Latest Positions

Finally, the markets have a reversal day that’s turned ugly. If it seems like it’s been a long time since the markets had an ugly day, much less a pull back, it’s because it has been.

We’ve been trimming our longs and adding some index hedges. But we’re still sticking with most of our longs and have exposure to more upside in coming months or years.

I’ve got a few stocks on my radar that I’d like to start buying in the next few days or weeks if we can get some more (any?) fear and panic in the markets.

Here is a list of my latest positions with updated commentary and ratings for each position.

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 (8)

• Primary stock exposure portfolio
  • Facebook (6) – Facebook’s stock has been climbing for weeks and is at all-time highs and the market cap of this company is now over $400 billion. The company’s only been around for 13 years, which means it’s created $30 billion of valuation per year since its existence on average. I’m going to trim 10% of my Facebook today, just locking in some more profits on this stock that is now up about 500% since we made it a Top 3 Largest Position back in 2013. 
  • Google (6) – Google’s hitting new all-time highs and it’s now up more than 300% from its 2011 levels and up 2000% since its IPO. I’m going to trim 10% of my Google today, just locking in more profits. 
  • Apple (6) – Let me know if you recognize a pattern here. Apple’s been going straight up for weeks and is hitting new all-time highs. I trimmed some of this one recently or else I’d probably go ahead and trim some now.
  • Nvidia (7) – This volatile stock has been volatile lately. It’s up 250% from where we bought it a year ago and I trimmed some back in December at $105. I’d probably nibble some more of this one if it got back down close to $90 in a broader market sell-off. Patience for now.
  • Amazon (8) – Amazon’s been strong for weeks and is at all-time highs. I’m holding my Amazon steady as there are still a lot of Alexa-, Cloud-, Retail, more catalysts for this company in months and years ahead.
  • Sony (7) – Boring but the company’s potential as a Virtual Reality leader, content king, smartphone image sensors and robots could make it exciting once again.
  • Ambarella (6) – Amba’s actually been range bound for once for the last few weeks. Holding steady.
  • Axogen (7). Still growing, still up huge since we bought it and probably a bit overvalued right now.
  • Zillow (5)– If Zillow can grow 20% this year and 15-20% for the next couple years after that, as it expects to, the company could earn more than $1.50 per share in 2019. But that still gives it a forward P/E of 30 on best case estimates two years out. I’m just going to let this stock go for now at about break even from where I bought it and will revisit it in coming months. 
  • First Solar (8) – Tough environment for solar stocks for the last couple years and the last few months. First Solar is still my favorite solar play, which is my favorite way to invest in energy. I’m likely to nibble some of this name soon.
  • Gigamon (8) – Gigamon’s expected to return to 20%+ topline growth next year after this year growing about 10%. Gigamon could earn $1.50 next year on that kind of topline growth and closer to $2 per share in 2019 if they execute. I’m holding this name steady for now.
  • Twitter (8) – Twitter’s not had a bid in weeks and the stock is hated once again. I’m going to nibble a 1/10th-sized tranche in this name today.
  • Impinj (7) – Impinj needs to deliver some nice wins and some continued growth when they report next quarter in a couple more months.
  • Lion’s Gate (7) – I had a very insightful talk with one of the bigwigs at Lion’s Gate in LA a couple weeks ago. They have quite a slate ahead and the company’s constantly trying to innovate how it builds franchises and distributes their content.
  • Solar Edge (7) – Small cap Israeli-based companies are high risky investments. This company has to deliver some wins and growth this year. This one is a binary set-up — either is doubles and triples from here as they win new contracts and grow revenues or it collapses as it fails to execute.
  • Palo Alto Networks (8) – I have just a small 1/3 tranche first position that we purchased a few weeks ago.  The quarterly report and guidance from $PANW were close to what Wall Street and all of us were hoping for. The guidance was taken down slightly from 30% topline growth for next year to 25% topline growth for next year. I expect they will actually do more than 30% growth for this year though. It does appear that Cisco and Microsoft are really trying to compete against Palo Alto Networks, so we need to keep that on the radar. I am likely to add a second 1/3 tranche to this name soon.
  • The Street (8)- I met with the CEO and the Chairman from TST when I was in NYC and we did talk some about the company, their strategies, etc. Sounds like they’ve accomplished a lot in the few months that David’s been cleaning the ship up and they are now trying to get the ship turned to kick off cash and grow again, as we all hope they will. I told them the same thing about their stock that I’ve told you guys from the beginning — if they can figure out a way to just kick off $5 million in cash, the stock would probably double or triple from these current levels. I’ll give a couple more quarters to get the ship turned in the right direction.
• Primary short portfolio
  • Pandora (8) – Pandora’s big move to compete in on-demand/streaming music seems like it’s been a flop. Next quarterly report will reveal a lot about the future of this company.
  • Biotech (7) – This ETF looks like it could break out if it gets over $300, but it also seems strangely bullet-proof to the big hits in AMGN and a lot of other big cap biotechs in the last few weeks. I’m just sitting tight using this ETF as a hedge on the broader markets.
  • IWM (8) – Down 2% today, my recently shorts and puts on this small cap ETF are kicking in. This is mostly just a hedge as I do think the stock markets are overextended and I just want some downside protection.
  • EWY (8) – Samsung’s CEO got arrested, North Korea’s actively grumbling but the South Korean stock market just climbed right up on those bricks of worry. It’s amazing when markets shrug off seemingly important developments, but it often can be short-lived. I’m going to short about a 1/3-sized position in EWY today.
  • HubSpot (8) – The stock’s been strong along with the strong tech stock market, but I don’t think the fundamentals will hold up this year. I’m sitting tight with this one for now.
  • HerbalLife (8) – I think Herbalife’s settlement with the FTC and the new unproven business model it’s had to implement since then is likely to cause big problems with the company’s earnings expectations for the next couple years. But the company has so far been able to stave off any major issues. It’s possible that Ackman’s going to have to reverse his short positioning in Herbalife as his investors demand money from his hedge fund. That might give short-sellers a great chance to build their positions at a higher level in coming weeks. We’ve got 20% gains in our Herbalife short position so far. So I’m I’m sticking with my Herbalife short for at least a quarter or two longer to see if the company continues to have to guide expectations for future earnings growth lower yet again, as it’s done each quarter since they settled with the FTC.
  • Valeant Pharmaceuticals (6) – *Tiny Position Same story: “I’ve been short $VRX since the $170s, as you guys know but I’ve covered most of it. I still think $VRX heads much lower. Back near its lows again, I’m holding my remaining short steady.”

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 way to go about investing and trading. 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.