Phil Jackson market wisdom, Blackberry, Akamai, Shopify and more

Here’s part 3 of the transcript.

Q: I hope you and your family are doing well. What number (revolution) rating would you give for the Blackberry stock buy.

A. I appreciate that! Again, it is so nice of you guys to say nice things about my family. This subscriber, I recognize his name, and he has been with me for many years. I thank you for the e-mail and for kind wishes to my family. We are doing very well.

Blackberry is a new purchase. I don’t do a new purchase unless the stock is rated at least an 8 or 9. I think it is probably safe to say, that after we bought it Blackberry reported a disappointing quarter again. But it’s not any surprise that revenues have been in free fall. We didn’t buy it for the last 90 days of business, we’re buying it because — frankly, I think the most compelling reason to own Blackberry is because of the QNX business.

QNX is the car operating system for a lot of smart dashboards out there that are in existence. If Blackberry can’t successfully transition into becoming a smart car platform in say Ford and/or GM and/or any other major car manufacturer around the world that they are already in business with, that already uses a QNX platform there could be huge growth. That needs to materialize in the next 12 to 18 months. Estimates, right now, for this year are down 40% but we knew that. That is, again, reflected here.  As for next year, the analysts are looking for flattish revenue numbers, not much growth. If they can penetrate the autonomous car business those numbers should turn. The analysts will have to start modeling some revenue growth.

Then you have the other kicker that if Blackberry could win in becoming an internet of things, an IOT play, getting into some platform success there would be another big kicker. Then revenue numbers would have to go up. If revenue numbers don’t go up it could be back at 6 or 5. They do have so much cash and should be generating cash with just minimal revenue growth at all so there is cushion down there at several dollars a share. Like any other investment early on here we are trying to anticipate the future and where the growth is coming, not where it has been. There is a compelling risk/reward here. We have a 30% to 50% downside and 5 to 10-fold upside, if the company really does get things turned around. So my rating for BlackBerry right now is an 8, to answer your question.

Q: Is Blackberry your next potential “Google”… hundreds of percent gains in the coming years… exponential growth? And/or…

A. I wouldn’t call it a next potential Google because Google has never been a turn around like Blackberry is right now. If anything a better question would be “Is Blackberry the the next Apple?” I bought Apple when it was actually below cash per share, but had a lot of cash and no revenue growth, a new CEO that had come in, his name was Steve Jobs. I don’t think the guy at Blackberry is the next Steve Jobs or something. So, Blackberry is not the next Google or Apple, but maybe a better analogy over all would be that it is the next Sony. We snuck in and bought Sony in the teens a couple years ago when it had a lot of cash and was sold and hated. I thought it looked like a reasonable risk/reward entry point and I thought we could have a simple 5-fold return, perhaps, over the next 5 or 10 years. It actually fell initially after we bought it from $18 down to $14 or $15 where we bought some more. We did our tranche buying and have ridden Sony now for two years and it’s hitting all-time highs and as you guys know I’ve trimmed a little. It is in the high $30s now. That is probably the best analogy and hope for the Blackberry potential if I had to draw an analogy to an existing position.

Q: You mentioned sharing your next “Google” ideas… I’m a new subscriber—wish I knew you years ago and hitched a ride on Apple, FB, Google… so I’m most interesting in catching your next new big wave— your next “10” long ideas vs. 6 or 7. I’ll hang on to some Amazon and FB for now, but keeping powder dry for the next “Amazon”, so to speak.

A. I think I accidentally answered that question in my opening statement but I will just sort of repeat myself now. Thank you for subscribing first of all. Second, I feel the pressure. I hear your questions, I know you want ideas, I want to give you the next 10 rated investment. Well, there are no 10 rated investments, except for betting on my career as I mention all the time. But I will try to find, and I am actively trying to find you guys another empire, but I won’t force it.

Q: I hope you and your family are doing well. Is it time to by Shopify?

A. Thank you so much! I’ve bene looking at Shop and yeah, it’s come down some. Let me pull the chart as we are talking, I haven’t looked at it today. $88. It has finally come down off that momentum it had that carried it up to almost $100 a share recently. Of course over the last year or two, like many of our own stocks that we have been long, its doubled. We are working on Shopify. It is an interesting company. It certainly has some revenue growth that I find compelling and it feels like something I am not going to buy and regret. I don’t know if I see it as a revolutionary company. But I’m still working on it. I can just see me missing this one and kicking myself later for not having bought it. So on that note, I am going to push myself to overcome that bias going into it and see if I can’t really keep my eyes open and analyze Shopify for you. I will do it as I am doing these books. I am in a mode right now looking at dozens of stocks and fundamentals, the industries they are in, the road maps that they seem putting in front of us and trying to pick out the best ones. Shopify is certainly in the running for that. It will come. Give me another 2-3 weeks to finish up this book. You guys better call me tomorrow morning, let’s get back on it.

Q: Any thoughts on Akamai Technologies? Shares have taken a beating this year, down 30% since February, half of the decline coming since the company provided a disappointing 2Q forecast in early May. I feel investors have over-reacted to what in retrospect will turn out to be a bump in the road, as Akamai evolves into a much more diversified and consistently profitable company. Akamai is growing, is solidly profitable, throws off a ton of cash and has a fortress-like balance sheet. And it’s worth recalling that not too long ago rumors had Akamai in the crosshairs of Verizon or AT&T.

A. Before I answer your question, I am going to offer a little insight that I learned over the years. That loaded in your question is someone who truly has studied this company, I think, if I had to guess, clearly owns the company already and is very bullish.

I challenge you to go find the bear story, to understand the bear story, because if you understand the bear story and still want to own Akamai, then keep it. But for now, take off your Akamai hat. Pretend like you haven’t ever owned it. Whether you bought it at $3 fifteen years ago or whether you bought it at $60 before it was down 30% earlier this year, take off your bullish hat and everything you know about the bull story and grasp and embrace the bear story on Akamai.

If you had million dollars that you won on The Wall with your wife on Chris Hardwick’s terrific show. (By the way guys my company makes an app for Chris Hardwick. Download the IAm Chris Hardwick App — iPhone and Android. It has his website for the show and everything else he is doing inside of it.) So, if you won a million bucks on his show, and I watched it in the IAm Chris Hardwick app, and you thought to yourself that you could invest this money in anything available, would you put $300,000 in Akamai? The question is, if you spend the next 5 days challenging yourself to truly understand the guys that are betting against Akamai, would you also put as much money into Akamai as you have been?

I hope that is helpful and I hope you took all of that the right way because I am truly trying to be as helpful to you and challenging you and not rain on your parade or something.

Which brings me to my analysis of Akamai. I like Akamai. Robert Marcin and I have been trading emails for the last month about Akamai. Robert Marcin, as long time subscribers know, is a long time friend/mentor of mine whom I consider to be the greatest value investor on the planet. He has run hedge funds and mutual funds over decades and had a lot of success. Now days I think he is just running his own money. We have been trading emails after he asked me “Have you looked at Akamai? If it was 30% cheaper right now I would buy it.”

It is still at the same level as when he e-mailed me. I actually did a fresh analysis of Akamai with him. I didn’t write anything up, but called him back up and said “I am looking at this thing and I think you’re right. If I could buy Akamai at a 30% discount (if it were one of these stocks that could get hit in a big panicky sell off with Bitcoin or something), that is one I would love to step in and buy. I don’t think the pitch right here, right now is it, but it’s close. I do like Akamai long term. I just wish and think, I might get an opportunity to buy it a little bit cheaper at some point and until them I am holding my horses. It is another name, sort of like Shopify, that is part of the broader universe of stocks that I am aggressively analyzing right now and trying to find a buyer to.

I am getting hoarse and dizzy. This is a lot of brain power I am turning out here. I can smell the smoke in the room from my ears.

I will leave you with this quote from Phil Jackson that I saw this morning and almost quoted but I thought the Buddha one was funnier. There is actually a little bit of market insight in this one:

“Approach the game with no pre-set agendas and you will probably come away surprised at your overall efforts.” – Phil Jackson

That goes back to what I was saying about Akamai and that all of us should strive for when we are looking at our portfolios, lifeline, career path and how all of it intersects and trying to understand the big picture.

Whether it is buying stock or how much money should I have allocated to tech stocks or money you should have in gold or in cash or whatever the case may be for you, can you look at it as objectively as possible?

Can you remove your pre-set agendas, bias? Can you remove your political bias? If you’re liberal, can you remove your distain for the current administration and party in power and look at the market and economy and the reality of trends objectively? If you’re conservative, can you look at the opposite side? Were you bearish because Obama was in office?

By the way I don’t think republicans are actually conservative and I don’t think democrats are actually liberal, but you get my meaning. However you view politics and the noises around the market, don’t let them drive your money decisions. Politics is a noise, but also meaningful of course because policies make a difference.

So perhaps that is it. Can you look at the policies but not the politics? Can you remove your pre-set agenda? “Approach the market and your money with no pre-set agendas and you will probably become surprise at your overall efforts.” I ought to change the last word to “returns”.

Peace love and happiness guys. I am going to go get a sandwich or something. Thanks for being a part of Trading With Cody!