Latest Positions: Mobility Stocks (TSLA, UBER, BLDE) PLUS A Few Trade Alerts

“I’m back.” Can I quote Jordan? Ha.

Let’s start with a few trade alerts. The markets have been on fire and we’ve had a sizeable run in most of our positions — especially those that we were buying earlier this month and we want to take a little of that off the table. Today, we are selling the remainder of our Instacart (CART), MP Materials (MP), and Unity Software (U) calls. Further, we sold 1/3 of our STMicroelectronics (STM) calls, about 1/4 of our Texas Instruments (TXN) calls, and 1/2 of our Disney (DIS) calls. We also trimmed some Cloudflare (NET) and Netflix (NFLX) common. Lastly, we picked up some at-the-money calls on Pfizer (PFE) dated out a few months.

Also, please join us today at 5:00 pm ET for our weekly about The AI Revolution call with JDO via YouTube live here. With all of the excitement/craziness this weekend surrounding the OpenAI/Sam Altman/Microsoft drama, this week’s call is sure to be eventful!

Additionally, this week’s chat will be at the normal time on Wednesday at 3:00 pm ET in the TradingWithCody.com Chat Room or you can just email us at support@tradingwithcody.com.

With Q3 earnings mostly behind us, we wanted to start updating our latest positions. Here is Part 1 of the list of my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position.

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 –

• Forever assets and other permanent holdings –
  • Media, hedge fund, and other private investment/business holdings (9+ because betting on yourself and running a business is always the best bet)
  • Real estate, including the ranch I live on in NM (6)
  • Physical gold bullion & coins (8)

• (Driverless/EV/Mobility Revolution) –
  • TSLA Tesla (8) –  We have seen a substantial turn in the overall sentiment around EV adoption over the course of this year. Much of the enthusiasm from the traditional automakers (Ford, GM, and Stellantis) has faded and they are now “pausing” the majority of their EV investments. Yet, Tesla has still been able to cut costs and continue to grow delivery numbers. This higher interest rate environment is separating the wheat from the chaff in the automobile industry. We have been writing for years now that we think the traditional automakers will struggle to make the transition to EVs because they lack vertical integration and much of the know-how required to make EVs work. Tesla’s position as the market share leader in the US will likely continue to grow and its only real threat is from China. BYD Group (BYD), Li Auto (LI), and Xpeng (XPEV) are growing rapidly with big help from the Chinese government. In the long run, we are confident in Tesla’s ability to innovate and stave off competition from China, but it could see some near-term pain if it keeps missing delivery targets. On the other hand, Tesla’s AI business is still in development and could be one of the best, if not the best, AI businesses on the planet. Unlike the now numerous large language models (LLMs) like ChatGPT, Bard, Anthronpic, LlaMA, Claude, etc., Tesla’s AI is unique in that it is learning to understand and interact with the physical world, not just provide text- and image-based responses to text-based queries from humans. Tesla is training its AI Supercomputer using billions of hours of videos from real Teslas so that the computer can understand how humans drive cars. Obviously, the first application of Dojo’s capabilities will be to autonomously drive Teslas, but we think within a few years this supercomputer will be able to control other devices that need to know how to interact with the real world. Tesla is already developing its humanoid Optimus robots which will rely on the Dojo Supercomputer, but many other companies will also build robots and license Tesla’s AI computer to train those devices how to work. This Amazon Web Services (AWS) like business model will be a high-margin business and a huge growth driver for Tesla in years to come.
  • Uber (UBER) (7) — Uber has had a hell of a run this year (up 117% as of this writing). The company is now quite profitable, commands a near monopoly in rideshare, and is still growing revenue rapidly. One of our favorite parts about Uber and the reason it will be around for years to come is that it is one of the best examples of the network effect and just how powerful it becomes once you hit critical mass. Robert Metcalfe’s formulation of the network effect states that “the financial value or influence of a network is proportional to the square of the number of connected users of the system,” meaning that the value of a network to each user becomes more valuable as more users join the network. CEO Dara Khosrowshahi describes Uber as a supply-driven marketplace. The more people that sign up as drivers, the cheaper and more available rides/deliveries become. As rides/deliveries become cheaper, more people opt to use the platform over relatively more-expensive, less available alternatives. As more people use the platform, it drives demand for more drivers, so on and so forth. Uber now has 6.5 million drivers on the platform (up 30% year over year) compared to Lyft’s (LYFT) estimated 1.4 million drivers, DoorDash’s (DASH) roughly 2 million “dashers”, and Instacart’s (CART) estimated 600,000 “shoppers.” At some point, LYFT, DASH, and CART might have to merge if they hope to stand a chance of competing with Uber in the long run. For these reasons, we want to stick with Uber but if you have not taken any profits on the stock, now would not be a bad time to raise a little cash. Uber’s valuation might be a little stretched here and the growth could slow down momentarily if the economy goes into a deeper recession. That said, we think Uber is a great pick for the next 10,000 days and want this to ideally be a forever position.
  • Blade Air Mobility (6+) — Blade’s stock has been on fire since it reported its first-ever quarter of positive free cash flow and near-breakeven GAAP earnings. Blade is still growing rapidly and the company is sitting on about $150 million of net cash, which gives us a sort of buffer on the stock price as long as the company stays cash flow positive. That said, this is still a speculative small cap that may struggle to scale in a world of higher interest rates. We are pleased with management’s execution in what we expected would be a somewhat difficult operating environment for a company like Blade that caters to a lot of high-net-worth clientele. We have trimmed some of our BLDE shares into this rally and are keeping this a smallish position since we are concerned with the viability of many of the small/micro-cap stocks if interest rates remain elevated for longer than the market expects.

That’s it for now. More to come later this week!

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 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, and you are trying to put some money to work while the markets have been rallying 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 of 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.

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.