by Travis Johnson, Stock Gumshoe | June 10, 2022 6:00 am
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Dan needs to stay in his lane (Value). I cannot justify any of these based on fundamentals.
Not sure which Dan you mean, are you referring to Dan Ferris’ pick of Visa that I referenced? If you mean Toast, the speculation I Wrote about today, that’s just me, no Dan involved… and you’re right, it’s not a “Value” stock.
Already in retirement i like to keep my accounts in a liquid condition. I have started buying January 23 call options on stocks that I feel have potential to move such as $SHOP, $AMZN, $GOOG, $ENPH, holding call option for me takes away the impulse to sell individual stocks during these turbulent market times
Creates an effective “enforced stop loss,” in some ways.
Martin, how far out of the money do you go on the call options? Do you go for more contracts at cheaper, farther out of the money strikes, or fewer options with strikes closer to the current market price of the underlying stock? Just curious about your strategy. . .
Mattremote, The options that I buy are usually near the money especially the ones that are coming up for a stock split in the near term. for example, Bought 1 SHOP Jan 20 2023 350.0 Call @ 93.35 $SHOP will split in late June on a 10 for 1 basis, I will the sell 9 of my call options and keep 1, the same was true for $AMZN had one call option in the money for 21.49 when the stock split I was in the money for about $21 so I sold and Bought 1 AMZN Mar 17 2023 115.0 Call @ 24.55 19 with the profits.
Thanks for sharing that strategy, Martin. So, you hope to profit not only on upward movement of the stock but also on multiplying the premiums for nearly in-the-money options, which are post-split individually much smaller than the original option premium on the pre-split share yet more than 1/10 of that pre-split premium. Interesting!
Travis, thanks for TOST.
Two asks (for your quick scan to see if it makes sense for a Friday file/purchase)
VRM- a similar story, well funded, high growth company that IPO’d and got crushed. Money in the bank and still growing, however, not profitable.
LGO – Vanadium miner that is also making Vanadium Oxide batteries. Vertically integrated and profitable. Might make sense in a commodity super cycle.
Just flagging to your radar.
MPW is a bummer.. I wanna hold for dividends though. It is selling for book vale at $16 so I figure that is a hard bottom?? I would need to hold for four years to get back loss if priced at $16
Completely off topic, but if you are 51 years old with 75-year-old hips, you should consider total hip replacement with a surgeon who uses a “direct anterior” approach. I had my first at age 59 and within 2 weeks was walking without pain. Had the other hip done 5 years later. I was surprised how well both surgeries went. I was able to return to work at a fairly active job.
Insist on the “direct anterior” approach as it’s superior to any other procedure. No major muscles are cut and there is less pain, greater hip stability and more rapid healing.
Thanks! Not there yet, but it’s in my future.
Cheers Travis!
Would love to hear some updated thoughts on MTTR at some point. I know you were in on $30 calls at one point so intrigued whether you have given it any more thought now it’s under $5
Still have some 2024 calls, but haven’t looked at their progress lately.
“Your 10 shares have multiplied ninefold” The 10 shares have become 100 shares. Why wouldn’t you say the shares have multiplied tenfold?
For some reason this latest Friday File entry doesn’t show up under “Premium Content”, had to find it under “Recent Articles”. Not a big deal but thought I’d mention it.
Thanks! My error, just fixed it.
Trade Note: As you might have noticed, Medical Properties Trust (MPW) did indeed hit my latest “stop” level( $16) following some bad news about one of their deals with Steward, and my shares were sold while I was on the road. I stubbornly held on a while back as we got some waves of criticism of MPW in the press, mostly because they were leaning away from Steward and sharing more information about the financial health of their tenants, but when their sale of some Steward hospitals to HCA was at least temporarily blocked by a judge, that was the push I needed to take my profits off the table.
That may well be a mistake in the long run, the valuation is certainly attractive if we trust that they can maintain these numbers, and MPW has been through these cycles before when negative news about their tenants drives the valuation way down… and it’s typically a mistake to sell a compounder. But they haven’t been in this situation in a rising rate environment or rising inflation environment, when hospitals are having to move on without more COVID rescue funding and are facing some pushback on for-profit consolidation, and I think the risk has climbed considerably that their cash results are going to take a hit at some point when one of their for-profit tenants, Steward or anyone else, needs an equity investment or other sweetheart deal to keep paying rent. If I trusted the management to be focused on building the long term portfolio and keeping shareholders in mind, I’d hold… but I’ve lost that trust with this group as their compensation keeps soaring and the financial engineering gets more obtuse. More on this on Friday.
I’ve seen the JP Morgan chart before and almost always immediately wonder about the reverse which you stated: “That’s obviously an exaggeration, because if you miss 40 of the best days over 20 years you’ll probably also miss some of the worst days… Do you have any similar graphics that show how one would do by missing the 10/20/30. etc. worst days?
Thank you, Travis!
This was a really good read … as always. I really appreciate your insights and your rational way of looking at the big picture.