Latest Positions: Energy and China

Here is a Part 3 of 3 of the list my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position. We will do this week’s Live Q&A chat at 10am ET tomorrow (Wednesday) in the TWC Chat Room or just email us your question to support@tradingwithcody.com.

Energy stocks and oil are getting crushed today and recession talk is everywhere. You know I’ve been saying that we’ve been in a recession for the last month or so and the good news is that much of a recession’s impact on corporate earnings is getting priced into the markets right now but the bad news is that a lot of the places people are hiding in the stock market — energy, utilities and staples are not all positioned as well for this particular kind of inflationary-impacted recession, especially the staples. I wonder if there are some good shorts in the so-called “safety stocks” as the action in energy and oil indicates today.

Here’s how I started off Part 3 of the Latest Positions write up two months ago: “Look, slow down. Be cool. We have been positioned cautiously and defensively for months now and this is just part of that process of finding a bottom on the other side of the Great Bubble-Blowing Bull Market that just saw its many bubbles go ‘pop!'”

That’s right now once again a pretty apt description of how I’d describe the action here still. Some great tech stocks are probably already putting their bottoms while others have much further to go.I took a lot of names out of the portfolio in the last two months and even moreso over the last year. I’ve got a list of names I’m continuing to work on and am getting ready to pull some triggers in coming days and weeks. No rush though.

The ratings for each stock go from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment.” The positions that are bolded are those that I consider to be “core” holdings and am unlikely to ever sell out of them entirely.

Longs –

The Energy/Materials Revolution –

• • SEDG Solar Edge (7+) – Last time I wrote: “Solar stocks are on the other side of their own bubble, as the unwinding of these wacky valuations that were so rampant in market continues apace. Solar Edge is still the best solar stock out there and its valuation isn’t that crazy, trading at 25x next year’s earnings growing 40% topline this year and 25% topline next year. Can the company meet those high expectations? I think it might be a stretch in a tough economy. I’ve trimmed this name as noted at higher levels and I’d look to buy some shares back if the stock drops below $200.” The stock subsequently did fall nearly 30% after I wrote that and almost went below $200. I’m still patiently holding this stock that I’ve owned in our personal account since I sent out a Trade Alert when the stock was at $14 several years ago and in the hedge fund since soon after it launched in 2019. I’d probably add to the hedge fund position if the stock drops below $200 as I’d noted last time.
  • MP MP Materials (7+) – Several months ago, I wrote: “MP is not cheap and is not Intel. I don’t know the management here well (and I don’t like the guy who brought the stock out as a SPAC) but I hold a small-ish position in this name. I would be a buyer again in the $30s.” The stock fell below $30 a share today and I nibbled some in the hedge fund as I had done a couple months ago when the stock was near $40 (mea culpa). I still like the unique positioning of this rare earth mining company but it’s still a pretty high risk name so it remains a small-ish position.

The China Middle Class Revolution –

• • JD JD.com (7-) – JD’s been a long-term investment for us since we flipped from being short to long this Chinese Internet/App company back in early 2019 when the stock was in the mid $20s. I’ve since taken some profits at higher levels than these and am mostly sitting tight with this stock for now.
  • BABA Alibaba (7-) – We started buying some BABA earlier this year and it’s down about 5% since my original Trade Alert about it and it’s been a wildly volatile stock along the way. I’ve traded around a small core position in this name and am more inclined to trim it than buy it right now. I’d probably be a buyer of BABA again in the $80s.