Trade Alerts, Solar Shorts, Beat-Up Space Stocks, Match Group, And Much More
Let me throw two Trade Alerts here at the top. I’m selling SWAV and VZ to free up more capital for other ideas and/or to just get out of them for now. I like each but SWAV is a biotech stock and I feel out of my comfort zone having to try to gauge the traction it seems to be getting in the health care industry. Verizon’s fine too but I don’t think it’s exactly a Revolutionary company and I want to find some more names like SMR that could be 10-50 baggers instead of names like Verizon that pay a relatively high dividend yield but aren’t changing the world.
And here’s the transcript from yesterday’s live Q&A chat. Also, don’t forget to follow us on Twitter @TradingWithCody.
Q. Cody – Hope you’re continuing to feel better! I remember an article you wrote (maybe it was two years or so ago?) about SpaceBook. The premise was that we should be investing in space companies and Facebook (and the metaverse). Do you still feel confident that those are the right areas to be invested in? Does it make sense to take another look at that article in real time? Thank you!
A. Here’s the article, written 23 months ago. I’m still very much excited about The Space Revolution but as I said in that article and ever since, most of the best space companies are still private and very hard for my subscribers to invest in. There will be some great space stocks coming public in the next 2-5 years (probably including the Starlink subsidiary of SpaceX and I own three or four of those private companies in my hedge fund along with RocketLab RKLB in the public markets. I’ve also started re-nibbling some of the more speculative space stocks BKSY, PL and RDW (consider this a Trade Alert).
Q. Good morning, I saw an article on Tesla trying to move away from using less Silicon Carbide, and there was a worry that other car companies will follow. Will that have much effect on WOLF?
A. Tesla and Elon talked a lot about this at their Investor Day meeting last month. Tesla is aiming to use little silicon carbide and almost no rare earth materials and both WOLF and MP were down like 5-10% the next day. The fact is that most other auto companies are a decade or more behind Tesla on anything like this and I think WolfSpeed’s market is much bigger in ten years than just EVs. But it is a negative for WOLF that Tesla is trying to use no silicon carbide technology in their cars.
Q. Cody what % cash are you right now. I assume not fully invested?
A. Correct that I’m not fully invested right now and haven’t been since I turned outright bearish on tech back in November 2021. The exact % of cash I am in the hedge fund can be a bit misleading because when we short stocks in the hedge fund we receive cash for it. And in the personal account it can be misleading because I have money I can send into the PA at any time from my checking accounts, saving accounts, etc. The point is that I’ve been preaching being and staying cautious for the the last year even as I remain very excited and somewhat heavily invested in some individual stocks like TSLA and INTC and UBER and ROK and RKLB etc.
Q. Cody I am short CVNA I can’t see how with all the debt they make it. I was checking to see if you are still short, and where do you cover ?
A. Yes, I’m still short CVNA although I do trade around with the size of the short whenever it moves big up or down. We had limit orders in this morning when CVNA opened strongly higher above $10 and we had limit orders to cover some of our common short when it was below $9 later in the day. We didn’t get filled on either. I think the stock could squeeze to $18 again but I think it will be at $0 before the next 18 months is over.
Q. You recently bought puts in ENPH. Is this a bearish bet on Enphase itself or a near-term hedge for the TWC solar/SEDG exposure?
A. Both. I think all the subsidies for solar are in trouble (check out this article from the LA Times) and that, along with higher interest rates, makes it harder for solar companies to meet the expectations that Wall Street and investors have for them this year. I’m not going to sell the SEDG which is up more than 1500% since we bought it a few years ago but I do want some exposure to the potential downside for most solar stocks that I think is likely this year.
Q. Cody, can you give us your opinion on MTCH. At the current print it looks like $3 down maybe $60 to $100 up.
A. Yahoo Finance says “Match Group, Inc. provides dating products worldwide. The company’s portfolio of brands includes Tinder, Match, The League, Azar, Meetic, OkCupid, Hinge, Pairs, PlentyOfFish, and Hakuna, as well as a various other brands.” I used Match.com one time in 2002 after I moved from NYC when I lost my apartment on 9/11 in Battery Park City and moved to Austin. The date wasn’t great. I never used a dating site again, not that I think there’s anything wrong with doing so. So I don’t have any perspective on Match’s various products. That said, I can still do the fundamental analysis on it: Trading at 3x sales and 13x next year’s earnings isn’t bad for company with 70% gross margins. That said, the topline is likely to grow only 6.5% this year and maybe 10%ish next year. That’s not very good growth but the stock isn’t terrible here. I’d rather own it than short it.
Q. Can you please give us your opinion on ELAN. # 2 animal health company, trading way below book value, promising pipeline for 2024 and beyond. Peak integration costs in 2023 from past acquisitions. Looks like $3down / $8 to $20 up.
A. Trading at 10x earnings, but it didn’t grow the topline last year and is only supposed to grow 3% this year. No dividend. “Elanco offers pet health disease prevention products, such as parasiticide and vaccine products that protect pets from worms, fleas, and ticks under the Seresto, Advantage, Advantix, and Advocate brands; pet health therapeutics for pain, osteoarthritis, ear infections, cardiovascular, and dermatology indications in canines and felines under the Galliprant and Claro brands; vaccines, antibiotics, parasiticides, and other products for use in poultry and aquaculture production, as well as nutritional health products, including enzymes, probiotics, and prebiotics; and a range of vaccines, antibiotics, implants, parasiticides, and other products used in ruminant and swine production under the Rumensin and Baytril brands.” Not a bad company, not a bad valuation, but not for me.
Also, here is a YouTube link to the SKTLs weekly volunteers call held yesterday where we had a great discussion of all things crypto.
I leave you with this picture of Amaris and I. Rock on!
