Cody Kiss & Tell: TradingWithCody 3D systems Corp, Bidu, Twitter and much more. July 8th, 2015.
Cody Kiss & Tell: TradingWithCody 3D systems Corp, Bidu, Twitter and much more.
@codywillard – Still no tangible panic in the US stock markets. China stock markets are, on the other hand, now truly in panic mode sell-offs. Can you imagine me asking my go-to poll question to Chinese retail investors, “Who’s more scared right now, the bulls or the bears?” The answer five weeks ago would have been about 90% “Bears are more scared” as the Chinese stock markets were up nearly triple on the year. Today, I’m sure such a poll would come back 99% that “Bulls are more scared.” I’d personally rather be long than short the Chinese stock markets for the next week. Sentiment can be a great near-term catalyst for both bulls and bears when the fear gets extreme. That said, I still wouldn’t actually want to gamble much if any of my own hard-earned capital on any foreign stock market.
Q: When we have corrections like we are seeing, security names plunging, semi’s finding no support, when do you start to think Great opportunity or great caution is warranted?
A: I’d like to say that we are already in a great opportunity to load up on our favorite longs here…alas, I just don’t see it yet. Valuations aren’t down tremendously and the broader stock markets are still just barely down 5% or so from there all-time highs set a few weeks ago. I’m looking to get more aggressive in my buying and even adding some new names but I’d like to see the markets get closer to a 10% overall pullback and maybe a 3% intraday down day of panic in the US stock markets to get me to start buying more aggressively than the little bit of scaling in I did yesterday in $ICON and $SYNA.
Q: What is your general view on chip stocks. This is a very cyclical but there are names that are at 52 week lows that pay dividends for patient investors. Any names in your shopping list?
A: I was shocked to see some of the highest-flying semiconductor names down 10% again today. $SIMO and $QRVO have been pummeled as have most any semiconductor name including our $SNDK. I was just looking at a chart of SIMO though, and it and a lot of these other semi names that have been crushed of late are still up big on the year and probably have some more room to fall if we actually get another 5% or so pullback in the broader markets. I’m struggling with what to do with my $SNDK as it struggles here too and I think it’s too early for me to try to nibble back any of the $AMBA I had trimmed when it’d been closer to $120.
Q: Most, if not all, 3D printing stocks are close to 2 year lows. Do you plan to get back into this sector anytime soon?
A: I like your contrarian thinking on the 3-D Printing sector. $DDD $SSYS and $XONEare all down more than 70% from their all-time highs from a couple years ago. I do think $SSYSis probably the best one to own (maybe the only one to own) and I might look to nibble back on it at some point. The valuation of $SSYS ain’t bad if they can actually hit their numbers for next year, as it’s trading at less than 2x revenue estimates and less than 25x earnings estimates. I’d like to see them deliver on a good quarter or two first and even if I had to pay up a little bit for it after seeing the business stabilize, I might look to do so. Not til I see them hit their numbers for a couple quarters first probably.
Q: BIDU has been hit hard as a result of the China sell off – As the only China based stock you have shown some favor for, do you feel any twitching in your trigger finger to nibble on some $BIDU calls or still too early?
A: Very interesting to look at $BIDU and how its been trading in total non-correlation to the rest of the Chinese stock market. Look at this chart and you’ll see $BIDU didn’t participate in the Chinese stock bubble at the beginning of 2015 but it has been hit hard in the Chinese stock crash of summer 2015. I wouldn’t say I’m feeling any twitch in my trigger finger to actually buy $BIDU, but as a trade here, I think it’s probably a pretty good set-up to be higher in six months given that the broader Chinese stock markets aren’t down another 30% themselves, taking $BIDU with them. I’d sure rather own $BIDU than any Chinese stock market index or any other China-based company, including $BABA.
Here’s the BIDU/Chinese chart I mentioned earlier: “…Look at this chart and you’ll see $BIDU didn’t participate in the Chinese stock bubble at the beginning of 2015 but it has been hit hard in the Chinese stock crash of summer 2015…”
Q: Any fresh thoughts on $TWTR? You mentioned a deep analysis like you did on $FB back when it was on “shaky” ground.
A: I haven’t done the work on the Deep Dive on $TWTR, but will do so asap. Sorry. I do think $TWTR will be up 300% from these current levels this time in five years, but I do think it could be in the $30s or even lower before that.
Q: I often wonder about the success rate of trimming into strength vs. trimming into weakness. Does it make a difference if your exit is in the same place? Are you aware of any studies done on the opportunity cost of missing long term gain by trimming on the way up vs. loss of gains by trimming on the way down or perhaps some short term calls on $HACK?
A: I have done some extensive analysis of whether I net benefit from my trimming/scaling approach and how I implement it personally, and it’s been a profitable playbook for me over time and has helped me ride winners but hedge against losers too. There is no science to it though, and some of my approach to scaling/trimming is just a reflection of my own goals, risk-tolerance, and so on. $HACK might be a good basket approach to security, but finding the best names in the industry will be much more rewarding to shareholders than using a broader basket.
Q: $FEYE has had almost a 20% pullback. I know you hold $PANW but would like your opinion if this would be a good place to start nibbling on $FEYE?
A: I just can’t get excited about $FEYE“s management. They are too concerned about the stock price and not enough concerned about just making sure they’re the best security solution in the business. The valuation of all these security stocks is through the roof already and I’m leery of adding more exposure to it.
Q: Any thoughts on $CSCO ?
A: I’ve owned Cisco in the past and like the fact that the company’s got new management that could really revolutionize their direction. But at a $140 billion market cap already, it’s trading at 2.5x sales but at a 12 forward P/E but the company is barely growing the rate of the broader economy/GDP here in the US.
Q: Maybe with the shine off the mainland market BIDU could represent the flight back to safety?
A: Yes, exactly, but not something I’m willing to be my money on.
