Hims can cover all current expenses with its own cash flow, so I suspect something bigger is brewing that will require a lot of cash. Time will tell; my guess is an acquisition.
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https://x.com/himshouse/status/1920894327490048234
There you go. 62 million shorts, which is about 34% of the free shares? (float, that is). And the most interesting thing is that this data is after the Novo collaboration, which by all accounts should significantly reduce the risk of any legal disputes. This was therefore one strong bear thesis why HIMS has been shorted.
Is this a classic double down, a refusal to admit oneâs own mistake, or what is causing the impossible number of shorts?
I wonder how much more volatility we will see?
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I am worried about that 800 million. A cash-flow positive company shouldnât do such things. Deals should be executed as a stock swap, so why go for a cash deal. In deals, the buyerâs share price always initially drops, even if itâs a good acquisition. Advertising is perhaps another possibility where money can be burned. This might be the only bullish scenario. The third possibility is some AI thingy and a big order for NVIDIA. This sounds very bearish to me in the short term.
I do understand that this is not wanted to be thought about in a bullish thread. The fact is that in stock investing, there are two difficult questions. When to buy stocks, and even harder is when to sell them. To my eyes, trimming HIMSâs position now seems smart. Two out of three times, the marketâs reaction to a senior notes purchase is negative. Letâs see if it succeeds on Monday.
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I would argue against this; in my view, a well-conditioned convertible bond (like this one) offers a relatively asymmetric risk to shareholders without messing with the companyâs operational financial side. Cash M&A scenarios are undoubtedly easier, faster, and perhaps even cheaper to execute than paying with shares. In both cases, the ownership of current shareholders is presumably diluted, but in one case, only when the M&A (or current business) has generated value visible in the share price. Otherwise, a convertible bond is free loan, meaning excellent money, even to grow interest if the M&A doesnât materialize. And as a bonus scenario, nothing prevents using a slice of the 800 million pot AND own shares for a billion-dollar acquisition.
Instead, in my opinion, convertible bond money should not be pushed into marketing, or indeed into any operational expenses. Investment in, for example, AI development is also with some reservation, but perhaps rather this way than with a conventional loan. However, the business case for internal development should be quite watertight so that 1) as a shareholder, one would be satisfied with the arrangement and 2) as a convertible bond lender, one would agree to provide a free loan.
It could be that HIMS itself doesnât yet know what the money will be used for (since the requested sum was raised once), and the dollars are for now just enabling quick moves if necessary. In the worst-case scenario, they will be returned at zero interest after being held in an interest-bearing account for a couple of years (in the truly worst-case scenario, the money is squandered with zero return, but no one plans that in advance).
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Why should transactions be carried out as a share exchange? Financial theory has arrived at a completely different conclusion. Correcting that error would surely be worthy of a Nobel Prize.
For example, in the C S Bio transaction earlier this year, the majority was paid with shares, even though not a single employee was included in the deal. One might wonder how long the sellers held onto those shares and if the transaction would have been preferred in cash, had there been access to this financing at that point.
And it must be remembered that the company already has a previously concluded, much more restrictive and very likely also more expensive, loan package. Its value is $175M, and the interest rate is SOFR+1.50%. Furthermore, its use includes terms and restrictions, unlike the new bonds.
If the immediate stock price reaction is used as a measure of value creation in a corporate arrangement, then financial theory naturally does not apply.
The customer acquisition cost is already hovering around +$1500. How much higher would it rise if even more money were allocated to marketing on top of the current $231M per quarter? The marginal benefit of marketing is decreasing, and up until now, the business has generated so much cash flow that more could have been invested in marketing if it had been profitable.
Thus, it can be assumed that just enough funds have been used for marketing to maximize the revenue-to-profitability ratio. If this were not the case, the management would be completely incompetent and should be dismissed at the upcoming general meeting.
That would really be something if they started acquiring GPU clusters. A fourth possibility would be to start developing drones that would deliver medicines to customers. That would also be bearish in the short term.
The marketâs reaction to the issuance of senior notes was seen last Thursday when the information was released. The true value of the arrangement will be seen over the next five years. It is not even known yet what the money will be used for, and especially not how those investments will succeed.
I personally believe that the money will be used for acquisitions that further increase vertical integration at the lower end. The company has previously stated its goal to âhandle a significant majority of customer orders for prescription and over-the-counter medications through its own fulfillment capacities,â and based on that goal, in the last six months alone, it has acquired:
- a 503B facility
- a peptide facility
- a home testing laboratory
and a 503A facility had been acquired earlier. In addition, logistics are also handled internally, as far as I understand.
Continuing along the same lines, the next step could be to acquire its own synthesis facility in the United States, where, for example, future HRT & TRT treatments could be manufactured from scratch. The necessary volume for this could be achieved within the next couple of years. Such an acquisition would be worth at least $200-$400M.
The entire business is based on volumes, which help drive down unit costs, and currently, only Amazon has similar financial resources as Hims. This will be reflected in competitiveness and at the point when the industry eventually shifts from a growth phase to consolidation. Hims is currently likely the only cash flow positive company in the entire market, and othersâ attempts to achieve the same will become increasingly difficult. Investments in this market are likely most profitable for those who make them first.
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I guess a new, bigger step will be taken in the UK, as everywhere it says first that money will go to international expansion.
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US indices are sharply green due to China-US tariff news, and Trump plans to lower drug prices (bullish?). The market reaction was at least +6% for HIMSS and negative for drug manufacturers.
Looks like itâs going to be a lively day. Short-sellers are sweating.
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Berkshire Novo Hims | Blomster Viljanen | #negotiator 330. Berkshire Hathawayâs investments and current status with Jesse Viljanen and Henri Blomster. Hims & Hers stock has yielded Sami a massive +700% since Henriâs last visit. Novo Nordisk and Eli Lillyâs obesity drugs are critically analyzed from the perspective of production bottlenecks and investor psychology, among other things. Investment strategies in a Trumpian world, the importance of dividend flow/buybacks, and growth company selections. In no case does this episode provide investment recommendations!
00:00 Warren Buffett, Jesse âDividend Engineerâ Viljanen and Henri Blomster, Asilo Asset Management
00:52 Hims and Hers stockâs +700% return, potency talk and pharmaceutical angle
01:42 Buffett fandom, gym equipment, BKS mugs and merch ideas
26:20 Novo Nordiskâs results and position relative to Eli Lilly
28:08 Differences in obesity drug efficacy and production issues
29:58 Criticism of momentum investing, Novoâs production outsourcing
31:40 Royalty question and reduction of Compounder risk from H2 onwards
33:40 New drug forms: long-acting and oral
35:19 Experimental natural science, thought models and investment psychology
37:43 Hims & Hers solutions to everyday problems, hard mints and telehealth compartmentalization
40:09 Real options and Himsâ strategic position outside the insurance doctor complex
42:42 Volatility, B2C risk and the perspective of insurance operators
44:55 Price fluctuations, Himsâ competitive advantages and savings targets
50:38 Amazon/AWS comparison, AIâs role in Himsâ growth
54:59 Building verticals and a scalable playbook
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Here we go again. Shorts continue their shorting and the caravan moves on, currently +10% in 15 minutes.
Also, a podcast from HIMS house with Mark Cuban: https://www.youtube.com/watch?v=j4yUhUqFGUc
All in all, thereâs a lot of momentum here now, and itâs starting to feel quite bullish when writing these on the forum.
So letâs try to cobble together something bearish.
Could someone find some proper bearish material to share? And I donât mean short-term price changes. For me, the only worrying bear case is that somehow big pharmaceutical companies lobby the US government (since it seems to be purchasable) and thus get all business disrupting the current state shut down? 
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Even an HS reporter has read this column
A telemarketer of weight-loss drugs became a billionaire after the Novo Nordisk agreement | HS.fi
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Hereâs a brief overview of the company from Investing visuals. 
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CFO Yemi Okupe was interviewed today at a JP Morgan event. Here are a couple of clips where he comments on the collaboration with Novo, the start of Wegovy sales, and growth figures for different product categories.
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Institutional Ownership Changes
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Just over a week ago, there was talk in the thread about Himssâs loan. On X, I came across a post like the one in the link below.
Does anyone know more about these matters and could tell if things are as described in the post? My understanding isnât sufficient for this. I donât know anything about the author.
https://x.com/paulcerro/status/1924848491106287633?s=19
To my understanding, this should significantly reduce the possibility of a short squeeze, which many investors seem to be expecting. Also, some short sellers shouldnât be in a panic to buy back, even with potential price increases?
P.S. Big thanks to everyone who wrote in the thread! I myself found the company at a relatively early and right stage thanks to the thread, and I intend to stay invested as long as the positive development continues. The insane volatility just occasionally tests my patience.
Maybe Iâm just simple, but I donât really buy into the idea that âhedgingâ debt securities would somehow make short sellers blissful.
A short seller can lock in their maximum loss by buying those convertible bonds, but they have to pay a high price for it. If a short seller has sold their shares for, say, âŹ25, then in this scenario, they would have to pay over âŹ70 for the shares when converting the bond to shares if the price rises that high. So, they make a loss of âŹ45 per share. They canât really make more of a loss than that, as a higher price would be beneficial. However, they would have to tie up that money in the bond at 0 interest.
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The loan redemption window opens on May 19, 2028, when the company can redeem the debt securities if the price is over 130% of the conversion price of $71, i.e., $92, for at least 20 consecutive days.
On November 15, 2029, the conversion window opens for debt security holders, after which the debt security is practically a normal American option, if one forgets the impact of the principal.
For Himss, the carrot is not just the 0% interest rate, but also the possibility to redeem the debt securities before the conversion window if the price rises above 130% of the conversion price of $70.67, i.e., over $91.87, by the end of 2028. In a good scenario, the cost is thus limited to approximately $1300 per debt security, of which the arrangement covers approximately $273. So, debt was obtained for three years at a 0% coupon rate. In reality, however, the interest rate is not 0%, because approximately $50M was originally paid for the capped calls arrangement, meaning the actual interest rate for the entire loan period is around 5%, or approximately 2% p.a.
In the capped calls arrangement, a call option is sold with a strike of $89.95, and a call option is bought with a strike equal to the conversion price, i.e., $70.67.
This way, the value increases linearly up to $89.95, at which point the sold option begins to offset the increasing value.
Dilution is the same in any case. So, if the share price is, for example, $85 in 2029, 14.1493 shares are needed to pay for one $1000 debt security, making the costs $1202.69. This can be paid in cash or shares, and it should not matter. The capped calls proceeds cover the excess amount.
Thus, dilution is a maximum of 14.1M shares, or 6.1% of the current number of shares.
That writing is the same kind of crap as 99% of all X-posts surrounding the matter. That also represents the vast majority.
A debt security whose conversion right begins on November 15, 2029, does not offer any kind of hedge for current short positions. The bondâs delta is almost 0, which one can verify by looking at its price curve and comparing it to the stock. In addition, it is still completely illiquid. And the author could consider how much more they would be willing to pay for the bond now if the stock were to rocket due to a short squeeze.
The possibility of a short squeeze is already 0.00%. All shorts could be closed at any time, and it would practically have no effect on the price. This is not Gamestop. And anyway, probably 30% of shorts are part of general market hedge portfolios, which often target exactly these kinds of high-beta stocks.
And even if there were a possibility of a short squeeze, the debt security could only affect a potential late winter 2029 short squeeze.
Exactly.
Certainly a killer setup to lock up money in a debt security for five years and then trade intraday movements.
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Here is Novoâs full press release.
Apparently, Novo has funded this as part of a larger campaign. However, Ro & LifeMD announced the matter synchronously, so why would Hims announce it only later?
However, this is not a groundbreaking matter; only the first month is at a discounted price until the end of June.
Novo is also fighting even harder against compounders:
Attempts by compounders to evade these laws by making manipulated, unnecessary, and pretextual changes to ingredients, routes of administration, or dosages are also unlawful.
I also believe that a bigger surprise will be revealed in the coming days, which will explain the matter.
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Hims did not release an announcement about the Wegovy offer, but a similar (smaller discount for a longer period) offer can be found online:
https://x.com/himshouse/status/1925610555609338240
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Now a press release has also arrived.
Hims bills orders all at once, so presumably thatâs why the same discount is spread over the first six months instead of just the first month.
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Had Martin Shkreliâs appearance on the Hims House podcast already been discussed; I listened to it in retrospect. Martin Shkreli is apparently a versatile figure in the stock market and a talking head on several channels. I picked up a few new things for myself here.
A large short position was discussed in the podcast. According to Shkreli, one should short stocks where the company has a fundamental flaw that could take the stock to zero. He considered that hedge funds might short HIMS purely for portfolio management reasons - it could be a preparation for an index decline. Or shorting is a portfolio managerâs attempt to reach âbonus levelsâ if a parabolically risen stock were to dip anyway. According to Shkreli, shorting HIMS makes no sense because the companyâs core business is growing regardless, even if the current weight-loss drug market were to disappear. I interpret Shkreli to mean that shorting is everyday life for hedge funds, and a sharply risen stock gives a fund manager the illusion of a potential quick short-term profit. And many then try that. So, a large short is a phenomenon of the short-term side of the stock market, which now happens to affect HIMS. Shkreli is now long on HIMS, as he should be. Companies like this donât come along often. This was not an investment recommendation but an opinion. By the way, I was looking at Tempus AI with interest. HIMS is tied to growth and cash flow, Tempus is more difficult, and I donât intend to diversify my HIMS pot into Tempus. Podcast link below.
Ep 26 - Martin Shkreli: The Case for Hims & Hers
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