The markets keep rallying, the bears keep pushing their shorts, the markets keep rallying, the longs keep trying to get back into what they sold in December, and the markets keep rallying.
Is it time for a pause? Maybe it’s time for our poll. You can post your answer on Twitter (or just email your answer):
Who’s more scared right now, the bulls or the bears?
I have nibbled some of our existing longs here and there, as I’m still trying to build the hedge fund portfolio up and brought in a bit more money in January. I’ve also been trimming a tiny bit of some of the names that have taken off and have kept my shorts tiny though I have traded around on them a bit too.
Meanwhile, I’m staying focused on trying to find great investments and/or trades. Here’s a new name for The 5G Revolution that I’ve been buying this morning for the hedge fund and will nibble a bit for my personal account too. The company reports tomorrow after the close, and while I do expect a strong report, I want to leave myself some room to buy more in case the stock gets hit after the report.
Added VIAV to the portfolio, a $2.5 billion telecom supplier company with solid fundamentals. Earnings expected to grow at a 15-20% rate in 2019 and 2020. It is one of our picks to take advantage of the revolutionary 5G rollout. 5G will touch nearly every industry and consumers will be leading beneficiary, with our telephones uploading, downloading data 100 times faster than now. VIAV is positioned well with its four business segments: Network Enablement, Service Enablement, and Optical Security and Performance Products. They noted on their previous earnings report from November 1 last year that (bold mine):
“The other big one of course is 5G. I mean, for us, even though the actual deployment is some time off, we make our money on the early stages of the network development, network testing, field trials and things like that. That’s where we make our initial revenue with lab equipment. Once it goes into production, clearly, we are looking to carve out a meaningful share for our Field Instruments in the RF space which is the area where we’re largely absent today.
And the other one I think is continued fiber. I’m pretty bullish on the fiber continuing to grow. And we’re seeing it now in obviously in the wireless networks, in cable networks, and we’ve had very good traction and execution in the fiber space around the world. And just the matter of fact, we are seeing very strong demand right now for ROADM 100 gig, 400 gig deployment. It’s just the precursor for the future deployments in fiber deeper into the network at the later time.”
These guys have several other business lines that I’m not as excited about but I’ve studied break down of their revenue numbers, their margins and their positioning and it looks like this quarter was probably a good one and that they are positioned well for the next year or two too as spending on infrastructure like fiber and testing of the new 5G networks rolls out.
Easy does it as usual.
Disclosure: At the time of publication, the firm in which Willard is a partner had positions in some of the stocks mentioned above although positions can change at any time and without notice.