Latest Positions Part 3: FANG, DIS, Space Stocks, Defense, Crypto, Shorts

Markets were nasty today with coronavirus fear. I’d rather nibble some of what we trimmed or cover some hedges than panic with the markets right now. In the meantime, 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.

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 is cheap on a lot of metrics, but has gotten more expensive during this months-long rally. Google is trading at 25x next year’s earnings estimates, and the 20% topline growth, even as the company now does nearly a quarter trillion dollars of sales each year, is impressive. The company recently became a trillion dollar market capper, but the stock has pulled right back since then — sort of like Amazon’s stock did last year when it was briefly worth a trillion dollars. I continue to point to Android and YouTube as perhaps the best reasons to hold onto our Google, which I’ve owned since the day it came public.
  • AAPL Apple (6) –Remember when Apple warned about earnings back on like the 2nd trading day of this year and the stock, already down in last year’s late year market mini-crash, got killed and traded down to $142? And Cramer was on TV saying something like, “AAPL should be at $120.” I love Cramer, he’s a mentor of mine, a friend, and gave me my first break on TV. But sometimes he can be late and wrong, just like any of us, really. Anyway, AAPL has almost doubled from those levels when all that news and I’d rather trim Apple here than buy it. In fact, I’ve added a few puts in the last month or two just to hedge this now very loved stock.
  • AMZN Amazon (7) – Amazon Web Services is perhaps the best reason to own AMZN. Or perhaps it’s the retail business. Or perhaps it’s the growing logistics and freight business. Or perhaps its the Amazon Prime Video business. Or perhaps it’s the Amazon Prime business itself. Whatever your reason for owning Amazon, I think it’s probably a good one. Amazon will nearly a third of a trillion dollars in revenue in 2020, up 20% from last year. Amazon will pass Apple in revenue this year, and Amazon generates 50% more in revenue than Google does, which does 25% more in revenue than Microsoft does. Each of these companies are worth about a trillion.
  • NFLX Netflix (7) – Netflix reported a strong quarter, though US/Canada stalled out a bit. Netflix rightly points out that streaming is still a small fraction of how people consume TV content but that it’s a secularly growing industry vs broadcast television being now in secular decline. The fact that global subscriber growth could hit 10 million per quarter this year is what it will take to keep this stock in rally mode off the lows where we’d bought it. Netflix is a truly great company, but it’s got to deliver some real earnings and cash flow in the next year or two or the markets are eventually going to get tired of funding this company. That said, the company could cut back spending growth on new content at any time and the billions saved would flow right to the bottom line. They can’t do that too soon though, as they need to keep establishing themselves as the de facto standard streaming platform now that the competition from Disney, HBO, etc is arriving.
  • DIS Disney (9) – Disney is probably my favorite stock here near $135 as it’s pulled back in large part because of people panicking over the China coronavirus. Disney Shanghai is definitely going to miss its targets this quarter, for example, and traders look at that and sell the stock. Meanwhile, the transformative Disney+ service is about to change the entire economics of this company. Margins in streaming can be terrific as scale hits and the impact of 100s of millions of people paying a monthly recurring fee for the Disney+ service will likely help drive topline estimates higher for future years.

• (The Space Revolution)
  • BA Boeing (6) – How Boeing has handled the entire 747 Max tragedy has been disgusting. I’m sick of holding this stock and truly shocked at the emails that we’ve seen released that warned about the Max before it hit market. On the other hand, it sure looks like a lot of this crisis is already priced into the stock and if IF Boeing can start delivering Max jets again in the next year, there are many years worth of deliveries ahead. All that said, it wouldn’t shock me to see BA get hit another 10-20% before bottoming, even if everything works out. I recently bought some puts to partly hedge this position.
  • SPCE Virgin Galactic (8) – Virgin Galactic is moving their headquarters to New Mexico down the 120 miles from where I live. To be clear, I don’t invest in the company because of that, but it’s happening because there is a spaceport in New Mexico, that the government has spent a quarter billion dollars on so that people can start sending stuff to space from there. I’m fundamentally bullish about Virgin Galactic. I don’t care that it’s just about the only pure play in the public markets. Virgin Galactic at $2 billion or $3 billion is a terrific risk reward scenario. You have 100% downside. And if their vision works out of all over 5 or 10, 15 years, that stock could be up 100 fold from here. It’s not about the $250,000 deposits that they’re getting for people that want to go and be one of the first people to be blasted up and become sort of an almost astronaut by going into almost outer space with the first ships. It’s about what that technology is creating and the ability to send new satellites up cheaply and the ship packages around the world faster and all of the things that you can do if you’ve got the capabilities to change how we travel, not just to space but around the world through space.
  • AJRD (8) – The tectonic plates of society and the economy and the world have all put us in a position that in 2020, that is a real private market phenomenon that we can invest in. I have invested in SpaceX and the private market. I’ve invested in Virgin Galactic. I own AJRD, which is a rocket company that’s been around for 50 years but still sells into this industry. I own a little bit of Boeing. I am trying to find all kinds of space related investment plays and ideas because it is the next, can’t miss, greatest, biggest growth industry that will create trillion dollar economies that we’re sitting in front of right now.

• (Defensive names)
  • CPB Campbell’s (6) –  I’m having a hard time holding onto this stock that has rallied 50% from its lows. This was supposed to be a safe, long-term investment with a nice margin of safety when we bought it in the low $30s. The P/E back then about 12x. It’s now nearly 20x. For a soup company that’s going to be lucky to grow its topline at all this year. But out of discipline, I hold onto most of it. I do think it’s a good idea to trim this one, 30% or more of it, if you bought it at the lows.
  • GLD Gold ETF (7) – Gold’s continued its strong move, as has bitcoin, in large part because every asset class has been on fire for the last few months and in large part because people buy gold out of fear and fear is high with the coronavirus spreading. I’m not looking to buy any more GLD unless it gets hit at some point this year for 5% or 10% or something. But I will hold onto most of my GLD and gold as a good hedge.

Shorts –

• Primary short portfolio
  • QQQ Nasdaq 100 ETF (7) – We’ve been adding to these hedges over the last few weeks and I’ll continue to hold some short hedges and puts.
  • SMH Semiconductor ETF (7) – We’ve been adding to these hedges over the last few weeks and I’ll continue to hold some short hedges and puts.
  • IWM Small Cap ETF (7) – We’ve been adding to these hedges over the last few weeks and I’ll continue to hold some short hedges and puts.
  • SPY Small Cap ETF (7) – We’ve been adding to these hedges over the last few weeks and I’ll continue to hold some short hedges and puts.
  • EWU and EWUS British ETFs (7) – 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 $8000 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.