Cody Kiss & Tell: NCAA predictions, EBAY and Paypal problems, Zulilly and more

Q. Who do you like in the NCAA March Madness tournament?

A. I’ve been offering to give even money to anybody who wants to take KY and give me the rest of the field. Having watched a few NCAA games for the first time in a very long time during the first and second rounds of the tourney, I can see why KY was even money in Vegas. Duke might get ’em. Notre Dame is fun to watch despite their annoying coach. And I’m cheering against UCLA and their Steve Alford coach and his son after they ditched my UNM despite having just resigned a contract with UNM before UCLA came a’calling.

Q. Hi Cody, a while back you said you were going to look into safer high yielding assets. Have you had a chance to do so? Thanks

A. Yes, I spent a lot of time looking for “safer” high yield assets….and there isn’t much. 0% interest rates globally for years on end now keeps forcing down the yields on anything even relatively “safe”.

Q. Is % of institutional holding a good indicator of stock ? $zu has more than 90% of institutional holding

A. I don’t use institutional vs retail ownership breakdown as meaningful. Lots of institutional investors are stupid, corrupt, confused, wrong and/or oblivious and lots of retail investors are brilliant, savvy, strategic and smart. I go with my own analysis on each position and whether I think it’s a good move or not.

Q. Thanks Cody. I hold $zu on loss. Any suggestion like whether to hold it or sell it ?

A. Wow, I had no idea that $ZU had continued to crash like that. It’s now down 75% from its post-IPO highs and that chart hasn’t had a breather in months. $ZU might earn up to 40 cents per share next year according to estimates, and that makes it still very expensive on a fundamental basis. My wife used to use Zulilly a lot but she got sick of the long lead times for delivery and I think she’s not the only one. I don’t know anything about $ZU‘s founders or management but if you believe in the company and/or its team, it might be a good long-term investment. Good luck, hope this helps.

Q. “$ZU might earn up to 40 cents per share next year according to estimates, and that makes it still very expensive on a fundamental basis.” What do you look at so quickly to find out this kind of information?

A. We’ll be adding this feature to Scutify soon. Here’s what I used for this one:http://finance.yahoo.com/q/ae?…

Q. Hi Cody Are you still recommending XLF puts at this level as a hedge to overall longs? If one were to go into them today, at what strike price and date?

A. I still think the $XLF puts are a decent hedge, and would look out at June or July with strikes around $23 or so. But remember it’s just a hedge and not something I’m pounding the table on.

Q. Would also like to hear if you are still bullish on your June $XLF puts or if you are considering throwing in the towel or rolling out? Seems like a high risk play for you these days…you’ve been conservative for awhile now IMO.

A. I repeat: “I still think the $XLF puts are a decent hedge, but remember it’s just a hedge and not something I’m pounding the table on.”

Q. What’s your take on possible apple watch production problems being reported and thus limiting large scale manufacturing?

A. Did you see the source of the “Apple Watch Production Problems” story? Not exactly a source for Apple investment insights. “Taiwanese publication UDN Mobile on Tuesday said that Apple has slashed its per-month shipment target to 1.25 million to 1.5 million units, from 2.5 million to 3 million units. The news outlet says it has spoken to sources in Apple’s supply chain, including contract manufacturer Quanta.” http://news.investors.com/tech…

Q. Last week I think it was, in response to someone’s question revolving around PayPal competition from FB Pay or Apple Pay or something like that, you said IF they were eager to do something, they might want to short eBay or PayPal when they spin PayPal off. Any sense in shorting one of them now, in anticipation? (Not sure of the spinoff timing.)

Q. Still on eBay for a moment: are you dubious enough to consider a kida-far-out put — say, July $55s? Doesn’t look like too high a premium, and $3 off current equity price? (I’d like your judgment on that EBAY “premium”)

A. Hmm, haven’t done the work yet on $EBAY so wouldn’t do anything just yet, but July $55 puts for three dollars each would require “only” a 10% drop in EBAY to pay off. The problem is one of timing — the EBAY stock might climb into the Paypal spinoff, as its not like we’re sitting here saying the EBAY/Paypal fundamentals have collapsed or anything…just that over the next year or two that Paypal is likely going to have a very hard time with competition.

Q. On rates: with the Fed’s loss of patience, but not TOO impatient at this point, would this be a good time, or too early, to get set for rates going up? Remind me again, is there any “pure play” (index, ETF, etc.) on rates increasing (or short on them dropping)? Or too soon?

A. $TLT is a way to play rates without using bonds or treasuries directly. I don’t know what would make rates actually go up in the US when there are still negative interest rates in Europe. Rates will certainly be much higher in twenty or thirty years than they are right now, but trying to nail the bottom has been and will continue to be very hard.

Q. INTC is at new year lows? any interest to lower your costs basis on that one? What R U hearing that $INTC inside will replace $qcom?

A. Nothing factual new but still lots of buzz that $INTC‘s gonna take a lot of market share in mobile and tablets from $QCOM and others in coming years. I’m not ready to add to my $INTC again just yet but am getting closer to adding a fresh tranche in coming weeks.

Q. I’m having a hard time buying ffiv. I recall cody cutting it from the revo portfolio in the past. I do not recall exactly what it was for but i vaguely remember him having an issue with management’s lack of execution. I would like to know why that changed or what changed. Not questioning cody’s decision making just asking for a little more info.

A. Never stopped liking $FFIV‘s management. When I sold it back in 2013, I wrote: “I still like F5 longer-term and I’ve been singing its praises as far back as in early 2006 and again in 2007 in my old column for the Financial Times when the stock was a small fraction of its current quote (see: Cody Willard: King consumer in full charge of future and Shout it from the laptops: convergence is back!).” http://tradingwithcody.com/201…

Q. Security names now down too much from your buys but down 2% any interest to add anymore to $SPLK $PANW $FFIV?

A. Just started building my $PANW, $FFIV and $SPLK names this week and am building up the first tranche a bit still today.

Q. Any interesting semi names for you as many are having almost 10% corrections literally in one day?

A. I’m not interested in trying to nail a short-term bottom in those semi’s that are being crushed 5-10% today. They’ve had a heckuva run, especially those being hit hardest today, and it might take a little time to let the newfound bulls get scared and shaken out.

My brain and fingers hurt now. Talk to you guys later!