Cody Kiss & Tell: Zillow talk, puts & shorts, Samsung sorrows & 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. Any thoughts on all the puts and shorts you bought? I’m just curious how much conviction you have in them and curious as to why you have not averaged down. Thank you.
A. Remember the puts are hedges and maybe this, from the Latest Positions write up earlier this week, will answer your question: “DIA (7) – I’m still down a little bit on these puts but these are just hedges that I put on when stock were at all-time highs heading into the election QQQ (6) – I’m now down about 70% on these put hedges, but that means our corresponding long positions have down very well and since our longs in the big tech names are much bigger than this tiny put hedge, the portfolio overall has been doing very well too. Remember that the PowerShares QQQ tracks a modified market-cap-weighted index of 100 NASDAQ-listed stocks, which actually serve as an almost direct hedge to our own long-held huge winners $AAPL, $AMZN, $FB and $GOOGL as they (along with $MSFT which I don’t own) are the largest components in the $QQQ and combined make up more than 30% of the QQQ’s weighting. By the way, when I first bought Apple, Google, FB and Google, they either weren’t in the QQQ at all or they made up less than 1% of it. As they’ve gone up 5-100x in the years since I bought each of them to become the move valuable companies in the world, their weighting in the QQQ increased proportionally.”
Q. Just an operations question – in most cases sell alerts involve a 1/10 size of the equity stake and buy alerts a 1/3 – 1/5 size. Reasoning? Is the goal to sell off a margin of the growth while maintaining the core position?
Subscriber comment: I will take a wild guess, just to see if I am right when Cody answers. Buying happens in larger tranches because we are building a core position to hold over time. Selling happens in small tranches because we are trimming to take profit around the core position, as opposed trying to unload the position.
A. Nailed it! Thanks: ” Buying happens in larger tranches because we are building a core position to hold over time. Selling happens in small tranches because we are trimming to take profit around the core position, as opposed trying to unload the position.”
Q. Cody not a fan of Zillow for a few reasons per your positions.Listed my house recently and was nightmare to get things corrected by realtor as no phone # to call.Also as looking for houses lot of info not correct.Have also heard this complaint through other realtors and home buyers and sellers.I have been using realtor.com whenever looking for info.Any thoughts? We are contemplating moving. Two realtors we talked with trashed Zillow. Two said is is comparable to realtor.com. When we fed our info into Zillow we got very superficial results, i.e. their formula for evaluating the house’s value was very simple?
A. I don’t think anybody uses Zillow for its valuation software…it’s more about ease of use and finding what’s listed in the public real estate listings using the app revolution.
Subscriber follow-up: Agreed, Cody. I don`t use for valuation but a lot of info about a particular house is usually not correct. But agree only use is maybe to search and find but realtors now can set you up with MLS and just send houses you are interested in. Just not sure what Zillow offers other than that.
Cody’s follow-up: When someone wants to move, they want to see as many houses that are up for sale as possible as easy as possible. Besides Zillow and a couple other wannabe apps there any other way to quickly scan any area of the country for MLS listings, pictures, etc?
Another subscriber follow-up: No, I still think $Z reflects where the industry is going. Like everybody else, I feel the pain when I see some red on my screen, but for most of my stocks, I intend to hold them for years, instead of weeks or months. Just as an aside, I recently listed a rental property on $Z and craigslist, both for free. My rental has had 119 views and I have gotten 7 contacts through $Z. No way to know how many views through CL, but fewer contacts than through $Z. Think about that for a moment. I use $Z a lot for scanning real estate sales, and listings in my area. I have tried other sites, but $Z is the best for that, for sure. I am thinking about listing my rental property on sale through $Z just to see how that works. One really huge key for a FSBO like me is $Z provides a way for you to get in touch with unrepresented buyers, so you can save huge on commissions. I am a lawyer, so I am exceedingly confident in my ability to sell and document my own home sale. But even if I were not a lawyer, I would rather hire one for $5K to handle my transaction than pay $40-$60K in sales commissions. The industry is not there yet, but I see it going in that direction. The home I live in now in CA was a seller to buyer transaction with no realtors. Because the seller wanted to make sure he got everything done right (after our deal was made), he hired a competent realtor to handle all the paperwork and escrow, for 1%. Because a seller and buyer were able to find each other without a realtor, this seller saved 5% in commissions, or $29K. The realtor earned $6K for doing paperwork, still a damned nice payday. $Z allows buyers and sellers to find each other without realtors.
Q. Any thoughts on NTDOY? I hear there are a lot of cool things coming out?
A. I think Nintendo $NTDOY has allowed the market to pass it by and I’m not a fan of the stock at these levels.
Q. Sent a message about $NVDA and the royalties coming to an end in 2017. Thoughts on how it will affect (or is it effect) the stock.
A. I would think that most market analysts were already modeling the loss of the Intel royalties from a patent settlement in 2011 now that it’s expiring. We don’t own $NVDA for its 2011 patent settlement and I doubt any other investors do either, so probably not much of a factor really.
Q. Is $ISRG a buy at this price?
A. I wrote this a few weeks ago about $ISRG and nothing’s changed: “I like $ISRGand it is indeed the leader in robotics surgery. The stock has always just been so expensive that I have never gotten comfortable and pulled the trigger. Maybe I should get a robotic hand to pull the trigger for me?”
Q. Cody, I have read some analysis that suggests that Samsung’s business is significantly diversified such that it can absorb a big ding to its smartphone revenues, such that the Note 7 fiasco should not cause them to crater.
A. The chinese android vendors are going to really come up and hit the markets around the world in the next 3-5 years. iPhone has some protection from this, but Samsung, HTC, Motorola, et al….Big Trouble (In Little China?) for them. I’m not saying Samsung’s going to disappear, but the profits on fridges and washing machines ain’t going to sustain its current valuation.
Q. Just wondering how much of Samsung’s business is based on mobile phones. Here’s why Samsung’s Galaxy Note 7 recall will have a temporary impact on earnings and Will Galaxy Note 7 Kill Samsung Stock?
A. Regarding Samsung’s dependency on mobile — More important than just how much smartphone sales and profits represent for Samsung, is how much does the market value their smartphone sales vs the rest of the company and I would argue that the smartphone division is the most valuable part of the company but that it’s about to lose value quickly in coming years.
Subscriber follow-up: Thanks for the answer re: Samsung. That makes sense. In addition to their own smartphone problems, $GOOGL is now entering the Android hardware market, which will add to to Samsung’s smartphone woes.
Cody’s response: Perhaps, though I think Google needs to be careful in choosing whether they want to be a platform company with lots of other hardware partners making Android products or if Google wants to be a hardware vendor like Apple. I think they should focus on software/search/operating systems/platforms and not try to become a major competitor to other Android vendors.
Q. How is Samsung the next Blackberry? Back then there were other companies coming out with better phones. Now the two big players are AAPL & Samsung in the smarthphone business. Who will take over for Samsung? Thought on SEDG ? Down 15% since purchase. Thinking of cutting losses on this one.
A. For years, Blackberry was THE only smartphone. Before that it was Motorola. Before that it was Nokia. Samsung today is set up like any of those preceding dominant phone vendors when they were at the top and everybody was sure they’d never let others pass them by. If you don’t own the platform, you’re commodity company.
Q. I still have a big position in $NFLX. Would u consider it for a buy again? Are you impressed by the report?
A. Yes, I was impressed with the strong growth numbers at $NFLX. Then again, they are the ones who set the bar for each quarter and each year and how come they’re always so incredible off on their forecasts? I think they should stop giving forecasts entirely.
Q. Subscriber posted link: Comparison of solar to conventional electricity generation.
A. That’s a partisan propaganda piece from CNSNews. No doubt that solar is subsidized as well as nat gas, oil, utilities, etc. More about CNSNews
Q. Nice move in our solar stocks today. I should have realized that when others were posting about max frustration w/ these names that it was a buy signal.
A. Me too!
Ok folks, that’s a wrap. Thanks!
