Cody Kiss & Tell: Currencies, earnings and crappy chemical food
Amaris’s surgeries went great. The first words they doctor said to us when we saw her after the surgery was, “First of all, that baby is amazing!” Thanks for all the kind words, emails, prayers, etc, everybody.
Here’s the transcript from this week’s Live Q&A Chat.
Q. I know you do not like to comment on others but Kass is now large short. You seem concerned about a near term pullback. Your thoughts are welcome. Thanks.
A. Haven’t we seen Kass “All in short” and/or “large short” and/or “serious short” and/or “getting more short” and so on pretty much all the time for the last seven years as we’ve been riding this Bubble Blowing Bull Market to constant new highs? That said, yes, I do think the markets are ripe for a 5% pullback or at least a 2-3% pullback near-term and that many of our own stocks are way overbought and likely to get hit at some point soon for at least a short-term pullback.
Q. Being a foreign investor, I need to be attentive also to the Fx world, what’s your recent view on the US$?
A. I’ve been saying forever that the path of least resistance is higher for the US dollar vs every other fiat currency on the planet. The reserve currency status of the dollar makes it ever in demand in developing countries, especially and that won’t change for a very long time. That said, I would expect that the Fed and the Treasury and those in power in the US want a lower dollar vs those other fiat currencies, so they’ll implement more QE and other tricks to try to keep the dollar from being too strong near- and mid-term.
Q. Hey Cody. I hope everything is going well with you and your family… I had a question on Zillow – Z. They report earnings tonight and the stock is up a lot from April 1st. What are your thoughts into the earnings release tonight? Thank you.
A. I’m a bit nervous about $Z ‘s earnings report tonight, but I’m always nervous about any stock I own that reports earnings. That said, the real estate market has been strong in the US this summer overall and the rental business for Zillow has huge growth potential anyway. I’ll buy more if this stock gets hit tomorrow.
Q. Good day to have been in $FIT. thanks Cody for getting us in back at 11-12! I remember you bought a 1/10th position. Are you thinking of averaging up? What is the strategy here. Thanks
Q. Your first thoughts on $FIT earnings’ call? Too late to chase or there are reasons to add to the position? Thanks
A. $FIT came in as we’d hoped they would, with strong fundamentals, unit sell-through, no inventory problems and they are ready to roll out new products for Xmas. That said, margins continued to decline and there’s still risk the company doesn’t roll out hit products when they do come out. I’m steady as she goes on this one too, but if I didn’t own any of it, I could see nibbling a small first tranche.
Q. Thoughts on the Axogen report and the stock’s huge spike up today to new all-time highs? I was just researching the company a bit because I was interested in buying more stock. I came across the message board where it seems to be the same theme of awful management. who knows, maybe the product is amazing and the management won’t matter much. http://cafepharma.com/boards/t…
A. $AXGN reported a more than $10MM in revenue vs expectations of about $9MM. They raised topline guidance for the year by a couple million dollars and raised gross margin guidance to above 80%. PS. @jrenals, That link that your shared with us is some deep research there. That said, it sounds like some disgruntled ex-sales guys at Axogen have a serious axe to grind. Whether they’re justified or not in being so angry about being underpaid is up for debate. 🙂
Q. Any insight into why they are beating expectations? Are they really good, or are the analysts really bad?
A. $AXGN is a small cap company that basically sets its own guidance…and I’d rather them continue to lowball and beat than to set the bar too high and fail.
Q. I don’t own any Axogen, still good for a first tranche?
A. I wouldn’t want to chase a stock that’s up 15% to new all-time highs like $AXGN is today, but this one is a small cap and will trade wildly volatile when it does move (as we’ve all seen over the last year while we’ve owned it). I’d start small, very small and hope to get a pullback to add more in weeks ahead.
Q. Is Hubspot still a short after their strong report last night?
A. $HUBS reported a strong topline growth quarter but their profitability remains elusive and I think churn remains a big problem there. The stock is up 10% this morning and I’m just sitting tight for now.
Q. Thoughts on the $FSLR charge and guidance cut? Is the drop today justified or an overreaction?
A. $FSLR is seeing the margin pressure that one would expect an energy-related company to see in a market where oil has crashed over the last two years. I’m holding tight on this name for now too.
Q. Do you see any reason we wouldn’t use this FSLR lull to build our positions if we are still in accumulate mode? I am always wrong about this darn stock. I’m about to go George Costanza and do the opposite of what I think I should do.
A. Haha, I just happened to see a few minutes of that hilarious episode of Seinfeld where George does the opposite of everything he thinks he should and ends up with an amazing life. And yes, I do think $FSLR is more of a buy than a sell or hold right now.
Q. I have $FIT calls expiring on 8/17 which have lost 90%+ of their value.. They received a small bump in the last couple of days. What is your philosophy on these types of soon to expire calls? Would you normally sell them and put the few hundred $ back in your pocket, or just let them expire worthless? Seems to me the former makes sense, and wondering why, if the latter.
A. I’d maybe look at selling 1/2 of those $FIT call options and pocket that part to salvage something out of them and then probably let the rest ride til expiration in the hopes the stock keeps making this rally move before they’re done.
Q. SDRL keeps dropping every week+month. it’s down over 15% in the past 5 days. What was the thinking behind closing out the put options ~2 weeks ago, if you think the stock will go to zero (and seems to be trending that way)?
A. My SDRL were going to expire in July and they were such a tiny position and so illiquid that I decided to move on.
Q. Do you have any thoughts on $GIS ? They’ve bought some startups that I like recently (EPIC foods)
A. Wow, Gillette has been on a tear as people chase dividend yields. Gillette is a boring no growth food company that’s selling cheap crappy food processed with sugar and salt and chemicals in a world that’s moving away from that crap, yet the stock is up 30% in the last six months. Thanks for mentioning it, as I am going to research it as a potential short here.
Subscriber follow-up: The world is not moving away from cheap crappy food. They can’t afford the healthy stuff. Only the 1% buy the healthy stuff.
A. Sad, but good counter argument.
