things are mispriced. I don't know that the global warming story has something like that yet, but I'm no expert so I really don't know.
pg_is_a_butt 7y ago
How long did it take the scientist at your firm to synthesis the disease and spread it around? You are monsters.
greglindahl 7y ago
Huh. I've been reading about this in the mainstream news for a long time. While we're here, did you leave tofu off of your proteins list? China is already one of the the fastest growing markets for it.
- xwowsersx 7y ago
  Interesting. I've never heard it in conversations about global proteins. I understand it's growing, but how big is the market currently in tons p.a.? Does it compete with the other proteins? Who are the major (public) players in the space?
  - greglindahl 7y ago
    I thought you were tuned into expert research on this topic? Does the financial press really ignore the tofu market?!
    - xwowsersx 7y ago
      Don't know what the financial press talks about, but just because they talk about it doesn't mean it's something investable for every particular fund. The fund I worked for has certain limitations because of how much capital we invest so we need to find large companies whose stocks trade a certain $mm/day, etc.
      - sturadnidge 7y ago
        There are probably a few people in this thread who saw 'pork' and instantly thought 'commodity', then extrapolated to 'soybeans'. Which doesn't sound like the game you're in based on this comment, which implies your bets were made via equities. That's not super clear from your original comment (which is neither here nor there, just saying). Thanks for sharing though, it's quite interesting.
        xwowsersx 7y ago
        Ah yes, you're right. I'm so used to thinking in Equities that I assumed it was obvious. We never expressed views in the underlying commodity, always in companies that are levered to it.
intothev01d 7y ago
I'll add onto that and the prediction for 2020's from yesterday that meat may very soon begin to price itself out of the market with meat alternatives from Beyond Meat and Impossible Foods, etc being first movers in this area could be a great investment over the next decade
- ethbro 7y ago
  Would love to hear an informed opinion on why meat alternatives aren't commodities. Is what the first mover brands are doing that unreproducible?
  - rkuykendall-com 7y ago
    Getting patents.
    - distances 7y ago
      Meat replacements are already dime in a dozen, there's been a boom at least for a couple of years in Europe. Some are better than others, but none have a power to control the market. Even if a single brand will be the most popular, there definitely will be (already is!) a commodity market where people will buy a good enough meat replacement from their local grocery store. If the main ingredient is oats or fava bean is maybe akin to difference between chicken and pork.
      - cm2012 7y ago
        Impossible burgers are an order of magnitude better tasting than any other meat replacement I've tried. Beyond burgers are hilariously worse.
        distances 7y ago
        Sure, but there's no way that would lead to market dominance. It will perhaps be the highest profit product and a market leader, but plenty of other options are good enough for a healthy market to exist. And TBH I think the obsession with a burger replacement is some American thing, here they are used for replacing meat (mostly minced meat) in all kinds of foods. I'm not sure I've even tried a fake-meat burger yet.
hanniabu 7y ago
> It will take years for China to get a handle on the disease. Is this an issue with everyone? Or China in particular due to incompetence?
- yocheckitdawg 7y ago
  China in particular due to the lack of a free media. Pork is an important staple in China, so politicians chose to suppress the bad news about the hog supply which limited the information available to farmers to make changes to mitigate the damage being wrought by ASF. If Chinese farmers had access to more information more quickly, the crisis would be nowhere near as severe as it has become. Once again another example of how Freedom of Speech is a foundational value of immense importance and should only be violated if there are extremely good reasons for doing so (and the vast majority of the time there are not).
  - fqye 7y ago
    WTF. This crisis has been openly discussed in China from the very beginning. And yes pork price has been going up steadily , but there was no such thing as political crisis. I mean China is not angel but it is absurd to smear China with nonsenses like this.
    - woodandsteel 7y ago
      So is it your view that the Chinese government has done a good job of handling the crisis?
      - fqye 7y ago
        Can you read? In what way did I hint that?
        parrellel 7y ago
        "This crisis has been openly discussed in China from the very beginning." and "but there was no such thing as political crisis." implying the usual Chinese Government stupidity isn't happening.
baybal2 7y ago
FYI, imports of all proteins in China is heavily regulated despite the claims of opposite. Effectively, import permits are issued per-country, and can be withdrawn on a whim to keep agrarian lobbies on their toes in exporter countries. That is done through sanitary and food safety permits. Current sky high prices may well be because you got a counterintuitive reaction from permitting officials, and they will fall again once they will ease on imports. China been historically edgy on imports of pork, and most private importers specialise on beef and chicken instead.
- ksec 7y ago
  >import permits are issued per-country It is even worst than that, it is not even issued per country or per company, it is per Plant basis. Along with other regulation hurdles. So you end up with news about China opening up to certain countries for import but then not issued a single license permit of any plant for years. But despite all of these, the still allow proteins via unofficial channels. The word "Allow" here means they knew about it, but they turn a blind eye to it.
  - chii 7y ago
    > they knew about it, but they turn a blind eye to it. and this is how those connected people make money.
    - ksec 7y ago
      Precisely.
  - marktangotango 7y ago
    Ok so China pork policy experts are here in the thread. Does this strike anyone else as a bit odd?
    - ksec 7y ago
      LOL, not really, we have many others on HN working in FoodTech, and AgriTech as well. The diversity of people on HN is quite amazing, from working in Nuclear research to Doctor and Chemist. I remember there was a Web Developers but part time Chef and Restaurant owner.
milofeynman 7y ago
As someone not in the financial world, this is one of the few times equities research has mad sense to me. It's still a bet but having that kind of research to bet off of is really interesting. Another time was that article about measuring the shadows of tankers carrying oil outside of port. I appreciate the insight.
- kaycebasques 7y ago
  I don’t know if this comment is too basic, but if you appreciate this type of speculation/investment, you’d be interested in the world of macro investing, short for macroeconomic. It’s all about looking at big global trends and then figuring out how to translate those into investments/bets.
  - weberc2 7y ago
    Any resources (blogs, podcasts) suitable for laypeople?
    - finolex1 7y ago
      You could like at the website of Bridgewater Associates, a big macro hedge fund, though they obviously don't publish most things.
    - throwawaymath 7y ago
      Read the blogs and articles published by AQR.
    - maroonblazer 7y ago
      While not exclusively macro, the podcast Econtalk regularly explores macroeconomic issues. https://www.econtalk.org/ https://www.econtalk.org/ The host has a libertarian bias but is pretty upfront about it so you know where he's coming from. I don't agree with him on everything but his podcast is almost always interesting.
    - Psyladine 7y ago
      Read Liar Poker, Michael Lewis's expose of Wall Street in the 80s. One sterling example of what makes a great trader came when he was woken up to news of Chernobyl. Like most people aware of the disaster, he was thinking in terms of fear, long term effects of radiation and nuclear anxiety. His trader friend called him with a tip to buy potatoes. He called back to say also diapers. The trader correctly identified market trends in reaction to both nuclear radiation on global food stocks, and human behavior aggregates to nuclear anxiety (which in 9 months leads to higher demand for diapers). It's a state of mind not entirely human, but understanding human behavior.
egdod 7y ago
Why do you think this market was so inefficient?
- xwowsersx 7y ago
  There was going to be temporary inefficiency no matter what because this was a pretty big and sudden supply shock. If your question is why did it last for as long as it did, I think it's because people (mainly sell side analysts) were very complacent and dismissed the concerns of didn't really understand the issues. Related to that is that it's harder to come by reliable information from China..which probably means the problem is far worse - if China admits to 1/4th reduction in hog herd, imagine how bad it must actually be!
  - egdod 7y ago
    Makes sense. And that is what I meant—it’s just strange to see material information not getting priced in within milliseconds.
    - perl4ever 7y ago
      People go around affirming how this happens, but I don't think very many people go out and try to determine through observation whether it's true. I noticed a stock was up ~60% one morning not too long ago, and when I looked for news, it turned out that they just had their drug approved by the FDA. But it continued to rise throughout the day, and eventually leveled off at about triple what it had been the previous day. The approval of a drug is about as clean and discrete a piece of market moving information as you can get, and yet anyone who could put it in context had hours to buy. That shouldn't make people go "oh, there are always exceptions", but "hmm, maybe a fundamental assumption somewhere is wrong". I mean, presumably people are using ML and inside information to the hilt, as much as they can, in today's market. But the consequences aren't what people think.
      - egdod 7y ago
        That’s interesting. What company?
justinzollars 7y ago
> This will cause prices of pork in China to rise. China will have to import pork to fill the hole in order to avoid a political crisis. I see this all the time. Is there any data to suggest a political crisis is possible? China is a well controlled authoritarian country.
- xwowsersx 7y ago
  I just mean there could be political unrest because pork makes up a not-insignificant portion of their CPI. Point is China doesn't want a huge run-up in pork prices.
- afterburner 7y ago
  The history of China is a history of near constant rebellion, that is ultimately quashed by central government. They worry about rebellion, they prepare for it. the current regime was ultimately born of revolution, and any revolutionary government is constantly paranoid about counter-revolutions, it becomes part of the DNA of the ruling class to worry about this stuff. Combine this with food riots being the fastest and oldest way to lose control, and it's remarkable you're even asking the question. It's like someone asking if the air can even be polluted, after decades of regulation have been implemented to control it. Well, yeah... just remove the regulations and see what happens.
  - jxramos 7y ago
    What are some of these said food riots, that's a gap in my history knowledge.
    - Fjolsvith 7y ago
      Cost of food rising in China: https://www.nytimes.com/2019/06/04/business/china-food-prices-inflation.html https://www.nytimes.com/2019/06/04/business/china-food-price...
    - afterburner 7y ago
      Are you asking about the existence of food riots in general? https://en.wikipedia.org/wiki/List_of_food_riots https://en.wikipedia.org/wiki/List_of_food_riots
jxramos 7y ago
Just out of curiosity why would a hole in the pork supply cause a political crisis?
- xwowsersx 7y ago
  I just mean that it would cause unrest because pork make up a not-insignificant portion of China's CPI.
elfexec 7y ago
> Funny to see this finally making mainstream news. So disappointing to see the top comment is an outright lie. This story has been covered by the mainstream media since 2018. What's even more worrying is this guy is giving investment advice to naive commenters who know no better. https://www.economist.com/china/2018/09/06/african-swine-flu-is-causing-alarm-in-china-and-beyond https://www.economist.com/china/2018/09/06/african-swine-flu... https://www.bloomberg.com/graphics/2019-eliminating-african-swine-fever/ https://www.bloomberg.com/graphics/2019-eliminating-african-... https://www.washingtonpost.com/world/china-races-to-corral-a-deadly-outbreak-of-african-swine-fever-before-it-spreads/2018/08/29/defbf39a-aad9-11e8-b1da-ff7faa680710_story.html https://www.washingtonpost.com/world/china-races-to-corral-a...
- xwowsersx 7y ago
  I didn't give investment advice to anyone. That's the outright lie.
  - elfexec 7y ago
    In this comment thread. dman 1 day ago [-] Any examples of how a retail investor would play this? reply xwowsersx 1 day ago [-] Buy TSN, SAFM, HRL...but it's probably too late at this point. We were placing bets on this 18 months ago. "Buy TSN, SAFM, HRL" sounds like an investment advice. Not only that your top level comment is investment advice as well, even if it doesn't directly mention an instrument or stock to invest in.
    - xwowsersx 7y ago
      You're just being uncharitable. I was explaining how the thesis would be expressed. It should go without saying (!), but I made it clear in other comments that I wasn't advising on anything. If you make investment decisions based on some short comments on HN then I have a bridge to sell you. People here are smarter than that. Nice to know you think of your HN peers as "naive". I hold them in higher esteem. Go find something else to be angry about.
zhte415 7y ago
All protein indeed. There is a current surge for insect protein. Not that people would swap from pork to insects, it is hitting all the supply chain.

dman 7y ago

Any examples of how a retail investor would play this?

davidw 7y ago
Buy an index fund. Do you think you can compete with that big investment outfit that has people working on this stuff full time?
- tempsy 7y ago
  everyone says this but so long as you aren't day trading this is mostly untrue buying individual stocks is not akin to gambling.
  - et2o 7y ago
    A substantial amount of evidence disagrees with you. Active traders (day traders or not) almost always underperform the market in the long run.
    - tempsy 7y ago
      ok. underperforming does not mean "gambling". i buy what i personally like and use and have made substantially more than the market on Apple, Amazon, Starbucks, PayPal, etc. am I a professional equity analyst? no. but is this "gambling"? I don't think so.
      - et2o 7y ago
        Tech has done very well the past few years. In the long run, who knows. Gambling is taking on excess risk for excess profit, especially when the odds are against you (expected value is negative). This could be poker or active trading. It's gambling.
        tempsy 7y ago
        Buy and hold long term is not active trading. You’re conflating two completely different things. It’s odd when I find HN to be so risk adverse when working in tech is all about risk. Fortunes are made with risk. Then as an industry we’re apparently all just degenerate gamblers if buying and holding Apple stock is akin to playing roulette.
        et2o 7y ago
        Yes, that is the definition of active trading. I suggest you do more research. Active trading is contrasted to passive trading (index funds). It’s akin to roulette in that it’s statistically non-optimal, not that the level of risk is the same. HN readers tend to be focused upon evidence and mathematically inclined.
        tempsy 7y ago
        If that were true literally no HN reader would work at a startup, but we know that isn't the case. Or take any compensation in the form of equity in one company, even at a large one.
        7y ago
- bluGill 7y ago
  Sure I can compete. I don't have so much money under my control that my act of buying/selling changes the market. Thus I can afford to make trades that are worth a lot of money on my scale, but not worth it for the big guys because compared to the total amount they must work with means they don't have the time. Note I said can. Reading the 10k and 8q and other such forms to find those opportunities is boring. I get paid very well to write software instead and just let an index fund grow my money. I can't live off my investments yet, but when they grow enough I'll be able to [substitute any of a number of hobbies I might get interested in], and it won't be a full time job moving money around.
  - davidw 7y ago
    "not worth it for the big guys" Sounds like a legit strategy, but it also sounds like part of it is actively not competing with them.
    - tomrod 7y ago
      Differentiated market.
    - nothrabannosir 7y ago
      If that's how you define it, then it was never the question to begin with. Someone just asked how to move on this info, which, we now all agree, is possible. Nobody said anything about competing until it was brought up as a glib dismissal of the original question. Which, we now agree, wasn't warranted.
      - davidw 7y ago
        From the OP "Buy TSN, SAFM, HRL...but it's probably too late at this point. We were placing bets on this 18 months ago." Emphasis mine.
        deleted 7y ago
        [deleted]
        7y ago
- toohotatopic 7y ago
  Aren't we already in an index fund bubble? How can the stock market stomach all of that liquidity? Don't the share prices go up beyond the value of the companies?
  - pm90 7y ago
    There is a large amount of wealth invested in index funds but that doesn’t mean it’s a bubble. By its definition index funds are amortizing their investments to mitigate risk, this is opposite of a bubble.
    - toohotatopic 7y ago
      I don't understand what you mean with 'amortize'. Doesn't it mean writing off the value of something? Why would you write off the value of an index fund investment? And how does that mitigate risk? I guess you mean that they spread their investment among all companies that belong to an index. But that doesn't solve the problem of too much liquidity.
    - ethbro 7y ago
      Depends on the index fund. Weighting seems surprisingly important, yet almost never mentioned by index proponents. Especially as their total cap comes to represent a broader proportion of the total market.
- ves 7y ago
  You absolutely can, because you have much less capital to deploy and no strings attached. The sorts of opportunities you’re looking for and they’re looking for can be totally disjoint. Some friends and I made a bit of easy money in college on very good derivatives trades that only existed at tiny volumes (low thousands). There’s lots of good reasons to invest passively but being unable to compete with big funds isn’t necessarily one of them.
  - davidw 7y ago
    "Quarter of the world's supply..." doesn't sound like the world of "tiny volumes", but something that moves pretty big markets, which is hardly an under-the-radar trade.
shadow-banned 7y ago
2x
xwowsersx 7y ago
Buy TSN, SAFM, HRL...but it's probably too late at this point. We were placing bets on this 18 months ago.
- dman 7y ago
  Fair enough - thanks for the pointers.
  - thedudeabides5 7y ago
    HOGS Wisdomtree ETF which tries to track US hog futures prices (with some drag)
    - xwowsersx 7y ago
      Not to be confused with HOG which is Harley-Davidson haha
- skidd0 7y ago
  I have a few questions about the kind of work you do. Mostly just about how you got started and what sort of activities you perform. If you have the time, could you please contact me at skidd0 [at] skidd0 [dot] com?
  - xwowsersx 7y ago
    Sure thing, will do later. FYI I transitioned back to software engineering so I'm no longer doing this professionally, but happy to answer any questions I can. Talk soon.
bluejay2 7y ago
One way would be to buy protein producers (e.g. Tyson) . The hard part is figuring out how much of the expected benefit is already factored into current stock prices though. As another user mentioned, this is not exactly breaking news to the investment community. Tyson for example was up 72% in 2019 (vs 32% for the SP500 and 27% for an index of consumer staples companies, of which Tyson is one)
- xwowsersx 7y ago
  That's exactly right.
- mikorym 7y ago
  The irony is that an increase in stock price is supposed to reflect future value (of dividends). In this case, the 72% does not accurately reflect the increase in value, unless they almost double their dividend for quite a few years after the whole Chinese pork fiasco. Market effect are exaggerated by investors and speculators. (Read: amplified, not fabricated [usually].)
  - nradov 7y ago
    Why should we believe that you're right and the rest of the market is wrong?
    - mikorym 7y ago
      The rest of the market knows this and uses it to make money. I am not sure what you mean in terms of someone being right and someone being wrong. Edit: The point about future value of dividends is a common approach. My personal addition was that 72% is probably an exaggerated effect, but these kind of swings are to be expected, with later corrections. The point about irony is that when people buy shares, they follow the price of sale of one share, they don't usually try to calculate the future value of dividends. A case in point would be Amazon. However, with Amazon, people expect dividends at some unspecified point in the future.
      - 7y ago
ww520 7y ago
I've bought and maintained holding on LW, which is in the worldwide market of potato products (french fries, etc). Reason being people would be looking for fat substitute when meat price goes up. Restaurants will increase their fries portion to account for the decreasing meat portion. The trend toward plant based food also helps.
- xwowsersx 7y ago
  Interesting thesis! We looked at the name, but never had that thesis. Maybe same could be said for CVGW (the avocado guys)?
  - ww520 7y ago
    When you look at the components of a fast food burger meal, you got: burger, bun, drink, and fries. Meat and drink stocks have been well analyzed and well brought. Bun has high substitutability and too diverse sourcing. That leaves fries. There're just a few players supplying the potato products. LW is the biggest one. Not sure about CVGW. Might be too small a market.
mc3 7y ago
Probably too hard to analyze. How do you know what the demand for meat is like? Will people just switch to other foods if it becomes too expensive? If pork is costing me $50/kg, maybe I start eating potatoes and nuts? Maybe other factors force the price down anyway. I don't know - I wouldn't. Just buy shares that are good for the long term.
elfexec 7y ago
I wouldn't take investment advice from strangers on the internet. Especially one so uninformed to claim "Funny to see this finally making mainstream news" or someone so shady that he'd lie on HN to get people interested in his scheme. The ASF and china's pig issue has been known for since 2018. Unless the economist, bloomberg, washingtonpost, etc are not mainstream. https://www.economist.com/china/2018/09/06/african-swine-flu-is-causing-alarm-in-china-and-beyond https://www.economist.com/china/2018/09/06/african-swine-flu... https://www.bloomberg.com/graphics/2019-eliminating-african-swine-fever/ https://www.bloomberg.com/graphics/2019-eliminating-african-... https://www.washingtonpost.com/world/china-races-to-corral-a-deadly-outbreak-of-african-swine-fever-before-it-spreads/2018/08/29/defbf39a-aad9-11e8-b1da-ff7faa680710_story.html https://www.washingtonpost.com/world/china-races-to-corral-a... https://www.vox.com/2019/6/6/18655460/china-african-swine-fever-pig-ebola https://www.vox.com/2019/6/6/18655460/china-african-swine-fe...

kickout 7y ago

This would be incredibly bearish for soybean futures, no? (or at least Brazlian ones, as the US tariffs have already cratered Chinese soy imports)

xwowsersx 7y ago
You mean because it would reduce demand for feed? I think that's right. As far as I can remember, China has to wait until ASF is completely eradicated before beginning to rebuild the herd so it's not like the lost demand from the diseased hogs is being replaced by the new herd. Also, piglets probably require less feed than the mature ones.
- kickout 7y ago
  Yea, that's the logic. Not place for all the world's soybean based protein to go (most of it goes to pigs and chickens). Which is surprising because soybeans are way up in the past month (people hoping for tariff relief). Other shoe waiting to drop, lol.
  - im3w1l 7y ago
    Would you mind explaining how tariffs interact with futures prices? Naively I would think that tariff relief -> more and cheaper imports -> lower price. What am I missing?
    - dhsuywej 7y ago
      Think of farmers in this instance as refineries that use soybean feed to convert Piglettes into Pork-Pigs. Tariff relief on USA brand soybean feed means that Chinese Piglette refineries will probably demand more of the USA brand feed than before because of the now lower price relative to other feed brands. However, at the same time, the refineries are experiencing a shortage of Piglette to mix with the imported soybean feed due to ASF and so they simply have lower feed needs/demands than before. You could make it more complicated by adding nuance like whether this will drive an increase in demand for imported pork as well which could, over time, stimulate USA/Worldwide feed demand as non-Chinese Piglette refineries expand and compete to fill the heightened demand for foreign pork (assuming things play out this way) but the overall gist is simply that there's pressure in two directions but probably not equal pressure.

mschuster91 7y ago

> - As a result, global proteins will enter a multi-year up-cycle. All proteins (beef, chicken, pork) will benefit. I am not so optimistic. Climate change discussions, a couple notable exceptions (Trump, Bolsonaro, Morrison) aside, generally has recognized that animal protein and the efforts required to create it (deforestation for growing food, over-nitration due to feces used as fertilizer) are no longer sustainable. I can very well imagine massive bans or quotas as a result, the Dutch government is actually forced to do something to reduce their CO2 contributions by their Supreme Court.

bluejay2 7y ago
Protein prices would likely benefit still under that scenario, at least in the short run, as you are talking about drastically limiting supply. Presumably the demand would still be there.
xwowsersx 7y ago
Multi-year could be just 2-5 years. You're talking a much longer-term structural thing. China has to deal with soaring pork prices. I don't think they care about environmental impact.
jessaustin 7y ago
Don't base your investments on wishful thinking.
moosey 7y ago
All of your suggestions will also cause the prices of animal-based foods to rise. I hope those price increases are substantial.
perl4ever 7y ago
If priced accurately, why do you think the externalities of CO2 are anywhere near enough to destroy demand for meat? I only perennially bring this up, because one time I was interested in what the numbers might be, and I looked up the National Resources Defense Council estimates were for the economic impact of global warming in ~a half century. The rather startling figures were only a few dollars per gallon of gas. Not to be at all precise, by "a few" I mean 1-10. Not, it seems to me, qualitatively different that the difference between US and European gas prices. Obviously people still eat meat in the EU and haven't radically changed their lifestyle. I'm not saying that therefore we should not stop climate change, just that as far as I know, the NRDC is reasonably reputable, not a nest of deniers, and they didn't seem to be supporting an economic case for major changes to everyone's lifestyle. That should be shocking, or at least require some resolution. Some people do have the opinion that mainstream sources downplay the consequences of global warming so as not to be too alarmist, and in fact we can't be too alarmist because it really is too late. Maybe that is correct, but when there is such a disconnect and people just don't talk about it most of the time, it deeply worries me. Not just the idea that the world might be ending and we aren't resolving how to prevent it, but that maybe nobody who is talking about these things is serious at all.

Havoc 7y ago

How do you place a bet on something so as you say undeniable though? Ie how are you in front of the priced in wave

dahfizz 7y ago
In another comment, OP says he was betting on this 18 months ago. They key is to detect big events like this before they become undeniable common knowledge.
- xwowsersx 7y ago
  Exactly
- Havoc 7y ago
  >They key is to detect big events like this before they become undeniable common knowledge. Indeed. It's quite hit miss though.e.g. I called the supermicro stuff right. Made money. Tried same on amd spectre and got burned. Each time relying on hn being ahead of the knowledge curve
- majos 7y ago
  > key is to detect big events like this before they become undeniable common knowledge But it’s not even enough to know before it’s common knowledge, don’t you have to know before investors with big pockets know (and buy, and drive up the price)? That’s a taller order since those investors have people whose job it is to know this stuff well before it becomes common knowledge.
xwowsersx 7y ago
I don't know if you can at this point. People were complacent and dismissed the concerns. Sell side only started writing about it 6 months or more after we caught wind of it. You just have to be ahead of the curve. Many reasons why sell side was complacent, including 1) analysts, especially US-based ones, are very focused on leading indicators of supply from USDA data and 2) they don't want to think about China that much bc they feel it's hard to rely on the data from there, etc

uhtred 7y ago

Beef, chicken and pork are not protein.

noir_lord 7y ago

Partner works in export for a massive pork producer. From what they are saying internally this is/will continue to be a huge shift in the market, the Chinese importers are paying way more generally and even for the parts that the European market doesn't use directly for human consumption.

ksec 7y ago
>Massive Pork Producer I am going to guess Danish Crown? Chinese has always been buying in qualities that exceeds any supply capacity. And that was before ASF, after that they try to contain it, as well as opening up more Brazilian Pork Import. While xwowsersx was genius in placing the bet 18 months ago, the price / tonne wasn't so clear* until close to mid 2019 when everything went out of hand. * It wasn't clear because despite raising prices, pork prices ( Brazilian ) has been trading at a ridiculously low level since ~2015.
- bryanrasmussen 7y ago
  Profile says North of England, does Danish Crown have anything in Britain?
  - rad_gruchalski 7y ago
    Yes: Danish Crown Ltd 57 Stanley Rd, Whitefield, Manchester M45 8GZ, United Kingdom +44 161 766 1144 https://goo.gl/maps/Bj3XfG6vZN7iELSr5 https://goo.gl/maps/Bj3XfG6vZN7iELSr5 https://www.danishcrown.com/en/contact/our-locations/danish-crown-pork-kontorer/england-manchester https://www.danishcrown.com/en/contact/our-locations/danish-... Danish Crown UK Ltd Activities: Sales to retailers, meat processors, wholesalers, foodservice, independent retailers and butcher shops. Production of premium hand salted Danish bacon and bespoke foodservice pork and beef. Nationwide distribution. Products: Cured pork (gammon and bacon), pork, beef, chicken, lamb, burgers and sausages.
    - bryanrasmussen 7y ago
      thanks, couldn't find anything from their website.

gowld 7y ago

Does this mean no McRib for a few years? McRib is how McDonald's plays the pork futures market.

jandrese 7y ago
Quite possibly. Although the trade war may distort the US markets enough to allow McDonalds to offer it again. It's hard to predict with Trump is going to do with the tariffs and how China responds.

philshem 7y ago

Are pigs still a source of pharmaceutical insulin? Edit: > Insulin can be made from the pancreas of pigs or cows. Human versions can be made either by modifying pig versions or recombinant technology. https://en.wikipedia.org/wiki/Insulin_(medication) https://en.wikipedia.org/wiki/Insulin_(medication)

hanniabu 7y ago
Interesting, I always thought it was a drug produced in a lab from other chemicals.
- lightedman 7y ago
  It used to be horse-derived humulin.
- khuey 7y ago
  Insulin is an enormous and complex molecule. Biological syntheses (originally from animals, now from GMO bacteria) are preferred.
sjg007 7y ago
It’s made in a bioreactor these days using ecoli or yeast.
galangalalgol 7y ago
They are still the source of some thyroid medications. The synthetics are preferred but not everyone responds well.

delegate 7y ago

> All proteins (beef, chicken, pork) will benefit. To paraphrase: Some people will make a profit from the mass slaughter of billions of living beings born and raised in hellish conditions. Once we abstract away the details with custom language, we can safely play with numbers and actually make a profit from it, moral implications just a distant afterthought. That being said, I'll go back to browsing around or maybe watch a movie; I've had protein just an hour ago, I feel full and satisfied.

bryanlarsen 7y ago

The price of pork is still crazy cheap. https://www.indexmundi.com/commodities/?commodity=pork&months=360 https://www.indexmundi.com/commodities/?commodity=pork&month...

xwowsersx 7y ago
I don't think you can just look at the futures, have to see price series for pork prices in China, e.g. https://www.pig333.com/markets_and_prices/china_106/ https://www.pig333.com/markets_and_prices/china_106/
- TaylorSwift 7y ago
  Do you have an alternative link for hog prices? The graph and prices are blocked by adblock or noscript. I'm looking at this for hog prices: https://tradingeconomics.com/commodity/lean-hogs https://tradingeconomics.com/commodity/lean-hogs - does this reflect the pork prices you are describing about?
  - xwowsersx 7y ago
    Let me look around, but I remember it being hard to find good price series for pork in China. Don't think the LH1 ticker is the one to look at, but maybe it's a reasonable proxy directionally...I'm not sure it's been a while since I charted the series against each other.

throwaway5752 7y ago

What structural theses do you have on global warming, out of curiosity? Or anything else of interest that can be shared?

xwowsersx 7y ago
Haven't thought about it. It's hard to find theses that have all the elements that makes it investable. Need 1. Something people don't know which 2. They will soon know which means 3. Things are mispriced. I don't know that the global warming story has something like that yet, but I'm no expert so I really don't know.

pg_is_a_butt 7y ago

How long did it take the scientist at your firm to synthesis the disease and spread it around? You are monsters.

greglindahl 7y ago

Huh. I've been reading about this in the mainstream news for a long time. While we're here, did you leave tofu off of your proteins list? China is already one of the the fastest growing markets for it.

xwowsersx 7y ago
Interesting. I've never heard it in conversations about global proteins. I understand it's growing, but how big is the market currently in tons p.a.? Does it compete with the other proteins? Who are the major (public) players in the space?
- greglindahl 7y ago
  I thought you were tuned into expert research on this topic? Does the financial press really ignore the tofu market?!
  - xwowsersx 7y ago
    Don't know what the financial press talks about, but just because they talk about it doesn't mean it's something investable for every particular fund. The fund I worked for has certain limitations because of how much capital we invest so we need to find large companies whose stocks trade a certain $mm/day, etc.
    - sturadnidge 7y ago
      There are probably a few people in this thread who saw 'pork' and instantly thought 'commodity', then extrapolated to 'soybeans'. Which doesn't sound like the game you're in based on this comment, which implies your bets were made via equities. That's not super clear from your original comment (which is neither here nor there, just saying). Thanks for sharing though, it's quite interesting.
      - xwowsersx 7y ago
        Ah yes, you're right. I'm so used to thinking in Equities that I assumed it was obvious. We never expressed views in the underlying commodity, always in companies that are levered to it.

intothev01d 7y ago

I'll add onto that and the prediction for 2020's from yesterday that meat may very soon begin to price itself out of the market with meat alternatives from Beyond Meat and Impossible Foods, etc being first movers in this area could be a great investment over the next decade

ethbro 7y ago
Would love to hear an informed opinion on why meat alternatives aren't commodities. Is what the first mover brands are doing that unreproducible?
- rkuykendall-com 7y ago
  Getting patents.
  - distances 7y ago
    Meat replacements are already dime in a dozen, there's been a boom at least for a couple of years in Europe. Some are better than others, but none have a power to control the market. Even if a single brand will be the most popular, there definitely will be (already is!) a commodity market where people will buy a good enough meat replacement from their local grocery store. If the main ingredient is oats or fava bean is maybe akin to difference between chicken and pork.
    - cm2012 7y ago
      Impossible burgers are an order of magnitude better tasting than any other meat replacement I've tried. Beyond burgers are hilariously worse.
      - distances 7y ago
        Sure, but there's no way that would lead to market dominance. It will perhaps be the highest profit product and a market leader, but plenty of other options are good enough for a healthy market to exist. And TBH I think the obsession with a burger replacement is some American thing, here they are used for replacing meat (mostly minced meat) in all kinds of foods. I'm not sure I've even tried a fake-meat burger yet.

hanniabu 7y ago

> It will take years for China to get a handle on the disease. Is this an issue with everyone? Or China in particular due to incompetence?

yocheckitdawg 7y ago
China in particular due to the lack of a free media. Pork is an important staple in China, so politicians chose to suppress the bad news about the hog supply which limited the information available to farmers to make changes to mitigate the damage being wrought by ASF. If Chinese farmers had access to more information more quickly, the crisis would be nowhere near as severe as it has become. Once again another example of how Freedom of Speech is a foundational value of immense importance and should only be violated if there are extremely good reasons for doing so (and the vast majority of the time there are not).
- fqye 7y ago
  WTF. This crisis has been openly discussed in China from the very beginning. And yes pork price has been going up steadily , but there was no such thing as political crisis. I mean China is not angel but it is absurd to smear China with nonsenses like this.
  - woodandsteel 7y ago
    So is it your view that the Chinese government has done a good job of handling the crisis?
    - fqye 7y ago
      Can you read? In what way did I hint that?
      - parrellel 7y ago
        "This crisis has been openly discussed in China from the very beginning." and "but there was no such thing as political crisis." implying the usual Chinese Government stupidity isn't happening.

baybal2 7y ago

FYI, imports of all proteins in China is heavily regulated despite the claims of opposite. Effectively, import permits are issued per-country, and can be withdrawn on a whim to keep agrarian lobbies on their toes in exporter countries. That is done through sanitary and food safety permits. Current sky high prices may well be because you got a counterintuitive reaction from permitting officials, and they will fall again once they will ease on imports. China been historically edgy on imports of pork, and most private importers specialise on beef and chicken instead.

ksec 7y ago
>import permits are issued per-country It is even worst than that, it is not even issued per country or per company, it is per Plant basis. Along with other regulation hurdles. So you end up with news about China opening up to certain countries for import but then not issued a single license permit of any plant for years. But despite all of these, the still allow proteins via unofficial channels. The word "Allow" here means they knew about it, but they turn a blind eye to it.
- chii 7y ago
  > they knew about it, but they turn a blind eye to it. and this is how those connected people make money.
  - ksec 7y ago
    Precisely.
- marktangotango 7y ago
  Ok so China pork policy experts are here in the thread. Does this strike anyone else as a bit odd?
  - ksec 7y ago
    LOL, not really, we have many others on HN working in FoodTech, and AgriTech as well. The diversity of people on HN is quite amazing, from working in Nuclear research to Doctor and Chemist. I remember there was a Web Developers but part time Chef and Restaurant owner.

milofeynman 7y ago

As someone not in the financial world, this is one of the few times equities research has mad sense to me. It's still a bet but having that kind of research to bet off of is really interesting. Another time was that article about measuring the shadows of tankers carrying oil outside of port. I appreciate the insight.

kaycebasques 7y ago
I don’t know if this comment is too basic, but if you appreciate this type of speculation/investment, you’d be interested in the world of macro investing, short for macroeconomic. It’s all about looking at big global trends and then figuring out how to translate those into investments/bets.
- weberc2 7y ago
  Any resources (blogs, podcasts) suitable for laypeople?
  - finolex1 7y ago
    You could like at the website of Bridgewater Associates, a big macro hedge fund, though they obviously don't publish most things.
  - throwawaymath 7y ago
    Read the blogs and articles published by AQR.
  - maroonblazer 7y ago
    While not exclusively macro, the podcast Econtalk regularly explores macroeconomic issues. https://www.econtalk.org/ https://www.econtalk.org/ The host has a libertarian bias but is pretty upfront about it so you know where he's coming from. I don't agree with him on everything but his podcast is almost always interesting.
  - Psyladine 7y ago
    Read Liar Poker, Michael Lewis's expose of Wall Street in the 80s. One sterling example of what makes a great trader came when he was woken up to news of Chernobyl. Like most people aware of the disaster, he was thinking in terms of fear, long term effects of radiation and nuclear anxiety. His trader friend called him with a tip to buy potatoes. He called back to say also diapers. The trader correctly identified market trends in reaction to both nuclear radiation on global food stocks, and human behavior aggregates to nuclear anxiety (which in 9 months leads to higher demand for diapers). It's a state of mind not entirely human, but understanding human behavior.

egdod 7y ago

Why do you think this market was so inefficient?

xwowsersx 7y ago
There was going to be temporary inefficiency no matter what because this was a pretty big and sudden supply shock. If your question is why did it last for as long as it did, I think it's because people (mainly sell side analysts) were very complacent and dismissed the concerns of didn't really understand the issues. Related to that is that it's harder to come by reliable information from China..which probably means the problem is far worse - if China admits to 1/4th reduction in hog herd, imagine how bad it must actually be!
- egdod 7y ago
  Makes sense. And that is what I meant—it’s just strange to see material information not getting priced in within milliseconds.
  - perl4ever 7y ago
    People go around affirming how this happens, but I don't think very many people go out and try to determine through observation whether it's true. I noticed a stock was up ~60% one morning not too long ago, and when I looked for news, it turned out that they just had their drug approved by the FDA. But it continued to rise throughout the day, and eventually leveled off at about triple what it had been the previous day. The approval of a drug is about as clean and discrete a piece of market moving information as you can get, and yet anyone who could put it in context had hours to buy. That shouldn't make people go "oh, there are always exceptions", but "hmm, maybe a fundamental assumption somewhere is wrong". I mean, presumably people are using ML and inside information to the hilt, as much as they can, in today's market. But the consequences aren't what people think.
    - egdod 7y ago
      That’s interesting. What company?

justinzollars 7y ago

> This will cause prices of pork in China to rise. China will have to import pork to fill the hole in order to avoid a political crisis. I see this all the time. Is there any data to suggest a political crisis is possible? China is a well controlled authoritarian country.

xwowsersx 7y ago
I just mean there could be political unrest because pork makes up a not-insignificant portion of their CPI. Point is China doesn't want a huge run-up in pork prices.
afterburner 7y ago
The history of China is a history of near constant rebellion, that is ultimately quashed by central government. They worry about rebellion, they prepare for it. the current regime was ultimately born of revolution, and any revolutionary government is constantly paranoid about counter-revolutions, it becomes part of the DNA of the ruling class to worry about this stuff. Combine this with food riots being the fastest and oldest way to lose control, and it's remarkable you're even asking the question. It's like someone asking if the air can even be polluted, after decades of regulation have been implemented to control it. Well, yeah... just remove the regulations and see what happens.
- jxramos 7y ago
  What are some of these said food riots, that's a gap in my history knowledge.
  - Fjolsvith 7y ago
    Cost of food rising in China: https://www.nytimes.com/2019/06/04/business/china-food-prices-inflation.html https://www.nytimes.com/2019/06/04/business/china-food-price...
  - afterburner 7y ago
    Are you asking about the existence of food riots in general? https://en.wikipedia.org/wiki/List_of_food_riots https://en.wikipedia.org/wiki/List_of_food_riots

jxramos 7y ago

Just out of curiosity why would a hole in the pork supply cause a political crisis?

xwowsersx 7y ago
I just mean that it would cause unrest because pork make up a not-insignificant portion of China's CPI.

elfexec 7y ago

> Funny to see this finally making mainstream news. So disappointing to see the top comment is an outright lie. This story has been covered by the mainstream media since 2018. What's even more worrying is this guy is giving investment advice to naive commenters who know no better. https://www.economist.com/china/2018/09/06/african-swine-flu-is-causing-alarm-in-china-and-beyond https://www.economist.com/china/2018/09/06/african-swine-flu... https://www.bloomberg.com/graphics/2019-eliminating-african-swine-fever/ https://www.bloomberg.com/graphics/2019-eliminating-african-... https://www.washingtonpost.com/world/china-races-to-corral-a-deadly-outbreak-of-african-swine-fever-before-it-spreads/2018/08/29/defbf39a-aad9-11e8-b1da-ff7faa680710_story.html https://www.washingtonpost.com/world/china-races-to-corral-a...

xwowsersx 7y ago
I didn't give investment advice to anyone. That's the outright lie.
- elfexec 7y ago
  In this comment thread. dman 1 day ago [-] Any examples of how a retail investor would play this? reply xwowsersx 1 day ago [-] Buy TSN, SAFM, HRL...but it's probably too late at this point. We were placing bets on this 18 months ago. "Buy TSN, SAFM, HRL" sounds like an investment advice. Not only that your top level comment is investment advice as well, even if it doesn't directly mention an instrument or stock to invest in.
  - xwowsersx 7y ago
    You're just being uncharitable. I was explaining how the thesis would be expressed. It should go without saying (!), but I made it clear in other comments that I wasn't advising on anything. If you make investment decisions based on some short comments on HN then I have a bridge to sell you. People here are smarter than that. Nice to know you think of your HN peers as "naive". I hold them in higher esteem. Go find something else to be angry about.

zhte415 7y ago

All protein indeed. There is a current surge for insect protein. Not that people would swap from pork to insects, it is hitting all the supply chain.