Positions: Social, Trillions And Buying A Tranche of NFLX

Here is a Part 2 of the list my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position.

The ratings for each stock 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 positions that are bolded are those that I consider to be “core” holdings and am unlikely to ever sell out of them entirely.

Longs –

• The Streaming Revolution –
  • NFLX Netflix (8+) – Netflix is undergoing a transition from being a must-own FANG growth stock for growth managers to a value stock that value managers are now kicking tires on. Netflix is going to earn $15 or so this year, growing to maybe $25 or so in three or four years, assuming 7% topline growth (which might be too aggressive). That’d mean we’re buying it at a 8x 2026ish earnings at these levels. It sure can go lower for now though, as the value managers are going to be cautious as always and it might take a quarter or two of decent reports (ie, not completely missing estimates and guiding lower as they have the last two consecutive quarters) before people will start paying up for this name again. I nibbled some in my personal account today and I bought a full 1/3-sized tranche in Netflix for the hedge fund today after this crash. I have room to buy more and would gladly do so below $200 and/or at lower levels than that.
• The Social/VR/AR Revolution –
  • FB Meta (8) – In the prior Latest Positions write up, I wrote, “FB is trading at 22x next year’s earnings estimates, which assume the company is going to spend a lot more this year than last year to beef up security and otherwise protect/grow their businesses, including Oculus.” Well, since then estimates have gone lower, but the stock has gone even lower more quickly, so the P/E is now about 12 next year’s earnings.” The risk here is that analysts are currently estimating that revenue will re-accelerate next year going from 10% to nearly 15%. After seeing Netflix’s big miss and guide down, it will be interesting to see if FB’s quarterly report.  I’ve been nibbling on more FB for the hedge fund near $200 today. I’ve owned FB in my personal account since I pounded the table on it and made it a big position back years ago after its IPO and mostly just sit on it.
  • TWTR Twitter (6) – The one thing we know about Elon is that he has the guts to do things differently. Twitter and Facebook and Snap et al have been playing this game of “We really try to stop propaganda and disinformation but there’s nothing we can really do about it. Just look at all the money we’re spending and all these times we tell people that what they’re about to read might be fake!” If Elon gets ahold of Twitter, he’s going to change everything. I wish he’d just buy 50% of the company and then let us ride along with him. As it is, his lowball $52.40 offer is too low by 10-20% if he really is serious about buying the whole shebang. I’ve got a small position in the hedge fund that I added to recently around $45 and I’ve owned Twitter since $14 per share in my personal account, as long time Trading With Cody subscribers will recall.
  • SNAP Snap (6) – I sold Snap out of the hedge fund back in early February and I only hold a small position in my personal account because we bought it at about $7 per share originally, again, as long time Trading With Cody subscribers will recall. Snap has executed well even as most every other social network not named Tik Tok has been failing to execute. Trading at 33x next year’s earnings but expected to grow the topline 40%, or about 3-4x faster than Facebook and 2x faster than Twitter.

• The Trillion Dollar Club –
  • AAPL Apple (6-) – Since it became Berkshire Hathaway’s largest position by far, Apple has been anointed as “safe” and its P/E multiple has expanded to what used to be unheard of levels for this stock. It used to trade for 10-15x earnings even when it had huge exponential growth in front of it and now it trades at more than 25x next year’s earnings even after this recent pullback in the stock. I could see this stock trade back at 15-20x next year’s earnings, which would mean it could hit $100-120ish levels. Wow, that sounds bearish as I type it and maybe it won’t decline quite that bad, but the upside potential from here seems constrained. I hold AAPL for 18 years now in my personal account, but I don’t own it in the hedge fund right now.
  • GOOG/GOOGL Google  (7-) – Case in point, Google, which is growing its topline about 3x faster than Apple is, is trading at less than 20x next year’s earnings estimates right now. Google’s topline estimates might be too high for next year though, and that could be trouble for the stock. I like GOOG here as I type because it is oversold and its still an incredible company with growth ahead, but I’ll give it some room here.
  • AMZN Amazon (7-) – New CEO is doing a fine job and the incredible combination of Amazon retail, AWS, Advertising and streaming video properties (Prime Video, IMDB, etc) keeps Amazon broadly diversified (but still exposed to recession trends). Growing their topline at about the same rate as Google, but trading at nearly 30x next year’s earnings makes this one expensive too. I’d be a buyer near $2700.

Part 3 coming tomorrow.