Cody Kiss & Tell: Weekly options, Twitter leadership, Coke and more
Howdy doodie time. Let’s rock. Ask away.
Q. Cody: an investing 101 question. What are your thoughts on WEEKLY options — when would one use those instead of the standard monthlies? When a near-term move/event is expected? (Then why is that better than doing the monthly and just bailing when the event happens?) Do they carry higher premiums? (This question from a guy who just admitted that sometimes “risk tolerance” goes into the crapper!)
A. I find the weeklies do sometimes carry higher premiums, if only because Street veterans like me have never gotten entirely comfortable with them — 3rd Friday of each month for expiration dates of my options is sorta ingrained in my head.
Q. What moves can $TWTR make to become more profitable? Do we need to see NEW leadership to get the stock to move in the right direction?
A. I heard Cramer last night when I was driving flipping back and forth to the commercials on Channels 112, 113 and 114 trying to catch a round of scheduled Scutify ads. Anyway, he was basically calling for Dick Costello’s, the CEO, of Twitter’s head. Lots of piling onto that call today. I was calling for new Twitter management when the stock had just come public and they left billions on the table. That said, I have changed my mind on $TWTR itself and on their management’s ability too as the last couple quarterly earnings reports showed some serious growth. I think most anybody can figure out how to monetize the billions of pageviews and promotions that go on Twitter every month.
Q. $FB down after good results. Are you planning to buy it here or for short term is it dead money?
A. For a trader, say over the next 3-6 months, I’d guess $TWTR’s got more upside from today’s quote. For an investor, say over the next 3-6 years, I think that $FB has more upside from today’s quote.
Q. I think we all know that the eco system at $AAPL is very valuable. Buying an iPhone for the first time may lead an individual to buy a Mac or an iPad, etc. Do you see ApplePay bringing value to the $AAPL eco system or do you view it as a stand alone product.
A. ApplePay is another key ingredient and differentiator for Apple’s ecosystem. It’s going to be huge. And it’s going to be very profitable. ApplePay in your watch next? GooglePay in your GoogleGlasses next? This is all coming.
Q. Any tea leaves to be read with the report that Alibaba is in talks with SONY Pictures to jointly fund films?
A. Sony knows they’ve got a tiger by the tail in their huge library of Hollywood-level movies and shows. Distributers like Amazon, NetFlix, Apple, Google et al are desperate for that content and Jack Ma of Alibaba is apparently trying to figure out how to get in that game too. Good stuff in theory, but nothing fundamental from it yet.
Q. Could you comment on how $YELP went from a most recent Cody revolution rating of “8” to suddenly being sold? It seems like an “8” indicated a high level of confidence in your expectations, and as recently as October 23 you said you might add a tranche of $YELP if you were not yet an owner. Thanks.
A. I would probably still consider $YELP at least a 7 or an 8 rated stock, but I wanted to trade it out for $TWTR. I am already very concentrated in the social media sector, especially if you consider my Scutify Chairmanship too, and I can’t own every stock I like and highlight for you guys. I’ve owned $YELP since we first bought it a few months ago in the mid $50s and trimmed some down when we had 50% gains or so but I am indeed letting it go for now to use that money to invest in a similar company, $TWTR.
Q. Well, then: I was all set, at close yesterday, to craft you a HUGE thank you for the $INVN call suggestion. (I had considered tranching out a bit at +60-70% in one day. But no.) Instead I learned that my risk tolerance decided to showed its evil brother, just in time for Halloween. So it’s in the doghouse now. What kind of research does one (that would be you) do to decide where we go next? Do you agree that management is incompetent and, frankly, was misleading?
A. I do think management tried to avoid taking their lumps from the overbuild of inventory. More importantly, it looks like management blinked in their negotiations to win the Apple iPhone 6 supply contract that they did win — but they made major concessions on price per unit and therefore their own profitability. As for researching it…I’m calling a few industry folks who cover the chip sector and who know Invensense just to make sure I’m not missing something in my own analysis since I’ve put so much time and energy and some money into this stock over the last few months. I also don’t want to sell out of anger/disgust — and I am certainly angry and disgusted at myself and this stock right now. I will be cut-throat about selling it if I do decide that is the right decision. Let you know.
Q. Emailed Question: $Yelp, $FB, $INVN, are my top 3 positions, But this earning season, all these 3 stocks loss a lot. also SNE, I put medium money in it (follow you), but 2nd day is earning day for SNE, I loss 10%+. I just have little $AAPL and some $GOOGL. that’s why I loss Big $ in this earning season. Please , please give me any directions on these 4 stocks, use your best knowledge. I feel sad, I want to sold all these stocks. Thanks!
A. First of all, I’m sorry to hear you are sad. I am more angry and disgusted about the INVN than the others, simply because the management failed so miserably. $YELP and $FB are both growing topline and earnings very strongly very quickly but that doesn’t mean their stocks won’t fluctuate wildly as they grow. Sony is a totally different type of investment, as it is a turnaround value stock, not a growth story (at least not yet). In order, for the next year or two, I would rate them in order of best to worst: $FB, $SNE, $YELP, $INVN. I don’t know to game whether the stocks will bounce back immediately or not — that is dependent upon the broader market action, sentiment, sector rotations, etc.
Q. Cody: will Amazon ever WANT to show profits vs just keep the spend going to be the dominant net retailer?
A. I think anybody who questions Jeff Bezos ability to create shareholder value when his stock’s been a hundred-billion-dollar valuation stock for years on end is mistaken. That said, I’m worried Amazon’s not catching critical mass on their content offerings/streaming video/and music…and that could end up being a big money pit. Amazon Web Services is growing and profitable though, and all of that is something to remember when you analyze Amazon as “just a retailer”.
Q. Whats your opinion on selling $ko and buying $sne?
A. Coke, $KO, sort of reminds me of a beverage version of McDonald’s. How long can Coke continue to expect to make huge profits and margins on chemically-colored, chemically-sweetened drinks that basically kill people who consume them too often. Juices, water and other drinks seem like a better place to invest than dirty sugar water. Coke’s trying to morph to meet that trend change, but I wouldn’t count on them succeeding in reinventing a 150 year-old company. Sony I own, but it’s got plenty of risks ahead of it too. Good luck!
Comment: just got kicked out of site took 10 mins. to get back in upgrade can`t come fast enough.
Cody: I know, I’ve spent half this Q&A on the phone with GoDaddy myself since they never seem to be able to fix this server issue on a consistent basis. We are working hard on the new site and upgrade….coming in November, I promise on that deadline.
