Full rundown and analysis of each of Cody’s Latest Positions

Will we ever retest the August lows when the $DJIA was in the mid 15,000s and every stock on the planet was seemingly marked down 10-20% in a single day? I want you to stop everything you’re doing and remember what it felt like back in mid-August when the DJIA was down 200 or 300 points most every day, the VIX which measures volatility in the markets was at multi-year highs, and the pain of owning most any stock was palpable. If you were scared or in pain or worried about your stock portfolio back in August then now is a great time for you to trim back some of your exposure and/or reduce your number of long positions and catch your breath a little bit. Especially if you’ve had the kind of run that we’ve had in most of our Trading With Cody portfolio longs and shorts, it’s not a bad time to take a little off the table and go buy yourself or your loved ones something special that you’ve been saving up for.

Every few weeks I sit down and go through my entire portfolio and rank each position on a scale of 1 to 10 and then send it out to my TradingWithCody subscribers. It’s very important to look at your own positions in order from largest to smallest and to rank each asset, equity and position you own. Doing so will help you realize the opportunity costs of owning lower-rated positions and to help you sell your losers while riding your winners.

Here’s a list of my latest positions. I’ve broken the list into Longs and Shorts. And from there, I’ve broken down each list into refined categories in order from the largest positions within each category to the smallest. I also give each stock a current rating from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment.”

So here’s the list:

Longs –

• Forever assets and other permanent holdings –
  • Media and other private investment/business holdings (9+ because betting on yourself and running a business is always a best bet)
  • Real estate, including land and the ranch I live on in NM (8)
  • Physical gold bullion & coins (7)

• Primary stock exposure portfolio
  • Apple (8) – Reporting earnings tonight. The good news is that expectations aren’t very high. The bad news is that Apple often gets sold off after an earnings report no matter what the say. We’ve owned this stock for a very long time and the Apple ecosystem, which I’ve been writing about since I first bought the stock back in 2003 is stronger and better set up for the future than it ever has been.
  • Google (7) – Blowout quarterly earnings report for the second time in a row sent this stock to new all-time highs. The stock is getting to be overbought near-term but the valuation on next year’s earnings isn’t bad as the company has $75 billion in net cash and should earn $34 per share next year.
  • Facebook (7) – Facebook’s earnings are coming up this week too. Expectations are higher for Facebook and the company needs to deliver strong topline growth and probably show some spending discipline (as Google has been for example) for the stock to pop. I took some profits on a small part of my long-held position in this name on Friday at $102 and would likely look to buy those shares back near $90 if we get the chance.
  • Sandisk (6) – With the company being bought for $85 per share by WDC (if WDC can get the financing) it’s time for me to just move on from this stock. I’m not in the arbitrage game and while I think the stock will finish up being bought out in the mid $80s, that’s just a 10% move from here and I’m not trying to game a 10% move.
  • Sony (7) – Sony’s in a great position to pick up Toshiba’s smartphone image sensor business on the cheap as Toshiba’s desperately raising cash after getting caught fudging their numbers. Here’s a good article that will help you get your arms around all the different businesses Sony’s in.
  • Amazon (7) – Another killer earnings report and the growth story at Amazon is far from over.
  • Synaptics (7) – Up 50% from its recent lows and at just 10% from its all-time highs, I trimmed some of this stock on Friday. Huge run off the bottoms and I wanted to lock in some profits as the semiconductor industry consolidation trend has helped some select stocks like SYNA rally. Sell when you can, not when you have to.
  • Ambarella (9) – I’m looking nibble some more AMBA soon and I might even add some longer-dated call options to get some more upside exposure. The stock is down 60% from its all-time highs set this summer. With a forward P/E of 14 and a forward enterprise value to earnings ratio of just $2.50 when you include the $7 per share net cash, the stock is very cheap for the kind of growth it might deliver. If it can deliver on those growth estimates.
  • First Solar (7) – Solar fundamentals are the only subsector of the broader energy sector to be showing any pulse at all. FSLR has $15 per share net cash and could earn $4 per share next year. With the stock at $50 right now, that makes it a very cheap 4 P/E and an even cheaper 9 EV/E.
  • Twitter (8) –The problem with $TWTR right now is partly that their user growth has itself stalled. The company will grow revenue per user quite quickly for the next few years and they’ve got 300 million users so there’s growth to be had there. But unless Twitter gets to 500 million users over the next two or three years, the revenue there will stall. That said, Periscope itself could add hundreds of millions of users over the next 3-5 years and that would create a new revenue stream for Twitter anyway.
  • FitBit (8) – With the huge order inflow from enterprise customers like Target supplementing the retail growth in Fitbit wearables, I think the company is set up for a strong earnings report and guidance. There’s a lot of shorts and bears aggressively betting against this stock and that could provide some real fireworks to the upside if the company delivers.
  • Silicon Motion (8) – Small cap semicondutor stock that’s cheap and could be a target for consolidation.
  • F5 (8) – F5 is a stealth network security stock, a facilitator of the App Revolution and a well-run profitable company that I’ve owned for many years and got back into a few months ago.
  • Applied Materials (8) – AMAT competitors LRCX and KLAC announced plans to merge and the margins for the entire sector are looking like they’ll expand in years ahead.
  • Axogen (8) – Consider this an angel venture capital-type investment since it’s such a small cap and still very early in this company’s business days.
  • GDX call options (6) – Gold’s cooled off a bit lately and I’m holding these call options steady.
  • GoPro (6) – Still frustrated with this stock. Tiny position but one I’ve got egg on my face since I flipped from smart bear in the stock to dumb bull. Binary set-up here — if the company meets or beats estimates on the next earnings report, the stock could pop 20-30%. A miss in the earnings report and the stock could drop another 20-30%.

• Primary short portfolio
  • Pandora (8) – The company reported weak revenue growth and increased expenses and the stock got hit for 35% on Friday. I think the stock can fall into the single digits in coming months if they don’t get their business fundamentals turned around but the “easy” money in this short has already been made. I personally covered half of my Pandora short into the sell off Friday, but still holding half short for now.
  • Valeant Pharmaceuticals (7) – What a home run trade we made when we shorted VRX just ten days ago. $VRX could fall much lower in coming quarters if the worst of the accusations are true, but with Ackman, ValueAct and other big investors doubling down on the stock, and with it already down 40% in a week, I just think the risk/reward is to let it sit for now. All that said, I am holding a tiny bit of my original short still on the sheets though.
  • IBB Biotech ETF (8) – Biotech’s bounced 5% or so since I added a tiny starter hedge position of some puts in the IBB. I’m likely to nibble on some a second tranche of IBB puts in coming days.

Remember: I wouldn’t rush into a full position all at once in any of these stocks or any other position you’ll ever buy. Patience and allowing the market and time to work to your advantage by buying in tranches is key. Maybe 1/3 or 1/5 of whatever you  might consider to be a “full position” in any particular stock. And I wouldn’t ever have more than 5-15% of your portfolio in any one stock position at any given time. The younger you are and/or the higher the trajectory of your career income, the more concentrated and risk-taking you can be with weighting in your portfolio. But spread your purchases and your risk out over time and over a several positions no matter your age or risk-averse level.

Scaling into a position using an approach of buying 1/3 or 1/5 tranches over time is how I build my personal portfolio positions, but there’s no scientific answer for your question. Sometimes you have to pay up for the latest tranche but I try to be patient and wait for a temporary sell-off to add to the existing position.

** NOTE FOR NEW SUBSCRIBERS:

If you’re new to TradingWithCody or if you’ve been a subscriber for a while but haven’t acted on much of my strategies yet and/or if you haven’t been in the markets, but you’re sick of getting 0% on your CDs, Treasuries, savings, checking, etc while the markets have been continually hitting all-time highs this year, what should you do now?

Before you ever make any trade, step back and catch your breath before moving any money anywhere. Rank your positions and your whole portfolio and make sure you’re not about to make any emotional moves with your money.

If you haven’t yet read “Everything You Need to Know About Investing” then spend a couple hours doing so, please. It’s a quick read but chock-full of important ideas, concepts and strategies that amateurs and pros alike should understand.

Then, take a look at my own personal portfolio’s Latest Positions and slowly start to scale into some of the ones you like best and/or the ones I have rated highest right now. I’d look to start scaling into a few of the many stocks in the Latest Positions that are at all-time highs along with a couple that we’ve recently featured in our Trade Alerts that I’ve personally been scaling into.

You can find an archive of Trade Alerts here.