by Travis Johnson, Stock Gumshoe | June 12, 2020 5:13 pm
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Damn, all of Tesla’s nicknames are a real mouthful. Nothing lends itself to a concise ticket symbol;
The Sorcerer of Serbia
The Man Who Invented the Twentieth Century
The Father of Electricity
The Forgotten Genius
The Wizard with Lightning in His Hands
Master of Lightning
Travis,
This year my SPAC investments did a great job for me.
1. DEACW (DKNGW),
2. VTIQW (NKLAW), I am out of both now and
3. FMICW , I still own, will be a good one too.
Anyone owns CHGG or knows more about this leader in distance learning?
I first learned about CHGG in a write-up (not tease) by Zacks on the work-or study-at-home trend during these pandemic times. The company addresses the needs of youth during their pre to post-college years. When I ran the stock through different analyst screeners, I was surprised to find them unanimous in issuing Buy ratings (which is rather rare!). I like that it has a Beta of 0.5 (i.e. less volatile than the S&P) and has 100% institutional ownership. Unfortunately, I opened a position the day before that “flash crash” we had earlier this month but the stock price has been doing well since.
I really like OPESW right now with SPAC. I’ve been to BurgerFi a ton and they are profitable. Travis had you had a chance to look at them ?
Nope, haven’t looked at that one.
Weissosu2,
I do not own OPESW yet but know its business with ( non – LOI )BurgerFI that has 125 stores in 23 States and in 2 countries, but I chose FMCIW instead because Tattooed
Chef brand ‘s plant-base meats food is well known and customers can buy them from
WMT, Costco, Target, Kroger, Whole food…….
Hi Travis,
Do you send out trade notes when you hedge?
Thanks,
Mike
Not typically, since those notes are only sent out for equity trades that are more than 0.1% of the portfolio and my hedge positions are usually options. Hedging is very personal and portfolio specific, so it’s worth thinking about but it’s also pretty expensive these days… and having a bunch of folks all look at the same options contract for hedging at the same time would likely be counterproductive.
My goal in recent years has typically been to hedge, using index puts, somewhere between 50-100% of my equity portfolio against losses in excess of 20-25% — I’m worried about complete washouts, not more moderate 10-20% declines. That typically costs me 1-2% a year in hedging costs, since the options roll over and have to be bought again to maintain the hedge… though this year those costs have covered themselves and cushioned me a little bit so far from the March collapse, thanks mostly to the TLT options I bought earlier in the year.
My timing is not generally excellent with hedging, though I got lucky this week with my latest position — previous ones were pretty ill-timed in the short term.
Thanks for the quick response and sharing your thoughts on hedging. Appreciate it.
Observations based on a small Regional sample size but it amazes me that AJG’s share price is close to $100 let alone be a company that remains operational… they are extremely lazy, highly incompetent in providing meaningful client service to the point that after a number of years I finally got fed up and transferred all our business to another provider – the result better policy, lower rates and much better client service
Possibly this post might help someone else to make a switch
Thanks for the real-world perspective. It’s a huge company so who knows where the incompetence might be in your case, but appreciate the feedback.
Question – what do you do if a holding becomes disproportional as a % of total assets (as compared to your start point/original investment) even if the company is doing well (a smaller cap company as example )…..do you take some of the assets out to spread? This case is if the company is doing well (not if the company has other issues). As you could end up with the small company having large growth leaving you with an equal percentage as compared to your foundation/core holdings (and typical overall exposure). Let it ride? Sell off to get it back into alignment? or ? thank you
That’s a question that is pretty personal, mostly as it related to risk tolerance. I tend to shave off a little bit of profit when small companies have become large holdings through rapid price appreciation, but that kind of rebalancing also really hurts a portfolio during good times… and especially during times like we’re in now. If I had never sold a share of Shopify, my portfolio would be better off, but it would also be 6% of my portfolio… and I’d be getting a wee bit anxious given that a 50% drop in the shares is entirely possible in any given month. “Selling your winners” is never popular advice, particularly in the past year when so many richly-valued technology stocks have continued to raise the bar and shock investors with the valuations they’re getting, but taking some profits can make outsize positions in high-risk stocks more emotionally manageable.
If you can handle the volatility, you might prefer to “let it ride” with high-growth small caps that continue to surge ludicrously higher this year… or even to be like David Gardner at the Motley Fool and just hold everything, trusting that the best growth stocks will make up for your losers over time, but just be honest with yourself and how much volatility you can stomach (he has held Amazon through some 50-90% drops, for example, and it has worked out great… but most stocks that collapse like that don’t recover like Amazon did, and some people won’t be able to sleep if that happens to your portfolio). You can also tighten up stop-loss triggers if you want to take a little profit but would prefer to wait until the momentum dies off, but the important thing is probably really just to figure out your own mindset and how much price movement you can stomach without acting — are you holding companies for a 5-10 year future that you envision, do you have a lot of confidence in management and their long-term prospects? Or did you just get lucky buying a growth stock and you’re more inclined to be an active trader and look for the next “story?” (Those aren’t the only two choices, just a couple examples).
I had asked because the real money portfolio just seems to stay in its % alignment …so the thoughts behind the concept are much appreciated. I also have ridden the buy high sell low wave to many times …so the reverse is a harder concept to figure out (having bought BIOGEN when it was less than 10 dollars….and selling it way before its current 275 (not factoring in splits)..more like still less than 10 …oh well)….all are good discussion points for learning. So, again thank you for sharing your thoughts.
Thanks for reading! The portfolio does often look fairly stable week to week, there are eight stocks in that listing that I’ve owned for more than five years (and four for more than a decade), and some weeks are quiet, with relatively small buys and sells, though that’s not always the case. Half of the stocks in my top ten positions were not in that group 6-12 months ago, both because of price appreciation and because of buys and sells, and I have both sold out of and added a few large positions in the past year… but I prefer to have those transitions be relatively slow, and they often are.
Mr. Gumshoe, my sincerest thanks for your short comments about SUTTER ROCK CAP CORP COM that tickled my fancy. Your described personal action previously is just what I have been doing so I reviewed the charts on SSSS and was tickled some more, so yesterday just before lunch time I studied the available options and decided to take a bite of Dec 10 calls as well. I noted a small loss by the end of the day but it’s a long year. This morning was a very pleasant surprise and I’ll bet you are pleased yourself. I usually kid about this kind of activity that that is a nice 1% profit in one day. The punch line is that I forgot that last step in the conversion to a percentage. Was that the Gumshoe effect? Good luck on the ride. I have not checked what your entry point was, but expect look there now. Chuck
Thanks Chuck… that was just fortuitous timing, I expect, we aren’t a big enough group to really have much of an impact on share prices most of the time. I expect other folks just did the same thing I did and wondered whether a high-profile IPO filing by Palantir in the next few months could drive enthusiasm for the shares of Sutter Rock, as it did in earlier periods when they were pre-public investors in Facebook and Twitter. For sure doesn’t work every time, and this speculation is about riding enthusiasm more than it is about real results. Palantir is already carried at a pretty high valuation on Sutter’s books and I have no idea whether it will be an IPO that really “pops” dramatically higher or gets revalued (assuming, of course, that the actual filing proceeds this time — it has come close in the past and not actually gone through with the IPO), so I’ll probably be quite mindful of taking profits at some point along the way. Palantir hasn’t really generated any breathless coverage this time around outside of the typical IPO/”dealbook” press, though there is clearly interest in this (so far just “reported”) confidential beginning to IPO talks with the SEC… and the IPO market is heating up a bit, so we’ll see.
Thanks, ‘nuff said.
Trade Note: Another Gamble
Following the slightly disappointing earnings report last night that was really just in line with what we should have expected, albeit with conservative guidance, I was really surprised that GAN’s CEO announced a still-pending and not-yet-complete deal with a new tier 1 customer on the conferencd call… and the stock did nothing.
I’ll write more about this on Friday, but my basic thinking is that they have enough confidence that their deal with this new customer will go through to announce it on the call… and to even go so far as to say that the market potential of that customer would essentially double the sizeof GAN’s business last year (operating revenue potential of $300-400 million, they think, versus GAN’s current client base that generated just over $300 million in 2019). That’s not an overnight deal, they see this potential as emerging after this unnamed new client matures, probably in three years or so, but that’s still a really big deal — and either the market was already expecting it, or the market doesn’t care because it’s not going to impact 2020 results (which could be pretty soft, particularly as they ramp up expenses to prepare for new business in places like Michigan, which won’t be generating any revenue this year). Still a high-risk enterprise, and it’s still early days, but I really don’t think it’s too late to buy GAN, and I increased my position by about 15-20% after that conference call.
I do need to disclose that I had a small position in extremely speculative options that I put in on Tuesday which are almost certainly going to zero ($35 calls that expire on Friday, a failed speculation that the earnings might be shockingly strong), so I need to disclose that in case my standing “sell at market” order for that failed position actually comes to something (it probably won’t, no reason anyone would pay a nickel for them now, so they’ll probably just expire).
Much more on Friday, but I’ve promised to share meaningful trades on the day I make them. You can listen to the call here if you like.
Thanks for this! I am new to the Irregulars and I was having some difficulties to follow up with everything. Having Trade Notes is probably very much appreciated between the readers and a great value for this service.
In the same niche as one of the under-the-radar stocks in the Real Money Portfolio called Hipgnosis Songs (SONG.L or HPGSF) is a new stock that just IPO’d earlier this month called Warner Music Group (WMG). However, their business models seem to be quite the opposite. Per company descriptions, SONG seeks to “acquire 100% of a songwriter’s copyright interest” while WMG engages in “the discovery and development of recording artists…and generating revenue from the intellectual property.”
I realize that the appeal of SONG lies in royalties derived from streaming hits from yesteryears. However, do you get the same impression as I do that WMG is (or will be) an updated and expanded version of Motown, with long-term growth and appealing to a new generation of recording artists?