Here’s the transcript from yesterday’s Live Q&A Chat.
Q. Any new ideas in the works?
A. I’m always looking at stocks, doing valuation and technology roadmap analysis, trying to find the next great short idea, and trying to make Trading With Cody as helpful as possible. One key lesson I’ve learned over the years that is important to remember is that investing and trading is supposed to be “exciting” or even necessarily “fun.” It’s hard work and we have to be diligent and careful with our money, but I’ll continue to share my analysis on stocks I do end up buying or shorting as well as those that pass on.
Q. It seems to me a December rate hike seems more probable than not. How do you anticipate the markets reacting in the near term and over the next few months going forward if hikes are implemented?
A. Read this for a full run-down on why I don’t think the Fed rate hike matters to the Bubble-Blowing Bull Market we’ve been riding for the last five years.https://twc.scutify.com/articl…
Q. What are your thoughts/expectations for AMBA with earnings expected tomorrow after the close?
A. Expectations for $AMBA are low as we all know that their largest customer,$GPRO has seen sales growth slow. If the company misses and guides lower, the stock has 10% or more downside potential which would take it back to where it was a week ago. If Ambarella’s other customers are more than able to make up for GoPro’s shortfall, the stock could pop 10% or more. Feet to fire, I expect a slight miss on the earnings report for the last 90 days of business but that they’ll reiterate the full year estimates ahead and that the stock will drop 3% or so after the report. I’ve owned this stock since the $20s and we trimmed some repeatedly when it was at higher levels, and I’m just going to let the shares I own ride for now.
Q. When Cody decided to sell ICONIX, I decided not to sell. My decision was based on 1) Cody’s comment below regarding potential upside, and 2) I hated to take the loss. So that was obviously a bad decision on my part! My question, is “Now what?” I think I should just hang on to it and hope it comes back. But it hasn’t come back at all, and is still slowly dropping. I’d hate to ride it right down to $0. So I’m just looking for an opinion/advice. What would Cody do? Thank you From Cody on 9-15-15: ”I’m sick of looking at this name and am selling it now despite believing there is good upside potential in the Snoopy/Peanuts/Charlie Brown franchise in coming years.”
A. First, realize that we’ve all had our losses and let’s acknowledge the lesson to be learned here that not wanting to take a loss isn’t a good reason to hold onto a stock. We’ve all done it though, and it’s not easy to swallow our pride and take a loss, but you see me do it when I cull my losers and sell stocks for a loss at times. Not every stock we pick is going to be a winner and it’s okay to take losses and sell sometimes. Remember that the reason I sold my position was because there were questions raised about the company’s accounting and financials and I don’t want to stick around when there’s any question about the company’s reported numbers. The questions remain, so I’m still wanting to stay away from it. Good luck and thanks for sharing so we can all learn too.
Q. I guess the answer is “there’s no one answer,” but what is/isn’t a reasonable timeframe for adding tranches? The specifics in this case are: $AXGN, which has performed nicely since you recommended it (I’m currently up 24%). After my first, let me call it, quarter tranche at that time, i added another quarter about two weeks ago. How do i know/judge if today’s dip is another “add” opportunity? Both generally (for any stock) and specifically for this one. (Haven’t seen any news on it, nor did I expect to.)
A. You’re correct that there’s no one single simple answer to your question. Adding tranches can be more luck than art and more art than science, and that’s why it’s always best to be flexible about how you do it. Maybe do a 1/8th tranche on today’s small sell-off in $AXGN, and put a bid in for another 1/8th tranche a few pennies lower and then look to do another 1/5th tranche sometime next week and so on. Remember that $AXGN is rare microcap stock for me to invest in and that I consider it a long-term venture capitalist type investment that could be a total bust or a nice long-term homerun.
- Comment and follow up question: Good answer. Hadn’t thought of “underbidding” for a tranche. Remind me — have you added to your initial purchase back then?
- A. Yes, I bought $AXGN the first time on October 6th https://twc.scutify.com/trade-… and did a second tranche on October 22ndvhttps://twc.scutify.com/trade-… . Good luck.’
Q. Is ok to add some $FB now? I trimmed 1/3 position before earnings.
A. So $FB is up a little bit since you trimmed it and now you’re considering putting some or most of those shares back on the sheets? It’s a great question and my answer will actually repeat two important lessons we’ve already seen in today’s chat. That is, #1, there’s nothing wrong with buying back a stock that’s higher than when you sold it if you think it’s going much higher anyway (related to how not wanting to take a loss isn’t a good reason to not to act). #2) Is that there’s no one single simple answer to your question. Adding tranches can be more luck than art and more art than science, and that’s why it’s always best to be flexible about how you do it. Maybe do a 1/8th tranche on today’s small sell-off in $FB, and put a bid in for another 1/8th tranche a couple dollars lower and then look to do another 1/5th tranche sometime next week and so on.
Q. What expiration and strike would you recommend if one would want to go long $FIT? Also, what are your thoughts on buying GPRO now (before the dec holidays) since the stock has come down from the 60s (in August) to 20.
A. I might just stick with the common stock and not use options on the $FIT for the foreseeable future. The stock has been in a down trend for a long time and the call options still have very large premiums on them. I never was comfortable with $GPRO‘s management’s decisions about how they handled their IPO and later their secondary and I just don’t want to own the stock any more at just about any price.
Q. FFIV and FSLR up on a down day. Great. But, GWPH up 5.00. Add to short or wait?
A. I will probably add another small tranche to the $GWPH short position when the stock settles down.
Q. Any thoughts on SYNA? Down steadily today albeit on light volume. I could see no news.
A. Nothing new on $SYNA as the stock had really rallied off its lows and seeing it come down a little bit is probably not a bad thing. It’s still quite cheap and growing quite fast as a smartphone supplier.