The high price of shares, art that uses the so-called non-fungible token technology and bitcoin have led some market watchers to warn that investors are becoming irrationally lush, which increases the risk of shock.
Exposure A, according to a prominent investor: a New Jersey sandwich shop with a single store, sparse sales and a market value of just over $ 100 million. Hedge fund manager David Einhorn, who famously called Lehman Brothers before its 2008 collapse, wrote in a quarterly letter to customers this week that the market value of the sandwich shop, Your Hometown Deli, it is the last signal that investors are getting undone.
“From a traditional perspective, the market is fractured and possibly in the process of complete breakdown,” Einhorn wrote.
He added: “It is likely that small investors who are absorbed by these situations will eventually be harmed, although regulators (which are supposed to protect investors) do not appear to be present or curious.”
Hometown International, which despite its name owns a single restaurant in Paulsboro, New Jersey, had sales of $ 14,000 last year. That was a drop of nearly $ 22,000 the year before. Despite its modest business, delicatessen shares, publicly traded since 2019, have risen nearly 300% over the past year to nearly $ 14. This recently gave the company a market value (derived from adding up the price of all its shares) of nearly $ 120 million.
Courtesy of Google Earth
The company does not have full-time employees. The CEO of his hometown, Paul Morina, is also the company’s chief financial officer and treasurer. Aside from that, he is also the full-time principal of Paulsboro High School, as well as the school’s wrestling coach.
No call was returned to the number listed on the hometown’s financial presentation. A message left at Paulsboro High School for Morina was not returned.
Shares in the hometown fell 3% on Friday to $ 13 as Einhorn’s letter circulated, still well above the price of the charcuterie operator’s shares of about $ 4 a year ago. .
“Strange things”
In his letter, in which Einhorn also predicts rising inflation and warns of rising national debt, the hedge fund manager said the hometown is just one example of what he considers a growing disconnect between actions and financial reality.
“Strange things happen in all sorts of actions,” Einhorn said. “Last year, on a June day, the shares of a dozen bankrupt companies doubled by about a whopping volume.”
Market skeptics see other signs of a possible bubble. One of the most noticeable came earlier this year when the the actions of the GameStop video game chain skyrocketed more than 2,000% in less than a month. This gave the retail cap, which had not made any profit for years, a market capitalization of $ 30 billion. Some other troubled actions, such as the pandemic scar chain AMC and software maker Blackberry, were also pushed up, probably by members of a Reddit message group in what became known as the ral · Read “meme stock”.
In another indication that some Wall Street analysts say it could target the market, investors over the past year have been retrieving offers from “special-purpose acquisition companies” or SPACs. Corporate structures are often called blank check companies because they sell shares to investors before the company actually has a business, with the promise that corporate executives will use the money from the sale of shares to make acquisitions. This type of investment, once seen as risky, has suddenly been embraced by investors.
More recently, commentators have pointed to rising prices digital illustrations that are sold as bitcoin-type NFT as the last sign of a potential bubble. Earlier this year, a relatively unknown digital artist, Beeple, sold an NFT for $ 69 million, surpassing the price earned by such famous artists as Picasso or Andy Warhol.
Bitcoins themselves have also skyrocketed, recently climbing above $ 60,000 for the first time. The digital currency had been exchanged for just over $ 6,000 for bitcoins a year ago.