Interest Rate Predictions, Bankruptcy Trades, Software Names, And Much More
Here’s the transcript from today’s live Q&A chat. Also, don’t forget to follow us on Twitter @TradingWithCody.
Q. I saw your bearish tweet. What is the state of the market and what makes you so bearish?
A. What bearish tweet? Not sure I’d describe myself as outright bearish. But not outright bullish right here right now either.
Q. Hi Cody, treasury rates have been so volatile, whats your feet to fire prediction on how they trend going forward this year?
A. Higher. 2 year around 4% at the end of this year, the 10 year around 4.5% at the end of this year.
Q. Any buys or sell today?
A. Nothing in the personal account. In the hedge fund, we trimmed some GOOG, bought some puts on BX, bought some puts on some solar stocks like ENPH, RUN, SPWR, we bought a small tranche of WOLF.
Q. I was reading some old articles about bankruptcy trades and you mentioned you learned from James Altucher. That sent me down another path and I learned that James Altucher also liked the strategy of buying companies that were trading below cash. I know you’ve mentioned this strategy in the past… often times with Apple. 2 part question I guess… (1) did you also learn some of this from James Altucher and (2) do you still use this screen/search for companies trading below cash to invest in?
A. 1) No, not from James. Back when I launched my first hedge fund in October 2002, right at the bottom of the dot com crash, there were hundreds of companies, including Apple that were trading below their cash balance. 2) That doesn’t happen often and right now there’s not much if any stocks that are trading for below their cash balance (other than in biotech, which is a constant because of the nature of that business).
Q. Hi, Cody. – last week or so, you wrote an entertaining and instructive column that was the result of asking ChatGPT and Bard for recommendations on which stocks “Cody Willard” would recommend using certain parameters. Like I said, fun and instructive reading what they came up with . . . But the whole thing made me wonder, without being subscribers to TWC, how did these AI instruments gain access to your “thinking” to come up with what they wrote? Am I off-base here, are you concerned by this? Note that ChatGPT, at least, often begs off on answering queries by saying it’s knowledge base doesn’t extend any closer than something like 2021. Comment?
A. I like to say that I used to be almost famous… Bard and ChatGPT know who I am because of that and the fact that I’ve published thousands of articles on mainstream publications like the Financial Times and TheStreet.com and I’ve been featured in articles from the NYTimes and LA Times which all talk about my approach to investing and about who I am.
Q. Good afternoon, looking at CRWD & WOLF your thoughts?
A. I nibbled some WOLF for the hedge fund this morning when it was down big. Bryce is digging in on the cyber security and other software names like CRWD. We’ll be writing about them and will send out a Trade Alert on any that we decide to buy.
Q. Cody: some of those ours did quite well this week. Any attractive options this week? Still holding most of them?
A. “Ours”?
Q. Cody, you mentioned that you think GH is in trouble. I wanted to ask you why. There have been big recent insider purchases by the CEO. I also find banks like MS with big target prices.
A. GH’s test isn’t as good as Exact Sciences test. Take a look at this article. That’s the main reason I think they’re in trouble, but it’s not like I’m invested in either one or that I have studied GH in depth.
Q. Cody: some of those puts did quite well this week. Any attractive options this week? Still holding most of them?
A. I sold the RIOT and MARA puts this week, sold the FSR puts this week, sold 1/2 the BAC puts, sold about 1/3 of my SMH puts. Still holding puts in BAC, SMH, XLF, WFC.
Q. Did you trade any VORB this week when they filed for bankruptcy?
A. In the hedge fund, we tried to buy some around 12 cents and lower but never got much filled.
Q. Cody, wondering your thoughts on SPCE going forward following VORB bankruptcy filing? Thanks.
A. Ever since SPCE neglected to raise money while their stock was at a bubbled up $20 billion market cap — they could have done a 10% dilution and put $2 billion in their bank account — and then waited til their market cap was less than $2 billion to raise much less money at a much more dilutive manner, I’ve been thinking that SPCE is probably doomed and headed to $0. Still looks that way and VORB should have done a better job with their own finances too. By the way, I spoke a bit about this on the SKLTs weekly call yesterday.
Q. Cody: on your new puts, typical 5-10 % OTM, dated roughly 1 month out?
A. Sometimes I do in the money puts instead of out of the money. Usually 5-10% either way. Rarely do I buy options with strike prices at the current quote. Sometimes I do less than a month out, sometimes I do six months to a year out. Just depends on all kinds of factors. I don’t do hardly any options in my personal account these days though.
Q. Is Immersed still around? Is it a loss?
A. It’s still around and I spoke to the CEO on a long zoom call a few weeks ago. They’ve got some exciting ideas for taking the company to the next level, but they are burning cash and they are still at high risk as they always were being a cash-burning start up like they are.
That’s a wrap! Happy Easter weekend to all!
