China/US Conflict Potential, AI Hype, James Dean, And Much More
Here’s the transcript from today’s live Q&A chat:
Q. Does potential for conflict with China concern your investing in TSM or other China/Taiwan based companies? Would you advise to buy INTC instead? Any thoughts on NVDA since you sold in the hedge fund? Thank you!
A. I own both TSM and INTC and they don’t have to be mutually exclusive. Yes of course it’s added risk that China is a threat to Taiwan but I also think TSM would trade at a higher multiple if it were based in the US so some of that risk is already priced in. NVDA is an amazing company. I still own it personally. It’s just has a wildly high valuation right now.
Q. Market running up today even after a gloom outlook. Wild. Thoughts on short term?
A. What gloom outlook are you referring to? Short-term thoughts right now is that we’re a bit in no-man’s land and that the path of least resistance is still lower for the mid-term but short-term we could get some bounces along the way as always.
Q. What’s your largest position right now?
A. My four biggest positions in alphabetical order are: GOOG, ROK, TSLA, UBER.
Q. Is it practical to have substantial cash on the sidelines? If so, what percentage of your portfolio would you sideline for the next few months?
A. With money markets and short-term bonds paying 4-5% or more, it certainly is a time to have more exposure in those places than ever before in my Wall Street career. That said, I have no way of knowing what your personal risk tolerance, investment goals, age and other aspects of your life are, so I can’t suggest a percentage amount. If you’re young and risk tolerant I’d have less cash/money markets/short term bonds than if you’re old and risk averse.
Q. Cody in the last positions report you rated INTC 8 due to good dividend, potentially taking share vs AMD and building US factories to be an onshore provider of chips…this was back in December. Have any of your thoughts changed, especially since the div was cut? Also, can INTC compete on price if the cost to produce chips onshore is higher than in other parts of the world? What’s the downside if they don’t execute?
A. I’ve written quite a bit about the dividend cut since December. Will include a couple links in the transcript. I do think Intel will be able to compete on cost and advanced technologies if they pull this fab business off, but it’s going to take a few years to get there. The downside is that the stock could go to $0 if they don’t pull it off. But I’d expect we’d be out of it before that worst-case scenario happens if it starts to fail on the fab business.
Q. What are your thoughts on QCOM. Seems like they are positioned well for the increasing levels of connectivity in all things IOT.
A. Yes that’s a large part of the potential upside in the stock.
Q. Where would you buy more QCOM? Still rate it a 7-?
A. I’ve mentioned it twice in the last couple weeks as a 7 and that I’d buy more at $110 or $100. Will include the links to those articles in the transcript.
Q. Do you like any calls or puts anywhere right now? Last time I asked, things went well. Those SI puts though, wow!
A. Yes most of those I mentioned last time worked out great. But right now I’m not seeing much puts or calls setups that I think are compelling. Sticking with common right now. A time and place for everything including calls and puts and other times sitting tight.
Q. I bought Rivian before earnings and a little more after the price took a hit. If TSLA can do what they say they can do with pricing, it will make it hard for other EV makers to compete. Is it worth owning any EV maker besides TSLA, particularly Rivian.
A. That’s a great question and one that I’ve been hinting at since that Tesla investor day. I’m holding a small Rivian position for now.
Q. With NVDA, so you see a pullback occurring soon? Is that why you decided to get out of the stock for now?
A. I think there’s too much AI hype going on right now and NVDA’s a crowded long. I’m not sure it’s going to pullback necessarily but I think the upside could be capped for a while and that there is more risk to a whoosh down in that name than in most stocks right now.
Q. Cody you used to do some trades on bankrupt companies. You had a playbook for the trades, but I forget exactly how it worked. Do you still do those? I know not technically bankrupt, but any trade ideas on SI?
A. The trade is to buy the stock of a company the day it declares bankruptcy and to sell it a few days later. You are correct that SI didn’t exactly declare bankruptcy today so I’m not doing it there. Staying away from SI now after that puts trade we did a few weeks ago worked out so well.
Q. AAPL, ADBE, ENVX and IBB did not appear on “where I’d buy more” list but can’t recall you selling them so assume they are just maintain – any corrections to my assumption or actions on any of these?
A. Great username “son of rebel”. I sent out Trade Alerts about selling those names although I still own AAPL in my personal account, just not in the hedge fund right now. I’d buy more AAPL at $100 or so.
Q. My father was James Deane…
Q. Cody: how is amaris?
A. Thank you for asking. She’s actually back in the hospital since yesterday dealing with a lung sickness.
That’s a wrap. Thanks all!
