Sana Biotechnology is the Tesla of cell therapy: Jackson

Key Concepts

• Hundred Bagger Ideas: Investments that have the potential to increase in value by 100 times.
• Middle Class Financial Strain: The perception that the middle class is facing increasing financial difficulties due to taxes and cost of living.
• Generational Wealth: The concept of building wealth that can be passed down through generations.
• Mag 7 Tech Stocks: Refers to the seven largest technology companies (e.g., Apple, Microsoft, Google, Amazon, Nvidia, Meta, Tesla) that have dominated market performance.
• Small-Cap Stocks: Companies with a relatively small market capitalization, often seen as having higher growth potential but also higher risk.
• Buy and Hold Strategy: An investment approach focused on purchasing assets and holding them for an extended period, typically years, to benefit from long-term growth.
• Cell Therapy: A type of treatment that uses cells to treat diseases.
• Stem Cell Research: The study of stem cells, which are undifferentiated cells that can develop into specialized cell types.
• Gene Therapy: A technique that uses genes to treat or prevent disease.
• Type 1 Diabetes: An autoimmune disease where the body's immune system attacks and destroys insulin-producing cells in the pancreas.
• AI Infrastructure: The underlying physical and digital components required to support artificial intelligence technologies, such as data centers and power supply.
• Data Centers: Facilities that house computer systems and associated components, such as telecommunications and storage systems.
• Hyperscalers: Large cloud computing providers (e.g., Microsoft, Google, Amazon) that operate massive data centers.
• Gigawatt (GW): A unit of power equal to one billion watts.

Tech Investing Themes and Market Optimism

The S&P 500 and NASDAQ have reached record highs, driven by optimism surrounding profits within the technology sector. Eric Jackson, founder and president of EMJ Capital, discusses current themes in tech investing, emphasizing a shift towards identifying "hundred bagger ideas." This concept stems from his past success with Carvana, which he identified early during its recovery from a significant price drop.

The Middle Class and the Search for Generational Wealth

Jackson observes a global sentiment, particularly among the middle class in Canada and the US, that it is becoming increasingly difficult to improve financial standing. This has led to a heightened interest in the stock market as a means to build generational wealth. Many individuals feel they missed out on previous significant growth opportunities (like Carvana) and are now actively seeking smaller-cap tech stocks with the potential for substantial long-term returns through a buy-and-hold strategy, aiming for growth beyond the dominant "Mag 7" companies.

Stock Idea 1: Sana Biotechnology (SANA) - The "Tesla of Cell Therapy"

• Company Focus: Sana Biotechnology is a biotech company exploring a platform approach to cell therapy, leveraging stem cell research.
• Key Innovation: The company is investigating the potential to reverse Type 1 diabetes through gene therapy and stem cell research. Early human trial results have shown promising evidence of reversing the condition in a few cases.
• Market Potential: Type 1 diabetes represents a significant global market. If Sana's early findings are validated in larger studies, their cell therapy approach could potentially be applied to cure other diseases.
• Valuation and Growth Potential: Currently a $1 billion market cap company, Sana has the potential to become a $100 billion company within a few years if their technology proves successful. Jackson believes the company has been overlooked despite its remarkable early results.

Stock Idea 2: Iris Energy (IREN) - Powering the AI Economy

• Role in AI Infrastructure: Iris Energy is positioned to benefit from the infrastructure demands of the AI economy. While many focus on AI software (like ChatGPT) or hardware (like Nvidia), the underlying infrastructure, particularly data centers and their power supply, is crucial.
• Business Model: Iris Energy builds and operates data centers, focusing on securing access to cheap power. They have facilities in Prince George, BC, and are expanding significantly with large facilities in Texas.
• Strategic Advantage: The company has 3 gigawatts (GW) of data center capacity scheduled to be energized within the next 12 months. This makes them highly attractive to hyperscalers (e.g., Oracle, Microsoft, Meta, Google) who require immediate access to data center capacity.
• Market Validation Example: The recent deal between Nebus and Microsoft, where Microsoft committed to $18 billion in revenue over six years for 1 GW of data center capacity, saw Nebus's stock price double overnight.
• Growth Outlook: With 3 GW of capacity coming online, Iris Energy is well-positioned to secure similar lucrative deals. As more such deals are announced, the remaining available capacity from companies like Iris Energy becomes increasingly valuable. Jackson considers Iris Energy a leading player in this space.

Conclusion

Eric Jackson highlights a shift in tech investing towards identifying high-growth, smaller-cap companies with the potential for significant long-term returns, driven by a desire among the middle class to build generational wealth. He presents Sana Biotechnology as a promising player in the cell therapy space with the potential to revolutionize treatment for diseases like Type 1 diabetes, and Iris Energy as a critical provider of AI infrastructure, specifically data centers, poised to benefit from the massive demand from hyperscalers.