Analyst price targets are bullshit. For better or for worse, they are bullshit. If you follow analyst price targets, you are going to have a bad time in the markets.

My quick reaction to $TOYO Analyst Day: First, the positives. The second Houston line is finished. US module prices jumped by 10 to 20 cents a watt. Plus, the third-party factory audit came back clean. What’s still in limbo: Customs is still holding up four cell shipments, and now they’re saying it hits Q4 earnings too, not just Q3. There’s no forward guidance, no Q3 results, and they haven’t locked in financing for the new cell plant yet. Also, nobody mentioned the First Solar patent case. In the previous tweet, I said I’d send the full update shortly after Investor Day, but I’m waiting a few more days. The reason is that $TOYO’s Customs adviser thinks the shipment detentions will be sorted out within a week. That alone will shift my numbers more than anything that came up today, so I’d rather wait and give you the full picture all at once. Long $TOYO. Not investment advice; do your own research.

Following up on my July $KLNG Brazil post. I said the Q2 margin line would be more important than the revenue headline. We got the numbers yesterday, and I think that I was right. The headline looks great: record revenue of $9.2M, up 78%. EBITDA margin hit 12% vs. 7% in Q1. Net income turned positive. They basically beat their own full-year margin guidance in a single quarter. But few things underneath the headline stood out to me. First, gross margin actually went backwards at 32.3%, down from 33.4% a year ago. That surprised me because service revenue grew 115%, and the mix shifted roughly 20 points toward services. In July, I argued that this mix shift should help margins. But it turns out the important distinction isn’t really services vs. products. It’s within services: lower-margin project execution versus higher-margin rental/storage revenue. Q2 had a lot of carousel construction and mobilization exactly the lower-margin part of the business. So @SebKrog , who pushed back on me in July when I called Brazil margin accretive was closer to right than I was. 2. The EBITDA improvement came from somewhere else. SG&A stayed around $2.3M while revenue grew 13%. That’s real operating leverage, but it’s different from seeing stronger gross margins or pricing power. And with headcount going from 74 to 90 this year, I wouldn’t assume SG&A stays this flat forever. 3. The cash flow deserves more attention. Operating cash flow was negative $722k in the first half despite positive net income. Cash is down to $922k, and they’ve now drawn $2.4M on the $5M facility. So the old “no debt other than leases” description isn’t really accurate anymore. Put those together and you get why a 78% revenue quarter didn’t move my valuation much. Revenue was better. Gross margin was worse. The balance sheet absorbed some of the improvement. There is one thing from the call that could change the picture. The second carousel is fully written off and will now be used as a storage asset charging a day rate on roughly 50 miles of umbilical. That’s potentially very attractive revenue: a recurring day rate on an asset with essentially zero book value. Watching for November with excitement to figure out the following. Does gross margin finally move above 33% as storage revenue kicks in and Brazil scales? If it does, the re-rating case starts to become much more interesting. If margins stay stuck around 32%, then I think $KLNG is probably a good compounder rather than a dramatic re-rating story. Obviously still long $KLNG. Not financial advice. Do your own research.

$OESX scored another big data center order this morning. Same hyperscaler, second facility, just three months after the first deal. Stock’s sitting around $30. I clearly missed that upside, and have to give credit where it’s due. In early August, I said these data center wins were interesting, but it was way too early to jump in. The real question was whether actual orders would keep coming, facility by facility. And here we are. Two deals in three months, and now their customer’s a Fortune 20 company. That’s pretty significant. Great headline. Does this justify the price? That’s a whole different conversation. Fundamentals didn't really change since August 5. $OESX still expects $95 to $97 million for the year; they’ve repeated that same target three times: no increase, even after landing these new wins. They’ve got about $70 million left to hit for the next three quarters, which means about $23 million per quarter. That’s even lower than Q1’s numbers. Plus, neither order has a public dollar value, neither shows up in the backlog yet, and every time management talks, they say the real ramp is coming next fiscal year. Here’s what’s actually different: Mr. Market stopped seeing $OESX as just another random lighting company and started treating it as part of the AI infrastructure story. That shift alone carried the stock, not the actual fundamentals. Sure, some of that makes sense, but let’s be real: if you buy at these prices, you’re paying a premium for infrastructure earnings $OESX hasn’t proved it can deliver yet. Both deals were product-only, went through distributors, not direct sales, and the CEO isn’t saying they’ve got any kind of exclusive lock-in. A few more things. The tradable float is tiny, so swings can be pretty wild both ways. And now with the stock surging, their balance sheet looks much better: Orion filed a $100 million shelf registration back in March, but until now, their float was just barely under the 'baby-shelf' rule that blocks smaller companies from selling the full amount. At these prices, they can tap all of it. I missed this run, and I’m not chasing it at three times the June price. There are many other exciting opportunities down there.

Our next virtual conference is here: October 27. Four companies and one investor pitch. Stay tuned for details. Special appearances by @bmb21 @MicrocapDr @Diego_La_Torre_

Hot take, I think valuation shorts are totally fine, and in some cases are more attractive than other forms of shorts. A few of my biggest winners this year have been valuation shorts. The big issue is valuation short against a strong narrative (eg Palantir 2025) or valuation

I’m short $DNA (Ginkgo Bioworks), and I’ve got call options as a backup. By my own playbook, a good short has to clear three hurdles, and just being “expensive” is only the first one. So why am I shorting a stock without a clear catalyst? Because this isn’t your run-of-the-mill overvaluation. The market pegs Ginkgo at around $830 million, which is ten times its revenue, and which has been cut in half: $20.2 million last quarter versus $39.1 million the year before. Meanwhile, its spending hasn’t budged. Ginkgo burns through $43 million in cash each quarter just to keep the lights on, plus about $14 million for space it’s not even using. That’s over $600 million in rent left to pay, and only about $300 million in cash. If you run the numbers, today’s price implies they’ll pull in about $1.5 billion a year by 2032, and that’s assuming healthy margins. I’ve tried out a few scenarios to see if the company can break even. None of them, even the most optimistic ones, get anywhere close. When the gap is this big, I don’t need to know the exact timeframe. I just need to stay in the game until the numbers start to bite. Second hurdle: Is there an event with a deadline? Not really. Q3 results, probably coming in November, will show how fast they’re burning cash. But Ginkgo can still raise money by selling more shares while prices are up. That would hit the stock on the day, but it could buy them a few more years. If they do a big raise, I’ll just close out my short, take profits, and walk away. While I’m waiting, I’m holding calls. No catalyst means the waiting game that comes on top of market enthusiasm for AI-run labs. That’s a very risky setup for naked shorts. The calls limit my losses if the stock jumps. Third hurdle: Can I actually trade it? Yep. For now, the borrow is affordable, and options are available. If they weren’t, I’d just watch from the sidelines. I could be wrong. The tech seems legit, and if they ditch that empty building or land some real orders with actual money, I’ll rethink everything. Not Investment Advice. Losses from short selling have no ceiling, small caps can gap 20% in a day, and your broker can raise margin or recall the shares when it hurts most. Options aren’t a free fix either: they cost money, they decay, they often trade with wide spreads, and they can expire worthless. A hedge that has expired protects nothing. Want to know more about shorting microcaps and the three hurdles? Here's the link to my FREE blog post:👇 microcapdr.substack.com/p/sh…