I suppose that it can seem like a natural reaction to want to buy more SHOP. We spent a lot of time analyzing and researching the company and it seems HIGHLY unlikely that there is anything wrong. Mr. Left probably wrong and we are probably right. Eventually, this will become known and the stock price will adjust. But is being right and acting on it (by buying more shares) the “right” decision.
Right now, I say no. I wouldn’t have had this view 6 months ago. I probably would have bought more shares. Today, I did the opposite. I sold around 40% of my SHOP shares. The share volume today is enormous; with 90 minutes left int he trading day already more than 17M shares have traded; that’s more than 10x the average. People are scared. People are selling. Any momentum traders are selling. Don’t get me wrong, I am very optimistic about SHOP. Nothing has really changed. So why did I sell 40% of my shares?
My position was huge at >21% of my portfolio. Selling 40% still leaves me with a 12+% position. I still think that SHOP could go up 10X in the next 5-7 years and a 12% position would replace my ENTIRE portfolio in this case. Do I really need more than 20% in there?
I think the chance of the price dropping significantly in the near-term by far outweighs the chance of the shares reaching a new 52-week high in the near-term. I would love to buy back all the shares that I sold today at a much lower price. I may also use options should I see a good opportunity for that.
This is just my opinion and my way of handling my portfolio. I could be wrong about the stock dropping further, but we all need to make decisions based on incomplete information. For me, it seems like a potentially good opportunity and I hope to be thanking Mr. Left twice (once for UBNT and once for SHOP) within the next 6-8 weeks.
Citron’s reasoning doesn’t make sense to me. He compares it to Herbalife, which was challenged as a pyramid scheme, multi level marketing company that sold thousands of dollars of product upfront to distributors (typically targeting the poor) that couldn’t then get rid of it.
Shopify has nothing to do with any of that, it’s a company that helps small to medium sized businesses set up e-commerce shops and helps them sell MORE of what they sell. At most, a small business starting to use Shopify is in for $30/mth.
I had not seen or heard about the ads about the “get rich quick” aspect and how people are becoming millionaires from Shopify usage. If those are true, they need to be stopped, but besides that I just don’t see any other similarities to Herbalife.
Still amazes me that it’s legal for these guys (Left, Ackman, Einhorn, etc) to take short positions, announce their short and reasons for it (sometimes valid, sometimes not), drop the stock price a large percentage, then cover their short (and then even potentially go long I’ve heard in some situations). Just seems like complete stock manipulation to me.
Chris, I think you have a reasonable argument to make in selling, although a couple weeks ago might have been a better time:) If you have a huge amount of $$$ locked up in one stock and feel uncomfortable holding that, it is probably good to sell a bit. I didn’t and I had been looking for a better entry point. As for your second reason, like Yogi Berra, I find that it’s tough to make predictions, especially about the future. You may have a better sense of when and why there may be drops in price, where I do not. Good luck!
As the saying goes, you never go broke taking a profit.
But of course the best time to make decisions about when to sell are before someone scares you out of your position as selling in the midst of a panic is usually not a great long term move.
Will be interesting to see how this one plays out.
Ackman hasn’t covered his HLF short, and I’ve never seen him go long on a stock he previously shorted. He deserves kudos for exposing their shady practices which resulted in severe fines and outlawed business practices by the SEC. All of his gains, if any, are going to charity.
He also exposed the huge risks MBIA were taking years before the financial crisis arrived. That stock is down 90% in 10 years.
It’s legal to talk about why you think a stock will go down, as well as up. It’s called the First Amendment.
You should thank short-sellers if their reasoning is invalid or illogical for giving you the chance to buy more at a distressed price. You shouldn’t want SHOP to go up every day.
You should want SHOP to drop to $1 on flawed analysis, then buy 100x the shares you could buy today, and then go back up to the ‘right’ price.
It’s legal to talk about why you think a stock will go down, as well as up. It’s called the First Amendment.
Ever hear of Barry Minkow? He got in a ton of trouble for publishing articles through his organization on stocks he had short positions in, without disclosing that information. He also traded using nonpublic information (insider trading) which Andrew Left has done as well - iirc, he gets a lot of tips from insiders, as well as mail from completely anonymous individuals.
The problem I have with Andrew Left is that he doesn’t mention his short position in most of his videos or appearances, only discloses it if asked, and in fine print on his website. This should absolutely be a requirement. Secondly, both CNBC and Cramer are literally just mouthpieces for him, it’s disgusting. I’m not sure if he has any dirt on Cramer or what it is, but the guy literally just sides with him every time. CNBC doesn’t give him any hardball questions, and just gives him plenty of airtime, legitimizing his often borderline fraudulent/defamation claims with their platform.
You should want SHOP to drop to $1 on flawed analysis, then buy 100x the shares you could buy today, and then go back up to the ‘right’ price.
Sure, I’d love to buy all the shares of it I could afford at $1 a share. Problem is, just about any growth business that tanks that hard would go bankrupt due to leverage and covenants based off the share price.
I think the chance of the price dropping significantly in the near-term by far outweighs the chance of the shares reaching a new 52-week high in the near-term. I would love to buy back all the shares that I sold today at a much lower price. I may also use options should I see a good opportunity for that.
I can’t argue with that approach.
It makes a big difference if third parties are pushing Shopify-built websites for would-be millionaires, rather than Shopify doing this directly. It seems much more likely that Shopify is promoting its services to actual, ongoing businesses, and shadier people are pushing e-commerce websites (which happen to be powered by Shopify) as a get-rich-quick scheme for everybody.
Herbalife is pushing a questionable product with a questionable distibution method.
I think the chance of the price dropping significantly in the near-term by far outweighs the chance of the shares reaching a new 52-week high in the near-term.
I agree with this statement. I bought shares when they were originally recommended by the Fool and never added because I was so shocked at how quickly the price rose. Perhaps it’s just my lack of knowledge of the company but I decided to keep my position small like I always do with first buys. It rose to as high as 5% of my portfolio and now it sits at 4.5% (math, duh). So at this point I’m not adding (wasn’t planning on it anyway because it grew so big so fast) and I’m also not selling. I did watch the video of the report but it seems like a pot shot. Just my take. Not everyone has integrity, sadly.
All Cramer cares about is having something to yell about.
We all take what we can. Cramer’s ability to analyze multiple industries, his insight on various sectors are pretty amazing. There was a REIT I was holding for many years, with significant gains and I closed because of Cramer. He called the problem at least 1 or 2 quarters ahead, at the time of listening to his comments, I thought to myself perhaps REIT’s are not his wheelhouse, but as the story developed, Cramer’s comments were playing in my head and closed the position. I was able to protect my gains and avoided a 40% price decline.