Here’s the transcript from this week’s Live Q&A Chat, including ongoing crypto talk, automobile technology and 5G wireless providers.
Q. This Barron’s article seems to pick $T over $VZ. Cody – Would love to hear your take on this.
A. This is the most important point: “Verizon Communications (ticker: VZ) is doubling down on its network, while AT&T (T) is rapidly diversifying beyond the phone business. The Time Warner acquisition came just three years after a $66 billion deal for satellite-TV provider DirecTV.” I wouldn’t short T anymore, mainly because the company might be able to pull a few billion dollars of synergies out of the mergers and/or play games with their earnings/cash flow to make things look better than they might actually be. But over the next ten years, I am quite confident that the best 5G wireless provider in the US is going to make a ton of money from being so, and that’s the asymmetric risk/reward I like in a stock. That said, I wouldn’t want to chase VZ here and think it’s a much better buy below $55 where I’d been buying it earlier this year.
Q. $EA Apex Legend advertising on TV now.
A. Yes, every time I see a commercial for it, I say to my wife, “Oh yeah, Go EA.”
Q. Hi Cody, I hear that some court may remove Elon from being CEO? Someone got locked into their Tesla for 45 minutes yesterday and couldn’t get out? Any worries???
A. Always worried about my long positions. That said, neither of those headlines scare me particularly. I think it might be a good thing for Musk to be Chairman and let someone else be CEO, though I think he’s proven himself as a CEO too, so if he remains CEO, that’s fine too. As for the lock-in, I mean, it happens. My 2018 Ford F150 pickup used to light up with alarms about 1/3 of the time I’d stop at a stoplight. I eventually traded it right back in and have a 2019 Ram pick up now. I haven’t been locked in it yet, but sometimes the big touchpad display on it won’t turn on for a day and I don’t have radio when that happens.
Q. Morning Cody, hard to find a more passionate bulls and bears battle than Tesla. Bulls say 2 to 3 year lead in battery tech, same type lead in AI. The TSLA proprietary AI chip need not outperform Nvidia, mobileye, etc., just provide much faster feature upgrade cycles. Big auto followers are bound to the 2-3 year development cycles of the big AI chip vendors. Further, it’s said that while Waymo has millions of miles of driving data, TSLA has hundreds of millions. Your thoughts?
A. Yes, I got some loving and some angry emails from Trading With Cody subscribers after sending out that Tesla Buy Trade Alert. Beyond the battery technology, it’s the capacity to make enough batteries that will be perhaps Tesla’s bigger moat in that regard. I’ll have to do some more work on the Tesla AI chip — thanks for pushing me on it. Tesla driving data is also a differentiator, but for how long, I don’t know.
Q. Have driven Audis for 30 years, right through sudden acceleration and less talked about deceleration. They fixed it.
A. Great point. I mean, how many times do the mainstream media freak out about a car headline/recall/anecdote only for none of us to remember it years later. I don’t remember any of the sudden acc/deceleration headlines from Audi, for example.
Q. Cody – was out of town…read your TSLA piece. Do you have the same mindset on TSLA future as you did for AAPL when you bought it for 1 dollar? You mentioned AAPL reference in the article…..thanks
A. No, I can’t say buying Tesla at this valuation is like buying AAPL at a $1 in 2003. It might be more akin to buying Apple at $20 in 2008 or FB at $40 in 2013. I hope it’s like that anyway!
Q. Hi Cody. Could you take a look at DSKE and let me know what you think? It’s a trucking roll up and very well run. Seems way undervalued based on recent revenues and adjusted earnings. But maybe I’m missing something.
A. I just looked at it. $300 million market cap, not profitable, growing about 10% per year. The real kicker is the balance sheet, with $600 million in debt. The company does maybe $50-60 million in cash flow per year. How is it ever going to pay back all that debt while returning value to shareholders, would be my question.
Q. Hey Cody, any thoughts on the overnight Crypto pump? Seems to be on the tails of a longer period of healthy momentum. My view is that there have been lots of people on the sidelines waiting for a bottom and are now afraid they missed it and now are jumping in. Thanks in advance.
A. As you know, I’d started getting more bullish on bitcoin and cryptos again lately, after being bearish from $20,000 to $3,000ish which came after me being bullish and owning bitcoin from $100. Anyway, I have no idea why it popped today, but your theory sounds quite valid to me.
Q. With some big financial players opting to create their own “coins” as opposed to using Lumens, do you believe that this is a trend that will continue – or do you believe that more and more will eventually wind up using Lumens in the years to come? Is it uncertainty about the price of Lumens that is leading to the creation of these in-house cryptos?
A. It’s not uncertainty about the price of Lumens that leads to the creation of in-house cryptos — it’s the big financial players seeing the billions being made by the creators of the winning cryptos like Lumen and Ethereum etc, and going, “How do we get in on that action?” Let me add that I strongly doubt that most of the in-house cryptos are going to succeed
Q. Cody, Best place to buy Stellar Lumens?
A. I don’t have an answer for you. Buying cryptos right now involves taking risk with custodial issues (meaning where you hold your cryptos at). Your stock account has all kinds of protections and the banks who provide stock accounts to you have proven themselves worthy of our trust in holding stock securities and options and what not. In order for me to buy bitcoins in the hedge fund, I have to use bitcoin futures (BRR). I can’t invest in Stellar Lumens or Bitcoin or any other crypto in the hedge fund until these crypto exchanges and account custodial and regulatory issues get solved. Doing it in your personal portfolio, I’d go to one of the major crypto exchanges and take your chances, I guess. Careful with your money!
Q. It’s a new month, so how about the latest TWC crypto rankings? Quite the move in the past 12 hours, so at current prices, which do you find most and least appealing… Stellar, Bitcoin, Ripple, Ethereum?
A. In order of most to least appealing: Bitcoin, Ethereum, Ripple, Stellar.
Sub 1: Coinbase now supports Stellar Lumens – FYI.
Sub 2: I don’t think so . I have a Coinbase account but I can’t buy Stellar Lumens there.
Sub 3: Coinbase recently added Stellar so I guess it depends on your location? You can also open a Kraken or Binance account and fund it with BTC/ETH/etc from your Coinbase account.
Sub 2: I just clicked Stellar Lumens on Coinbase. While I could see a chart for Stellar Lumens, The message on the bottom : “This asset is not supported by Coinbase.” I don’t know if location has anything to do with it.
Sub 3: If you’re in the UK or NY, XLM isn’t available yet. Other than that, I’m not sure what the issue could be.
Sub 2: I am in the USA.
Sub 3: As long as you’re not in New York state, you should be good. Otherwise, I have no idea… sorry.
Sub 2: Oh, ok. thank you. That explained it.
Sub 3: No problem. In that case you can just open something like a Binance account, then send Bitcoin or Ethereum to it from Coinbase, then purchase your Lumens.
Cody: All this discussion/debate about whether you can buy the crypto called Stellar Lumens on the crypto exchange called Coinbase underscores why I won’t recommend any exchange over the other. And why I can’t buy cryptos in the hedge fund — it’s still a wild west in cryptos!
Q. Cody is AXGN in a wait and see mode? Stock has been nowhere now for awhile, hate to lose what profit is left, any thoughts?
A. Maybe trim some. I need to loop back around and do some new homework on AXGN.
Q. Thoughts on TST?
A. I just emailed TheStreet’s CEO: Hey David, Hope you’re great. Good time to talk this week? Thanks, Cody
Q. Hi Cody – do you have any thoughts on SEDG? It’s been hanging out flat for a while.
A. Issues with warranties and questions about profitability are hanging over the stock right now. It’s a small position for me right now and that’s probably where I’ll leave it til we hear the next quarter’s report.
Q. it’s been a great few months this year (and thank you!). I’m starting to get a little nervous.. should I be?
A. Thanks for the kind words. Emotions are the enemy of the successful investor, but I am also a bit nervous these days. Valuations are through the roof again, there’s little fear amongst investors and bulls (except for the continued fear of missing out) and charts are getting extended. I think it might be time to raise some cash, if you’re feeling nervous. It’s a better time to trim when it’s “been a great few months” than the next time the markets hate on our positions!
Q. Credit Suisse out with an upgrade on COMM, thoughts on adding to position here??
A. CS is raising numbers in 2020 to $3.19 from $2.66 due to synergies. If COMM earns $3 next year, I’d expect the stock to be closer to $30 than $20. But I’m just sitting tight with my common position in it for now.
Q. I read a lot about BTC being less relevant as the peg of Bitcoin to altcoins is removed over time. A lot of folks feel BTC is relevant because you need it to buy altcoins. Do you see Stellar and Ripple and others outperforming BTC ? Or will it still remain one of the stands for crypto?
A. I still think that all the tens of billions of dollars being invested in Bitcoin technologies makes it the clearest winner.
Q. If you (Cody) purchased LYFT (and I know you didn’t) at the opening at $87, and another nibble at $70, would you hold tight or cut your losses, learn an IPO lesson, and move on?
A. It depends on how big of a position you’ve made it, but even before LYFT came public, I told my research partner that LYFT would be a sell at $85 or above and a buy near $65.
Q. Cody – with all the vegan habits, possibly cattle prices going higher and a lot of vegan companies coming to IPO market. Are you looking at any of these ?
A. Probably not. We’ll see though.
