Cody Kiss & Tell: Semi inventory, land vs. commercial real estate & much more.
Cody Kiss & Tell: Semi inventory, land vs. commercial real estate & much more
Q: How are you holding up in NM? Family and friends and good news / baby steps getting you through this tough time?
A: Yes, we are holding up fine here in NM. My wife and I are surrounded by both of our loving families and lots of friends and other support. Amaris is doing remarkably better than most of the doctors thought she’d be able to. She’s a miracle. And my other daughter Lyncoln is just so strong and sweet and staying strong too.
Q: I just finished listening to the LLTC conference call. They said that their miss and rather large guide down was due to end demand weakness. Not because of high inventory levels. LLTC is a bellwether for analog semi names as they sell parts to just about everyone. I believe they have 44% industrial exposure and about 22% auto exposure. Any thoughts?
A: End-demand weakness is what leads to inventory gluts. The semi companies that sell to handset and smartphone vendors are struggling, as Samsung’s own inventories of both handsets and chips that go into handsets are building because there’s soft end demand. Auto and other industrial demand are probably steadier and easier to manage than that of the high volume handset industry, which is cooled off at least temporarily. The Chinese handset vendors selling cheap smartphones are taking share and the suppliers of those companies are not feeling as much of the softness as the bigger suppliers.
Q: What are the implications for SNDK, reports tonight?
A: Correct: “I think I combined reading your post with Cody’s, and I was thinking that if end user demand in smart phones was a significant issue for the bad report, then the same might be true for SNDK.”
Q: Would you rather be long/short QCOM and SNDK into earnings tonight?
A: I’d rather be long QCOM than short it and I’ve got no feel at all for SNDK. I don’t think SNDK’s quarterly report will be a blow out but I’m not sure how bad it would have to be for the stock to fall to what would be new 52-week lows if it were to fall more from here. QCOM’s just been hated and still has a lot of Chinese/IP issues ahead, but I think they might talk about breaking up the company and/or other financial engineering stuff tonight that would make me rather be long QCOM than short it. No position in QCOM for me tho. I am however long some SNDK common stock for a long time now.
Q: Hi Cody, what’s your take on investing in commercial real estate (retail, industrial)? Just wondering your general thoughts on risk/reward, metrics to look for, timing, etc.?
A: Unless you’re in the business of real estate and/or a building company, I think buying land is much better in general investing in industrial or retail real estate. Land can sit and doesn’t have any costs to upkeep. Owning buildings and finding leasers and handling maintenance and dealing with taxes and local governments and so on….sounds more like a job than an investment!
Q: Hi Cody, what’s your opinion on $TLT and $TBT? Thanks
A: It sure looks like the top for rates was put in when the 10-year was near 1.5% and the TLT hit all-time highs earlier this year. I have no idea how to play the TBT, which is an Ultra Short 20+ Year Treasury ETF which I assume it means it somehow uses leverage. I’d rather be short the TLT than long it for the next six weeks and for the next six years. But I have no position in either.
Q: Good early afternoon, Cody. Great continuing news on Amaris! General question on your views, now, on the recommended (and purchased) calls on GDX and SLV. With their roughly divergent performance since your call, and the way the actual metals have performed, has your contrarian thinking on either/both changed? Or do we hold tight? Too soon to change thinking on SLV? (P.S. Your name still isn’t showing…)
A: I didn’t expect that SLV would instantly bottom and then bounce back to $20 the day I bought call options. Rather, as always, I started slow and still have lots of room to play with any SLV and/or GDX positions I have. Nothing’s changed since I bought the SLV options or the GDX options — SLV is still at $14ish and still could potentially rally strongly from these levels in the next eight weeks before my SLV call options expire. GDX is also about where it was when I bought the GDX call options earlier this week and still could pop big in the next four months before those call options expire.
Q: Talking about gold, I am not sure it is the right moment to buy it yet. I mean, I can see $GDX really oversold and I understand the contrarian criteria to buy it now, but I do not see macro-economic conditions in favor of gold: strong US dollar, no inflation worldwide, low interest rates but possible increase in near future, those will be against gold price. Gold is in a funny place. I think it goes lower, but seems that’s what everyone thinks right now. Makes me rethink from a contrarian move. I recently had a convo with a commodities trader (since the ’70s) and he made that point that based on historical ratios, gold is overpriced when compared with present silver and platinum prices. He thinks gold falls to restore historical ratios rather than silver/platinum rising. Things to think about.
A: Notice I haven’t started buying any outright gold yet. I just think there’s an opportunity to risk a tiny bit of capital on some GDX gold miner call options that would be a big reward if gold were to just stabilize and/or rally anywhere above $1150/oz.
Q: There is commentary floating around that the downside action on $AAPL is overplayed. Was wondering whether you had an opinion on the swoosh down.
A: Yes, I’d rather be long than short $AAPL from the $124 levels for the next five days. But I’m not making any trades off that logic.
Q: My portfolio is down much bigger than Nasdaq index today with AAPL earning. I do feel some adjustments, rebalancing, or hedge needed on my tech-concentrated portfolio. Any suggestions? I am a contrarian trader and not comfortable trading frequently in and out of the market based on the market movement. I trim and lock in profit once in a while but often miss good opportunities to get back in again. Do I need to adjust my trading style as well to be successful in this fast moving tech sector?
A: I’d suggest you and I do a full Deep Dive analysis of your situation and portfolio and I’d be happy to help. Get started here: https://docs.google.com/forms/d/11kpyWeA_IUzMx3I424lfyVnrom8SRylXMnxdsWK7tLo/viewform
Q: Have you taken another look at IBM or do you still plan to?
A: Yes, I just did a bunch of work on IBM over the last week or so and I just can’t get comfortable with the amount of legacy/consulting business they rely on. IBM Watson and IBM Big Data are gonna be huge, but I can’t get excited about the stock.
Q: SNE announces they are starting a joint venture in drone development – is this a good move or a distraction from their content cache?
A: Sony drones isn’t a bad idea, and the company’s imaging chip sensors could use a successful drone to break into the drone camera industry which Ambarella completely owns right now. Probably drones won’t ever really move the needle for Sony itself tho.
