Mea Culpa For Loser Picks, Trade Alert on SMR, U Call Options, Best Solar Stock, Lots Of Stock Q’s, More

Before we get into the transcript from this week’s Live Q&A Chat, I have something to say.

Mea culpa for any loser picks I’ve had this year. Investing in innovation stocks can be very hard. Most tech-centric funds are still down more than 50%, even after this recent bounce in the markets, from their Covid YOLO FOMO Bubble Highs because it’s been a terrible bear market for most small cap and mid cap tech stocks for over a year. The bear market in small/mid cap tech stocks isn’t an excuse for my own stock picks that haven’t worked of course.

But I’m human too and I only get the the pitches that the stock market throws to all of us at the same time and when it’s been a bad market for these kinds of names, I too will have some losers. We have had many homeruns over the years and I’ve had some great timing on getting longer or more defensive through out this bear market for small/mid cap tech stocks which is why the hedge fund has been able to do so well this year. We, of course, have also had some great moves in all of our Forever Positions like AAPL, GOOG, META, TSLA etc this year which is also why we’ve been able to outperform all of our competitors.

SMR reported after hours and it’s not good. I’ve mentioned many times that this is not a big position because it’s so speculative and we are bailing on it. Again, mea culpa.

I’ll be frank as I always try to be and tell you that I’m also sick of these kinds of names. The anger and pain from some of the subscribers — many of whom seem to only listen to me when I write about stocks that have low stock prices — is palpable. Mea culpa on ever picking any stock that didn’t go up forever like it seems some of our names did over the last 20+ years that many of you have been reading me for.

That said, long-time subscribers will know that each and every single one of the trillion dollar and other homerun stocks I have had us in for the last 20+ years also went down on occasion, often with 50% or more drops before they kept coming back and climbing to these heights. It’s part of the process even on the biggest winners in history, many of which we have nailed over the years.

So look. I’m going to step away from writing for the next week and a half. I’m headed to NYC next week anyway, and I know that sometimes it’s important for any investor to step away and clear their head. I feel a lot of pressure to deliver great results for Trading With Cody subscribers and not just for the hedge fund and I know that some of the subscribers are unhappy with my new picks this year and some of them have just ignored my good picks and other trades.

I’ll do a complete review of each position with updated analysis and new Revolution ratings for each position the week of November 20.

Peace and love and thanks to each of you for being a part of the Trading With Cody community.

Here’s the transcript from today’s Live Q&A chat:

Q. Anything you would be buying here?

A. Not much right now after this huge rally we just had, other than the recent Trade Alerts in some of the names like Texas Instruments (TXN) and STMicroelectronics (STM), which have popped nicely but are still relatively attractive here. I’d consider some Unity Software (U) calls or maybe a nibble in one or two of the small-cap names we are in that are down big. I bought a few slightly out-of-the-money calls on it in the hedge fund dated out to December this afternoon. I bought a few slightly out-of-the-money calls on it in the hedge fund dated out to December this afternoon. Other than that, I’ve been in cash-raising mode this week in the hedge fund though, as noted in the last two write-ups we sent out this week.

Q. Any stock with a rating of 8 or above now?

A. Tesla (TSLA). Maybe Uber (UBER) and/or Intel (INTC). Let’s get through another couple of weeks of earnings reports and I’ll redo each rating for each of our stocks with new analysis etc. Stay tuned for that in a couple more weeks.

Q. So I have a large position of Uber (UBER) call options (40) expiring Jan 2025. Now up 120%. At what time do I sell or exercise the options?

A. I’d need to know much more context to be able to give detailed opinions on this, such as how big of a position relative to the rest of your portfolio, how much risk you like/want to take, etc. Long story short though, I’d consider selling part of them, maybe 1/3 to lock in some profits, even as I still very much think Uber (UBER) is a good long-term investment.

Q. Robinhood Markets (HOOD) = not good. Maybe it’s time to completely sell out of these smaller, speculative stocks (Robinhood Markets (HOOD), Rocket Lab (RKLB), NuScale Power (SMR), Solaredge (SEDG), Blade Air Mobility (BLDE), MP Materials (MP), etc.) and stick with the mega caps? Yes, the returns won’t be as good but the potential downside seems more limited. I don’t know anymore. It’s hard seeing some of these names get crushed…

A. Yes, it can be tempting to do that. That said, when I bought Apple (AAPL) and told my followers about it back in March 2003, it was a smallish cap stock itself with a market cap of about $1 billion. Google (GOOG) was a $23 billion market cap when I bought it and told my followers about it back in August 2004. Bitcoin had a market cap of less than $2 billion when I bought it in 2013 and wrote about it for you all dear Trading With Cody subscribers (started Trading With Cody in 2011). So smaller caps can become mega caps and that’s actually where much of big money is made over decades. I certainly think there is good risk/reward in each of our megacap stocks still if you look out over another five or ten years, but I also don’t think we will have 2000 baggers in them like we did in AAPL or a 350 bagger like we did in Bitcoin in those mega caps. They are certainly “safer” than some of our small caps, as there is very little to no existential risk in them like there is in small caps, but Apple was trading for less than its net cash balance back in March 2003 because Wall Street was pretty sure it was going to zero. I’m too sick of our small caps. I’m sick of losing money on anything. But that’s why we talk about position size and making sure that you don’t over-allocate into the smaller, more speculative investments while keeping our Forever Positions and mega caps in the portfolio too.

Q. I saw the trade alert on Instacart (CART). Can you please provide a full write-up on this one? Or at least some preliminary thoughts here and your rating? Thank you!

A. Let’s get through this first earnings report from the company since their IPO and we’ll do a full write-up if we are going to make this stock a full-sized long-term investment. Long story short is that it’s got low churn so far, has a critical mass of grocery stores and consumers on its app and is growing nicely with 70% gross margins and is currently trading at just over 2x sales.

Q. If rates have peaked and solar demand returns to trend, then are you tempted to nibble a little of the major solar companies here (Solaredge (SEDG) & Enphase (ENPH) in particular)?

A. It’s not just rates that have hit some of the solar companies like Solaredge and Enphase as the solar power inverters that they make have had a hiccup in demand too. I’m definitely still a long-term bull on solar, but you know what the best stock for The Solar Revolution is? Hint: It’s also the best stock for The AI Revolution. And it’s also the best stock for The EV Revolution. Ie, Tesla (TSLA).

Q. All roads lead to Tesla (TSLA) then…

A. Or do Teslas all lead to roads? LOL

Q. Thoughts on (former TWC names) Enovix Corp (ENVX) post-earnings and Unity Software (U) pre-earnings? U stock once had some life to it but now seems stuck in the mud under 30.

A. My spider senses started going off with Enovix and all the hype it gets and gives. I love Unity’s primary business of being a platform for game developers to build games and apps on but they got into the advertising business with a bad acquisition of Iron Source a couple years ago. I still want to own that stock and I actually bought a few slightly out-of-the-money calls on it in the hedge fund dated out to December this afternoon. It reports earnings tomorrow night so it could be up or down 20% or not move at all of course so be careful.

Q. What are your thoughts on Unity Software(U)? It’s been hovering a lot under $30 but it seems like a good long-term bet as the software is often used in gaming etc.

A. Yes, I love the gaming building platform but I hate its ad business. See my earlier answer, please. I bought a few slightly out-of-the-money calls on it in the hedge fund dated out to December this afternoon.

Q. Thoughts on another former TWC name that was jettisoned (higher) back in April, Shockwave Medical (SWAV)? Staying in the medical space, how about Medtronic (MDT) here near 52-week lows?

A. The weight loss so-called wonder drugs like Ozempic have made investors flee these kinds of medical device companies that cater to overweight and obese people. I think the selling in these names might be getting close to being overdone but I’m not an expert on medical stuff and that’s probably going to keep me from investing in them.

Q. Please take a look at a past holding Shockwave Medical (SWAV). The numbers are still good and I think it would be a great takeover target. Past rumors were that they were in play. Your thoughts?

A. I don’t think it’s a good idea to own a stock in hopes that a bigger fish acquires the company and I have no idea if Shockwave is even up for sale. See my prior answer on Shockwave too, please.

Q. I, like many here I think, am in way too deep on Rocket Lab (RKLB) to get out any time soon.

A. RocketLab (RKLB) is a very risky startup as I’ve been saying since the day we bought it. You might consider selling a little bit to lock in some losses for tax purposes and to possibly avoid further potential downside. I have trimmed some in the hedge fund in the past several times as noted but I too am underwater on it. That’s not a reason to keep it though. The company is in the business of going to space which is famously hard to do. I still can’t hardly believe that it hasn’t been acquired but as noted earlier, hoping that someone buys the company we’re invested in is not a reason to own it. I still very much believe that we will make a lot of money in the next two decades by being early investors in The Space Revolution but not all space companies are going to make it and Rocket Lab still has a hill to climb to get there.

Q. Looking at Block (SQ) (formerly Square), earnings were not too bad and the stock ran from $39 to $50. Any thoughts on this name?

A. It was cheap and still isn’t expensive here. But I’m not willing to bet on Jack Dorsey, the CEO.

Q. Thoughts on TransMedics Group Inc (TMDX)? 159% growth YoY.0 $225 million in revenues for 2023 which isn’t too shabby for a small company. $425 million in cash. Only FDA-approved technology for lung, heart and liver transplants. Stock took a huge hit the past three months ($90 to $40, now at $60) because they purchased their own planes. Initial results show that was a smart decision. Not sure how ultimately big this market can be but if they have this revolutionary technology, they should be able to dominate. Gotta figure they would be great buyout candidate as well.

A. I don’t know the company and medical-related businesses are not my forte, but I will take a look at this stock and let you know if we ever find anything we like about it.

Q. Regarding the potential Bitcoin ETFs, if the ETFs get approved, will the corresponding institutions actually buy BTC? Will all of the sudden institutions start buying outright BTC in size?

A. Yes, a lot of institutions and family offices are holding off from buying bitcoin until there’s a clear custodial solution for it like a bitcoin ETF. But it also could be a sell-the-news kind of event at first. Long-term, I still very much believe that all fiat currency roads lead to bitcoin.

Q. Would you add to ProShares Bitcoin Strategy ETF (BITO) at this level? Thank you.

A. No, in fact I trimmed a little out of the hedge fund here at $18/share. We were pounding the table on bitcoin/BITO back a few weeks ago before this big rally it’s had.

Q. Which one of your longs are your favorites to hedge/sell calls right now? Thanks.

A. If you run a hedge fund, it’s very important to try to keep some hedges on. In my personal account I don’t have any hedges on right now. Feet-to-fire, I’d probably consider selling some calls against NVIDIA (NVDA), going out a month or two as the premiums are quite large. I don’t think that most retail investors/Trading With Cody subscribers should be messing with trying to sell calls against our longs though. I hope that answers your question.

Q: I wanted to write and thank you for your note about your heart attack. Last week I had some mild symptoms but, partly as a result of your note and partly as my father had heart issues, I checked myself into the ER within 1 day. After some tests, I had a balloon angioplasty and have come out feeling fine but rattled with all the pills! By the way, this was all free as I am in the UK, and I came out less than 48 hours after presenting to the ER.

A. God bless and I hope you are fine. Thanks for the kind words. Also, I forget to take my morning heart pills about 10% of the time completely and I forget to take them in the morning about 30% of the time. I told my wife just this morning that we need to put a daily reminder in my iPhone that reminds me to take my morning heart pills every day at 10am.

Q. Being a while, may I ask how is Amaris?

A. That is so sweet of you to ask. Thank you. She’s doing mostly great. She had a stomach bug and gave it to my wife and other daughter but other than that she’s been quite healthy and happy lately. She’s in love with my acoustic guitar and her two favorite songs right now are “Twist and Shout” along with “Better” by Regina Specter. She is an amazing and tough kiddo. Both my kiddos are.

I leave you all with a picture of Lyncoln singing “Better” to Amaris earlier this week. You can see how much she loves her big sister. See you all in a couple weeks. I’ll probably be on Fox Business’s show with Charles Payne one day next week but I don’t know what day yet.