Friday File: A New Cyclical Buy
by Travis Johnson, Stock Gumshoe | January 15, 2021 5:15 pm
Adding a distributor to the Real Money Portfolio, plus a few more buys and sells, thoughts on Lemonade, Intuitive Surgical, Pershing Square and many more...
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Source URL: https://www.stockgumshoe.com/2021/01/friday-file-a-new-cyclical-buy/
Thank you for you clearheaded diligence this week, Travis. :]
U could send that discarded kiloword to me – I’d read it!
(And i could find the traditional 65mg of salt, if needed.)
i was reading an article about the Ark Innovation (ARKK) stock ETF. there firm filed securities this past Weds. on which stocks will launch under the (ARKX) ETF ticker. im going to be watching for this ARK space exploration ETF when it IPOs . Also, Virgin Galactic Holdings (SPCE) stock is up double digits in todays premarket, but as the day in trading went for them looks to be flat. i do think that the space sector stocks will eventually shot for the moon. pun intended 🙂 along with this new ARKK ETF ticker (ARKX). thanks for this article…….
I for one would love to read your 1000-word political commentary.
With regards to Dan Ferris’ pick – could this be Mastec Inc (MTZ), Travis?
Sure, that’s a decent match as well — exposed to many of the same industries, though as a contractor instead of a distributor. It’s a similar size and carries a somewhat similar valuation at first glance.
Thanks Travis. Just on the pershing square spac what would be the advantage of a company like Stripe partnering up with them when at the minute they could just IPO like air bnb and watch their share price double or more in a day (most of the recent IPO’s seem to have gone parabolic).
If there isn’t a big advantage is the risk hightened that they will end up with a sub par company that will disappoint the current and perspective holders.
It would be a tough sell for Stripe or a really high profile company — the advantage is speed and control, you get to skip the roadshow and investment bank games and pick your partners, and PSTH has lined up some strong shareholders who would appeal to some owners (Baupost, etc).
It would be much easier to find a big SPAC target during a weak market when IPOs are not going bonkers…. but they only need one, and a personality and culture match is part of what makes it possible.
But yes, my guess is that in the end it won’t be a super-high-profile company that’s very well known like Stripe. We’ll see.
Thank you, Travis for your insight! As a new investor that is still learning the ropes of the market, what price do you think is reasonable for Broadridge Financial (BR), Illumina (ILMN) and Goosehead insurance?
I’d be happy to begin building positions in those at roughly 10-20% below current prices. They are solid companies and might work out well at current prices, so I wouldn’t object to starting with a tiny stake now… owning a stock tends to make you watch and study it more closely… but with the market this elevated I’m a lot more comfortable building positions slowly and looking for dips to buy.
Thank you, Travis!
Travis, I have one more question as I am new to options and trying to udnerstand them better. When you write “New speculation in Viatris (VTRS) options (Jan 2023 $35 calls) goes into the portfolio, nothing really to say about that (mostly just a generic drugs bounce-back bet) “. Does it mean you buy options for this stock?
To nataimages – Yes, you read that correctly, he bought a Call option. It is often recommended to have at least a year’s experience before messing with options – they can be a VERY fast way to loose your shirt!
just curious on the stocks that you would like to buy at 10-20% less.. any thoughts about selling puts for the income and then hope they get exercised ?
A week ago through Fidelity I could have exercised my PW Power Reit rights per the known terms.
Fidelity had sent all the necessary announcements and forms with instructions to call.
I was waiting on the price gyrations, exercise deadline Jan21.
Today: “You did not provide instructions for this offer, which has been withdrawn by the offering company.”
I bet it is withdrawn…within their rights….hoping for more $ ?
Interesting, sounds like lots of brokers handled the procedure differently.
yes, withdrawn Jan 12 at Fidelity, at least one customer had previously accepted they thought.
I use a different broker, and was unaware that brokers could get involved at all. But the PW subscription material says very specifically that applicants have to send the applications and payments directly to PW (in Old Bethpage, NY). Note the Jan 22 closing is coming right up.
From the materials: “(if you have) …questions or comments regarding the Rights Offering you may contact us at (212) 750-0371 or via email: ir@pwreit.com.”
My personal guess is that they were trying to issue new shares without stirring up more public attention than necessary. Also that the current share price may drop to the subscription price, but not below. Out to the future, the public will see a price dip has already happened, and (guess added to hope) they might consider it a buying opportunity.
So I participated in the rights offering to double my tiny position (still a “nibble”) – but I’m not a very good guesser.
Wow seeing $BR on the radar takes me back! I remember asking about it here not long after first joining, looking for blockchain adjacent plays and figuring a company that does that much financial processing would probably benefit quite a bit. It was under $95/share at the time!
Wish I had followed my own lead, or had more good suggestions since, but I’m no stock picker.
Another fun Freudian, “getting them to also pay casino games!”
MTZ not WCC
Thanks… also a solid match for the limited clues, and exposed to many of the same industry/infrastructure trends. I like WCC a bit more, just because of the underestimated impact of the merger, but wouldn’t be shocked if MasTec ends up being better. Both should be set up nicely for the next couple years if stimulus spending hits the industrial and infrastructure sectors.
VTRS options bought date typo in the real money portfolio.
$PW I have emailed power reit last week and David Lesser responded saying you can email the required documents instead of mailing if it makes it easier for anyone still considering or worried about the tight deadline.
Thanks for the update… we’re closing in on that $26 price again as the enthusiasm wanes a bit, so we’ll see how it goes.
Travis I have a small position in LNMD and was looking to add to it. A friend suggested I look at ROOT instead. LMND trades at close to 50x premiums and ROOT at 8x. ROOT struggles with being noticed as a ticker because of the ROOT crypto. Looking at the two; ROOT started in car insurance ( joinroot.com ) and is moving to Real Estate and LMND started in RE and is moving into pets, life etc. They have desires to move into other areas. I am not sure what the moats for either of these companies are except they compete in a highly regulated industry that tends to quash innovation. That can be huge advantage as you can grow like crazy before anyone takes you seriously. They are both heavily dependent on reinsurance. Have you looked at ROOT?
I haven’t compared the two recently, but there’s both a lot of room for disruption and a huge barrier to entry given the massive marketing costs required to recruit new customers. I think Lemonade is doing better at signing up new customers so far, but that could easily shift — Metromile is an interesting one as well, and there are many more, many entrepreneurs have noticed how much people hate insurance and are trying to fix (and profit from) that.
Unfortunately I think that INAQ SPAC was created to bring them public so I couldn’t benefit from the spac ride but I have been debating adding them as well. With these early mover disruptor type companies I will often buy a basket then add to the one with momentum. I was looking into them when the spac was at$15 and they jumped to $18. Pulled the trigger already at $17.50 … with Chamath, Cuban and Graves on board it should have some momentum for returns and the ability to grow.
Risky business: Some companies are investing their cash balances in Bitcoin. It depends on the way you feel about Bitcoin, to me it sounds like a risky bet with shareholders money.
MicroStrategy #MSTR CEO Michael Saylor has been a heavy buyer. The stock closed at $550 today and has an EPS of 20 cents having skyrocketed on the heels of the Bitcoin rise. It was $135 on August 11, 2020.
https://news.bitcoin.com/microstrategys-btc-holdings-more-than-double-in-value-to-2-4-billion-four-months-later/#:~:text=Microstrategy%20initially%20bought%2021%2C454%20BTC,valued%20at%20nearly%20%242.4%20billion.