Here’s the transcript from this week’s Live Q&A Chat, including my feet-to-fire prediction for the markets, cryptocurrencies, earnings and lots of stocks.
Q. Cody, what is your feet-to-fire prediction for short term ? For TWC portfolio, you do not have much puts I believe. Are you looking to buy some puts ?
A. Feet to fire prediction for the stock market for the near-term is this. I’d expect a steady market for now, maybe a 0.5-1% moves per day with a general direction higher. When Trump decides that there’s been enough window dressing and that enough of the giant global corporations that lobby the Republican Democrat Regime have gotten enough gravy out of a “deal” with China, the markets will spike 2-3% in a day or two’s time. That might mark a top in the markets. Then the markets fade lower for a few weeks and people start clamoring for the Fed to cut. And because of all the supply chain disruptions and other economic impacts that are already imbedded in the global economy from the Great Trade War of the 21st Century, the Fed WILL finally start to cut. And that would make the market rally 3-5% in a week or less. And that would probably mark another market top. And then the markets might tank a bit more and then put in another bottom? Good luck trying to game all that, even if it turns out correct!
Q. Hi Cody, can you give us your thoughts on TWTR? It is taking a hit today. Thanks.
A. I’m going to nibble a little starter position in TWTR for my hedge fund, probably today.
Q. Good morning Cody, do you think Mr. Trump will admit one day and excuse for the harm and mess he did to the US and Global economy?
A. Did Obama apologize for the corporate giveaway called Obamacare and the damage it’s done to the wealth gap? Did Bush or Obama apologize for the Bank (and Auto) Shareholder and Executive Bailouts of 2008? Did Clinton apologize for “deregulating” Wall Street and Banks and eliminating Glass Steagal? Did Reagan apologize for crowding out the private sector by exploding the concept of debt conservatism? Do you see a pattern?
Q. Mornin’ amigo… first off… can we get a lil’ Amaris update? Next, a multi-part crypto Q basket: A) What inning do you think we are in of The Great Cryptocurrency Crash? What percentage chance do you think we see a sub-3000 Bitcoin before the bottom is in? C) Sub-2000? D) You’ve mentioned that you believe Stellar could bottom before Bitcoin… do you still think this will be the case?
A. Amaris doing better every day now. Last week was scary, this week we just want to get her all healed up so we can get a timeline to get her home. Still scary, but she’s such a warrior princess. A. I’ve been pondering what inning we’re in for the The Great Cryptocurrency Crash and I think it’s the 7th or 8th inning now. Some of the survive-able cryptos have probably put in bottoms, some are finding them.
As for the other questions: 80% chance Bitcoin goes below $3000 before the crash is all over. 70% chance it goes below $2000. Yes I think Stellar will bottom before Bitcoin.
Q. Hi Cody hope Amaris is improving .Question on AXGN do you find it troubling at all that management comes out and says nothing about the negative report or the big drop in there stock price?
A. I’m not so worried that they didn’t address the negative report. That said, I’m as terribly disappointed about this stock and at myself for not having just taking all of it all the table when it was worth more than a billion bucks.
Q. Any before earnings feelings and guess?
A. Google would be the only one I’d pick as a potential probable-to-beat-estimates name here. But I’m not going to play it as an earnings play.
Q. Hi Cody. awesome to hear Amaris is improving. im looking to buy some 1 or 2 more stocks asap and wondering which … You said that DELL was perhaps your fave long the other day. Of some of your other recent /imminent trades is it possible to rank TWTR/QRVO/APRN/SEDG/OPRA ?
A. First, as I have to remind myself as I’m building this hedge fund portfolio — go slowly. Do NOT go “asap,” ok? At this moment, I’d rank the names you asked about as probably: DELL, TWTR, SEDG, QRVO, OPRA, APRN.
Q. when you send out your positions list, will it mirror your hedge fund moves? Meaning will you have the recent buys and sells on there? If not, would it be possible to have your regular position list AND your hedge fund position list?
A. With all my focus being on taking care of my family and slowly building the hedge fund, I haven’t thought about how I’ll address the Latest Positions write up the next time I do it. I’ll figure something out.
Q. Hi Cody, Thank goodness Amaris is improving. Let’s all keep sending love her way… Two companies to ask about. SQ, and STOR, which has done well over the past year in a tricky market. Blessings to you and family…
A. I like SQ and have bought for the hedge fund. STOR is a REIT that I know nothing about. Sorry.
Q. Cody: Glad to hear that Amaris is getting better! In your market direction/top/bottom analysis upcoming debt ceiling increase did not come up in any way. Do you think it is negligible to markets? Thank you!
A. Correct, I don’t think the debt ceiling increase will matter much to the stock markets.
Q. Cody, Could you please give us your investment thesis on both Opera and Applied Optoelectronics. I will not be able to be on the call. Thanks for all of your work during difficult times.
A. Valuation on both look very compelling. The non Apple world needs a browser alternative. Strong cash flows, stock’s down big, people want an alternative and more private browser solution, which is what Opera is. AAOI — The stock’s down big, is now trading at about 10-12x next year’s probable earnings. Inventory issues might be fixed, margins would expand if so.
Q. Can you offer any more thoughts on your purchase of Dell? It sounds like they have several catalysts, conservative valuation, and the cloud. Thanks Cody.
A. Yes, with the stock trading at 6x earnings, any growth at all should provide some upside. If the company fails miserably this year, the stock will go down of course, but I think they are about to have a good year too.
Q.Practical question: I had a full position for AXGN that I build over time at approx $27 cost average. As a result of recent drop I now have aprox. half of full position. Should I buy at current levels or should I rather wait till when you nibble for your portfolio? Thank you!
A. I’d probably just sit tight for now.
Q. With respect to SQ, it has run up quite a bit since you added to the hedge fund. Would you recommend nibbling at the $70 level (or selling puts) and subsequently filling out a position if/when the price drops?
A. I’d probably just nibble a little bit.
Q. Can you give us a brief look under the hood of your WINR algorithm, inputs and conclusions? For instance, i am Intrigued you said micron scored quite high.
A. Here are some of the most heavily weighted factors that go into my WiNR Ratio Algorithm which weights each factor differently based on my own 15,000 hours of analyzing stocks and seeing what works and what doesn’t and what matters most and what’s mostly noise: Projected 3-year topline growth rate, A company’s Revolutionary factor, my conviction level, the risk factor of the trade (the latter three of which are on a logarithmic scale).
Q. Opera looks interesting, possibly much more than just a browser. What are your thoughts on the other projects such as crypto wallet, Opay, Opera News, and ad growth, which all look intriguing? As does the equity investment in Star Maker (think Smule).
A. Yes, agreed on all points.
Q. Hi Cody, that is awesome to hear about Amaris! I wanted to get your thoughts on Visa and MasterCard. I bought them both several years ago and have done well with them and I’m curious to see what you think about them. Thank you for your time.
A. Great companies, each of them. And I wish I’d bought them when they came public. At this moment, they are trading at 25x next year’s earnings estimates and while they are each growing 10%+ per year and that’s just not a compelling valuation for me.
Q. Hi Cody, any toughts on Zillow (Z)? You mentioned it was worth a look at this price.
A. Looked at Z just yesterday again. Still too rich of a valuation to be a great risk/reward scenario just yet.