Q. Why has tech lagged so far in 2013 while consumer staples like Hershey and Heinz growing 6% a year now have PE’s of 20’s yet tech with 15+ percent growth have such low PE’s?
A. That is a great, great question. I don’t know “why it happened”, but it did and that means if you believe that tech will continue to outgrow other sectors, then you would want to take advantage of the fact that it did happen.
Q. If you are around, in your e-mail alert now you say you are underinvested as the euphoria builds- As far as I know most people HATE the market, no one is embracing the upside. Meanwhile the LONG tech portfolio has DEEPLY underperformed in light of FIO 40% declines, AAPL 40% declines, FB 20% decline, BIDU, NUAN, etc. So on an individual basis tech has been beaten up. One would think on a stock by stock basis you would be adding to your longs here as they have not been keeping pace with the market upside aside from GOOG, SNDK and perhaps AMZN.
A. Our biggest longs have been hitting new all-time highs and we nailed the FB trade at the bottom and at the top. I added to my AAPL (calls even) just yesterday and have been building up my new longs, not to mention our call options in MRVL and NVDA are kicking butt. Regardless, as I’ve told you every time you’ve asked this question for the last three weeks, I think it’s a fool’s mission to worry about YTD numbers. We’ve had an incredible three year run in the portfolios since I came back from TV land, and I think we’ll have another incredible three year run in the portfolios ahead.
Q. Good afternoon, Cody! For the Q&A: Two unrelated questions — on BBRY, the other on your posts. Blackberry: I seem to be reading that the initial positive reports of sales were overstated, or at least confusing — mostly in England, not USA, something like that. That being true or not . . . in a post a while back you contemplated going short after the initial euphoria following introduction of the Blackberry 10. Are you there, or close, yet? Could it be the current pop in the shares are merely tag-alongs with general market momentum? And my question on your weekly-activity posts: is it doable for you to post the price of calls and options that you buy/sell in addition to the price of the underlying stock at the time? Valuable info! If not, why? Thanks.
A. We nailed the top of Blackberry long ago when it was, yes, nearly 10x today’s price. We covered for a huge profit, but that was way too early, at like 5x today’s price. I still think BBRY is doomed and I wish I’d never covered a share in that short, but for now, I’m happy to sit on the sidelines. It’s too much of a battlefield stock and could easily pop to $17 again. I was looking to short BBRY on that initial euphoric pop on the new platform rollout hype, but I was on my honeymoon when it was primed and ready and now is already back down. If your time horizon on a BBRY short is more than a year and you think you can handle the pain if it were to run back to $17 or higher before it collapses, then I’d say it’s still doomed. Take a look at these articles: Three problems facing RIMM, RIMM is Dead; now what? and RIMM is (still) truly dead.
It’s a good suggestion, and we’ll try to start doing that. Bill, please make a note.
Thanks for that, Bill and Cody. Um…Cody, I mean.
Q. Cody, what to you make of ZAGG. Earnings were good and supported your position however the stock went from up 10% to crap. What is going on and has your position changed any? Are you full in at this point?
A. I’m not quite full in to ZAGG yet, but I plan on scaling into more in coming weeks. Like I said last week after the stock didn’t pop after earnings, for all we know, some huge hedge fund out might have owned a million shares of ZAGG at $15 and AAPL at $650 and he’s lost his shirt there is having huge redemptions and is having to sell every share of ZAGG he’s got and he can’t stop until he’s out. I bought ZAGG with the expectation that it would double or triple in the next couple years if they execute, and nothing’s changed about that.
Q. Based on what you said about ZAGG, still have “faith” in your ZAGG short?
A. I’m long ZAGG, not short and yes, I still have faith in the investment or I would sell it immediately.
Sorry, I DID mean long on ZAGG — and happy to hear you’re still feeling good about the call. I’m “short” on my typing ability.
Ha ha. My parents made me take typing lessons when I was like 10 years old. I type fast. Glad they did it.
Q. Do all these Apple downgrades all of a sudden rolling in surprise you? Just noise or anything they saying concern you? Guess once you hit lows people start piling on.
A. These guys ignored AAPL at $7, started coverage with sells/holds back at $70, started upgrading it at $300 and started bulling the stock at $500 and throwing out $1000 price targets at $700. My followers and I bought AAPL at $7, bought more at $70, put on a $1000 price target at $300, and mostly trimmed at $500-700. I’ll take the other side of the so-called “analysts” who are downgrading the stock at yearly lows after the stock has dropped some 35% or whatever.
Q. What other places are you looking for the next Apple…any sectors, ideas, place you are thinking?
Believe it or not, I think the “next Apple” will come from a garage kind of start up that revolutionizes something like…pancreatic cancer testing technology. I’ve got lots of ideas of other sectors to look out for too: motion/voice interactivity and electricity are two other sectors I’m looking hard at, for example.
Q. Are you still into the IBM short considering the recent ascent?
A. Yes, I’ve still got a small IBM short on the sheets and I still think it’s a great hedge to the rest of the tech portfolio. Indeed, I’d bet dollars to donuts that shorting IBM at $208 and buying AAPL at $420 in March 2013 would be a profitable trade whether the markets go up or down over the next three years.
Q. Cody related to your post about shifting the focus, have you seen Infinera? It looks like they have the best technology for optical networks.
A. Very long-time subscribers know that I owned and traded Infinera and the other optical component stocks back in 2002-2005 or so. I just don’t think there’s enough margin and upside in the optical component suppliers as I do in the guys who actually make and sell the equipment. Much as AAPL and GOOG were the biggest beneficiaries of the upside move in the first phase of the smartphone/tablet/app revolution, I expect the CIEN’s and JNPRs to be the best plays on the second phase of the revolution.
What else you guys got?
Q. Cody post your latest positions this Friday. Thanks!
Q. OK, Cody, here’s a question for you. let me know if you think it’s an answerable one: if you had a choice right now, with a six-month growth/sell horizon, which would you buy today — CIEN or QCOM?
A. For that time horizon and for the longer term, it really depends on your risk tolerance. CIEN is probably the more risky trade of the two. But I’d probably choose CIEN to answer your question.
Okay folks, that’s a wrap! Thanks again for another great back and forth. See y’all soon!
What 46 min CHAT? Cody, are you still here?
I’m here. Nobody asking any more questions though. And I’m hungry for some lunch! Need to figure out what I’m gonna eat still. What’s up?
Q. Ok so we see the disparity hershey and Heinz like stocks vs tech- are we missing something? divergence beginning? Or are we just in need to be Patient and like you say this being one of those times were we underperform for weeks or months waiting for our sector to take the spotlight once more?
A. I don’t have a crystal ball of course, but I absolutely expect that buying tech and shorting the broader markets and/or defensive stocks would be profitable two years out from now whether the market goes up or down.
Ha ha! Gracias.
Ironically, I’m going to put down my AAPL product and go consume a HNZ product or two. Ha!
Same here- Heinz Ketchup