by Travis Johnson, Stock Gumshoe | September 27, 2019 3:46 pm
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I sold Kush because they have made some very bad decisions, the dilution to share holders was quite significant. In one day they increased their shares outstanding by almost 20%. They also through in a warrant at $2.25. Those warrant buyers are not going to wait around for significant fixes that need to be made. They have destroyed equity and placed a cap on the share price for months, mabye even years to come….I bought some call options on more short term promising stocks. Kush is a big disappointment to me.
Indeed, it was a really bad deal… which either means they’re idiots, or they REALLY needed the money. Will be an interesting few months for them as they try to manage through this vape issue.
Loved the rant. Great write-up.
>hint for those trying to build an addicted customer base: if you use flavors like “cotton candy,” parents might notice
Eh, they might notice, but they’d also be wrong about the targeted demo.
Cotton-candy-flavored grapes are a thing and I haven’t heard about a single kid gushing about them– it’s all been Millennials acting like kids (IMO) that are obsessed with them. I think the same is going on with such saccharine sweet vape flavors.
FWIW I do agree with you on thinking the culprit is likely black market juice cartridges, but I think the thing to stress here for potential investors is that what is “right/correct” doesn’t really matter here. What matters most is the public perception of what is “right/correct.”
If people are dumb enough to vape too much, then they’re dumb enough to go to the other extreme of being ban-happy on an otherwise “harm reduction” tobacco product. Too much tea leaf reading for me to get involved so I’m out.
So far, here in Texas, every news report I’ve seen about someone ending up in the hospital has been through the use of the black market ‘pods’.
Next I’m waiting for the class action lawsuits. Who could have predicted Round-Up or Johnson’s Powder would gather the momentum they have.
Thanks for your analysis for TTD and OKTA. I was thinking of asking you for your take on the cloud stocks and here you are. They do seem to be out of favor recently, so are the cannabis stocks. There are just too many factors now that are making investors jittery. I am afraid we are not out of the woods. Either we have a super long time horizon or swing trading. I got super lucky with Charlotte Web but pretty much all my other cannabis stocks are in the red.
Re: vaping – I suspect the issue is a more basic one due to the paucity of knowledge on how the inhaled vaping carriers (propylene glycol and glycerin) are cleared from the lungs. Both products are GRAS (Generally Recognized As Safe) for oral ingestion, but few studies have been done on respiratory inhalation of these carriers. It stands to reason that with long term use these carriers must be deposited in the lungs. Perhaps the needed long term inhalation safety studies were overlooked in FDA’s quest to do whatever can be done to lessen exposure to combustible smoke? After all, these are GRAS substances, right?
Hi Travis great write up as usual.
Regarding your gaming plays i know you spread the risk by investing in activition, EA sports and MTG but is there any particular reason why you discounted Take-Two Interactive from the list? Is it that you dont think they will transition as easily into the esports arena? I had previously looked into this after hearing of the borderlands series success but i didnt know if they relied too heavily on a couple of titles and ended up opting for EA instead due to their sports tie-ins.
Regarding TTD there seems little support after each earnings call until a rise leading up to (and hopefully after)the next one. A better strategy (for me anyway) in retrospect would probably have been to sell half after the last call then wait for the seemingly innevitable 20-30% drop in the following 2 months before accumilating more shares in anticipation of a rise after a (hopefully) positive November report. Oh well, live and learn.
Strategies are always obvious in retrospect 🙂
And yes, TTWO is appealing but too focused on their cycle of just two or three games… and ATVI has its very strong mobile business, which the others lack.
What about this Dylan Jobine tease that just came out as the “Holy Grail of Medicine’s”
It’s suppose to cure all 6000 generic diseases that we have. Also will make millionaires out of most early investors. Really??
I am overwhelmed at your articles
Morals n ethics. You are the kind of man
Who deserves great admiration
Respectfully
Drfred
famfamsrsr, I think we could all add a huge amen to that statement!
Regards,
Frank
I’ve steered clear of Kushco due to their low margins. Gross margin was only 18% in the latest quarter, compared to an industry average closer to 50%. Growth is there, but profitability seems far away with both EBITDA and earnings trending in the wrong direction.
That’s sure been the right call so far!
Trade Note: Stops and Nibbles
I was stopped out of the remaining stub of my Starbucks position today, so that’s no longer in the Real Money Portfolio (though I’d consider re-entering if either the situation in China improves, or the price drops to the low $70s).
And I did some nibbling on stocks that i think look fairly appealing after recent declines in price — these are all very small add-on buys, but I’ve now increased my exposure to Walt Disney (DIS), Nokia (NOK), Fibra Uno (FBASF) and Keysight (KEYS).
More details on all of those thoughts when I have a chance to get more into the weeds in tomorrow’s Friday File, but I told you I’d let you know on the day I make a trade in the Real Money Portfolio, so that’s your update. SBUX stopped out, added to DIS, NOK, FBASF and KEYS.
Travis, I also received the red signal from Tradestops. How do you decide which ones to follow precisely and which not to?
Soul searching 🙂
It’s different every time, but when I see the stop signal I re-evaluate the stock — whether I buy, hold or sell after that depends a lot on my confidence in the business and on the current valuation, but other factors come into play as well (including position size).
thanks Travis, perhaps you could tell your readers the symbol for the tiny 5G MEGA stock
that Alex Green of the Oxford Club is “promising”,—if I sign up. They said it was trading around $25.00 —nickk
Covered that one recently here: https://www.stockgumshoe.com/reviews/oxford-club/whats-the-new-1-stock-in-america-teased-by-oxfords-great-american-wealth-project-presentation/
Hi Travis, do you have any thoughts on Arista? Nibble at 220?
I’ve been steadily buying ANET this year at prices both above and below that level, though haven’t done so this week (and the stock is right about at my cost basis right now). No real changes to the fundamental story, it’s still expensive and there’s still some timing risk as we wait to see whether big customers get fully into buying more of their products and upgrading data centers after that pause earlier in the year. I don’t expect any meaningful update on that front until they report, which should be in early November (probably Nov. 1), though recent notes from analysts citing the “tough comps” for the third and fourth quarters have probably had some impact on investor sentiment and expectations, too (Nomura just cut the price target from $290 to $230, which is a big move).
Thanks.
Will be interesting to see if Travis’ recommendation of ATVI changes in light of their dropping a gamer over their banning of a pro-Hong Kong gamer.
I’m leaning toward no despite the stock erasing the 5% gain I’ve seen since purchasing it last week.
Will probably end up being like UAL stock was in light of Dr. Dao being dragged from a United flight (last year? 2 years ago?): the stock dived while it was in the news cycle (like 3 weeks IIRC, kinda long) and then regained it all back and then some in the same following time period.
Curious though Travis if you see any backlash toward American companies kowtowing to the Chinese government’s increasingly pedantic demands (Marriott firing an Omaha employee for LIKING a pro-Hong Kong tweet, NBA owner and players apologizing for pro-HK tweet, etc.)? I think for it have an effect in the market it would have to be a consumer (and shareholder) groundswell, but I just don’t see it happening past the typical news cycle lifespan (sadly IMO).