Conducting Our Semis, RKLB Boom, Interest On Cryptos And More
Here’s the transcript from this week’s Trading With Cody Live Q&A Chat.
Q. Hi Cody, I’m hoping all is well. From your recent communications it seems you are in camp of earning are rising which support current bublicious prices? Sept. and Oct. are are kind of known for pullbacks, should we raise cash?
A. I’m in my own camp, always. My analysis is a bit more complex than just “earnings are risking which supports current bubblicious prices” although that statement is certainly tru-ish right now. That said, I continue to think that valuations are still very stretched in many sectors of the market, especially in small cap tech stocks — although there are now some bargains in the small cap tech sector too courtesy of the big drop in many of those names. I’d stick with individual stock picks and using some small hedges with the indices — which in general I do think are likely to pullback 10% or more from these current levels at some point in the next few months or early next year.
Q. Hi Cody, with all talk about chip shortages, what’s your feet to fire take on the semiconductor sector now? Do you think the run continues or is it due for a correction? Thanks.
A. Because this question is so difficult, I hold long positions in what I think are the very best semiconductor stocks (and each of which that I bought at a small fraction of today’s trading price — remember when I told people to load up on NVDA at a split-adjusted $8? Anyway, I hold NVDA, TSM, QCOM and, at least in the hedge fund, I short some SOXX against that.
Q. “VAC -u (VACQ) very much” for Rocket lab. What are you doing with your position today? I only had a small position in RKLB when the big run up started. With recent activity, when should I attempt to add? This threw my game plan off.
A. I trimmed some in the hedge fund and in the personal account as it crossed towards $18 to $20 today in large part because I’d made VACQ (RKL one of my top 2 biggest positions over the past few months that I’d been buying it around $10 and I need to be disciplined. I still think the stock can be a 10 or 50 or even a 100 bagger for us over the next decade, but a double in the stock price over the last week prompts me to lock in some profits. I also shorted some call options dated out to next week and October in the hedge fund to further hedge the now increasingly relatively larger sized RKLB position there.
Q. I listened to the conference call yesterday on RKLB. The biggest take away for me was RKLB is noticing shortages in parts supply of satellites. There is a demand and nobody can handle that demand. That is why they are planning to build the supplies themselves. The CEO said that they know how to build parts in scale.
A. Thanks. I’ll write up some updated Rocket Lab analysis now that it’s fully de-SPAC’d and publicly traded and since we got the first earnings report out of the way. It was a blow-out quarter with so much exciting stuff going on including the huge growth in the backlog.
Q. Hey @Cody, I know you answered some questions regarding RKLB already but I am someone who believes it has potential to go much higher. I’ve already trimmed 10% on a large position that I initiated at 9.88. Should I stay put?
A. It’s a good problem to have — deciding how much profits to take. 10% is the minimum that I’d suggest trimming here, but depending on how large you made your position and your own risk tolerance, that might be enough of a trim here.
Q. RDW (Redwire) stock is running up also. What potential do you see for RDW?
A. From the write-up last week on it: Redwire is a supplier to the Space industry and already does $120 million in revenue, looking for 30% topline growth this year and they company expects that growth to accelerate over the next couple years, taking sales to $1.4 billion in 2025. With much lower gross margins than the aforementioned Black Sky, this stock rightly trades at a discount to SFTW, with GNPK currently being valued at 5x 2021 revenues and “only” at 3.5x 2022 revenues. If the company can actually deliver $1.4 billion in sales in 2025 at 35% gross margins, we’d probably be looking at earnings of $200 million or so. Throw a 10 to 15 multiple on those earnings and you’d be looking at a $2 billion market cap or a stock trading probably around $40 or so in four years or so.
Q. Hi Cody, I hope Amaris’ check up went well. I took some gains in RKLB, as you mentioned to do. Many thanks! I hesitated trimming Bitcoin but I’d like to know if it goes back to 50K+ do you suggest trimming?
A. Thanks for the kind words — check up went well. Yes, I’d trim some bitcoin if it gets back above $50,000.
Q. Voyager gives 9% interest on USDC. Seems too good. What is your opinion on USDC and Voyager?
A. It gives me butterflies of anger at the regulators for not getting in front of this type of stuff. Banks pay less than 1% interest, but somehow these guys can safely get you 9% to 10% interest or more? If it sounds too good to be true….IT IS! “Beat your bank this summer by earning up to 10% interest on your USDC in the Voyager app with our interest booster. Earn an additional 1% (APR) interest boost this month on USDC, BTC, and ETH when you hold at least 2,500 VGX in your Voyager portfolio. How it works With the Voyager Interest Program, you can actively trade crypto and earn interest simultaneously with no lockups or limits. To participate, maintain the required minimum monthly average balance of any of our 32 digital assets we offer for interest. Profits will be paid out on the interest-bearing asset monthly and deposited directly into your Voyager account. All interest rates are per annum. Voyager users will be automatically enrolled in the Crypto Interest Program. Users can unenroll by tapping “opt-out” on the Crypto Interest page in the Voyager app or by submitting a ticket to our support team.” I’d run for the hills from Voyager.
Q. Facebook’s got new glasses. Any comments?
A. Yea, they look pretty cool if you’re someone who wants to record your life for social media. I have the Bose sunglasses that double as headphones — I have the older and the newer versions. I LOVE my Bose headphone sunglasses. I personally probably won’t want the Facebook Ray Ban shades, but I bet they’ll sell well.
Q. Back in July, you said if UBER was below $40.00, you would be “excited.” UBER has dropped <40 several times this past week or so. Should we “nibble” some at these levels? *Note: I have been a free subscriber ( former US Marine and now NY State Trooper) for almost a decade and want to thank you for what you do for Veterans and 1st Responders. I only recently started following your playbook the past year or so and have made over 2k in gains (not much for some, but I am pleased). Again, thank you for what you do and continued health and blessings to you and your entire family.
A. Thanks for the kind words and thanks for serving our country and for risking your life trying to help your community keep law and order. Yes, I nibbled some more UBER for the hedge fund and for the personal account when it’s gone below $40 as planned. Nothing huge or anything, just patiently building up a position in this core name.
Q. My name is Wiley Cooper and I am a 15 year old trying to get into investment. In one year, my account has more than doubled (likely due to TSLA and Covid), and I was wondering what you are thinking about when it comes to Uber(UBER) and Disney(DIS)? I bought UBER at ~$46.00 and Disney at ~$119.20, and I understand you believe UBER to be a safe holding. I am curious, what makes you think that? I am not doubting you, your RKLB (formerly VACQ) position is making me happy thus far, but I would love to know what UBER’s deal is. As for Disney, I bought several shares during the pandemic and am wondering if this is a hold or buy position. Thank you for your time.
A. It’s great that you’re already learning about the markets at your age. My #1 advice is always to move slowly and don’t be greedy, which it sounds like you understand that concept already. Here’s the full analysis we wrote up on UBER when we started buying it. Long story short, it’s a de facto standard for ride sharing, it’s got Uber eats and logistics/shipping that will contribute to grow in years ahead. DIS is a great company, Disney + is growing but needs more content. I like other names better than DIS, but I like DIS just fine.
Q. What do you think of FUBO as a cord cutting play?
A. I have spent the last couple days working on FUBO and have liked what I found enough that I signed up for the service last night to start checking their product out for myself. Stay, er, uh, tuned, please, so to speak.
Q. Can you please share with us an allocation of your personal portfolio? A simple list going from largest position to smallest would be helpful! Thank you!
A. I’ll share my Top 5 largest positions with you are: TSLA, RKLB, FB, QCOM, TSM, GLD (oops that’s 6)…Smallest 3 positions are NKLA, PINS and TWTR.
Q. I heard some talk about CLOV this morning and I see it is rising. Is this still a short for you? Thanks.
A. Thanks for reminding me…I covered my CLOV short and sold the puts but would look to put it back on if CLOV got closer to $12 or $13.
Q. Cody, for the new subscribers like me, its hard find useful information from the latest positions email. Your description mostly says you’re holding them because you bought them at the rock bottom price. What about the folks who bought at a later time? It would help if you can rate your positions based on current value, provide a price point where we should start buying, where we should go aggressive. Such information will make the latest positions emails mush more valuable. We can save it for later.
A. I’ll make some improvements to the Latest Positions for next time. Thank you for subscribing!
Okay folks, that’s a wrap. Thank you all!
