Good morning all. Amaris is still in the ICU. She’s on a ventilator to help her breathe. Thanks for the concerned questions and prayers everybody.
Q. Cody, your directional instincts have been good. Rare to find a strategist with both long and short chops. Do you have a catalyst in mind for another potential sharp downturn? Trade, Brexit, recession? Thanks.
A. I don’t think that we need another outright catalyst for the next leg down, actually. There are plenty of risk factors still out there, including earnings growth risks, valuation risks, etc. It’s rather amazing when you think about how all the questions in here today and all the pundits out there talking — that it’s almost like everybody has taken it for granted that whatever caused the panicky sell-offs in December and even just last week are all finished and that “the bottom is in.” I told you guys at the bottom last week that I was bullish. Now, frankly, already, with so many stocks up 10-30% or more in the last TWO trading days, I’m getting a bit bearish about the near-term.
Q. Cody – do you think we test the lows of Dec again or maybe go a bit lower to make a firmer bottom to rally into summer ?
A. Those are not the only two options, of course. I do think the markets are going to give the bulls another scare or two before it’s all over. And there’s always the risk that there could be some more REAL downside in coming months or years, you know.
Q. Cody, Apple at 147…WOW It seems to me that the only “short term” bounce from Apple we will get is when a trade deal is done, and if it is interpreted as a success for the US. What do you think of Apple, “short, term” right now?
A. I expect Apple will trade along the same direction as the Nasdaq for the near-term. And I expect the Nasdaq to put another 2-3% rally on here and then maybe fade back and/or spike down again at some point, feet-to-fire that is.
Q. Good morning CW, I see you are shorting IWM, I happen to be long “small caps” in my 401k, should I be? Longer term prediction please.
A. Longer-term, I think owning IWM is fine. The only reason I shorted some was to hedge the building portfolio in the hedge fund. It’s a tiny position and I might cover it for a loss already.
Q. What are your thoughts on SEDG acquisition.
A. I like that the company is spending a TINY bit of money to fill in and help advance their technology road map.
Q. Good Morning Cody question for chat. Any new thoughts on AXGN or just staying the course. Hoping Amaris is also feeling better.
A. Thanks for the kind words about Amaris. Axogen’s revenue update was about in line with estimates so that seemed ok to me. When the stock was above $30, 40 and 50 and I was trimming it repeatedly, I kept explaining that there was no reason for it to be valued that high. It’s a much better value below $20 and I’m just holding onto my remaining shares for now. If it gets below $15, I’d probably start nibbling on some.
Q. Cody, wishing Amaris a speedy recovery. Can you comment on MU? From valuation perspective it looks cheap. Current share price: $31 Market cap: $35 billion Price-to-Tangible-Book: 1.07 Price-earnings ratio: 2.64 Price-sales ratio: 1.25 I understand that they have recently lowered the guidance for next quarter and year but even considering that it looks cheap. Love to hear your thoughts.
A. I’ve looked at MU and have run it through my WiNR Ratio algorithm last week. MU’s WiNR rating comes out quite high, but my conviction level isn’t high enough.
Q. Question for Chat: Barron’s 31 Dec issue talked about DIS remaking itself. What do you think about DIS? Could this be a play similar to our SNE play?
A. SNE was trading at a fraction of revenues when we bought it at in the teens. DIS is trading at 3x sales here. I think DIS is going to have a much harder time trying to compete with Netflix in the streaming app game than people realize. I’d rather short DIS than buy DIS right here at $107 for the next year or two.
Q. Mornin’ amigo. Continued prayers for you and the fam. You’ve mentioned Ripple as one of your favorite cryptos. Those on the bearish side point to it being too slow and centralized, and that banks will never adopt a currency where one company controls the entire supply. Any thoughts on this (and XRP in general)?
A. Big question and one that I’d have to spend some time thinking about and writing up. The short answer is that I see enough companies building around XRP that I continue to think it could make it as a survivor.
Q. Hey Cody, all the best to Amaris…What do you think about some of the so called cloud stocks like ADBE, NOW? Are you at all interested in FTNT?
A. I’d rather be short than long ADBE at this moment, but would rather now be involved in it at all so that’s what I’m doing with ADBE — nothing. I’ll run FTNT though my WiNR algo and if it comes out high enough I’ll let you know.
Q. Any thoughts about Roku, appears to be gaining momentum and potential for growth more than NFLX.
A. I looked at ROKU three days ago and ran it thru my WiNR algo. At the time, it was trading at 3.5 next year’s sales estimates and the company isn’t supposed to be profitable this year. I didn’t quite like the risk/reward set up enough to buy it there. Now, the stock has rallied 30%+ in the last TWO days. And it’s quite stretched valuation-wise now at more than 5x next year’s sales estimates. I wouldn’t want to be short or long ROKU at this very moment, frankly.
Q. Cody, do you consider Spotify SPOT a revolutionary company? They dominate music, but is that revolutionary?
A. Yes, I do consider them revolutionary and they came out quite high in my WiNR algo last week when I ran SPOT through it. That said, again, it’s trading like ROKU, at a big multiple of sales and not profitable and I think it could get much cheaper at some point. So I’d rather be long SPOT than short it, but I’m neither yet.
Q. Is QRVO strictly a 5G play? I don’t see much else to recommend it at the moment-AAPL iphone sales are slowing after all.
A. QRVO got cheap in this market downturn and I think it’s got enough diversity away from iPhone and potential growth in several Revolutionary industries like 5G and iOT and even driverless — that I wanted to start nibbling on it.
Q. Can you comment on your case for buying JD puts?
A. I don’t trust the company, I think estimates are too high and then there’s this potential catalyst — the CEO was arrested in the US on rape charges. And while he got to go home and back to running this company, I don’t think the people in charge in China are going to let the “shame” he’s brought on their business industries go without punishment.
Thanks all. I’ve got a lot on my plate. Will be back as soon as I can.
Q. Is there a call in number, or is the chat just going to be in the chat room today? Thank you!
A. Sorry, no call in today. I couldn’t juggle it all.
