Here’s the transcript from this week’s Live Q&A Chat, including discussions about NVDA, the budget impasse’s effect on the markets and The 5G Revolution.
A couple trades to alert you about. I nibbled some AAOI this morning. I trimmed a little bit of my DELL call options. Closed out the APHA short.
Q. Cody – where do you see the budget impasse/wall/china deal rally stall at ? S&P 500 is already at 2750. Thanks.
A. Interesting that you phrase your question with the premise the market is “already” at a level. Then again, given the relentless nature of this year’s rally, it makes sense. Anyway, I’ve been striving to ignore the markets right now as I see so many single stock opportunities and Revolutions that I want to keep trying to get in front of. The relentlessness of the rally can keep you on the sidelines from good stocks if you’re looking at the markets.
Q. US needs to dominate 5G technology for a number of good reason. In this regards, Huawei will be blocked for US and Europe. Which companies would benefit from it? Nokia? Cisco? Erricson? Billions of dollars will be spent on 5G. Can you provide visibility?
A. I’ve been doing deep homework on the best ways to invest in The 5G Revolution. I’ll know everything about who makes what where in 5G and I’ve already got theories on the best sub sector within 5G to invest in. Stay tuned!
Q. Cody, could you take a look at ASML for the next chat? Thanks Cody.
A. I’ve looked at ASML and the other semi cap stocks several times lately and I just can’t terribly comfortable that the cap ex cycle from their customers has bottomed.
Q. Looking for a suggestion to protect large gains in a stock that has run a long way over the last year. I own a few hundred shares of twlo, would like to put a hedge or similar before earnings tomorrow. Would be interested to hear some strategies employed to protect gains while hold stock. Is buying puts best option?
A. Probably buying some close-dated, slightly out of the money puts is one way to do it. You’ll cap some upside if it spikes tomorrow, but you’ll feel less pain if it tanks.
Side note. I’m listening to Greta Van Fleet radio on Spotify during today’s chat.
Q’s: 1) NVDA, is it significant that softbank sold out of their position? 2) Also re: NVDA – what kind of miss would it take for you to move on from NVDA? 3) Cody… would you consider buying puts on NVDA in case it tanks after earnings? Gaming slowing in China, the trade war, excess inventory to work through, no confidence in CEO, maybe he gets it wrong again? Lots of headwind. And while NVDA has rosy future with AI, Data Centers, and Autonomous Driving… those are still a small part of revenue growth. 4) NVDA has a lot of short term negatives it right now, which concerns me.
A. Sounds like sentiment is such that if NVDA reports any kind of a quarterly earnings and guidance that doesn’t just suck, the stock could pop some more. Like I said earlier, some out of the money puts can help hedge your position on an earnings report but it can also cut into your profits over time. You can also just trim a little bit of your position, say 5-15% if you’re stressed about it. I’ll read the report and the earnings call transcript tomorrow and see where we stand.
Another NVDA Q from email: $NVDA: Softbank sold its stake in NVDA. They have been long-term investors so market timing not necessarily a hint but looks odd anyway considering the stock is 50% off its high. Should we take this as a be-cautious signal before adding to a position?
A. Interesting how nobody seems to be excited or bullish about NVDA right now.
Q. Do you consider AAOI a high risk investment, i.e. if they can turn things around in a year or so, they will double in price? How big a long term risk are silicon transceivers to them?
A. Yes, it’s a higher risk investment than say a GOOG or an AMZN. It’s a bit more like CALX in that it’s a binary set up. The stock could be very cheap if the company is benefiting from the increased data center spending that we’ve heard about from GOOG and AMZN themselves last week. If the company is still failing to get good yields on their lasers and is losing customers, it’s going to get hit again and I’d likely bail on it too. I nibbled on some more AAOI this morning.
Q. Hi Cody, what are the gross and net exposure in your fund under this restless rally?
A. I’m net long, that’s about all the color I’ll provide on that.
Q. Cody – is it time for cryptos to bounce a little for 2019 ?
A. Yes, probably. I’d rather be a buyer of the good cryptos than a seller right now.
Q. Hey Cody. You added VIAV to the portfolio on Feb 4th (thanks for that). What rating would you give it on your 1-10 scale?
A. Maybe a 7/10 for VIAV after the spike here.
Q. Since you recommended we buy the end of year selloff in PANW, its returned some nice gains in a relative short time. Should we trim a little?
A. I almost trimmed some PANW just yesterday, but still holding on for now. Would rather be a trimmer than a chaser of PANW here at $223.
Q. @Cody, what do think about XLNX’s present and future products? From what I can tell they seem to be in the sweet spot.
A. Yes, XLNX is in a sweet spot, stock’s not cheap though. It’s on my 5G radar for sure though.
Q. RE PANW, ok. I’ll wait for your Trade Alert trim. This one does not make me nervous like NVDA.
A. Maybe we should be buying NVDA and selling PANW since everybody’s nervous about NVDA and confident about PANW. The hardest trade is usually the right one…
Q. Are you still holding JD puts?
A. Yes, sigh.
Q. DELL: You rated it a 9….do you still think it is a 9 after the recent move. Any other thoughts? Cheers!
A. I’d rate DELL an 8/10 now that it’s rallied from $44 to $53 in a straight line. Might be time to trim a bit of the call options. At 6x earnings it was really cheap. Now it’s at 8x earnings, still very cheap, but not as wildly cheap as it was.
Yes, I’ve jammed to 2Cellos before. They’re fun, but not something I can listen to long-term.
Q. @cody Do you like Lumentum? Seems like it has a good shot at the 3D market.
A. Haven’t worked on Lumentum lately.
Q. Hope Amaris and your family are doing well. What is your take on Electronic Arts (EA)? The stock was recently down 50% from its 52 week highs but has rallied in the past week. How does it valuation look right here? Does it look like a buy here?
A. I don’t know how EA ever competes against Fortnite in this new world. EA’s got a lot of work to try to keep their current gamer base in tact, much less grow it now.
Q. How about LULU? I live in California, true, but I see a ton of people walking around with yoga mats. It’s a big destination for people, every week. What do you think? Thank you.
A. At $20 billion market cap, it’s just too expensive a stock for me to chase here.
Q. @Cody – ADTN and CALX were the only two vendors competing for VZ ng-pon2 business. With selling CALX and adding ADTN, do you think ADTN will be able to profit more with this partnership or be the main vendor? It doesn’t seem like VZ would want two vendors with different setups in the mix, but would rather choose one.
A. There’s a lot of spending on the 5G network and CALX could still win some VZ or other big carrier business. I just got sick of waiting for Calix and Adtran looks like it’s got several spots it can win in 5G.
Q. Cody – general question….10 years ago you made the big prediction that AAPL will be first trillion dollar company..great call….if you were look at next 10 years which company might do stellar performance although may not move like AAPL.
A. Hmm, good question. Maybe Twitter or Verizon? Verizon could be a multi-trillion dollar company in ten years.
Q. Cody, pls SNE Sony time to add at $44? Short term soft guidance but still cheap and $80-100 possible within 3-5 years? To me all their actions seem LT accretive, USD/JPY main risk?
A. I’m more inclined to sell SNE than buy more. It’s been a great run, but it’s not a screaming buy of a stock right now and might be time to move on.
Q. Comments on Dell’s run vis a vis earnings?
A. Agreed that it’s likely Dell will have a good first earnings report. But nothing is guaranteed!
Q. Cody, what are you doing the rest of the day?
A. Hard work and loving on the family when I can.
Thanks all. Have a great day.
