The deep and wide on my Latest Positions

Jim Cramer taught me that I should review my portfolio constantly, weighing the risks and potential rewards of each position on a regular basis. You almost want to treat each position as if you were thinking about having to buy (or short) it afresh each time you look at it. That’s the long and short of it, so to speak. As you guys know, once I put a name in my portfolio, I stay up with it like a hawk and continue to analyze it. Here is a list of my latest positions with updated commentary and ratings for each position.

I’ve broken the list into Longs and Shorts. And from there, I’ve broken down each list into refined categories in order from the largest positions within each category to the smallest. I also give each stock a current rating from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment.”

So here’s the list:

Longs –

• Forever assets and other permanent holdings –
  • Media and other private investment/business holdings (9+ because betting on yourself and running a business is always a best bet)
  • Real estate, including land and the ranch I live on in NM (8)
  • Physical gold bullion & coins (8)

• Primary stock exposure portfolio
  • Facebook (8) – Facebook is dead, long live Instagram. Instagram is dead, long live Whatsapp. Whatsapp is dead, long live Oculus Rift Virtual Reality. There’s a lot of user, revenue and earnings growth in just about every facet of Facebook’s business. In one of my speeches last week in San Francisco, I mentioned a few times that it’s always important to “Bet on brilliance.” Mark Zuckerberg, Jeff Bezos — these two guys are brilliant. I’ve been betting on them each for a long time and don’t have any plans on changing that.
  • Google (8) –Google has been on an absolute tear since the Brexit lows but can still continue higher as Android continues to grow in importance as a platform for wearables, iOT and other revolutions. Google’s move to monetize mobile (alliteration, anyone?) has been successful, but has paled in comparison to Facebook’s own move to monetize mobile (alliteration again, anyone?). That isn’t necessarily a bearish thing though, as Google’s continuing to figure out how to create value from the trillions of times that the billion people who use a smartphone every day access the Internet.
  • Apple (8) – All eyes are on Apple’s big September 7 announcement, which comes tomorrow. Is it the iPhone 7 reveal? An Apple Watch 2 reveal? Probably both and unless the iPhone 7 in particular has some real innovations and cool tech to it, we might expect Apple to sell off 3-5% as the presser goes on. Regardless, there are hundreds of millions of iPhone 7’s and 8’s and even 6’s to be sold over the next year or two and Apple’s valuation at these levels still has me expecting to see it closer to $130 than $100 by the end of the year.
  • Amazon (7) – Amazon’s Prime service is taking over the US. Shopping is easier than ever, especially for those who don’t have convenient access to stores. The big story with Amazon is that they’re slowly starting to build a fleet of carriers and a package distribution network for their own deliveries so they don’t have to keep paying UPS and Fedex. Eventually in another decade or so, the company will actually open their delivery service up to the public and undercut the UPS, Fedex and USPS prices. It’s the same thing Amazon did with Amazon Web Services, which they built for their own network first and then opened up to the public.
  • Sony (7) – Sony is within 1% of new highs since we first bought the stock exactly two years ago this week when $SNE was trading in the mid teens. When I bought the stock I’d noted that “Netflix is worth $30 billion today. Sony is worth $20 billion.” As of today, Sony has indeed caught back up to Netflix, as each company has a market cap of $42 billion as I write this with $SNE at $33.50 and $NFLX at $99. I wouldn’t want to chase Sony right now, but I do still agree with my conclusion from that original Sony Trade Alert when I bought it two years ago that “I expect we could see a triple in Sony over the next five years.”
  • Nvidia (7) – Nvidia is widely loved right now and as I’ve mentioned before, I hate seeing it sitting near the top of the IBD momentum stock list as it has been for weeks now. The stock has doubled since we bought it a few months ago as the company’s leading position as the de facto standard chip supplier for the Virtual Reality Revolution, the Driverless Car Revolution (part of the Drone Revolution, Artificial Intelligence Revolution — well it’s certainly in a position to ride the near-term hype in addition to being positioned to actually grow huge from supplying those revolutions. I wouldn’t want to chase it right now but will be looking to nibble on more shares if it gets hit in a broader market sell-off as I did recently when it got hit by the Brexit panic. 
  • Qualcomm (7) – Qualcomm is up nearly 50% since I added it to the portfolio a few months ago. The yield is still more than 3% here and the company’s chips for wearables, drones, smartphones, tablets and other revolutionary products are catching lots of traction and wins for the future. I think Qualcomm can be a $100 stock in the next year or two.
  • Twitter (8) – Twitter’s also been on fire since we added it back into the portfolio a couple months ago, up around 40% since then. The company is becoming a live event TV station and the ubiquity of the Twitter app makes it a stealth way to play the same Streaming Video Revolution that Netflix and Sony are also positioned so well for. 
  • Ambarella (7) – Ambarella is executing, continuing to diversify away from relying on GoPro as its primary customer, innovating and keeping its tech edge, and the stock reflects that. Valuation here isn’t terrible as the company is expected to grow topline 20% next year to earn $3 per share, giving it at 22 P/E as I write this with the stock at $66. I originally bought this stock in the low $20s and am holding it as a great way to invest in the wearables, drone and robotics revolutions, which all require high-quality video chips. 
  • Zillow (8) – Zillow’s biggest competition as “The Uber of Real Estate” as I’m wont to call it is a smaller, private company called Redfin. I wouldn’t be surprised if Zillow and Redfin ended up combined as Zillow has already rolled up its other largest competitor Trulia. Zillow’s not cheap, as its trading at 6x next year’s sales estimates, but its de facto standard status as a Real Estate App Revolution play makes me likely to buy more of it if we can get it on a sell-off discount at some point in weeks or months ahead.
  • Axogen (7) – Axogen has executed and grown and delivered on everything we could have asked of the company for the last fourteen months since we’ve owned it. Revenues are up 50%, gross margins have continued to rise and the stock has responded. With the big pop $AXGN recently got when the Russell 2000 small cap stock index announced it was including Axogen into the index, we’ve seen this stock more than double since we bought it. It’s not a “cheap” small cap any more, as it was trading at just 2x revenues when we bought it, but with its $200 million market cap, it’s trading at 5x revenues. Meanwhile, I continue to hold most of my shares and expect this stock can continue higher on its own or that the company could be bought out by a larger company like Gilead or who knows who else.
  • First Solar (8) – First Solar has been one sick stock for the last few months. I expected it would be dead money while the energy cycle was on the weak side of the cycle as it has been for the last year and a half, but it’s been frustrating watching this stock fall. I’m still a big believer in solar and I’m doing lots of homework on Solar Edge ($SEDG) on a recommendation from Marcin, and I might add it or even just swap it for First Solar as I finish up my analysis on each company and where they are right now.
  • FitBit (8) – Fitbit’s new product line looks pretty good and will likely drive some upgrades from existing users and new buyers to give Fitbit a shot. More importantly, Fitbit still has the potential to become a de facto standard as a health platform. Not there yet though. I’m holding my Fitbit steady for now. Frankly, my loss on Fitbit bothers me a lot. We do a good job of taking our losses and letting our winners run, but I’ve been holding onto losses in this name for months now. Being frustrated with the market and how it’s valuing a stock isn’t a recipe for being objective, so I might end up letting go of this name soon and then being able to revisit it afresh after a month or two.
  • Lion’s Gate (6) – Lion’s Gate has been trying to break out above $22 but needs a catalyst such as a new hit Netflix series or movie franchise to make that move. This is one of my smallest positions and I’m just holding it steady for now.

• Primary short portfolio
  • IBB Biotech ETF (8) – Biotech stocks and the largest biotech ETF, $IBB, are set up for a binary outcome into year end — they are about to rally 10% or drop at least 10%. The thing is, Hillary in particular and Trump eventually are likely to escalate the anti-price-gouging and profiteering going on at the largest biotechs with their outsized gross margins that they get from using the same health care system laws that they themselves wrote into place with Obamacare, Bush-Medicaid expansion and the quasi-socialist/corporatist anti-capitalist health care system that the Republicans and Democrats jointly create every day. Anyway, I’m not sure we’re anywhere near seeing an actual crack down on the price-grouging profiteering approach of the largest health care sectors, but the rhetoric from the candidates is likely to hit these stocks. There are hundreds of examples of health-care services, devices and products that have gone up 3-10 fold in the last ten years and at any time, the candidates can pick one to attack with strong rhetoric for the next two months. On the other hand, maybe some of that bashing is already priced in as the IBB is down 8% from its recent highs just a couple weeks ago and could rally back to those levels if the market looks past the rhetoric as being the empty threats it is.
  • Hubspot (8) – Hubspot has been hanging touch, up about 10% since I shorted it a few weeks ago, but down 8% from its recent highs a couple weeks ago. I continue to think it is a good hedge to our revolutionary longs and overall positioning in the portfolio as it could fall 80% if the market decides to trash unprofitable growth stocks like this one is. On the other hand, I have to be willing to cover and take my losses and lick my wounds if the company does sneak up near or into profitability in coming quarters. 
  • Herbalife (8) – Herbalife has been hit for 10% in the last couple weeks since we shorted it after everybody declared the company “victorious.” I hate betting against Carl Icahn, who continues to buy more of this stock, but I have to stick with my own analysis which says this company’s move to an entirely new and unproven business model would have been done years ago without the government forcing them to if that new business model was actually anywhere near as good as the way of doing business like they had been before the government told them they can’t anymore. 
  • Pandora (8) – Pandora has made some very smart (or desperate) moves by buying Rdio’s assets, business model and software as Pandora finally recognized that their own radio station model is dying vs subscription models like Spotify’s and Apple Music’s. And Amazon Prime Music. And Google Music. Pandora is too doing too little too late to save its business when its trying to compete against the most well-funded and mot valuable tech companies on the planet. Pandora’s still not profitable and isn’t going to be anytime soon if they’re serious about trying to compete against Apple, Google and Amazon for the long-term. So I remain short Pandora and would like to add more to this short position if the stock rallies on acquisition rumors or a strong quarterly earnings report or something.
  • DIA (7) – My puts on the $DIA, which moves with the DJIA, are down a bit since I bought them, despite the DJIA itself being down a bit too — that’s mostly because the market’s steady-betty action of late compresses the premiums on call and put options. These are hedges into the election and if they expire worthless in two or three months, it likely means our own portfolios and the many long positions in them will be at all-time highs.
  • QQQ (6) – Same thing for our $QQQ (The PowerShares QQQ tracks a modified market-cap-weighted index of 100 NASDAQ-listed stocks) puts, which actually serve as an almost direct hedge to our own long-held huge winners $AAPL, $AMZN, $FB and $GOOGL as they (along with $MSFT which I don’t own) are the largest components in the $QQQ and combined make up more than 30% of the QQQ’s weighting. By the way, when I first bought Apple, Google, FB and Google, they either weren’t in the QQQ at all or they made up less than 1% of it. As they’ve gone up 5-100x in the years since I bought each of them to become the move valuable companies in the world, their weighting in the QQQ increased proportionally.
  • Valeant Pharmaceuticals (7) – *Tiny Position I’ve been short $VRX since the $170s, as you guys know but I’ve covered most of it. I still think $VRX heads much lower. The stock’s up recenlty mostly because they are supposedly going to raise $8BB in asset sales…that still leaves them more than $20BB in debt though.
  • Kandi Tech (*no rating, too hard to short, puts too expensive) –*Tiny Position The stock seems stuck in a tight range and I’m likely to finally close out this position and lock in those profits.”

Remember: I wouldn’t rush into a full position all at once in any of these stocks or any other position you’ll ever buy. Patience and allowing the market and time to work to your advantage by buying in tranches is key. Maybe 1/3 or 1/5 of whatever you  might consider to be a “full position” in any particular stock. And I wouldn’t ever have more than 5-15% of your portfolio in any one stock position at any given time. The younger you are and/or the higher the trajectory of your career income, the more concentrated and risk-taking you can be with weighting in your portfolio. But spread your purchases and your risk out over time and over a several positions no matter your age or risk-averse level.

Scaling into a position using an approach of buying 1/3 or 1/5 tranches over time is how I build my personal portfolio positions, but there’s no scientific way to go about investing and trading. Sometimes you have to pay up for the latest tranche but I try to be patient and wait for a temporary sell-off to add to the existing position.

** NOTE FOR NEW SUBSCRIBERS:

If you’re new to TradingWithCody or if you’ve been a subscriber for a while but haven’t acted on much of my strategies yet and/or if you haven’t been in the markets, but you’re sick of getting 0% on your CDs, Treasuries, savings, checking, etc while the markets have been continually hitting all-time highs this year, what should you do now?

Before you ever make any trade, step back and catch your breath before moving any money anywhere. Rank your positions and your whole portfolio and make sure you’re not about to make any emotional moves with your money.

If you haven’t yet read “Everything You Need to Know About Investing” then spend a couple hours doing so, please. It’s a quick read but chock-full of important ideas, concepts and strategies that amateurs and pros alike should understand.

Then, take a look at my own personal portfolio’s Latest Positions and slowly start to scale into some of the ones you like best and/or the ones I have rated highest right now. I’d look to start scaling into a few of the many stocks in the Latest Positions that are at all-time highs along with a couple that we’ve recently featured in our Trade Alerts that I’ve personally been scaling into.

You can find an archive of Trade Alerts here.