Nvidia short-term vs long-term, Impinj outcomes and revisiting Gigamon
Cody: Alright folks, if you have questions then jump in. I’m happy to talk markets, stocks, politics, geopolitics, war, crime, punishment, big brother.
Subscriber: Hello Cody. I just joined your website.
Cody: Hello. Thank you for joining.
Subscriber: No problem. I just had a question. I bought a lot of Nvidia recently and I wondering what your thoughts are longer term on Nvidia? How high do you think it can go? Do you think it can triple or quadruple from here?
Cody: Well, I’ve long said that I’ve thought Nvidia could have a triple digit market cap. But it’s already there now, so let me put it that way these days. I don’t know if I’ve ever said it like that. I think Nvidia could be worth two Intel’s if Nvidia truly continues to dominate AI, self-driving cars, virtual reality — so many different huge growth sectors, and Nvidia is there and the margins are growing and huge and this could be a $300 billion market cap company. I trimmed some when it hit $165/170. I’ve owned it since $30. I trimmed some around these levels in part, as I said at the time when we bought it at $30, this thing could have a triple digit market cap. And when it got to the triple digit market cap it made sense for me to come out and say we’re here; let’s catch our breath a little bit. Now, that being said, I haven’t sold all of it. It’s one of my bigger positions; not my biggest position perhaps. But it feels like Bitcoin to me right now though. I think Bitcoin and Nvidia and maybe Amazon, some of these high flying stocks, Tesla, these things could get crushed 30 or 40 percent. Bitcoin, I think, could get crushed for 60, 70, 80 percent in the next 3 to 6 to 9 months. I wouldn’t bet that was going to happen, but if there was a bear market in general, if there was a scare of some serious war mongering, North Korea stuff or some black swan financial crisis thing creeps up, those things could get absolutely demolished.
And even without that kind of a severe demolishing, I think they could just have some air taken out of Nvidia’s tires. It’s about time we get some fear around Nvidia. I’m sick to death from hearing all the guys on CNBC brag about the last 10 points they made on it. They missed the first 500% move, but everybody talk about it now that it’s here at a $100 billion market cap.
Nvidia is a sexy stock right now. I don’t want to buy a sexy stock. I want to buy it before it was sexy; sell it when it’s sexy; buy some more of it when it’s hated. There will be a vicious cycle at some point — people will sell, bring out more sellers, and the momentum guys will puke it and everybody will declare the artificial intelligence and virtual reality revolutions are over. And then we can really start buying some more Nvidia. I don’t think that’s going to happen in the next 3 to 6 months. I don’t think that crash is going to happen in the next 3 to 6 months. But then again, I wouldn’t be shocked to see Nvidia at $130 at some point.
Subscriber: So would you take am initial position now you would say, or would you wait?
Cody: I like to have my cake and eat it too. And so, I would encourage you to consider buying a ⅓ size position now; getting your toe in the water. Heck, maybe a ⅕ size position because I could be wrong of course. If I had a crystal ball, if I knew it was going to $130, I’d sell it all today and buy it back at $130. I’m not doing that because I don’t know if that will happen. I would think there will be an opportunity at some point in the next few months or year or two that there’s panic around Nvidia and that’s the time I would want to buy ⅓ or a little more than ⅓ and buy my next tranche. So, you might want to put your toe in the water here knowing that it could triple in the next 5 to 7 years but that you might get the opportunity to buy some more at $130. Maybe there could be a real panic and you can get some at $90. Who knows? I don’t know but those are the pitches that we wait for. In the meantime, you might do a bunt here by just getting a little bit started.
Subscriber: Ok. Cool. Thank you.
Another Subscriber: Hi Cody. This is Kevin and I was calling to get you to expand on Impinj now that Amazon has closed on Whole Foods? And Impinj stock has had a pretty decent move since you recommended it.
Cody: Well, it had a heck of a nice move early on. Frankly, that Impinj is a classic Trading With Cody position, right? It’s a small cap stock, less than a billion dollar market cap right now. When we bought it, I think we paid about $30. It dropped to like $24; felt terrible. I think we nibbled a little more. Probably not enough. Next thing you know, 6 months later, it’s had a couple of good strong quarters. Everybody’s in love with it. George Gilder is out talking about it, which he has been.
This Impinj is a place where George Gilder and I see eye to eye. This looks like a good risk reward in the RFID industry and it goes to $60 and we trim a little and then it goes back to $30. I bought a little more two weeks ago, I think I caught that near term bottom under $30 on that trade alert. And knock on wood, it’s at $37 now. We might want to trim a little bit of what we just nibbled back. What the heck, you get a 25% move in two weeks, you might want to trim a little.
At any rate, longer term; the thing with Impinj Is that it could be a $10 billion company. It could go up 10-fold from here if they end up being the de facto standard or part of the solution as a platform at Amazon and/or at other retailers and at grocery stores; whatever it is. Now clearly, if they end up being part of the Amazon platform for groceries and retail shops then that’s what will get us there alone. The other retailers would be complementary to that and/or a potential savior if Impinj if it doesn’t end up in Amazon. You can expect at some point in the next 3 months to a year, the next 1 to 4 quarters, at some point we’re gonna find out if Impinj is in the first iteration of Amazon’s Whole Foods platform solution to eliminate the need to deal with checkout counters and track inventory and other things. The day that happens, that stock is either up 50% or down 50%. It’ll be a binary outcome that day.
And frankly, it’s sort of a binary outcome stock. We either end up selling that thing at $10 or $15 a share because it’s completely missed all of its targets and no one is using it and Amazon is not using it, and they didn’t win at Amazon. Or, we end up high-fiving each other and trimming some at $300 because Impinj did win.
So tie this back to that discussion about the Bitcoin risk reward earlier. That’s why I like Impinj here. I’m not promising you guys it’s a winner. I’m not promising you it won’t go down 80 or 90 percent. But I am telling you there’s a potential it could go up tenfold and there’s a potential we could lose 70%. That’s a pretty good risk reward scenario if you have some confidence in the company. Which I do. So, whereas with Bitcoin we could double our money if it goes to $11,000 which is what the upside target was from George Gilder, versus, it could go down 80 or 90 percent. So bitcoin could be win that’s worth a double but it’s a risk that there’s a 90% loss at some point. That’s not necessarily as attractive as something that has the potential for a tenfold return vs a 60 to 70 percent loss like the set up we have with Impinj.
Subscriber: Hey Cody, I know you’re not in GIMO currently. Do you have any thoughts around that though?
Cody: Let me pull it up. Frankly, I haven’t looked at GIMO since I removed it from the portfolio. After I’d sold it went right up the next day, I removed it from my screens entirely. It was up by 10% after I sold it or something a few months ago and I had to quit looking at it for a while. The chart looks pretty good, doesn’t it since it put in its bottom earlier this year? For the last few months, it’s higher highs; higher lows. Look, Gigamon is partly a play on Amazon web services. I’ve been hearing commercials lately for Barracuda touting themselves as a play on security for Amazon web services. Everybody wants to be involved with Amazon web services and Microsoft Azure. I wish I hadn’t of sold it frankly. I wish I had of bought more instead of selling it. You know, we all make mistakes and I hate making mistakes and I hate having to admit that I’ve made a mistake to you guys but I’m willing to do it every time I think I should. And dang it, if I don’t think I should now. I think I’ve made a mistake selling GIMO.
I just lost faith in management. And if management has got the ship turned there’s is a lot of potential upside.
Without a doubt this sector, cyber security, is a monstrous growth industry. George Gilder and I also talked about the fact that Bitcoin has got the double sided sword because everybody still associates, and partly rightly so, with black markets and ransomware, and that’s not good. The overall concept here is that all of this stuff has to be secure and blockchain is very secure; it has the potential to disrupt standard cyber security over the next 5-10 years. But over the next 5 years, without a doubt, every major enterprise has to spend more money each year than they did the prior year on protecting their networks; their data. And Gigamon, is probably a good way to play that. I still think Palo Alto Networks is probably the best, purest, clearest winner in that sector, but we probably should have a basket of cyber security stocks. As I mentioned before when I sold it, I just have so much crowd exposure points; you can’t own them all.
