Latest Positions Part 4: Content, Video Games, Space, Defense, etc

Here is a Part 4 of 5 of the list 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 –

• (The Content Revolution)
  • NFLX Netflix (6+) – Netflix ran to $575 last week before its earnings before falling below $500 after the report. Wall Street had extrapolated out the amazing coronavirus crisis acceleration of growth that Netflix experienced. Hundreds of millions of people around the world stuck at home. If you didn’t have Netflix, you probably signed up for it or at least tried it. So they’ve had millions upon millions of people sign up in the last 90 days, 120 days. Wall Street, in its classic extrapolation of the present into the future, took those new accelerated numbers that pulled forward growth from the future and/or included people just trialing things, and decided that that’s probably going to be reality for this year next. Netflix gave them a little bit of a reality check, said hey look, we’re not going to get another five million subscribers next quarter. Cut that in half or do two and a half million. It’s still great growth. Not as good of growth, but about half as many people. But the other problem then is now the bulls are all of the sudden looking at cashflow. The bulls have been ignoring cashflow since forever with Netflix and focusing on user growth. If we’re going to focus on cashflow at Netflix, I’m not sure we should because Netflix also told us that next year they’ll be cashflow negative again because they’re going to accelerate spending again.
  • SPOT Spotify (6+) – I have found a few albums lately that are not on Spotify, including an album with one of my most listened to songs from my Apple Music purchases, Slow Runner’s 2006 “Everything Is Exactly What It Seems.” Lyrics: “I thought I’d figure out how to change, But you never change, Everyone is exactly who they are, Everyone is exactly who they are, You’re not straying far from who you were in high school, Everyone is exactly who they are.”  I also found an old country gospel album from my wife’s late grandaddy’s collection published in Tucumcari NM that wasn’t on Spotify. Oh, the stock? It’s extended, not cheap but not terribly expensive at “only” 5x this year’s revenues, but I’m holding it steady.
  • Sony (7) – Sony’s a content play. More importantly, Sony’s a video game platform. More importantly, it’s another stock that’s not too terribly parabolic or expensive, trading a less than 20x earnings.

• (The Space Revolution)
  • SPCE Virgin Galactic (6+) – Virgin Galactic has hired a new CEO, replacing the engineering-genius with an expert in consumer marketing from Disney as Virgin Galactic gets ready to start delivering its services to consumers in the next year or so. The stock has finally taken back off after being a bit of a laggard off the March lows. SPCE is not a low-risk stock though and I would expect more volatility along the way over the next couple years as the flights and revenues start to happen.

• (Defensive names)
  • CPB Campbell’s (6) –  In the prior Latest Positions, I wrote: “Campbell’s has been a pretty steady stock for us, as it’s risen from $30ish where we bought it at the lows to now $50 a share…I’ll hold my smallish core position here steady out of discipline though.” Indeed, this stock has been steady since then too, hanging around $50 a share. I have a hard time being excited about this stock right now, as the 2.8% yield is not compelling, nor is the negative 5% revenue growth rate that analysts expect for this year and next and the 20x P/E is a bit rich too. I’m still not happy that the company sold its healthier lines of revenue and bought the crappy Lance brand. Holding it steady for now though.
  • GLD Gold ETF (7) – Again, in the prior Latest Positions write up, I wrote: “Gold’s been on fire for most of this year, but remarkably, it had a mini-crash of its own in March and bottomed exactly at the same time the stock market did. I suppose that underscores the power of the Fed’s printing press when they kicked it on into overdrive with new trillions of dollars at about the same day that the markets bottomed. I’ve long explained that I think gold could go to $5,000 or $10,000 an ounce in my lifetime and part of that theory is that the Fed will have a hard time putting its dollar printing genies back into the bottle in my lifetime.” Well, GLD and gold are up at new highs since then and I’ve had to trim GLD down a little bit lately here around $173.
• (Genetics Revolution)
  • CRSP Crispr Technologies (7) – Big move in this name since we bought it a few months ago as it’s more than doubled since then. I liked the company’s balance sheet to begin with but Crispr just raised another $1/2 billion with the stock in rally mode and why not? I always love it when a company raises cash while their stock is up, not when its back is against the wall. It’s a long way from here to profitability even in the best case scenario with Crispr Tech here and we should consider this stock to as essentially a venture capitalist-type investment — there’s a lot of potential upside from here, but still a lot of risk of execution, science road map, etc.
• (Network Revolution)
  • CSCO Cisco (8) – I like Cisco for these reasons: Trading at 15x this year’s earnings estimates, it’s cheaper than Campbell’s. 5G and satellite broadband could accelerate demand for routers over the next few years. The developed world’s governments are trying to avoid using Cisco’s biggest competitor (Huwei) and are signing bills to ban their equipment. Nobody else I talk to or follow is interested in CSCO right now.