Dreamer Corp - Port Update

Investment Analysis Clubs Where Angels Fear to Tread
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Decided that I was breaking my own rules. Don’t think lows are in, and just bc some of the broken toys are at 52 wk lows, why should I buy them when I have identified the companies I really want (they just aren’t at 52 wk lows yet, in most cases)?

So I sold GOOGL, OKTA, FSLY, and DOCS.
WBD and ROKU a bit underwater, so waiting to potentially sell them.

Although I understand the businesses of SPG, UPST, WBD, and ROKU better than the ones I sold. Not that I don’t think Google/Alphabet has a tremendous future…just that they have a mammoth ad biz that could be at risk in recession, and they aren’t keeping up with Azure/AWS (yet) and Waymo not material (yet) so what is my hurry there?

I know I go back and forth, and exit too early most of the time. The ones I exited were trades, and since a quick pop didn’t occur, I didn’t have patience to hold thru a downturn (if one appears) from here.

I should be closer to 24-25% cash deployed, vs 30%.
Might want that closer to 20% until I think it is a major/final bottom.

Part of me wants so badly to recoup my negative gains, and the year is quickly aging fast, but I need to make the smart decisions for next 2-3-4 years from here, vs worrying about how my 2022 gains will look compared to previous great results of last 5+ years.

Dreamer

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ok…pared down SPG slightly. Basically the last two allocations I bought were in the green so I axed them.

That brought me down to about 80% cash, and then 20% invested in largely SPG, with UPST and WBD and ROKU following.

Feel better now. As you were.

Dreamer

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i wonder dividend stocks like spg works here because we had 6% yields without any risk. may be need to be careful here buying SPG.

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—-

But with 50% upside if it gets back to the original $135 precovid target price i chased in 2020/2021. I think it can get there again in 12-18 months. Combined w divvy. But, yes, still risk.

And i have dropped a ball or two in my time…

image

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I need to make the smart decisions for next 2-3-4 years from here, vs worrying about how my 2022 gains will look compared to previous great results of last 5+ years.

Standing ovation from here, Dreamer. [I failed the video clip test here]

So important to resist reaching for a result as of a meaningless day on the calendar. Follow the process.

KC

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Sold my WBD. Limit in to sell ROKU a bit higher…trying to not take much of a loss. Overall, my recent trades are slightly up.

Think I am finally resigned to holding onto something long-term, so trying to leave the SPG and UPST alone, even if we can go much lower.

But felt like more lows to come in market, and wanted cash higher.
I played some broken toys, but no real big/immediate bounces occurred, so didn’t have high-confidence to hold long-term, so saw no point in continuing to tie up cash and/or watch those go lower still (potentially).

What do I like?
Usual suspects of TTD, NVDA, DDOG, NET, PTLO, GLBE, maybe DIS. But at lower prices.

Dreamer

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*i wonder dividend stocks like spg works here because we had 6% yields without any risk. may be need to be careful here buying SPG.

This is worth a discussion. Let’s start with Graham’s method of assessing margin of error wrt p/e’s. He used the 10-y
ear U.S… treasury rate as a bench market as he was buy and hold. 10-year. Inverting that rate provided a number that can be compared to a p/e. The 10-year being a safe standard number, the p/e should be less. I believe he looked for a 1/3 safety margin.

A reasonable question would be, "what 10-year rate? Today’s? or forward looking in a rapidly changing interest rate environment. Venumadi is looking forward to 6% rate for 10-year and I think that is reasonable. We think we know that the Fed will keep raising, or at least “wants” to, and I feel that 4.5% is probable. The curve might invert, but if the Fed’s action succeeds in taming inflation without a nasty recession, the curve should have positive slope. So 6% for the 10-year in that circumstance should be considered as possible, IMO.

Now, the 10-year is currently 3.796% which inverts to a “p/e” of 26.3. At 6.5%, the bond “p/e” is 15.4. The 1/3 safeties would be 17.6 and 10.3. I am not really sure whether p/e is correct comparison for SPG as they have depreciation and such. Free cash flow per share is probably better than eps. But in any case, the p/e 13.6 currently, TTM. The p/e looking to 2022 est earnings is 16.1, and 2023 is 14.9.

A discussion could be had as to whether the current 10-year rate is appropriate to use for the safe p/e, or my forecast 6.5%. But at current rate, the SPG p/e does provide a 1/3 safety.

The 2022 and 2023 fcf/share are $8.70 and $!0.58 and those p/fcf are 10.2 and 8.4 and that satisfies the 1/3 safety for even 6.5% 10-year rate. For the kind of business that SPG has, FFO rather than FCF is used. They seem very similar toi me, but:

** Funds from operations (FFO) is the actual amount of cash flow generated from a company’s business operations.*

To calculate the net FFO, one must add the non-cash expenses or losses that are not actually incurred from the operations, such as depreciation, amortization, and any losses on the sale of assets, to net income. Then subtract any gains on the sale of assets and interest income.

FFO is commonly used by companies that engage in Real Estate Investment Trusts (REITs), a business that primarily operates on income-generating real estate transactions*

In addition, if we look through the recession, what probability do we place on the share price of SPG to return to $125 or more? $125 is the average of the top ranked analysts for SPG. And, there is the 7.5% dividend as long as SPG does not need to cut. So with the hopefully not misplaced trust in SPG management, and past performance thereof, I chose to invest in SPG even in the face of tougher comparison to 10-year treasury yields.

I have 27% in SPG, 1% in OKE, 2% in 1-year T’s, and 39% cash.

KC

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No changes, but thought about playing a QQQ or even TQQQ long position.
Looks like a possible new BMR is underway.

Ultimately I decided that I still didn’t have prices I liked on stocks I like (outside of the SPG and UPST previously bought) and so there wasn’t much to do.

So this may be similar to June-Sept and the new BMR could last for months and I will feel crappy (except for any SPG/UPST gains along the way) or perhaps the BMR ends today.

Who knows. I just don’t feel we are done yet. With midterms coming up, I expect we perhaps see some wild up/down chop. Eventually, I hope for a full capitulation/crash. If the stocks I like don’t hit my prices, I may have to find new stocks.

I still consider the tech/cloud/SaaS names to largely be in the “Meh” zone of having come down off ridiculously bloated highs, but still not low enough to be bargains or even fairly-priced. Looking at TTD, DDOG, NET, NVDA, when I say that. GLBE should not be flying high off lows, considering the horrible global macro backdrop for ecommerce. I dunno. And finally, I am still regretting not capitalizing more on PTLO under $17. I don’t expect it to suddenly be $50 or anything, but I do think it is a long-term compounder with decent returns in the 20% range for a decade plus.

When in doubt, gonna do nothing.

Dreamer

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This market is still all about the FED.

Looks like todays job openings number came in lower than expected this morning. I million less openings. In this case bad news is good news for the market. This is what the FED is looking for.

We have September unemployment number on Friday. If unemployment goes up in a meaningful way were off to the races with BMR.

if goes down we probably retest new lows.

Such a binary market. It’s like Vegas bet red or black. Place your bets

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I think it is all just a rebound BMR…if market needed an excuse, then unemployment it is. Blah.

I bought a 3%+ allocation of PTLO.
For some reason, it was negative on a mammoth Up day.
My reasoning was that I like them long-term, even from here, and if we are just at start of a prolonged BMR, then I expect PTLO bounces up more soon.

Expect I can still get PTLO much lower eventually. But will probably hold my nose on losses here, due to the long-term view, and just add more as it goes lower. On flip-side, if we get 20% out of this BMR, I probably pocket the gains and wait for newer lows.

Dreamer

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Bought smidgen more UPST
With the PTLO bought yesterday, and pre-existing SPG, my cash is about 79%.

Dreamer

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CPI and macro mkt numbers expected this week.
Could be cause for a BMR.
Part of me wants to buy the saul stocks and enjoy a bounce.
The other part of me says they aren’t cheap enough yet (for Long-term) so why bother.

I thought…what is “better than cash” and I dusted off an older “BtC” staple of mine: T (AT&T).

Apparently only 3-5 percent of their debt is not fixed and fixed debt is mostly maturing in 5-70 years. So they should be able to collect internet/wireless fees (don’t see people cancelling a lot of that in a recession) and keep paying a divvy, and stock is not only at 52 wk low, it is even with 1993. So almost a 30 year low. Granted it is confusing with the split from WBD, but suffice to say it seems “cheap”. Not expecting much here. Just want it to do a bit better than cash.

Thinking about deploying more to get in front of a BMR, but I already still have my SPG/UPST/PTLO longs. Those have held up at levels I bought, so haven’t added more. PTLO slightly lower, I guess, but waiting for $18’s before I back up truck there.

GLBE still not low enough. DDOG has good trend…near 52 wk lows or set them today, and I do not like them long-term until 60s/70s.

Same with NET and TTD. NVDA still trending down nicely.

Content to miss out on yet another BMR. Going to try and wait for my prices***. (***Subject to willy nilly changes in attitude at any moment)

Dreamer

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CPI and macro mkt numbers expected this week.
Could be cause for a BMR.

Or could be cause more 52-week lows, as could financial problems in UK. Or China COVID. Or some random stream-of-consciousness monologue by a Fed governor… The market has some serious behavioral issues such as would lead some to buy T, and others to play with puts and calls. So I checked out T on my E*Trade account. Looked at the news feed. Not much. The lead item was about RingCentral being put on some zombiestock list. Say what? Am I wrong or does this indicate that the relevant news item selector is some sort of bot? RingCentral news is important to T investors? Whatever. Or am I just channeling my inner dowager grandmother self sniffing, “there is just no quality anymore”? Sigh.

GLBE still not low enough. DDOG has good trend…near 52 wk lows or set them today, and I do not like them long-term until 60s/70s.

My GLBE $25 puts are now in the money–and still 8 trading days to go. Hell, GLBE could be $20 or $30 by then. Down to $24.00 after hours with a 52-week low of $15.63. $24.35 is my break even on that one. Of slightly more importance to me is that two of my good-for-60-days orders were triggered last night. BRZE at $32.50 and NCNO at $30.12. Neither is particularly close to 52-week lows. NCNO rallied to $30.99. BRZE? I don’t wanna, talk about it… I Don't Want To Talk About It (from One Night Only! Rod Stewart Live at Royal Albert Hall) - YouTube

(one of my favorite sax solos).

Anyway, I have a $76 put on DDOG that expires Friday so not currently in play. But the 52-week low was made Tuesday at $80.43. Down another 5% would put me some DDOG shares at $75.05 net of option premium. Hmmm. I guess those puts should be considered to be in play.

Hang on to your POMO, Dreamer.

WRT DW’s IRA, we can’t do electronic application at Merrill Edge as foreign residents. I did finally wrestle the Interactive Broker application to the ground but there are issues. You know, cows on the green hillside pasture and sea view and tropical breezes have soothing value, but there is a point where the bureaucracies make it too painful and complicated. I didn’t click the submit application icon. I have confirmed with Schwab that she can still make her RMD, at least by transferring shares to taxable, regular stock account. So for now, she could sell the individual stocks and buy one or two or three ETF’s and go into buy and hold and forget about it mode. Can’t say that we’ve been crushing the Dow or S&P500 anyway.

That’s all I got for a Wednesday morning. Flu is in the rearview mirror, thank you very much.

KC

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NVIDIA Corporation is estimated to report earnings on 11/16/2022

I’m looking to buy just before, or just after. I cannot see any way they will meet their guidance. I’m expecting a warning earning November.

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NVDA keeps marching towards $100. But I really think you have to hold for the oversold $88 or whatever, to get great returns in the coming 12-24-36 months. I believe in autonomous vehicles and even metaverse. But they won’t be here next year or the year after, in a meaningful rev contribution sort of way, imo. So we need the fluff out of the stock price, in order to start investing and getting credit for the future over time more reasonably.

Dreamer

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bought first small allocation of DDOG at $80.
Exciting.

Still remember when Saul scolded that dude, earlier this year, for wanting to “wait for DDOG to retrace to $135” before buying.

Just getting to $135 would be a 68% gain for me.
Valuation matters, kids. It always has.

Dreamer

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I totally expect (hope?) that DDOG goes into 60s/70s. I will average down along the way if so.

But my napkin math on both DDOG and overall market says we have about 20% more pain max. That would put S&P around 2800, as an example. Granted that DDOG probably moves more than index, but also at some point the elite stocks get bid up off lows faster than crap stocks (you would hope) so I think long-term that DDOG from $64 would be a winner, provided they can keep 40-50% growth going another 3-4 years.

I also won’t be greedy. If I still hold DDOG a year from now and I have 100% gains, I may just take profits. It is all about CAGR and if I get more of my projected gains faster than expected, I won’t wait around to squeeze a bit more blood out of that rock.

Dreamer

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bought more PTLO, DDOG, and some S.
update later.

market bouncing…will see if the worst is yet to come or not.

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In order, i have allocations in:
SPG, PTLO, UPST, T and DDOG tied, and S.
SPG is about 12% while S is about 1.5% of port.

I get a kick out of owning DDOG at a cost basis that is, literally, half of the amount that Saul scolded a dude earlier this year for calling out as his target price. ($78) I hope it gets into the 60’s before this bear market is through.

I am about 30% invested now. Probably holding here until/unless we reverse course and head for newer lows (again). Not interested in chasing in this macro bear environment.

So far we have seen the impact of interest rates on stock prices. We haven’t yet seen the impact, if any, of a recession on stock prices. Granted that may impact more of the traditional/value side of the market than the growth stocks…hard to know. That is why I am ok with starting to average in now.

I really want GLBE and PTLO to retrace to their lows. NVDA to get into 80s or below. TTD to get into low 30s. SNOW at what…90? NET near 35.

Reserve right to add to SPG if it dips into low 80s or below.

POMO on…

Dreamer

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and the market is off and running in the green now!

coulda woulda shoulda bought more, says Mr. Hindsight.

Let’s see if this is a nonsensical relief/bounce or start of a new BMR or if a raging dumpster fire ensues by Monday.

All scenarios on the table, imo.

Dreamer

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