Carson Block

Block explicitly states his fund has put spreads on HYG and LQD ETFs to play the thesis that credit spreads will widen. He believes AI-driven job displacement will cause a severe economic/market crisis. This will lead to outflows from passive funds, reversing the flow-driven market multiples and causing credit spreads to widen significantly. SHORT via put spreads because the anticipated crisis will crush the value of corporate debt ETFs. He prefers this over shorting equities due to cheaper volatility and a potential liquidity mismatch during a crisis that could exaggerate ETF downside. The AI job displacement thesis is wrong or its market impact is significantly delayed beyond the option expiry.

Block explicitly states his fund has put spreads on HYG and LQD ETFs to play the thesis that credit spreads will widen. He believes AI-driven job displacement will cause a severe economic/market crisis. This will lead to outflows from passive funds, reversing the flow-driven market multiples and causing credit spreads to widen significantly. SHORT via put spreads because the anticipated crisis will crush the value of corporate debt ETFs. He prefers this over shorting equities due to cheaper volatility and a potential liquidity mismatch during a crisis that could exaggerate ETF downside. The AI job displacement thesis is wrong or its market impact is significantly delayed beyond the option expiry.

There has been a huge under-allocation of talent to the mining space since at least 2000, creating an edge. Junior miners can offer venture-type returns with more data to base decisions on. The firm is invested mostly on the long side, agnostic on metals.

A systematic momentum strategy within the S&P 500 has compounded at over 70% gross since October 2024. The firm sees edge in momentum as a pragmatic way to invest, counterbalancing the natural skepticism of short sellers.

Third-order AI disruption effect: state and local government finances (especially large issuers like California, New York) will strain, causing municipal bond ETFs to freeze and face dislocation. He plans to short MUB via put spreads and cover during the dislocation.

AI will displace ~15% of knowledge workers within 3 years, killing 401(k) flows that have powered the largest stocks. People will sell taxable assets and redeem retirement accounts, causing the S&P 500 and Nasdaq 100 to unwind hard. He expresses this via put spreads for capped risk.

SoFi uses aggressive fair value option accounting, marking personal loans up to 108–109 on day one and financing purchasers to support those marks. A $312 million transaction with a subsidiary appears misleading and, if disallowed, could force a restatement of about $1 billion of previously reported EBITDA. Management has extracted over $50 million via forward agreements.

AI will displace ~15% of knowledge workers within 3 years, killing 401(k) flows that have powered the largest stocks. People will sell taxable assets and redeem retirement accounts, causing the S&P 500 and Nasdaq 100 to unwind hard. He expresses this via put spreads for capped risk.