Trade Alert (Removing Three Longs) and Latest Positions

As you’ll see below, I went through and made notes of my latest analysis about each of our positions. I’m removing three positions from the portfolio. I’m selling Palo Alto Networks and Splunk and Iconix. Details in the notes below.

Every few weeks I sit down and go through my entire portfolio and rank each position on a scale of 1 to 10 and then send it out to my TradingWithCody subscribers. It’s very important to look at your own positions in order from largest to smallest and to rank each asset, equity and position you own. Doing so will help you realize the opportunity costs of owning lower-rated positions and to help you sell your losers while riding your winners.

Here’s a list of my latest positions. 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.

Finally, I 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” (there will never be a 10 rating, because there is no such thing as a perfect investment, of course).

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 answer for your question. 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.

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
  • Apple (7) – I have owned for many years as a largest position. I added recently to it when it fell below $100 in the market’s recent mini-crash. I might trim those shares back down a bit if the stock gets above $120 sooner rather than later.
  • Facebook (7) – Has been and still is the ultimate App Revolution play. Made it a Top 3 position back when it was near $20 per share, trimmed some here and there and tranched back into some here and there as per my playbook. Recently trimmed some near $95 per share. For example,”On March 10, when $FB was above $70 a share, I sent out the following Trade Alert– ‘I am however going to trim down a bit of our biggest position, Facebook, just to lock in some more profits. On April 7, 2014, I bought those shares back: “I’m stepping back in and buying exactly as many shares of Facebook as I sold on that profit-taking trade this morning at $56-57ish. This is why we tranche buy and sell and this is how move to take advantage of the swings the markets give us.” I’d look to buy more $FB personally if we got the chance to do so near $80 or so.
  • Google (7) – Was aggressive in buying GOOG call options in addition to making it a Top 3 stock holding when it was below $500. I sold the last of my GOOG call options a few weeks ago after the stock popped on a strong earnings report. And yes, I bought yet more GOOG common stock near $575 per share a couple weeks a go during the market’s recent mini-crash. I’ll be looking to trim some of this name near $700 or before.
  • Ambarella (8) – One of the most volatile stocks on the planet for the last three months, but one of the biggest winners on the planet over the last couple years. It’s up big since I added it as a Wearables/Drone/Robotics Revolution investment when it was in the $20s. I’ve trimmed and tranched along the way, most recently trimming some near $120 and nibbling back on some common stock near $62.
  • Synaptics (8) – Very cheap, very well positioned as long as smartphones and tablets and wearables continue to grow. The threat of Apple developing their own chip is probably already priced in, meaning that if Apple doesn’t develop their own chip and continues to use Synaptics for future iPhones, the stock has likely got more upside. I trimmed some near $100 and have been nibbling some back recently.
  • Sony (7) – Stock is stuck near $25 and will be until the company’s video content library gets more monetized over the next couple years as the Internet TV/Movie wars heat up.
  • First Solar (7) – We’ve owned this one since I flipped from long-term bear to long-term bull on the Alternative Energy Revolution. The stock might struggle to break out until energy prices finally bottom. Solar remains a Revolutionary technology and First Solar is a best of class in the industry.
  • EZ Chip (8) – A small cap way to bet on the future of Internet-of-Things, as the company’s chips are primed to become a very cheap way for appliances and cars and so on to get on the Internet and become “smart.” It’s another one I snuck in and bought more of recently during the market’s mini-crash.
  • Sandisk (7) – Struggling as its biggest competitor in the flash storage space, Samsung remains aggressive in the market place. Longer-term, flash is the future of most all servers, devices, and so on.
  • FitBit (9) – The stock is quite cheap given its high growth rate. I’ve recently bought more.
  • Palo Alto Networks (6) – This stock is wildly expensive and needs to show 20% plus revenue and 30% topline growth for the next three or four years to drive it higher. That would give it $10 per share in earnings and assuming a (still quite high) 25-30 P/E we’re looking at a $250-300 stock. This one was part of a basket play on the Network Security Revolution, but I’m going to go ahead and take my 30% profits on it.
  • Splunk (6) – Another wildly expensive stock that was part of our Network Security Revolution basket that needs to show 30% plus earnings growth. I’m going to go ahead and sell this position here near $60 which is where I originally started buying it a few months ago. 
  • F5 (7) – The cheapest of the Network Security Revolution basket, trading at 16x next year’s earnings estimates. Analysts are looking for 10% topline growth next year but I think the company is likely to grow faster than that. I owned this stock for many years in my old hedge fund and I’ve always like management here. I’m keeping this name despite selling the other two.
  • Amazon (7) – One of what I’ve long called the New Four Horsemen of Tech (along with Google, Apple, Facebook). Recently bought it back.
  • Twitter (6) – Dead in the water til they get a new CEO, but I own it for the Periscope lottery ticket. Twitter’s probably worth the company’s current $20 billion on its own, but the Periscope app could be worth that much on its own too.
  • GoPro (8) – Recently added this name, flipping from long-time bear on the stock to now owning a small position. At 17x next year’s earnings estimates on 30% topline growth potential, I think this stock could get back above $50 or higher in the next year.
  • Applied Materials (8) – I recently put a toe in the water in this company that supplies giant equipment to the semiconductor factories at Samsung, Intel and other such fab companies. With $2 billion net cash on the balance sheet giving this an enterprise value of less than 10x next year’s earnings estimates, this stock could have a lot of upside in it over the next two to three years if the semiconductor spending cycle can stay steady along with the broader economy.
  • GDX call options (6) – Sold most of these for some decent profits and am holding the remainder til they expire in December.
  • SLV call options (6) – I’ve been down on this position since I opened it. Holding what little is left in value of these options til they expire in December.
  • Iconix (2) – Accounting issues and SEC investigations and CEO exit…I’m sick of looking at this name and am selling it now despite believing there is good upside potential in the Snoopy/Peanuts/Charlie Brown franchise in coming years. 

• Primary short portfolio
  • Pandora (8) – Our lone short position right now. I’ve shorted this name before to some nice profits and expect we’ll see this one below $10 per share sometime in the next three years or so. I might stop myself out of the stock if it were to run above $22 or so.

** 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.