Latest Positions Round Up (and a Trade Alert too)

Here is a list of my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position. But first, a Trade Alert noting that I’m going to sell my SNE this week. It’s been a great run, as we’ve ridden Sony for three and a half years from the mid-teens and trimmed a few shares along the way, including most recently when the stock was near $60.

I’ve broken the list into Longs and Shorts. I’ve further broken the list down in order of highest-rated to lowest-rated. Those ratings 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 stocks 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 (8)
• Primary stock exposure portfolio
• (The Big 3)
  • GOOG/GOOGL Google (8) – The company guided towards increased spending on cloud and data centers which didn’t impress Wall Street despite Google putting up great numbers last quarter. Sometimes I wonder if Android is Google’s most valuable asset, despite the fact that it doesn’t generate much revenue. Being the operating system on every Huawei and other Chinese smartphones means that Google, despite all the claims that Google’s not in China, is perhaps the most entrenched US company in China. Android runs billions of devices around the world. Google owns and controls the “open source code” of Android. I’m not sure how or when Google will ever directly monetize that unrivaled global ubiquity, but Android’s critical mass is truly unrivaled in this world’s history.
  • AAPL Apple (8) – 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%.
  • AMZN Amazon (7) – Is Bezos distracted? Perhaps. Is there potential overhang from his pending divorce and the shares/control of Amazon his soon-to-be ex-wife might have as a result? Maybe. Is Amazon’s cloud service the gold standard of the cloud services industry for the next 5-10 years? Yes. Is Twitch one of the most under-rated, fastest growing and valuable assets under the Amazon umbrella? Heck yea. Is Amazon likely to be higher or lower than these levels ten years from now? Higher.
• (Social Revolution)
  • FB Facebook (7) – I was just checking on Amazon-owned Alexa.com (no relation to the Alexa Voice Revolution, Alexa.com is a website traffic measuring service that Amazon bought back in 1999) to see if Facebook.com had dropped from its long-held 3rd place on the browser-visited websites in traffic in the last year. Nope. Surprisingly, Instagram.com is at #16 vs Facebook.com’s #3. That’s because Instagram users mostly use it as an app, not a browser-site. Here’s an interesting chart that underscores how people aren’t searching for Instagram content on the web, rather they get their by links and imbedded posts:

    What percentage of visits to Instagram.com come from a search engine?

    

  • TWTR Twitter (8) – Twitter’s more important than its stock price indicates. While Facebook is apparently going to try to re-invent itself as a Snapchat-like “privacy focused communications platform), Twitter is all about its public-ness. I’ve got faith that Jack Dorsey can truly get this company monetizing and benefitting from its unique place in our media world. Then again, I still can’t fathom why you can’t get a stock quote on Twitter when you click on someone’s $cashtag symbol. People who are reading Twitter for stock information are a very highly-sought after demographic and it’d be so easy to make a few extra cents on every stock-inclined Twitter user every day. Twitter almost bought Scutify as their solution to that issue years ago before Jack had come back as CEO, so you know somebody there once thought about it. Someone tell Jack we’re still here and/or to just pay some programmers to add stock quotes and data to Twitter already.
  • SNAP Snap (8) – Last time, I typed: “The earnings report this coming Tuesday are a bit binary — either the company’s going to show it can grow users and monetization or the question of whether they’ll need to raise more money will start to crop up. The stock could fall back to $5ish if they miss this quarter, but the stock could run to $15 if the company were to deliver two good quarters in a row.” Snap reported some good numbers, it looks like they’re monetizing nicely and one more quarterly report like that and the stock might indeed go to $15.
• (5G Revolution)
  • VZ Verizon (8) – I wonder if investors will be disappointed in the lack of 5G revenue and growth from Verizon this year and early next. It’s not like the day they turn on 5G services in most cities that there’s going to be a lot of new IoT or self-driving cars or virtual reality devices that can use it. But, oh, in late 2020 and in 2021 and beyond, we will start to see Verizon’s investors enjoy the returns on the billions that Verizon has invested early in 5G to become the leader of the industry for decades to come. Sprint and T-Mobile would be much more formidable competitor as one than as two, but they’ll have to spend in a hurry to catch up to Verizon.
  • INTC Intel (7) – Intel spent tens of billions to buy driverless car and IoT companies and those acquisitions, along with 5G infrastructure chips, have positioned Intel nicely for the next ten years.
  • QCOM Qualcomm (7) – I wouldn’t be shocked to see Qualcomm lose their court cases and that the stock would get hit 20-30% that day and that we might then truly see a long-term bottom put in this stock. The 5G growth ahead for Qualcomm is going to be impressive and with the dividend nearly 5%, I’m a holder of the stock here.
  • VIAV (7) – Seeing early benefits from 5G but this is not a pureplay and the other moving parts at VIAV will have me on my toes with this one for the next few quarters.
  • COMM (7) – This company’s antennae could be on millions of small cells in coming years. The other sectors of company aren’t nearly as exciting but provide steady cash flow. Valuation’s very attractive here at less than 10x next year’s earnings.
  • UBNT (7) – The company’s backhaul solutions that take all the data coming to a 5G small cell and beam it back to the tower where the fiber optic connection to the Internet resides and then back again are exciting growth engines for 5G. But I don’t like the company’s other product lines or the valuation here. So I’m treading quite lightly in the name for now.
  • ADTN Adtran (7) – This is an old school telecom name that’s trading at just 1x sales. A few quarters of better-than-expected earnings would juice this name. A few quarters of inline and/or misses, the stock’s got 20-30% downside.
• (Cloud Revolution)
  • Palo Alto Networks (8) – Palo Alto’s earnings report numbers were really strong, with an acceleration of growth and gross margins. Palo Alto is also a stealth 5G play as they have a platform to help carriers protect their new 5G networks that they talked about quite a bit last night on the call. The company is also going to buy back nearly 5% of the float — which I wish they would just put that money on the balance sheet or send us dividends instead, but it’s still a positive. The valuation’s stretched here but this is a best in class play on a Revolutionary secular growth sector like network security. I’ve been buying more of this one this week as it’s one of my favorite stocks for 2019 and beyond.
  • DELL Dell (8) – Dell reported fourth-quarter revenue of $24 billion, above consensus estimates of $23.8 billion. The company also guided for 2019 revenue of between $93 billion and $96 billion, slightly above analyst estimates of $94 billion. Just barely higher, or inline, really. I’d mentioned it could go to $80 by the end of this year, but I doubt it. Maybe I’d say my year-end target is the mid-$60s if I had to put a price target for an arbitrary amount of time for one particular stock with billions of dollars of moving parts, but more importantly I’ll tell you that I plan to own Dell for a long time if they can grow 5-10% per year like this.
  • SQ Square (7) – Terrific growth from this revolutionary company. It’s all these small businesses — and large — that use Square that keeps me in this stock despite its lofty valuations.
  • SPOT Spotify (7) –  I like the subscriber growth numbers and the potential for Spotify to use the surging popularity of podcasts to create some of exclusivity to their content. Spotify’s valuation isn’t great, but at 2.5 next year’s sales estimates, it’s not terrible either. Do you realize that Spotify will do $10 billion in sales next year and that Netflix did $20 billion in sales this year? Did you have any idea that Spotify is doing almost half as much revenue as the great Netflix is right now?
  • NVDA Nvidia (7) – Can Nvidia run back to its former highs near $300? Yes, but perhaps not this year. But the company’s got to deliver a couple quarters of growth and no inventory issues and the stock could easily get back over $200.
  • ZEN (7) – Valuation here isn’t thrilling, as the company trades at 8x next year’s sales estimates, so I’d like to see a big pullback of 20% or so before I’d get aggressive in buying this name. But the execution each quarter is impressive, the profitability is about to take off and I’ve got a starter position going in this name.
  • SPLK (7) – Again, valuation here isn’t thrilling as the company trades at 6x next year’s sales estimates and 60x next year’s earnings estimates. That said, the growth and profitability are accelerating here so I’ve got a starter position ready to build up if it will come down a bit.
• (Energy Revolution)
  • SEDG SolarEdge (6) – The company’s running into some warranty issues and that’s got investors concerned about future cash flows and earnings margins. The digital solution that Solar Edge provides is revolutionary enough to keep me holding onto a small position in this name for now.
• (China Middle Class Revolution)
  • JD (7) – Strong quarterly results from JD and the company’s positioned to continue to grow exponentially as the middle class in China grows exponentially. My only China exposure for now.
• (Defensive names)
  • CPB (7) – Campbell’s earnings, guidance and tone were better than expected and everybody expected it to be worse than expected so that stock’s popped nicely since we bought it a few weeks ago. The dividend is still above 4% here and I still like this one for the next six months to 27 years.
  • GLD (7) – Gold’s a good hedge against a potential economic/financial Black Swan event and probably has maybe a 10% downside risk at most this year, I’d expect.
• (Other)
  • UA Under Armour (7) – Inventory issues are getting cleared up, but when was the last time you saw a product from Under Armour and thought, “Must-have cool?” I’ll give them another quarter or two to deliver some product innovation or we might have to move on from this one too.
  • OPRA Opera (7) – Opera’s quarter was pretty darn good but the stock’s been sold off since. Opera’s also stepping up investment on marketing and will need to see those increased investments pay off for the stock to get back to its all-time highs of more than twice the current stock quote. I’ve got a call into the company and am spending some time getting to know this company well before I make it a bigger position though.
  • AXGN Axogen (7) –Axogen reported a strong quarter and even increased the size of their potential market. I’m holding a tiny position in the hedge fund in this name now too.
  • TST The Street (6) – The company will report earnings this week and we’ll get an update on what the plans for the remaining assets are after they get all this cash in from their latest sell.

Shorts –

• Primary short portfolio
  • IBB Biotech ETF (7) – IBB might be a good short now that my old frequent TV guest and drug approval lover, Dr. Scott Gottlieb, resigned last week. Consider this a Trade Alert letting you know I’m starting a small short position in IBB in the hedge fund now too.
  • QQQ (6) – I’ve bought just a few QQQ and SMH puts and shorted a small amount of QQQ and SMH common to keep some hedge exposure on.
  • SMH (6) – I’ve bought just a few QQQ and SMH puts and shorted a small amount of QQQ and SMH common to keep some hedge exposure on.
  • Tiny short hedges, rated about a (7) – in VHC, GLUU. 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) – I’m thinking it’s time to nibble some cryptos again, believe it or not and these four are the best.
    • Stellar Lumens (7) – I’m thinking it’s time to nibble some cryptos again, believe it or not and these four are the best.
    • Ethereum (6) – I’m thinking it’s time to nibble some cryptos again, believe it or not and these four are the best.
    • Ripple (6) – I’m thinking it’s time to nibble some cryptos again, believe it or not and these four are the best.

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.