Dreamer Corp - Port Update

Investment Analysis Clubs Where Angels Fear to Tread
#126

That worked out well. Even worse for me. How about we open a chapter of UPST Anonymous? We wouldn’t need quite so many steps–or would we?

Good job though, combining COVID and another bad UPST position/trade. I mean, how much worse could you feel? Oh, its like how low can UPST go----->lower. How much worse? ----->worse. Dang!

O.k., I bought the dip on Tuesday, too. But no UPST, and again I didn’t inhale. BILL and GLBE. Little green shoots. Up 2.3% and 2.4%. No options this week, the premiums very much too small to justify the risks.

AND, salve for the wound, look at those BMW stocks, top of the leader board:

VFC     +4.2%
PVH     +1.6
SWK     +0.5
MNRO    -1.8
SMG     -0.29
OLED    -1.17

In total I had 5 greens, the three above plus my long term holdings OKE and Lucid’s beloved SPG. Ya, but -cha still lost 0.6% of yer port, dude. That, my friend, is what passes for victory these days.

50.5% cash, a neutrally buoyant POMO position https://www.youtube.com/watch?v=V8OSIx72KZI

Hang in there, boys and girls,

KC

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#127

Fever broke last night.
Spent 5 hours trapped in a bad acid trip where I kept reminding myself that this bar code and/or receipt was good, so I should be able to fall asleep. If that doesn’t make sense, then you are reading it correctly.

This week has been a slow bleed, it seems.
Kind of sucks because I wanted to short from higher…look at ENPH…should have kept that short on. Do I short ULTA now or wait? What about GPI? NVDA is neither too high nor too low…blah.

As usual, the mantra of “don’t buy unless at a 52 wk low” seems to hold true, as PTLO floundering. Turns out with their stock B-to-A dilution, this may be fair though. So even though I have wanted to add, they are still above 52 week low, and so I wait.

Of course, then you have the UPST of the world that say “hold my beer” as they continue to reach new 52 wk lows. Again - either they go out of business or this is a good long-term hold most likely…at these prices anyway.

Watching GLBE, TTD, NET, DDOG, and many others marching lower, but not yet at lows. So doing nothing.

Sad thing is I don’t see this as capitulation.
The 2000-2002 analogy seems to be playing out potentially, which means 2023 may not be much fun either.

I could see Q1 having a nice/final BMR before the final plummet…but who knows.

The DOW is really hanging in there, and given a potential earnings/recession in 2023, that continues to make sense as a short candidate (I think).

Here is the good news (once again “I think”): 2023 may signal the return to individual stock picking, at some point. Because economy/recession may very well come to pass, but the best companies should detach from the indexes a bit over time.

DDOG still needs to come down to earth. As does SNOW.
PANW at 52 wk low and looks really rich still…no idea what people were thinking there. “Security!!! Always up, bro!!!” Puhlease. Go work in IT channel for a few years and realize there is a world of difference between infrastructure stocks and pure cloud SaaS plays.

I have lost maybe close to 1% from recent peak…largely thanks to PTLO and S so far. Blah.

Dreamer

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#128

gained that right back.
down 9.1% ytd.

haven’t done anything this week.
I figure we need an approx 25% up day in market, to move my non-cash holdings up enough to close that gap.

ha.

eff you, 2022.

Dreamer

#129

Found on TWTR:

"$UPST still carries 38.92% short interest at $12.45 per share. It now has a $1 billion market cap. In Oct 2021 it was a $31.8 billion market cap. "

It reminds me of “The Long Way Down” - by Nick Hornby.

#130

so the $PANR play imploded today, due to apparently below-average results from their well/drilling.

Proof I am not an oil guy.
I don’t need the tax loss, so am going to see if it will rebound a bit before calling it a day. May still sell some now. Thinking.

Gave back some of yesterday’s gains with that, but still time left in day. Either way, in that -9 to -10% YTD range still.

Dreamer

#131

made a bunch of moves

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#132

Bought some $TIP with no real strong conviction other than it has been beaten down a while, and eventually bonds may detach from equities and be a safehaven while equities fall further at some point in 2023.

I can’t say 2023 looks much different yet.
Too high to buy, too low to short.

Choppy McChoppersmith buying dope behind the dumpster in Meh alley in the town of Blah. (he realizes it is legal now, he is just too cheap to pay full price).

Dreamer

#133

Yes, the Feel Good 2023 lasted about an hour. I bought a sliver of FOUR and immediately lost 2.5% on that. I got greedy on UPST and did not sell in the first hour, when I could have unloaded the excess shares for a few pennies of Green. Now I sit down $1 per share. I have my IRA share of SPG and OKE on dividend reinvest so picked up a share or two of each.

That’s it. Start the glorious new year off with a down 0.7%. 49% cash. Blah.

KC

#134

I am now up every day of 2023 so far!
(gets out calculator)

Let’s see, about 250 trading days a year, times (X) per day, equals…
Yep. Should be retired by EOY.

Been great chatting with all of you. Be well.

Dreamer

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#135

Bought sliver of DDOG, and laid out some target prices on some other stocks of interest. I do think DDOG could get to 50s and maybe even upper 40s.

Trying to buy opportunistically and catch some bounces/BMRs for small gains, while I await the big capitulation I hope/expect still occurs this year.

Dreamer

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#136

Sold some stuff.
I lack conviction at moment, so upping cash. Was hoping today finished stronger to push me into putting on bigger shorts, but sitting mainly in cash instead.

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#137

Week Two. First full week of market for the year. Obviously, we are still being blown around by macro events and risk sentiment. First earnings will come out from banks. Such environment lends itself to modest trading to hopefully fetch a few pennies from seemingly random moves in the broad market indexes.
In response, I have had some activity. I returned to the options selling. Established five positions:

STOCK        CALL STRIKE    PUT STRIKE
DDOG              71            61
SNOW             141           123
CRWD             101           N/A

I am overallocated on CRWD so do not to risk getting more.

On Tuesday, I sold the up move by UPST, albeit too soon. I didn’t want to miss out on near break even on the shares that were put to me a couple of weeks ago. The sale removed the excess allocation but I still had a full position for Tuesday’s move up. If, when, inevitably (?) we get a pullback I can buy back some.
The “revert to the mean” stocks have been good. I was up 14% on SMG. Thus the quandary. Buy more since I am way below my allocation? Is this FOMO? Or, in true MF fashion, am I adding to a winner and using that 14% as my safety cushion. I listened to my inner TMF1000 and doubled the position for to reduce my position’s gain to 7% gain and caught Tuesday’s up move so the position is now up 11%. Pat the back while the patting is good.
As long as back patting is testing flexibility, I took a look at holding high growth, per my September 23, 24 post. Thesis looks to be still intact. Those 8 stocks from that other board are now down 27% compared to down 18% on November 25. Not too much back patting here as I own 6 of the 8 including my portfolio is up 9.9%, for a 50% out performance. (checks math on Excel, scratches head, and says yes, 50%). The 9.9% gain in my portfolio came from option sales, a minor amount of trading, and stock price increases of the six ”Return to the Mean” stocks.

Stock        % of Port    %  Gain (Loss)
VFC            4.9              8.0
OLED           3.7              7.8
PVH            3.0              9.6
SWK            1.3              2.5
SMG            1.0             11.2
MNRO           0.5            ( 0.5)
(/pre)

Like Dreamer, I have no conviction on these broad market risk-on moves.  So I will trade around the edges.  I think UPST is particularly vulnerable.  I have seen no securitization.  The KBRA data on auto loans is not encouraging as far as volume is concerned.  Longer term, the deteriorating default data is good for UPST as long as their relative performance is superior.  But I don’t think I want full exposure going into earnings.  Sell the rallies?

KC
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#138

First, sorry for the previous post. Edited it 3 times and still (or because) left something out.

I trimmed UPST about 10%. A little trading around the edges, although I still plan to reduce before earnings which I show as 2/14 [note to self: set up earnings calendar].

Beyond that, I spent some minutes relearning Excel logic formulae to discover my option income for 2022. I didn’t start until June. Received 5.17% of May 31 portfolio value. Port ended up down 9.11%, but there were no losses on shares put to me. And I don’t think I lost anything from shares being called away. I just wrote the options on the stuff that I had in the portfolio.

I don’t think I am deluding myself. Looks like I made my RMD for the year in 7 months. I made 1% on CRWD alone including a rigorous analysis of shares assigned for either sale or purchase from option contracts.

I noticed that AFRM was also up a lot Wednesday, so I am guessing that the market is forecasting favorable interest rates coming up. Presumably lower, but who knows what the net second or third derivative of delta interest rate is for consumer lending companies profitability and thus, derivatively, the stock prices.

I think that’s all the drivel I have for the mid-week report. Carry on.

KC

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#139

Hi Oforfive,

I see you mentioned quite a bit on the CRWD options…Are you bullish on CRWD at these prices? I see you are value oriented and so wanted to get your opinion on this.

If the CRWD puts are assigned ( or were theoretically assigned), would you be happy to hold them or would you immediately just sell it and move on.

If you are happy holding CRWD at this price, would you keep it as a very small % of your portfolio then?

Thanks to you and dreamer for the lively posts.
Charlie

#140

First of all, disclosure, my investing record mediocre to poor. My retirement is funded by my being a very good saver and home ownership near Silicon Valley. You want investment advice, talk to Dreamer. :slight_smile: As Will Rogers might say today, “all I know is what I read on Seeking Alpha”.
Having said that, I am cautiously bullish on Crowdstrike over my targeted investment period which is 2 to 3 years. That is a massive cop out, I know. I am not bullish on anything at the moment, if the time frame is 6 to 9 months. Of course we are in a relatively dead period between 3rd and 4th quarter earnings, but my stocks are witnessing 5% to 10% swings in a day without any stock specific news. It is all macro.
It is tempting to say that CRWD is a good value now. But most such comments really mean that they are a good value relative to some metric. This might be historical CRWD stock price, or it might mean relative to other high growth stocks, but for the most part it doesn’t mean relative to Investing 101 value metrics. Bert Hochfeld is the value guru in hypergrowth IT companies. He compares EV/S for a company’s growth rate cohorts and then tweaks for free cash flow. But if the entire cohort, and cohort of cohorts, are inflated, then the comparisons don’t mean much. CRWD held up until recently and the current weakness probably reflects the remaining air coming out–that security is not recession proof.

We know what has happened recently. Comments from the last 5 weeks or so:

“But the fact is that valuation for Crowdstrike, cheap heretofore, has become even more compelling. The EV/S ratio is now less than 10X. But the combination of a free cash flow margin of 30% and growth that is in the low to mid 30% in a recession year, brings the valuation of the company to far below average for its growth cohort.”

“With an increased free cash flow margin, the company’s Rule of 40 metric is now over 60. Cybersecurity according to all available surveys has been and remains a user priority, and Crowdstrike is the leader in one component of the space, now on sales at an EV/S of less than 8X.”

"CRWD ended 2022 with an EV/S of just above 8%.a free cash flow margin just above 30% and a growth estimate for the next 3 years of greater than 40%. "

“Crowdstrike shares now have an EV/S of about 7.3X, and a projected free cash flow yield of 4.2%. Of course, these latter two metrics are as attractive as any for a hyper growth company”

Rule 1 here, “It can always go lower”.

At some point this market sentiment is going to turn around. Since I was savaged over the last year, I want to be in the market when the mood changes. 2 to 3 years I am looking at stocks that I think will more than double. I think CRWD is one of those. But why buy now? That is why I am 50% cash and getting more invested on a slow, regular basis. Dreamer ended the year in good shape. If he is holding cash when the spring unloads, he get on the train come out very nicely. That is why we have different cash % with pretty much the same market and growth stock views.

Now, did I hold onto the CRWD that was assigned? Yes. But, I turned around and wrote calls near the put strike price. And made some straight sells. I am targetijng a cost investment of 5% of portfolio value for 20 stocks. CRWD was 6.4%t after a put assignment. If these $101 calls are assigned, then I will buy back enough shares to put my cost at 4.5% of port value and give myself a little room to sell a put and to let CRWD earn its way back to equal weighting.

So I am happy to have around 5% position in CRWD. Most of my stocks are in 2% range so this was an existing position that I did not sell down (it did that job by itself) I am looking for 100% gain in, say, 2 years. Average 1-year price target of analysts is $171 (just looked that up, was not a factor in my target).

KC, just a guy on the internet

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#141

Thanks a lot Oforfive. That was very helpful. Much appreciated!

Charlie

#142

adding to my shorts here.
since I am always early, it seems, that probably means the BMR runs longer, but that is ok.

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#143

increased the SPY short to about 10% allocation.
Let’s see if the markets can get thru earnings season without throwing up in their mouth a bit.

enjoy the weekend all!
Dreamer

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#144

and for reference, I am essentially flat YTD so far…maybe up .0x% or so, but nothing to write home about.

I like keeping the S in the port as a slight hedge, as when it pops it pops fairly hard, and it isn’t terribly far off the lows yet.

long-term goal continues to be:

  1. try not to lose too much money on market downturn and/or make a couple bucks on the way.
  2. hope to recognize good entry prices if/when they occur, and ride it back up.

I have no idea if a BMR is about to smack me across the head here or if my timing will wind up being good with increasing shorts.

I just feel that if the stocks/markets increase too much from here, they aren’t really bargains, which makes no sense in a high-rate, low-liquidity, ongoing-QT, possible-recessionary macro backdrop.

Stop looking at how far the stocks are off their ATH’s…they should have never been that high. What is reasonable given their growth and profitability and competition, etc etc… Odds are that “reasonable” does not equal 30 P/S ratios or higher.

Not a chartist, but if you draw a line visually on SPY chart, you can kind of see a consistent trend line on a 5yr that says maybe not too far off where things would be if the covid dip and the covid rip never occurred:

image
image1804×456 70 KB

But I counter that with everything mentioned above.
You also see that SPY grew about 18.5% from Jan 2018 to Jan 2020 (pre-covid peak). This was during a bull market.
Then grew from that same pre-covid peak (not the covid low) almost 43% the next 2 years. Say what?? If growth had simply matched Jan 2018 to Jan 2020, then we would have been around 3931 on Jan 2022. Where are we on Jan 2023? 3999. So you can argue both that we are actually still higher than where Jan 2022 should have been, and you can argue "well…we also didn’t get that 9-10% market gain we were averaging every year.

True. But what changed?
Same things that happened with Dec 2018 crash and short-lived Covid crash…economy looked like crap or Fed had raised rates. Now we have Fed having raised rates dramatically more aggressively than in what caused Dec 2018 puke, and while things don’t seem as economically dire as the uncertainty at pandemic bottom, we have more a slow and steady erosion of savings, thanks to higher inflations, removal of QE for QT, and expected onslaught of weak/soft earnings and forecasts to start imminently.

Using the less aggressive rate increase effect in Dec 2018, from the prev high to prev low, the market fell about 17%.

If we take the more realistically true (in normal bull market conditions) of what Jan 2022 should have been at, aka 3931 and we say “ok, what is a 17% drop from there?” I get about 3260.

Now - if you think this rapid rate increase and the after-effects of elevated inflation should lead to a greater market collapse than Dec 2018, then you can revise your target lower.

In 2022 thru Friday the 13th of 2023, we haven’t yet gotten quite to 3263. We pretty much got in the mid-3500 range at the lows in 2022, or about 9-10% down. Does 9-10% down seem like a devastating move and obvious bottom?

Not to me.
But I am not modeling targets using highs that never should have printed in the first place.

Napkin math.
It is worth about as much as a napkin costs, and I am just a guy on the internet, but it tells you where my head is at.

Dreamer

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#146

I know everyone is finding it hard to focus on life because they are wondering why KC deleted his post. Well, put you mind at ease. KC had a multiparagraph post with table and insighful observations and… when the Reply icon was pressed, only the final, unusually inane sentence was there. Sigh. Cognative decline? At least suboptimal cognition. Sigh.

So let’s condense things. How ‘ya doin’ so far KC? Well, Up 4.9 for the week, up 3.6% YTD. If 'ya got it, flaunt it, 'cause these things don’t last. Taxable account up 7.1% YTD, riding an 88% position in OKE (energy up).

Options had good week, all 5 short puts and calls expired worthless so premiums added to the cash which is now about 48%.

It looked like a garbage pickup day Friday. I’m not redoing the table, but the biggest up moves were by these household names: VERI, 9.65%, STEM, 7.8$% BRZE 6.5%, ONDS 4.4%. All 5 “revert to the mean” stocks were up, two of them 3%. To me, a sure sign of a low quality, short term, risk-on, BMR.

KC

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