Trade Alert: Yandex/Pandora pair trade and Full Netflix Analysis
Here’s a pair trade idea I’m working on right now — buying $YNDX Yandex common stock and pairing it with a short $P Pandora common stock.
Yandex is up 20% since I flagged it as looking like it was finally bottoming around $14 or so, and I think it’s headed back into the $20s and onward higher in the next year or so. Pandora is a stock I’ve shorted/bought puts on before and continue to think it looks like it’s long-term business model will struggle to make shareholders any money. Spotify is a Pandora killer if there ever was one and the market for consuming music is bypassing Pandora faster than they can keep up.
So I’m going to put a tiny long position in Yandex and a tiny short position in Pandora. These will be my two smallest positions and I might go ahead and add to them over time, but for now, just making it a tiny pair trade.
Now onto today’s report:
Netflix reports earnings on Wednesday April 15 after the market close. Here’s a round up of Netflix news, headlines, analysis and an update on my own Netflix analysis.
Bloomberg reports that Netflix is seeking to increase its share authorization to 5B from 170M in what could be a first step towards a stock split.
NFLX was also UBS upgraded to buy from neutral, and raised its price target to $565 from $370
Also – from JP Morgan’s morning analyst notes: “Our favorite names overall remain FB Facebook, TWTR Twitter,LNKD LinkedIn, and YHOO Yahoo!, while into the next 2 weeks of earnings specifically we expect NFLX Netflix, Facebook, andGOOG Google to fare best.
I personally have quite a regrettable history of not owning Netflix despite loving the stock. It’s one of the few times I pound the table on a stock but don’t ever actually end up pulling the trigger on it for my own portfolio. And what a shame this is one of those.
Last week, I told you guys about this Netflix trading mistake: “A year or so after that, I was trying to invest Netflix when it had fallen 60% from its recent highs. But the guys running the hedge fund next to mine were short Netflix and shorting more and even paying people to sign up for the service and then cancel it, trying to make the company’s churn numbers climb. I put in a bid at $8 to buy my first tranche in $NFLX and was looking good as it fell…”
In one column about “How to invest today for the app bubble arriving tomorrow” published in early 2010, I wrote these very words:
“Hopefully you were one of those people who got in that second phase, after the early adopters had worked through much of the bugs and the mainstream masses were just starting to get their first Internet accounts back in 1996/1997, right? And hopefully you’re one of those people figuring out ways to invest in the app bubble now that the early adopters have worked through much of the bugs and the mainstream masses are just starting to get their first apps … right now in 2010, baby!“
And later in that same column, I highlighted two of the very biggest winners in the stock market since 2010, Netflix NFLX and Priceline PCLN:
“You can chase a Netflix or Priceline that will both benefit from their app-strategies and will continue to take marketshare from the huge marketplaces that they continue to disrupt. You can even go start your own app company like I did.“
Then a year or two later, after the stock crashed when it’d announced splitting its CD-subscription and streaming product lines, I told Simon Constable when it was at $100 that it would be a $1000 stock some day. But I still didn’t buy it, can you imagine?
I haven’t traded NFLX in years and obviously have many regrets about not having owned it as a Revolution Investment. I have enough tech/app wins and exposure right now that I still don’t plan to buy NFLX. So Netflix is up about 5000% since I almost invested in it and missed it back a decade ago and up 500% since I didn’t buy it back five years ago.
I tell you this story and my regrets of not making that trade to help you learn from my mistakes rather than just having to learn from your own. It’s important not to dwell on missed opportunities but to go out and find the next one instead.
Finally, here’s a full one hour interview with me from Marketwatch’s Ken Roberts’ Bull & Bear Radio Show. Topics include:
*Cody lists some of his personal holdings.
*How to Revolution Invest.
*How to time the market’s long-term cycles.
*How to handle the next market crash.
*Best stocks for the Wearables Revolution.
*Why he owns Sony.
Click here to listen to the full hour of Cody’s interview.
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Don’t forget I’ll be speaking twice at the Las Vegas Money Show in May.
