Portfolio Management, Stimulus Bonanza, Careful With Immersed And More

Here’s the transcript from this week’s Trading With Cody Live Q&A Chat.

What’s up folks? I just want to reiterate that you should only put a TINY bit of capital, if any at all, in any private investment you make. Be careful out there.

Q. Do you put a limit to the # of positions you have in a portfolio? I feel like I keep seeing more and more companies I like, but I rarely ever completely get rid of another holding. Is it good practice to only add a new name if you’re willing to chop something else once you get up to a certain # of positions? I currently have about 30 names… maybe not too many yet, but feels like it’s getting there (for me at least).

A. Yes, I like to keep the list to about 15 to 20 stocks and then if I create a basket to bet on a new theme such as we are doing with The Space Revolution, I’m okay with it getting up towards 30 long names total.

Q. At this moment in time, what % short vs. long vs. in cash are you in your hedge fund?

A. I appreciate the question, but I don’t feel comfortable answering this all the time and I don’t really know why it’s relevant to you guys at home anyway.

Q. Cody, the reason why we find such value in understanding what % short vs. long vs. in cash you are at present is that it quantifies some of your more abstract statements. When you say things in a trade-alert like “I’m cautious here, but not outright bearish”, there’s a lot of room for interpretation there. We would find great value in understanding how a professional like yourself specifically translates that into portfolio action.

A. Not much has changed in my allocations since I’ve talked about them last. I try to stay pretty hedged in the hedge fund most of the time. It’s all relative though.

Q. Cody, do you sell short term out of the money calls on large volatile positions like TSLA? Thoughts on this strategy to generate some yield?

A. In the hedge fund I occasionally short some short-to-mid-term out-of-the-money call options on TSLA, but not in my PA. The longer you go out on the expiration date, the more time premium you can pocket, obviously. But I only do a small fraction of shorting TSLA call options compared to the TSLA shares I own so I don’t lose my stock if I want to keep it.

Q. With the green new deal spending bonanza, would you add to SEDG or TSLA now?

A. I don’t even know how to start to try to game the lies and headfakes and propaganda of the endlessly corrupt spending programs that Republicans call “privatization” while funding the industry with taxpayer funds or the Democrats’ version of the same game called “Green, Labor, Stimulus”. I have never even once thought about whether or not this latest government’s version of corporate welfare giveaways and protections will be channeled towards Tesla or Solar Edge. We own those two stocks because we are up more than 1000% and more than 2000% respectively on those two names since we rightly foresaw that the marketplace was ready for mainstream-priced EVs that are way better than any old-fashioned gas car and that solar is the best renewable fuel for our world for the next century.

Q. Cody any interest at all in other solar plays..like ENPH or, gulp, Sol after they all came down? anything else in that space? and what is your take on SEDG? up a lot but very volatile…obviously that could be related.

A. I think Solar Edge has the best technology so I stick with it. I’m inclined to short some of the other solar companies but now that you’ve asked about it, I realize that I should double down and do a bunch of homework on The Solar Revolution and where we are in it and who’s best and worst in the industry. So stay tuned for that in the next few weeks.

Q. Morning I am wondering how consolidation will be seen in the space stocks?

A. Given that it’s approximately the first out during the first inning of The Space Revolution, I don’t expect to see massive consolidation in the Space sector for the next five years or so when we’re more like in the 3rd or 4th inning.

Q. Can you let us know what %s you allocate between stocks in the space basket? Should SPCE also be included? Thank you!

A. Maybe the average investor at home should have somewhere between 5% and 20% of their portfolio allocated to Space Revolution stocks depending upon their risk tolerance. Space is a VERY risky endeavor. As for your question on SPCE, yes I meant to include it in the write up the other day. Here: Virgin Galactic (SPCE): I first invested in and highlighted this stock for Marketwatch readers when it was at $10 and still trading with the ticker IPOA. I have trimmed some along the way in the 18 months since then but I still own this name in both the hedge fund and in my personal account. SPCE, just like all the other space companies, is probably a little overvalued at the moment. Especially with $0 revenue and not being able to get their test flights successfully into orbit. But again, we are looking up to 30 years down the road.

Q. GNPK, this looks like a roll up. Love to hear your view as to how much real ‘synergy’ there is in these parts, and how much is cutting edge versus ‘mass’.

A. Yes, they aren’t pretending to be anything but a roll up. But this industry will be rolled up and there are going to be dozens of new companies that can be rolled up coming out in the next few years and while I’m always cautious about investing in a roll up, at this very early stage of the Space Revolution, I’m willing to put a little bit towards this name because the risk/reward looks pretty good to me for the next five years or so.

Q. In the last article you mentioned that would stay away from SRAC. I did not sell my stock because it was down and I did not want to accept loss… I bought at 20-21 dollars. Should I sell it and accept the loss or you would hold until it gets back?

A. Unfortunately, as always all I can really do is tell you what I’m doing, when I’m doing it and why I’m doing it. I am not looking to buy back SRAC any time soon and I might even short it at some point or I might buy it some day again. It just depends on what the company does from here on out. I sold it when I sent out the Trade Alert about selling it. Good luck! Addition: All that said, I never think about trying to hold a stock I’ve decided to sell based on what my cost basis is on the stock. Losses are good for tax purposes anyway!

Q. I invested a tiny bit on immerse. I actually have friends that use this thing. I’ve never used it myself though.

A. I like how you phrased it “a tiny bit”. It’s a pretty neat app, I’ve used it although only a handful of times because I’m not a poweruser of the Oculus (yet).

Q. Regarding your email yesterday concerning the possibility of investing in Immersed: I understand that this would be a risky investment. The link you provided has a great deal of information on the work they would be doing, but not so much on how the investment would work. What are your thoughts on how this investment would mature? How (and when) do you foresee getting a return on your investment? Will there be shares of stock issued? Will Immersed eventually go public?

A. The answers to your questions will underscore some of the main reasons that it’s so much more risky to invest in a small private start up than a publicly-traded stock. We don’t know how the investment will mature (or even if it will). We might get a return on our investment in two or five or ten years or not at all. You’ll own the shares via Wefunder and that sort of means that shares have been issued already. We have to hope that Immersed either goes public some day or gets bought some day or starts issuing huge dividends some day if we are ever going to monetize this investment.

Q. “You’ll own the shares via Wefunder and that sort of means that shares have been issued already.” Shares authorized/allocated is not the same as shares issued. What does it mean to own shares “via Werfunder”?

A. I’d suggest reading all the details in the contracts and legal documents that are over on the wefunder site. I am not trying to convince anybody to invest in Immersed or any other investment I ever write about. As always, I am just telling you what I’m doing with my money and you can choose to do so too based on your own homework and risk tolerance and so on.

Q. Cody, immersed Virtual Reality is now 50% of my portfolio. I would be a billionaire in 5 years. YOLO

A. You better be joking! I will personally cancel your account and ban your IP address from TradingWithCody.com if you’re serious.

Subscriber: Lol

OMG, that was funny, Vince! I’ve never been April’s Fooled in my own chat room before. That’s funny.

Q. Me too re FB biggest position. Thanks!! Nice to get there before the street starts raising price targets. Do you have a price in mind yet where you peel some?

A. Yes, I peeled off some of my FB call options in the hedge fund today though I didn’t touch the common in the hedge fund or in the personal account yet. If you’re asking when we should peel some off and it’s already your biggest position, the answer is that in your particular case it might be time to trim some just so you don’t stress out about it if it were to pullback.

Q. I would like your opinion on MDA.TO. This company is in IPO as of today on the Canadian stock market. They are the company that makes the Canadarm that has been in use on the ISS I believe.

A. It’s a 50 year old space company and I use the lower case “s” for a reason, because it’s 50 years old and not a Space Revolution company. I’d look to short this name before I’d look to invest in it and here’s a big part of why…while all the Space Revolution start ups that we’re risking our money on are using our money to invest in growth, this 50 year old dinosaur MDA “plans to use about C$340 million of the proceeds to repay debt and the rest to fund ongoing growth initiatives, including the development of a next-generation commercial satellite, according to the filing.” I don’t know how much debt this company has but I bet that they’re only going to be paying a tiny fraction of the debt they owe with this new investor money.

Q. Cody, re semis, 1) would love to hear your view as to why QCOM seems not to get much love. As semis with real moats go, not very expensive. 2) Does INTC wanting to become the TSM of America change your view at all, while maybe getting a few $billions of democratic republican regime cash to help out?

A. As we have seen QCOM triple in the last year or so since we bought it and since that means its way outperformed the general semiconductor indices, I’m not sure why you say it’s not getting any respect. QCOM and INTC both trade at about a 15 PE which sounds about right, really IMHO. As for Intel deciding to get serious about spending their own and your taxpayer money to help the US get less dependent upon Taiwan and South Korea for chip factories, that’s a great strategic initiative for the US and our security. But I’m not sure they are going to be able to magically catch TSM which itself just raised the stakes by saying they’ll spend $100 billion over the next three years which dwarfs even Intel’s big plans announced last week. TSM is already 2 generations or so ahead of Intel anyway. So no, I am sticking with TSM and not buying INTC.

Q. Cody, what you do with DELL stock? Hold? Trim?

A. I mentioned last week that I’ve sold some of my DELL calls along the way and haven’t taken any DELL common stock. I plan to continue to sell any DELL calls that are about to expire before they expire so that I don’t have to own the common stock. I still own a few April DELL call options that I plan to sell in the next two weeks before they expire and also some DELL July dated call options.

Q. What do you think about companies dealing with mRNA technology (e.g. MRNA, CVAC, BNTX)? I would imagine that this is a revolutionary technology not only in terms of vaccine development but also other diseases like cancer in the long run.

A. Yes, it’s probably going to help Revolutionize medicine treatment in coming years. That said, I’m leery of trying to become a biotech expert and I’m leery of investing in vaccine companies after the move they’ve already had.

Q. Cody, what are your thoughts on JMIA as it now sits at roughly half of its 52 week high? Would you consider buying more at this point, holding, or selling?

A. I’m sitting tight with my personal account but I’ve traded around the JMIA volatility lately in the hedge fund a little bit on the edges.

Have a great weekend and be safe out there.