Latest Positions: FANG(D), Defensive names, Space Revolution, Shorts (and Trade Alert: NFLX trim)

Here is Part 3 of 3 of my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position. Happy Thanksgiving to you all and I thank you all for reading.

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.

• (The We-Were-FANG-Investors-Before-FANG-Was-a-Thing Basket)
  • GOOG/GOOGL Google (7) – Google’s had a pretty great rally over the last six months, despite all the handwringing over anti-trust issues, etc. I’ve always pointed out that there’s no way that the Republican Democrat Regime is ever going to crack down these giant tech companies. For the last two years, Trump and Republicans and Democrats have all been like, “We’re going to do something about these giant tech companies that keep squashing or buying out their competition! It’s time to break these companies up!” Meanwhile, Google’s like, “We’re buying Fitbit.”
  • AAPL Apple (7) – One of the biggest reasons for the huge rally in Apple this year is that the analysts have all figured out what I was explaining to Trading With Cody subscribers back when the stock was getting crushed earlier this year because the analysts were all concerned that Apple’s 5G strategy was too slow or something. Back in March, I wrote: “Apple‘s one of the best plays on 5G and nobody realizes it yet. In 2021, there will be enough 5G penetration along with the new apps and feature sets and services that 5G penetration will spawn that we’ll finally see a major upgrade cycle hit for the iPhone. Hundreds of millions of people will upgrade to the new 5G smartphones in 2021 and 2022 and Apple‘s going to make a bunch of money on that. In the meantime, I’d buy more every time it gets hit by 5-10%.” I see analysts using these types of numbers and analysis all the time lately. I think it’s better to trim some AAPL than chase it here.
  • AMZN Amazon (7) – Speaking of dubious anti-trust concerns, Amazon has acquired at least eight companies this year and invested in EV car maker start up Rivian and YES Network and others. In the prior Latest Positions write up, I’d noted that “I’d look buy more near $1700 and to trim some near $1900.” The stock got down to $1705 after I wrote that and has now rallied to $1822 and I’d probably not want to chase it here but am sitting tight on my shares.
  • NFLX Netflix (8) – Netflix has put on a nice rally since we added it back to the portfolio a few weeks ago near $260. It seems that the world has come around to my view, at least for now, that, “The hype/worry/concern about the competition from other streaming platforms has been overblown. All these OTT services for $5 are probably complimentary to Netflix’s more complete and more expensive at $15 or whatever. It’s cable/satellite/broadcast that these services nail the coffin in, not Netflix.” As a Trading With Cody subscriber noted yesterday, ” I have Disney+ and content is blah for a 47 year old male…” Which is why most of us will probably keep Netflix for now. I’m going to trim 10% of my NFLX here, just to lock in some profits and manage some risk after the stock has rallied more than 20% since we bought it, consider this a Trade Alert. 
  • DIS Disney (8) – The Disney+ streaming service makes hundreds of millions of consumers into extremely high margin recurring revenue generators for Disney. How many working class families spend $40 a year buying Disney content right now? And how many of those will now happily fork over $72 a year buying Disney+ for years to come? Meanwhile, ESPN has a lock on live sports branding in the US, which is really the missing piece keeping most consumers from cutting their cable cord subscriptions. Disney’s going to figure out how to monetize live sports better in the streaming world than other US company, I believe. Frozen 2 is going to do at least $2 billion in movie sales and generate billions in profits for the company over the next few years too. Other movies, their brands, etc are also being monetized by Disney ever better. I don’t want to chase it, but I want to own some more DIS at some point.

• (The Space Revolution)
  • BA Boeing (7) – So much headline risk with Boeing as they try to figure out how and when they’re going to solve this 747 Max crisis. So many hundreds of billions of dollars in orders for new planes in coming years that, if Boeing can get these planes back into the air, there’s transparency into growth for years to come. I trimmed some BA earlier this week and am sitting tight on the rest for now.
  • SPCE Virgin Galactic (8) – This company came public through a reverse merger with a SPAC (blank-check companies—initial public offerings for special-purpose companies, or SPACs, that raise cash for acquisition). This stock rallied 20% in the days after we bought it before crashing nearly 40% from those highs. I’m just getting started investing in this space (pun intended) and have bought some more SPCE since it fell but I’m pretty mad at myself for having started nibbling before the crash obviously. Regardless, the idea here is that The Space Revolution is just starting to become a viable multi-trillion dollar business and that we’re likely to see a Space Stock Bubble over the next few years and that SPCE is one of the best and most liquid ways to get in front of all of this very early on.

• (Defensive names)
  • CPB Campbell’s (6) –  The folks running Campbell’s Soup have done a great job of getting this company’s trajectory turned back in the right direction. The quality of the product has improved (I know because I probably consume a can of Campbell’s soup probably once a month these days) and cash flows are strong, distribution is growing again, etc. That said, this is a company that, like say McDonald’s again, is growing just about at the same rate as the GDP at best. But the stock is trading at almost 20x next year’s earnings. Remember that Facebook and Apple are trading at around 20x earnings too, with Facebook obviously growing much faster than either Apple or Campbell’s. So I’m not exactly in love with this stock right now at this valuation, but I bought it when it was trashed because I wanted long-term exposure to the distribution network the company controls. And so I’ll sit tight with the stock here.
  • GLD Gold ETF (7) – Gold is still up 10%ish from where we were buying it earlier this year and down about 5% from where we were trimming it a few weeks ago. I think it’s good to have a little gold and/or GLD as a hedge but I might not buy more til GLD gets closer to $130 (it’s at $137ish right now).

Shorts –

• Primary short portfolio
  • IBB Biotech ETF (7) – IBB’s been one of the best hedges we could have in the markets this year, but that could change in a heartbeat, I suppose. I do think medicine-related businesses will be under fire as the Republicans and Democrats who run for offices in the next elections will pretend that they’re going to do something about it. Closer to the election, if biotechs and hospitals and other healthcare industry stocks are getting crushed, there might be some good buying opportunities.
  • QQQ Nasdaq 100 ETF (6) – We traded these hedges nicely over the last few weeks and I’ll continue to hold some short hedges and puts.
  • SMH Semiconductor ETF (6) – We traded these hedges nicely over the last few weeks and I’ll continue to hold some short hedges and puts.
  • IWM Small Cap ETF (7) – We traded these hedges nicely over the last few weeks and I’ll continue to hold some short hedges and puts.
  • SPY Small Cap ETF (7) – We traded these hedges nicely over the last few weeks and I’ll continue to hold some short hedges and puts.
  • EWU and EWUS British ETFs (6) – I’m mostly out of these short hedges, but still have a small short exposure in each.
  • Tiny short hedges, rated about a (7) – in VHC, GLUU, CVNA, EVBG, HTZ and others. We’ve had some huge homeruns in our small shorts this year. I might cover these at any time and I’m not expecting to make much money on these shorts. They’re just hedges for the hedge fund and I’m not sure any of these are no-brainer shorts. Please don’t just go around blindly shorting these for your personal portfolio.

Cryptocurrencies/tokens –

• • Bitcoin (7) – We’ve had a good year buying bitcoin futures before they popped, trimming them on huge rallies and nibbling them back when they sell-off again. I’d be a buyer of bitcoin near $7000 and a trimmer above $10,000.
  • Stellar Lumens (6) – I think it’s best not to group all cryptos together and that over time, each will trade on its merits and perceived/accepted values. That’s probably what’s happening right now with Bitcoin.
  • Ethereum (6) – I think it’s best not to group all cryptos together and that over time, each will trade on its merits and perceived/accepted values. That’s probably what’s happening right now with Bitcoin.
  • Ripple (6) – I think it’s best not to group all cryptos together and that over time, each will trade on its merits and perceived/accepted values. That’s probably what’s happening right now with Bitcoin.

Disclosure: At the time of publication, the firm in which Mr. Willard is a partner and/or Mr. Willard had positions in some of the positions mentioned above although positions can change at any time and without notice.

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.