You guys ready to rock n roll, then? Ain’t no noise pollution. AC/DC – Rock and Roll Ain’t Noise Polution
Fed fed fed. Fed up with fed. I am at least. We all know their tools of their owners, the big banks. Whatever. Bet gold is up before the close? I would.
Q. Question on using index puts as a hedge for an account that is otherwise primarily long – how would you typically size such a position? I’ve started to use these but have found it tricky to decide what the right size is for the position to act as a decent hedge without eating into too much of my potential gains so am curious what sort of range you would suggest and how you typically approach sizing a position like this. Thanks
A. Great question, and as always, my answer would depend upon your own risk-tolerance, income potential, net worth, etc. That said, I’d think that anything less than 1% of your portfolio in broad index puts when you’re trying to hedge would be a waste of time, but that anything more than 3-4% of that portfolio in broad index puts would eat away at your gains too much to be considered “good” hedges. Make sense?
Yeah that does, thanks!
Q. Do you have additional companies on your watch list for wearables? I for one and looking to position early in a bunch of these. Any others to consider?
A. Too early to know who’s going to supply whatever wearable actually catches traction, but you know I’m on top of it. Stay tuned.
Q. I’m seeing some noise from smart door locks that use geofencing and apps to know when to open and close… Looks like an area where tech will be ubiquitous. Wondering if you know a play there yet, or if you think the Schlage’s of the world will just acquire a startup offering the best product in that space?
A. I think that’s low-tech enough that the margins in geolocking, etc will be very low. My dad was proudly showing me his Honeywell app to control the thermostat at his house the other day, and it underscored how badly Google overpaid for its Nest acquisition a few months ago, as I’d suggested at the time.
Q. HI Cody. Hope all is well. I’m gonna bust you and Bob’s chops a little here:-)…… I asked the following Q to you and Bob Marcin on scutify and have yet to get an answer: “@CodyWillard $SHLD has a real estate liquidation value estimated at $20 a share by the extreme pessimists and $150 a share+ by some very savvy people. Also, it’s a holding company so I don’t understand why @RobertMarcin who is usually spot on is not making this distinction.” Basically, analysts are overlooking Sear’s huge real estate portfolio and the fact that it is a holding company and not focused on the retail. Bob analyzed $HPQ more rigorously, why doesn’t he do the same type of analysis on Sears? Bob’s analysis of Sears is akin to if I own a ten unit apartment building that is worth $1,000,000 and half the units are vacant so my building is worth zero. That is the logic Bob is applying to Sears. Have you guys really done your homework on $SHLD or is Bob just shooting from the hip because he doesn’t like retailers?
A. #1. Robert Marcin is a friend and a very good value investor with whom I regularly chat about ideas in the markets, but there is “you guys” about Bob’s opinion and my own. He’s his own man. #2. I remember seeing he did answer your question on Scutify, but he didn’t address it to you. I can’t find it now. #3. Bob don’t shoot from the hip when he writes stuff this detailed, ” All Star: RobertMarcinPosted … 20d ago $SHLD game over. when not if. if they lose money over Xmas, well what retailer has a right to live if they do that? stock hard and expensive to borrow, so i am not involved. but i suspect the co a goner in next few years. and eddie was anointed the next buffett not too long ago.”
Q. I don’t see anything detailed about the real estate or the holding company in his reply. I understand that you and he are buddies and no dis to him, he helped make me a ton of money on $STX and he’s great. I’m perplexed that you see “great detail” in a post that refers to one very specific segment of a holding co.– the retail, and excludes a lot.. The question I asked was after the post you quoted and I don’t see any reply, general or otherwise. But I will see if I can find him on some other forum to press him. All that said, do you have an opinion on $SHLD?
A. I’ve no interest in trying to figure out if the real estate or value or arbitrage or whatever is there in $SHLD. Sears is dead. I can’t imagine there’s any value in the equity long-term.
Agree to disagree on that one. Book value of a holding co. backed by real estate is to me very interesting. But there are probably less convoluted investments in the market so I can understand the reluctance to get involved with a veritable can of worms, especially when the CEO is not being transparent with shareholders. But to me, despite all this, solid real estate is solid real estate and warrants a speculative buy at the right price. To each his own. Thanks again.
Thanks and good luck with it.
Q. One last questions from me Cody: do you see $JCP as a good short? They claim they’ve worked out their issues and will continue to grow, but I have doubts….what’s your opinion?
A. Same as Sears, JCPenny is dead and it’s never coming back. I can’t imagine there’s any value in the equity, but I’m not short either and don’t plan to be.
Q. Afternoon, Cody. The question — always — is gold. Last I heard ( I think), you were still advising waiting for market forces/manipulators/whatever to chonk it down a bit before getting in more deeply Still there? Will you have an opinion after the Fed speaks? I’m doing fine in $GDX; Elad is waiting for $GDX to dip just a bit more before getting back in. Are YOU that close?
A. I’m likely to just buy some outright $GDX and forget it for a year or two. I do think the big banks and the Fed want gold lower and they’re doing everything they can to crash it another time or two before the end-game finally comes some day.
Q. I am thinking about buying some August calls on $XONE. Thoughts?
A. Like I wrote last week, I think that expectations are low enough that I’d rather be long than short $XONE into anything but a disastrous report. The shorts are heavy on it and a good report could pop it 15% or more. That said, big risks to play a stock into an earnings report, but by giving yourself out to August, you give yourself some time for the stock to come back if it does crash on a bad report tomorrow. Be careful.
Q. Cody, I’ve built up a bigger position in $XONE earlier than I had planned over the last month or so. It’s no bigger than I had originally planned to be in it but I built up a full position quicker than I had planned and it’s currently my largest holding. Going into their earnings today, would you trim some if you were me or just ride it out and keep the full position? I’m not in need of the cash from it for any other opportunities that present themselves, but just wonder if it makes sense to have it as my biggest position going into earnings or should take some off given the last few days results.
A. It’s a total gamble for me to try to guide you on whether or not tomorrow the markets like whatever $XONE reports about its business results from the last 75 working days and its guidance for the next 75-250 working days in its report tonight. $XONE‘s not one of my biggest positions, as its part of the 3-D printing basket with $SSYS. Like I wrote earlier, I do think it could pop 15% or more if it reports a good report, but its still a company in its infancy and growing pains could happen. I like it long-term, looking out over the next decade, and feet to fire, I’d rather be long than short into the report. But all that said, if you’re asking if you should trim down some $XONE, it probably means you’ve got too much for comfort for your own portfolio, so the conservative thing would be to trim it down some before the report. Good luck however you handle it.
Q. Cody 18% rise in one day off $FSLR? time to trim some?
A. With $FSLR projecting $6 a share in 2015, and potential upside to that number, it’s still very cheap if the company delivers. “$FSLR said it expects full-year earnings between $2.20 and $2.60 a share, and between $4.50 and $6 in 2015.” Revenue to jump 33% y/y too. No joke growth.
If you think you’re too heavy in $FSLR, then you should trim some off tho. Maybe 1/5 or 1/4 of your position or something.
Q. Hey Cody, I’ve bought and sold $FSLR many times over the past year. I had a good feeling about their meeting today and bought more on the early dip this morning. I’m up big after the 18% gain today….so time to trim, or as I suspect, do you think this stock breaks $100 this year?
A. Like I told the prior questioner, “If you think you’re too heavy in $FSLR, then you should trim some off tho. Maybe 1/5 or 1/4 of your position or something.” That said, it could get to $100 this year if the markets believe it can actually earn $5-6 next year.
Q. Not usually your bag, but any thoughts on DexCom $DXCM?
A. $DXCM is benefitting from both Obamacare as well as BigData as both are hot, hot, hot. At 12x next year’s sales and 200x next year’s EPS, I don’t like the valuation here. “The company also offers SweetSpot, a software platform that enables patients to aggregate and analyze data from diabetes devices and to share it with their healthcare providers.”
Q. $FF seemed to impress on earnings are you looking to add it back on a pullback?
A. They didn’t give me enough substance in the new guidance without the free welfare money they were being subsidized with up into this report. It’s certainly still on my radar, but I’m not convinced of its prospects for this year and forward still.
Q. Good afternoon Cody, What are your thoughts on $VSAT, wireless on airplanes and they own there own satellite. Not to mention that they have a stake in the government. They are at their high right now but I see a big future developing with wireless in airplanes. Your thoughts? I’m also curious on your take on coupon.com ipo. Are they worth the long term ???
A. I’ve not done any work on $VSAT in a long time, but I’ve never much thought it was a good long-term revolution investment, so to speak. I don’t like the Coupon.com valuation, and it reminds me of when $GRPN came public and then subsequently crashed.
Q….so then, cody, will you re-visit Coupon.com after the actual IPO for a possible play?
A. Yeah, I might look to short Coupon.com after the IPO depending on how the pitch looks.
Q. OK, with less than ten minutes to go, the clock is ticking down. Thoughts on the Madness? Florida going to stick it out. How about your ‘local’ teams? Harvard in an upset goes all the way through? (Never mind.)
A. Lobos are better than I expected from the little I’ve bothered to watch. I like the underdogs and even tho Wichita State is a #1 seed, I’d love to see them win it all.
OK, I’ll go with the Lobos. As long as they don’t keep me from grabbing my billion dollars. (With which, as I said in an earlier chat, i will purchase Scutify and make us ALL rich.)
Who said I was willing to sell Scutify for a measly billion bucks?! Just kidding.
OK — deal’s off.
Okay folks, that’s a wrap. Thank you as always.