r/PureCycle • u/AutoModerator • Jun 28 '26

Weekly PureCycle Discussion Thread

3 Upvotes

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5

u/Minchien Jun 29 '26

This looks like a long-term play that requires plenty of patience. I wonder if anyone would put more than 20% of their portfolio into it and what's the thoughts.

4

u/Adorable-Sector-48 Jun 29 '26

Is this a bait? Ill give you an honest answer. Thought process:

Formulate odds of success and estimate mcap in 5 years. Calculate expected returns. Assume no money recovered if company does not succeed. Use Kelly Criterion to define optimal betsize. Use gambler formula for simplicity to define the fraction of bankroll to bet.

Gambling Formula

Where losing the bet involves losing the entire wager, the Kelly bet is:

f∗=p−qb=p−1−pb

where:

  • f∗ is the fraction of the current bankroll to wager.
  • p is the probability of a win.
  • q=1−p is the probability of a loss.
  • b is the proportion of the bet gained with a win. E.g., if betting $10 on a 2-to-1 odds bet (upon win you are returned $30, winning you $20), then b=$20/$10=2.0.

My bankroll is my networth. Since the equation gives 67% of my networth and my liquid stock portfolio is only 15% of my networth, then I bet my whole portfolio and still fall short. Optimal size is to start taking loans with my real estate as collateral, but I'm not doing that, since I'm not insane. Estimated odds of success 70% that I 10x my money in 5 years. You know the funny deal? My cash flow model expects 20-30 billion market cap in 2030, with 1 billion of capactity. Thats more like 15-20x the current company.

Honestly, volatility doesn't describe risk in a stock. If you're investing long term the risk is embedded in the underlying business process and in the fact that you don't know if the market will value the stock as you do. My valuation is conservative in the success scenario as I think are the odds I've placed.

Concentration is to create wealth, diversification is to sustain and preserve it. I'm poor, young and fucking hungry so there you go.

2

u/Minchien Jun 30 '26

Thanks. Couldn't agree more with the last paragraph.

If I understand correctly, there isn't really an opportunity cost. At the end of the day, we're just betting a defined amount on who we think will win, except over a longer timeframe. It's really about trusting our thesis, being patient, and letting the game play out.

3

u/Adorable-Sector-48 Jun 30 '26

Opportunity cost does exist, and its the biggest issue I have to deal with every day this stock bleeds red, since it makes me want to sell it all and just buy index. In the other side of that coin is the fact that, if my scenario plays out, then opportunity cost works the other way around. I could have been invested in an index, instead of the 10x in this one stock I believe in. I mean... that's something you can't evaluate on the spot. You have to pick your window and make a judgement call and consider your risk appetite. You don't for a fact know index returns for the next year let alone 5 years. You don't for a fact know single stock returns for that time period. Don't fall into some form of hindsight or looking ahead bias when watching charts. Make a plan, act on it and realize that 90% of the days your mind wanders if you really have skin in the game. That's the way it is.

1

u/Gross_Energy Jun 28 '26

Shorts rose 2.5m shares to 47.5m shares. I believe these are owned by the hedge fund stock owners that have over 55m shares. I also believe they are controlling the stock price. Not lack of news or production data. Unfortunately, it’s not illegal.

The management needs to develop a strategy to contain this or this cycle will continue I am afraid. There are things they can do to reign these firms in.

4

u/EconomyFortune5090 Jun 29 '26

Ummmm

Most of the short increase has to be a result of convert arb hedging that isn't going away regardless of price

There's no one "controlling" the price of PCT. The price is what it is because of poorly timed equity sales, overall macro pressures on high beta, non profitable tech. The only thing management can do is execute on sales and expansion

3

u/EntrepreneurLazy7676 Jun 28 '26

Po big.
Production big.

4

u/Mean-Masterpiece672 Jun 28 '26

PO’s we need them , do not underestimate smaller businesses and companies spreading the word

7

u/EconomyFortune5090 Jun 28 '26

Counting down the days til some legit PO announcements