Cody Kiss & Tell: Gonzaga, Bitcoin, Starbucks, Apple and more

Here is the transcript to this week’s Live Q&A Chat. Visit the Trading With Cody Chat room on the Trading With Cody iPhone app,, the Trading WithCody Android app  or in the Chat Room. If you have any questions about our service, just email us at support@tradingwithcody.com.

Q. I’ve been your subscriber for the past few years and I appreciate your input and often contrarian analysis. I recently looked over $SBUX’s quarterly results and conference call, and I became quite optimistic about the long term of the company. The refugee scheme is also applaudable, and good for their business. The one point that was highlighted in their conference call was their inability to respond to online orders during peak times which might have driven some of their customers to their competition. Also, they are heavily dependent on China which might be a gamble given the US-China relations in our political climate. On the upside they are looking at ways to increase revenue by creating separate Starbucks lounges where clients can enjoy premium coffees from experienced barista as well as cocktails and canapes. I believe that this can appeal to millennials.

A. My first job in NYC back in 1996 was as a Starbucks barista. I had a few options but they never vested because I took a job as a paper-stapler and file-sorter at Oppenheimer on my way to becoming a stock broker, analyst, venture capitalist, hedge fund manager, etc. Anyway, I have long thought that $SBUX was too expensive to own and its just grown and grown and grown over the years making my valuation concerns irrelevant. I still have that same concern. In another 30 years will $SBUX have made my ongoing valuation concerns about the stock irrelevant?

Q. Despite rather strong results and outlook, the stock is mostly flat recently. What is your take? Also, Biotech has been recently hit a lot, and I have been looking at Gilead, strong earnings, good cash flow, p/e around 5-6. Could it be a play for a rebound in biotechs?

A. I am short $IBB and often cite Gilead’s outrageous 90%+ gross margins that they charge the taxpayer/system after lobbying to get those prices and products into the marketplace as a primary example of why. I think $GILD and most other mega-cap biotechs have limited long-term upside and perhaps even limited long-term viability.

Q. Okey, dokey. So, at least so far, your polls say the sentiment out there is that the bears are more scared. What does that mean to you? I’m always a bit confused when you do these polls, you being a contrarian and all . . .

A. When it’s 90% plus “Bears are more scared”, it’s often a good sign the stock market is about to pullback 5-10% near-term. Unfortunately, the poll today stands: 38% Bulls are more scared vs 62% Bears are more scared.

Q. $AAPL at a new all time high. Last time this happened, you called for a trim. So, is this a trim, or a hold as it continues to leg up?

A. I trimmed some $AAPL this morning.

Q. What about a trim on $FB? It’s close to it’s all time highs.

A. I’d trimmed some $FB near $130 a few months ago and I’m sitting tight with the remainder for now. Might trim some soon though.

Q. Do you anticipate $GIMO stock price to drop significantly because of the pending lawsuit?

A. $GIMO could certainly drop, but class action lawsuits about near-term stock swings and such are rarely if ever the reason for a stock to get hit.

Q. I have some Bitcoin from a few years ago when you recommended it at much lower prices. Would you buy more, sell or hold? Thanks!

A. Congrats on the $BTC homerun. Yes, I’d probably sell 1/3 of my $BTC if I had enough to matter.

Q. Cody, do you think we should buy another tranche of $NVDA after its recent pullback?

A. I think the Nvidia could pull back below 100 if the market were to pull back. Then again I do think it could triple do 300 as I have said repeatedly since we bought it at 30

Q.  Had any time for college basketball? Gotta love that pesky little Gonzaga, huh? Oh yeah — and now that $AAPL has passed 130 as you predicted, pending a world collapse, have another target?

A. I hope Gonzaga goes undefeated. Love the underdogs and the smaller schools. I expected Apple might be range down between say 120 to 140 for a while.

Subscriber follow-up: Thanks for both comments.

Q. What do you think about $ACIA?

A. $ACIA has 30% topline growth this year and is trading at less than 20x this year’s earnings estimates. I’m not a big fan of fiber optic components in large part because the prices have always commoditized over time in the last couple decades. The stock is cheap enough I’m interested, but not Revolutionary enough to make me buy it.

Q.  There is an article this morning on Solar Edge post yesterday’s earnings.  What are your thoughts on this analysis?

A. Seems like Mr Johnson doesn’t think the near-term quarterly results were good and that the company might not make this year’s results. Not sure there’s much meat to his analysis though.

Q. When you purchase a put for your portfolio, such as the $HLF puts purchased in August, is it always your intent to use it only as a hedge? I ask this because I purchased $HLF puts in August at $5.80 to watch them peak at over $12.00 in early December and then maintain a price of over $10.00 throughout the month of December. Now the puts have declined to where they are essentially worthless. Did we miss a trade at a substantial profit or was it always your intent to hold the puts to expiration?

A. I can’t really separate the two — I short stocks (and sometimes complement that with buying puts) that I think are failing as a business model or otherwise headed much lower for fundamental reasons partly to hedge our overall long portfolio. I add more shorts and/or puts when I think there’s a good chance the market/economy are headed much lower, so they are also a hedge in that sense too. As for the $HLF puts that I’ve ridden up and down — of course it was a mistake not to have at least trimmed them when $HLF was near its lows a few months ago. I thought $HLF was in a $VRX-type free fall and was headed much lower still. I still do think $HLF is in trouble so I remain short the stock and I’ll just hold onto those puts in case it happens before they expire.

Q. Cody, any thoughts on TWLO? Guy I respect and seems to know tech well said “buy TWLO and hold for 2 years!”

A.  $TWLO not expected to be profitable this year and is trading at 8x this year’s expected revenue. 30% topline growth rate for this year is nice, but not sure I want to venture into that kind of a stock at this point in the cycle.

Q. Does anything stand out from your recent travels? bull/bears, rates, trump, tech niches, policy trigger points, etc?

A. Yes, all of the above!

Subscriber comment: Thanks for helping us manage risk in this market. Have a great day!

Ok folks, that’s a wrap. Thank you!