Cody Kiss & Tell: Correction, catalysts, congress, gold and GappleSoft
Here’s the transcript to this week’s Live Q&A Chat. Be sure to join me next Wednesday at 2pm at https://twc.scutify.com/members.
Q. In regards to your Trade Alert this morning about your latest hedge with IBB, you said you were buying puts at $120. Do you mean $320? Sorry if I’m not understanding what you meant.
A. Sorry, I meant the $320s for the strike price on the $IBB puts. Typo.
Q. TWC made me reconsider and buy $TWTR lately – just before the spike above 50$. I’m a newcomer here- subscribed just some two weeks ago.
A. Welcome to TWC. Move slowly and let the trades come to us. Patience is one of the best things you’ll learn here.
Q. Hi Cody – it now still a good time to add to TWTR? I have a 2/3 position and would like to add more. Periscope is going to be a great tool.
A. I’m a bit bearish about the broader markets near-term and on high-beta stocks like TWTR itself near-term specifically. That said, I think at a $25 billion valuation, that $TWTR is undervalued and that over the next five to ten years it could go to a $100 or even a $150 billion valuation or so. Depends on your own time frame, risk-tolerance, etc on whether you want to try to time a short-term move for the last tranche vs just buying some and holding it for the long-term.
Q. You said in an earlier answer: “I’m a bit bearish about the broader markets near-term”. How would you translate that into terms of a possible corrections?
A. A 5-10% correction, back down to test DJIA 17k wouldn’t shock me. Might not come at all though, of course.
Q. Is there a media moment in the next week or two, e.g., a government debt ceiling crisis, that could stimulate one of those short term panic selloffs that we see periodically?
A. Great question, trying to look ahead and anticipate something on the mainstream media calendar that might tip a correction into happening. I’m not sure I’m aware of anything specifically, but the headlines we aren’t aware of yet are the ones that usually have the biggest chance of becoming an actual catalyst anyway. We’ll see, I guess.
Q. I thought that there was a Congressional deadline looming in the next week or so related to a debt ceiling or funding Homeland Security or some such thing.
A. I agree: “I thought that there was a Congressional deadline looming in the next week or so related to a debt ceiling or funding Homeland Security or some such thing.” There’s always that kind of stuff or something like that out there to worry about. My mom used to always say, “You can always find the next crisis, you just have to look for it.”
Q. Though you have been a GPRO bear for long time, you mentioned about buying it for short term in one of your scuttle. What stopped you from pulling the trigger for short term? Or do you strictly stick with your playbook and won’t ever game for short term?
A. I’m an opportunist when it comes to the markets and trading and investing. I will certainly make short-term trades, sometimes aggressively when I think the risk/reward is terrific. In regards to the $GPRO Scuttle your referring to, I was just commenting on GPRO’s set-up, but certainly didn’t ever consider it a good enough risk/reward scenario to buy GPRO. At $15, I might reconsider and even get long $GPRO for an investment and/or a trade. But probably not before that kind of a crash in its stock.
Q. Hi Cody, Will you or have you done any additional analysis on SNDK since the latest warning last week? Do you still like their prospects going forward from this level?
A. Sandisk is moving into some cutting-edge new 3-D-like flash drive technology and I think they might be struggling a bit with the transition. The NAND flash industry and pricing seems to be pretty good away from Sandisk. That all likely translates to looking out to next year and expecting that Sandisk is about to take their business and margins to the next level which would then put the other companies in the industry behind the curve. In two years, I think $SNDK can be much higher than the $60s its right now trading at, but that for the next six months or so, it could flounder. I’ll hold mine for now. Might add some more SNDK common at some point too.
Q. Question on INTC– Will they get into the mobile market in a meaningful way?
A. INTC’s not likely to become a huge player in mobile in the next six months, but six years from now, it certainly could be. I like their odds and the risk/reward in the valuation of the stock enough at these levels to be a long INTC common stock investor.
Q. What is your plan for YNDX and GDX that are in your watchlist ?
A. I’m liking $ZNDX here around $15 as it’s looking like it has found a bottom, at least for now. I might go ahead and buy some common and/or some Yandex call options at some point soon. Was just looking at them this morning but didn’t pull the trigger yet.
A. $GDX is a buy if/when $GOLD itself gets and stays above $1300 or so. I don’t think trying to game these bounces in the $GDX between $15 and $25 are making anybody any money. And there’s not much margin for most gold miners with gold below $1300. At $1500/oz gold prices, the $GDX would rally into the $30s, and so on.
Q. What are your thoughts on buying EBAY before the split with Paypal? We’d get shares of both (kinda like pre-ipo PayPal shares) and eBay would be a potential take over target.
A. I’m actually trying to figure out how to short EBAY and/or Paypal. I think EBAY itself is struggling to grow out of being a giant garage sale and that Paypal’s got growing competition from the most well-funded and best-positioned companies for digital payment processing at Apple, Google, Amazon, Visa, Amex, etc.
Q. Suggestion on $MSFT please.
A. New CEO is much better than old CEO but they have lost in mobile. Their tablets are good and they’re still dominant in PCs and their XBOX isn’t bad either…but nothing to get excited about there, that I can see.
Q. $AAPL has been trading pretty flat recently. Apple Watch will be on display in the stores with pre-order available April 10, sales of the Watch begin on April 24, plus earnings release with likely dividend increase announcement on April 27. Any opinion on May 1 $APPL options priced @ $125 +/-?
A. There’s soooo much focus on the Apple Watch roll out that I don’t know how anybody would go about trying to game it. Too tough to even try to gauge what Apple’s stock’s gonna be doing over the next 30-60 days, in my opinion.
Q. You were rushing into buying security stocks yesterday even though you mentioned that you expect a sell-off in high-beta tech stocks sometime soon. When you expect a near term drop, why did you rushed instead of waiting ? PS: I have been following your analysis for more than 2 years and your playbook rocks better than Barney’s playbook in ‘How I met your mother’ 🙂 .
A. Ah, heck, that’s another TYPO on my part and I apologize. It should say “I’m NOT rushing into any of them…” in the Trade Alert. You’ll see I do explain further that I’m waiting for the drop to get more aggressive. Sorry for the confusion. I’ve now inserted the NOT in brackets: “I’m going to add a second small tranche of common stock of each of the three security stocks I added to the portfolio last week, buying small tranches of $PANW, $FFIV and$SPLK. I’m flat on $SPLK and $FFIV and up about 3% on my $PANW common stock purchases in each from last week. I’m [NOT] rushing into any of them and each will now be about 1/2 the size I’ll eventually want them to be with $FFIV being the largest of the three. I’d like to see a big sell-off in high-beta tech stocks like these sometime soon and I’d get a little more aggressive in my buying. But not yet.”
A. And as for this part, ” I have been following your analysis for more than 2 years and your playbook rocks better than Barney’s playbook in ‘How I met your mother’ 🙂 .” That’s too funny! I just sent it to Neil, the actor who played Barney.
Q. Cody, any thoughts on feye and why not in security basket?
A. I like $FEYE’s positioning as a leading network security company, but they are trading at 10x this year’s sales with growing losses and negative cash flow…I just can’t get comfortable with it at a $6BB valuation where it is right now.
BREAKING NEWS: $GOOG $AAPL and $MSFT agree to merge, $AAPL shareholders getting 1/2 the next company, to be called “GappleSoft” and trade under the symbol: “$RULER” Below is an image of their new logo
I am just kidding, of course, like #AprilFools on the $RULER “Gapplesoft” mergers, ok? 🙂 Hoohah.
