Here is the transcript to this week’s Live Q&A Chat. Visit the Trading With Cody Chat room on the Trading With Cody iPhone App, the Trading With Cody Android App or at https://twc.scutify.com/members/. If you have any questions about our service, just email us at support@tradingwithcody.com.
Q. What do you think the chances of Trump winning in November are?
A. Trump has a 30% chance of beating Clinton head to head in November. I still can’t believe that people in the Republican party actually think that “Trump has given voice to the millions of blue collar and middle class Americans who are sick of DC.” Hilary represents a more normal corporate/bank-dominant society than Trump does and that will probably be why she’ll probably win in November. I would NEVER vote for either candidate and remind you that I am running for write-in as Prez.
Q. Is there a new one next to the Bitcoin? What do u think about it?
A. It will be very tough for any other digital currency to catch $BTC Bitcoin in critical mass, but in ten or twenty years, I do expect we’ll see other alt-currencies that will be close to mainstream too.
Q. Feet to the fire call regarding $FIT after the bell?
A. Remember a few weeks ago I wrote: “$FIT shipped more than 1 million Fitbit Blaze and 1 million Fitbit Alta devices in the first month that they were available, which exceeded internal Fitbit sales forecasts. Based on a Mean Suggested Retail Price (MSRP) of $199.95 for the Fitbit Blaze and $129.95 for the Fitbit Alta, those shipment figures equate to approximately $330 million in total sales in only one month. Given that management’s guidance for Q1 2016’s sales was $420 to $440 million, and that sales of the Fitbit Alta and Blaze surpassed internal sales estimates, $FIT is certainly on track to surpass its initial guidance (and analysts’ consensus estimates for $432.7 million in sales) in Q1 2016 if one assumes that all else has gone well during the quarter.” I still expect that $FIT will report a blowout quarter, the question will be about guidance and inventory. A strong report and guidance will likely be bought tomorrow, otherwise, the stock gets sold tomorrow.
Q. Cody, $GOOGL plans to launch online TV service based on YouTube. This means $GOOGL, $AMZN, $NFLX and even $FB slowly encroach on each other’s turf. This might hurt margins of all in next few years.
A. It’s maybe the bottom of the first inning in the Internet TV wars and it’s still $AMZN/$NFLX/$FB/$GOOGL vs. the cable companies and satellite TV companies, not vs. each other (yet).
Q. Wondering what your thoughts on $FSLR are here?
A. $FSLR could be dead money for the next year or two as energy prices settle. Longer-term, it’s my favorite energy stock and I’ll probably ride it out.
Q. Current thoughts regarding $AMBA here?
A. $AMBA makes me sick to my stomach sometimes as we should have been short $GPRO as a hedge on it and I failed to do it. I still think $AMBA‘s the name to beat in HD chipsets and that HD chipset growth is going to be very large as wearables, robots, and drones grow. $QCOM and $INTC and others are threats to $AMBA, but I’m holding onto it for now, feeling stupid sometimes for having done so.
Q. I understand your concerns about foreign companies, like $MBLY (as discussed earlier), but are there any countries you consider investable? $MBLY has a pretty global roster of relationships with all the major car companies and Israel seems to be a successful base for tech innovation?
A. I own $SNE out of Japan and it’s an exception to the rule. I will sometimes make an exception to the non-domestic stock rule, but rarely. I do think $MBLY looks like an interesting company, but I’m not comfortable with risking my money on it at these current valuations.
Q. Cody, we should have shorted $TSLA and $SCTY. I have a relative working at $SCTY and I think it’s really a scam.
A. Yes, I’ve been thinking we should add the $SCTY short as a nice hedge for our $FSLR and I might go ahead and pull the trigger on a $SCTY short sometime soon. Can you tell us more details about why you think it’s a scam of a company?
- Subscriber Follow-up: Cody, Jim Chanos explained it better than me.
- Interesting commentary from one of my favorite short sellers, Chanos. That said, the Barron’s link you included is from December 2015 and ends with this snippet: “Shares of Solar City ended the session up another 25 cents, or 7%, at $14.32, after yesterday soaring 34%.” You telling me that Chanos has been short this whole time as the stock has doubled since then? Ouch!
- Subscriber Follow-up: Cody, when you short stocks at Chanos level, you always hedge your short with near-term calls. He’s the all-time best short seller.
Q. What are your thoughts on $WDC and/or $STX? Both have gotten crushed, they both offer a dividend, and memory needs are not disappearing, although the PC space is declining and that is where most revenue is earned. $WDC is buying $SNDK so they should be covered for most future memory needs. Would love your prognosis.
A. I like $WDC with $SNDK as a long-term winner in the storage wars, but their balance sheet will be quite heavy in debt when the deal is done. That will probably keep me out of them, in the same way I can’t get comfortable with $MU‘s balance sheet. $STX faces secular decline in their non-flash storage business and that keeps me out of them. Maybe if the stocks got even more crushed, though they’re already down 70-80% the last year.
Q. What are your thoughts on $WFM? I feel the organic/healthier eating trend will continue. There is now more competition for $WFM but I feel it’s like Starbucks…you can get a cup of coffee anywhere but people still go to Starbucks. I feel $WFM has a similar cache.
A. $WFM‘s risking a lot on the 365 concept and that’s likely to make or break that stock for the next year or two. I sold the stock when the company announced plans to borrow $1BB to buy back stock, as they are now going to be leveraged with high net debt instead of a net cash balance ready to use for growth.
Q. Cody, any interest in $UA after its recent decline?
A. $UA down big in the last couple weeks, but still at the same levels it was just a couple months ago. The stock is still trading at 50x next year’s earnings estimates and that’s just too expensive for me to chase here. It might be a good short-term trade again at some point, but I don’t like that pitch set up right now either.
View from my office yesterday in rural New Mexico this afternoon includes a herd of wild horses in the valley below. See the babies? So cute!
Okay folks, that’s a wrap. Thank you!