Defense, Tensions, Protests, Chat Transcript
Here’s the transcript from Friday’s Live Q&A Chat. It seems a bit tone deaf given all the tensions, protests and violence going on all around us right now in this country. Given the escalation of the tensions in this country, given the economic ramifications of those tensions, given the structural risks developing in the economy and the financial system, I’m continuing to mostly get more defensive in the portfolio. And though my job is to focus on the economy and markets as they relate to the world around us, I am striving to be a better citizen, to drive change, to support those oppressed.
Hola mi amigos. I snuck in 18 holes at Rainmakers in Alto NM, one of the most beautiful courses in the world when it’s 60 degrees, slightly cloudy at 7am on a Friday. Let’s rock. Ask me anything.
Q. Morning Your stock pics have been awesome! Please update 5 Best Buy’s now. Enjoy your weekend.
A. Thanks for the kind words. Feet to fire, the top 5 stocks for the long-term I’d buy if I had to buy something today would probably be (in no particular order): TSLA, TSM, CRSP, DVAX, TWTR, SPLK…and the rest, really. I like all of our stocks for the long-term. I
Q. Of all the shorts you listed, are there a few that are your favorites? Thanks.
A. Would you believe I have dozens of names that I think look like good shorts/puts options, but I picked out ten of my favorites for you guys. And now I have to whittle it down further?
Q. Thanks for the trade alert Cody, caught things at the peak today and a number of those puts are already green.
A. Well, it’s a long way from here to see if the trades/hedge work.
Q. Hi Cody. Loved your latest email and the title “What could possibly go wrong”. I’d like to be net neutral with a portfolio of Cody stocks and an equal amount of puts. In addition to the individual Puts you recommended are there any indexes which you think are better to short at this time. I’m currently short SPX but not sure that’s the best index to short. Thanks for your service.
A. IWM (small caps) and SMH (semiconductors) are probably my favorite two index short hedges here, but a basket of index short hedges is probably best: SPY (or SPX), IWM, DIA, QQQ, SMH and maybe a little EWU (Britain stock market).
Q. Cody, You like your stocks but you hate the market. I get that there has been some run up in bad stocks the last few weeks, and do agree that its a casino more than we have seen in some time, but as you know, the casino can go on for a lot longer than we think possible. I like the idea of being cautious here, its getting toppy, but 1) a lot of your/our stocks are the market and 2) technically the market is in good shape with a huge amount of stuff trading over the 50 DMA and a lot of our stuff having gone a little sideways recently so that they aren’t quite as extended..thoughts?
A. I agree with you. Doesn’t change my stance though. Just to clarify, if you short SPY and QQQ while you’re long AAPL, AMZN, GOOG, MSFT, FB, you’re basically betting against everything but those companies in the market.
Q. Hey Cody, Thanks for the update on Puts you just sent out. Would you be setting these out 3 months? 6 months? My prior set of index puts are all close to worthless, but assuming that this is a good thing as we’ve had lots of upside.
A. I’d look out to June or July maybe out to 3 months. And yes, those index puts we had earlier were hedges and they did their job.
Q. Can you please take a look at MARK as a possible short to add?? Thank you.
A. Market cap of MARK is less than $200 million. The options aren’t liquid and the spreads/premiums on the options are high, so while I’m not a believer in MARK, I’m not likely to short it.
Q. Cody should you PENN to the put list?
A. I can think of worse ideas than buying some puts on PENN, but I didn’t do it and haven’t really dug in on that name.
Q. More of a comment than question. Got a kick of out your post about DDTG the other day. Not sure if you know who that is but he is owner of Barstool Sports. PENN bought big stake in them to bring in mobile/online sports betting. I know somebody asked you about DKNG other day but I think PENN is good alternative. Half the market cap and Barstool followers are crazy and VERY loyal.
A. Yes, I’ve recently discovered the entertaining insanity that is Dave from Barstool along with the rest of Wall Street. PENN’s an interesting play but not one for me.
Q. “Online poker betting hits a record high during the pandemic” – Plays right into what Cody is suggesting.
A. Daytrading and online poker betting at record highs during a pandemic when millions are out of work. What can possibly go wrong?
Q. Isn’t this a HUGE deal? The Fed 2 months ago eliminated bank’s requirement to keep ANY reserves at all, including cash in their vaults. If there is ever a crisis and a mass withdrawal ensues, this would get out of hand real fast if banks Across the board wealth destruction and governmental overhaul. The Fed – Aggregate Reserves of Depository Institutions and the Monetary Base – H.3 – May 28, 2020
A. Man, that ship has sailed, hasn’t it? I mean, the Fed is basically backstopping all the banks’ equity and bonds, why not just say that the big banks are all backstopped by the Fed too, which is basically the case already. This monetary system of the US Republican Democrat Regime won’t end well, but who knows when it does end.
Q. What do you think of ZS as they reported today?
A. Doh, how could I not have had us in that one? Other than that, I think it looks awfully expensive right now.
Q. Cody, are you worried that if Bitcoin takes off, it would pose such threat to the current fiat currency system that the government around the world will not let it survive? E.g., look at what they did to Libra? Thank you.
A. They called Zuckerberg when they wanted to shut down libra. Who they gonna call when they want to shut down bitcoin?
Q. Cody, any thoughts on Shop? I am pretty sure you would feel its too high to buy, but in a relative world do you like the fundamentals? Incidentally, its got the highest market cap of any Canadian stock (more than our banks).
A. SHOP is an incredible concept, an incredible company. Will they avoid becoming Canada’s latest Blackberry or Nortel? Probably. But you are right that the SHOP valuation is waaaaay too high.
Q. Cody – any thoughts on CGC based on their earnings that come out this morning?
A. I was surprised how badly the company apparently has been positioned. A strategic reset this year? What? I mean, I thought these guys were supposed to be the Amazon of pot. Maybe they still will be. If I had to own pot stocks I’d probably stick with CGC and GWPH for now.
Q. I’ve successfully traded Canopy Growth over the last year or so. Missed the March low and the run to $22-23 confounded me. Anyway, its pulled back 20% today to the $17.50 area. Need to listen to the call again to wrap my head around the big revenue miss. One off or structural problems with the business / category? Also, their previous conviction related to an increased focus on cost structure and proprofit delivery didn’t seem there today. The increase in operating expenses as well as a cash burn rate is also concerning as it is rapidly eroding the company’s war chest. Management themselves admit this, with a number of internal changes expected while Canada presents a difficult start to the fiscal year. Other takeaways from the conf call 1) market share has dropped from low 20s to high teens, driven by the value segment showing strong development, as well as supply chain issues relating to high-THC products. 2) 2.0 products represented less than 2% of sales during the quarter, though currently tracking at more like 9%. 3) 50% of production costs are fixed so expect margin pressure over the next few quarters. 4) Estimating store count to increase from 950 to 1200 over the next 12 months. Have you done work here or in the space? Thoughts appreciated.
A. Yes, I’ve done some work on the pot stocks and CGC is my favorite, but you are correct about how bad that quarter was that they reported this morning. I mean, the market has been basically giving a free pass to all earnings reports unless they are really awful…and CGC’s qualified. It might take a quarter or two to get Wall Street’s faith back in the company.
Q. Hi Cody, I know nothing about the marijuana business. But I heard an interesting point. Most states are going to need to increase revenue, do you think they may legalize Marijuana in more states etc. Thank You.
A. Yes, absolutely. The collapse in state tax revenue is going to accelerate pot legalization.
Q. Howdy Cody ! My question is about the significance of Facedrive (FDVRF) s development of the TraceSCAN app to help with testing and contact tracing ! Buffet, Bezos And Blackrock Are Betting Big On This $30 Trillion Mega-Trend “ Facedrive (TSXV:FD,OTC:FDVRF) is already on the front lines of the COVID-19 battle. In fact, It’s just developed new technology to help combat the crisis. The TraceSCAN app and wearables provide contact tracing to help mitigate the spread of the COVID-19 virus. Using Bluetooth technology, TraceSCAN alerts users with a notification if they have come in contact with an individual who has tested positive for the COVID-19 virus. Recently, the Labourers’ International Union of North America announced it would adopt Facedrive’s TraceSCAN digital COVID-19 contract-tracing app to protect the health and safety of its Canadian 130,000 members.” I am a long time TWC subscriber holding up in Thailand, where everyone out and about wears a mask, No problem ! And Covid-19 new cases and fatalities are very low in a country of 70 million people! Continued vigilance Here ! Unity is strength Thanks.
A. Thanks and backatcha with the positivity. As for FDVRF, it looks fishy to me, I’d steer clear (pun intended).
Q. I am wondering about Apple, virtual reality, holograms etc. are you investing in VR, and what are the best stocks ? Eva the tennis champion.
A. This question comes from a famous violinist from Iceland whom I’ve watched having her own concert at Carnegie hall. She also beat me in tennis sometimes. The answer to her question is that it’s probably to dig back into The Virtual Reality Revolution to see if any stocks stick out.
Q. He had mentioned in an article we will see highs for stocks this year. Cody your opinion on mr siegels article.
A. I didn’t see Jeremy’s article, but he’s a good dude, I’ve met many times. I’ll stick with my answer that the odds of the S&P 500 hitting a new high this year is 1 in 6.
Q. Hey Cody, I keep hearing about 3D printers and how they are printing facemasks and various supplies to aid during the Covid Crisis. Do you have any recommendations for 3D printing stocks? Thanks.
A. 3-D printing has struggled to become mainstream, but like with my prior answer on VR, it’s probably time to take a fresh look at 3D printing stocks to see if there’s some opportunity.
Q. What percentage of your portfolio do you currently allocate to gold?
A. It depends on whether you’re talking about the hedge fund or my personal. And either way, I’m not sure it’s relevant in many ways. I do think everybody should have some gold coins and/or bullion around somewhere that they can access in a time of need. As an investment vehicle, maybe 1-5% of one’s assets into gold seems appropriate-ish to me.
Q. Follow up, do you have an opinion on goldmoney.com? It’s Peter Schiff linked and seems like a really interesting idea, they quasi digitize gold to be used like bank accounts or Crypto. You can easily transfer ownership to anyone who also has an account, link it to a Mastercard so one can spend their precious metal holdings just like cash accounts anywhere Mastercard is globally accepted, full ATM use as well. Pretty low fees and uses vaults all around the world. It’s publicly traded, has 2 Billion+ in assets. gold/silver for the digitized world?
A. I am familiar with goldmoney.com and Peter but I haven’t dug into it enough to pass judgement if its as safe and backed by what it’s supposed to be back by, as, say, bitcoin is, which is backed by mostly nothing, of course, but you know what you’re getting at least. Do you feel like you really know if that gold that you’re supposedly transferring really is there with goldmoney.com‘s system?
Q. Goldmoney… You can at any moment, visit and take possession of your precious metals, they say its fully reserved ratio, Loomis and Brinks vaults if wanted, fully insured, audit guaranteed by KPMG quarterly.FDIC insured as well. there is always the possibility of fraud, but it seems an interesting way for smaller savers to hold precious metals without it locking much capital… offset possible inflation of savings, while still conveniently liquid.
A. Fair enough, but I’m still leery.
Q. Cody, how did you hit today on the links? Think you could beat Charles Barkley?
A. Over the last year, I’ve gone from shooting in the 100s to shooting under 90 occasionally now. Drives have gone from 200ish to 260ish. Still gotta get more consistent and more distance on all my clubs though. I shot horribly the first 4 holes today and then got warmed up and was probably 12 over on the last 14 holes.
Ok folks, that’s a wrap.
