Latest Positions Part 1: TSLA(!), UBER, FB, TWTR, SNAP, TMUS, QCOM, CSCO

Here is a Part 1 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, including a couple Trade Alerts. I’ll send out Part 2 and Part 3 later this week. (And in the meantime, don’t forget to join me Wednesday morning at 10am ET for this week’s Live Q&A Chat. Come directly to the TWC Chat Room or just email us your question to support@tradingwithcody.com.)

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 a best bet)
  • Real estate, including the office I work out of, some land and the ranch I live on in NM (8)
  • Physical gold bullion & coins (7)
• (Driverless Revolution) –
  • TSLA Tesla (7) – Tesla TESLA TSLA!!! I mean, wow, even as I was perhaps the biggest TSLA bull on Wall Street back last spring when the bears were pouncing, the bulls were bailing and analysts were, well, crapping their pants — even being the biggest Tesla bull on Wall Street, I never fathomed that this stock would rally the way it has since those days. The stock is up 200% off the very lows that it hit in those trying times. Wait, I didn’t realize that it was up that much either. Holy crap. TSLA is literally 200% off its lows a few months ago and the shorts at Seeking Alpha and on Wall Street act like nothing has changed. The Wall Street analysts that have neutral/sell ratings on Tesla are trying to save face by pointing out how they had some $400-500 “Best case scenario” possibility for TSLA while they actually have egg all over their face. Maybe we should trim some. Which we did recently. One thing I know about the market is that just about the time you feel smart, it kicks you in the face. So I’ll shut up and point out what might be the single most important Tesla fundamental trend instead — they are about to go from making cars in the most expensive place in the world to make anything — California — to making cars in the least expensive place in the world to make anything — China. If gross margins for the actual Tesla cars are running 15-20% and trending higher from the plant based in the most expensive place in the world to make anything, what do you think gross margins are going to do when you start making cars in the cheapest place in the world to make anything? Answer: They’re going higher. Not to mention that the company is now selling $2000 software upgrades at nearly 100% gross margins to make your cars faster after you buy them. Anyway, look, I can’t believe TSLA’s market cap has gone from $30 billion at the low to nearly $100 billion right now. I think there might be some better opportunities to buy it than when it’s just rallied 200% off its lows, but I do think it’s a must-own forever. And that’s why I made my largest position last spring and continue to hold most of my position. By the way, one of the hedge fund managers from that Vail ideas conference wrote me the following today: “Great call on TSLA. It is funny, when you pitched it as a long, being short it was the equivalent of the proverbial ‘long IBM.’ Everybody else was shorting TSLA; being wrong shorting it had very little psychological cost.” I wrote him back that: “Thanks for the kind words. Being long TSLA had LOTS of psychological costs. LOL.”
  • UBER Uber (8) – Nice rally off the lows for UBER over the last few weeks but it’s still far from being a stand out stock for us. I’m a bit sick of looking at UBER, but sometimes that’s the best time to buy more of one of your positions. One of the smartest hedge fund managers I know is pretty darn sure that Uber and Lyft are like Sirius and XM satellite radio before they merged — that is, it’s a no brainer that these two companies are going to get together so they can quit bashing each other on pricing and drivers. I know, I know, how could the Department of Justice ever let such a clear violation of anti-trust laws go through? Well, have you been paying attention? Uber and Lyft will line enough politician pockets to get such a deal approved.
• (Social Revolution)
  • FB Facebook (7) – FB has rallied strongly since I wrote this six weeks ago: “Everybody hates Facebook and the lack of privacy, the hacking and the time suck that both it and Instagram can be on their lives. But everybody keeps using Facebook and Instagram. And by everybody, I mean the vast majority of the people who have an Internet connection on the entire planet. As for the stock analysis, well, the company is still growing topline 25-30% per year with 80%+ gross margins and the stock is trading at just over 20x next year’s earnings estimates, which are probably too low. I think this stock looks pretty good into year-end and for next year, as 2021 earnings estimates will probably be close to $12 per share, meaning a 20-25x forward estimate on that would get you a $240-300 price target next year.” FB could use a rest here, and the quarterly report better be a good one if the stock is to avoid a near-term pullback. On the other hand, I do expect this quarter to be a strong one as ad dollars from major corporations flood Instagram, following the eyeballs and the strong traction the ads on Instagram get.
  • TWTR Twitter (7) – Twitter, along with Square, seem to be suffering a Jack-Dorsey-discount these days. The company needs to report a strong quarter with topline exceeding expectations in order to get Wall Street back on board, at least a little bit. Then again, all the Dorsey-angst and focus on the last 90 days of business might be a wall-of-worry for TWTR to climb in coming months. Twitter also needs to keep growing its daily user base, it needs to monetize better, it needs to get more traction globally. The potential for this company to become a hundred-billion dollar market cap is there, and it could happen in the next three to five years if everything can come together according to their (Jack Dorsey’s) plans.
  • SNAP Snap (6) – Snap is facing so much competition for teenager eyeballs from Tik Tok that I’m worried it could be in trouble this quarter. The user base at Snap sits at nearly a quarter billion people every month, which is impressive of course. But Snap’s core user base has been teenagers and young adults and that demographic is notoriously fickle about what’s considered the “cool” network. I’m not sure Snap’s ever going to be able to break into the middle-age and older demo as both Facebook and to a lesser extent, Instagram, have. And that’s a problem. We bought Snap when the stock was near its all-time lows and it was quite hated. The stock has climbed a wall-of-worry ever since and I’ve been steadily trimming it down because I too am worried about the stock. I still hold a core position in it and I’m going to buy a few SNAP puts dated out to late February with strike prices around $17 or so, just to get a little more protection on the sheets here for the portfolio in general and for SNAP in particular.
• (5G Revolution)
  • TMUS T-Mobile (6) – Last time, I wrote this: “I’m disappointed that the legendary John Legere, who I long underestimated, is retiring. I’m torn because betting on his genius and leadership was a primary tenet of my buying the stock, but I also know that the company is set up to benefit from the Sprint merger and perhaps dominate 5G with the spectrum Legere had them invest in years ago. So I hold onto the stock for now.” I’m increasingly convinced that satellite broadband internet is going to compete with 5G in ways that most analysts don’t expect. Perhaps the promise of 5G will actually be delivered by satellites as much as towers. And that means another competitor is coming for the wireless oligopoly of Verizon, AT&T and T-Mobile/Sprint. And I have enough positions on the sheets already. So I’m going to let go of TMUS here with a slight gain.
  • QCOM Qualcomm (8) – The number one thing that concerns about Qualcomm here is the same thing that worries me most about Apple here. Since I was touting them a year ago as the best plays on The 5G Revolution, the stocks have put on these huge rallies. Fast forward a year, and everybody can see that Apple and Qualcomm are ramping up to go meet the coming 5G demand. The fact is that Qualcomm is going to make a ton of the chips that go into the smart phones to run 5G speeds as well as the chips that run the infrastructure on the towers and on into the network. That’s going to be big business for Qualcomm for the next two to three years at least. The recently raised dividend bringing the yield back near 3% doesn’t hurt either. This is one of my largest positions, so course I’m worried about it.
  • Cisco (8) – Cisco is going to benefit no matter whether The 5G Revolution or The Satellite Broadband Revolution win. The routers and the software businesses that make the Internet run are still dominated by Cisco. The company’s been a forgotten leader for years and the stock trades at less than 15x forward earnings, but that’s largely because the topline growth has been terrible. Huawei has long been a global competitor (and thief) of Cisco’s businesses and I think the global move away from using Huawei will also work to benefit Cisco in coming years. Any topline growth, even just of 5%, would get this stock towards a 20 P/E in this market and estimates would have to go higher if the topline grows. So if the topline grows that would likely mean this stock could double in the next year or two.

Part 2 and Part 3 coming later this week.