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TGIF – A Weak Week in the Markets Drifts to a Close

Same old, same old…

We're at the same levels we were at on Tuesday (a bit weaker), when we extensively went over the technicals, so we're not going to do that again.  As you can see on the S&P chart, our short at 2,728 on the S&P Futures (/ES) is still holding up and we see no reason to change it today or over the weekend.  Similarly, our big shorting hedge on the Nasdaq (/NQ) is still up $2,000 per contract (from 7,000) at 6,900 and our predicted bottom is a $10,000 per contract gain at 6,500 if "sell in May" becomes a thing around the holiday weekend.

We primarily use the Futures for hedges as we are generally bullish in our 5 Member Portfolios and that means we like to have a little extra protection – especially when the broad market is shut down and we can't make any adjustments.  We're very happy with the portfolio performance so far this year and, in fact, we're too happy so, as we've been discussing in our recent Morning Reports as well as our weekly Live Trading Webinars, I think it would be far wiser to go to CASH!!! into the summer and we'll see if July earnings make us want to buy again.

We're not officially doing that because PSW is a teaching site so we teach people how to manage portfolios in good markets and bad but CASH!!! is a very valid strategy and allows you to take a nice vacation and have a life – those are good things!  Personally, our Hedge Fund is over 90% in cash and my kids' college accounts are 100% in cash into the summer – but you can play the market any way you want!  

One portfolio that we make available to the general public is our Money Talk Portfolio, where every trade idea is announced live on the show and we make no adjustments other than on those appearances.  I haven't been on since Feb 1st but, even so, the trade ideas in this ultra low-touch portfolio are already up 73.4% since September – not bad for 8 months and only a few adjustments.  

 

Being well-balanced is the key to any good portfolio and, of course, it's important to have hedges.  Our SQQQ hedge in the MoneyTalk Portfolio however, is getting long in the tooth and needs to be rolled but the LBrands (LB), IMax (IMAX), Apple (AAPL) and Wheaton Precious Metals (WPM) have already rocked higher with Barrick Gold (ABX), GE (GE) and Alaska Air (ALK) all still good as new trades.  This was a $50,000 portfolio we predicted would hit $118,535 by Jan 2020, which would be up $68,535 (137%) so up 73% is better than expected with 19 months left on these positions.  

Image result for trading professionAs we discussed in this week's Live Trading Webinar, trading is a profession (if you want to do it properly) and you should know EXACTLY how much money every one of your positions is supposed to make and you should always know if they are on or off track towards making those positions.  Once you have control of your portfolio, it's much easier to make the necessary adjustments to corect those positions that are going off course.  

Yes, sometimes we cut our losses and sometimes, like NOW – it's wise to cash out early since we SHOULD only be up about 40% at this point so up 73% is nearly double what we expected so, logically, if we cash out and take 3 months off – we'll still be right on track and, if we happen to miss a market correction while we're getting a tan – then we come back to buy cheaper stocks with 173% of our original principle.  There's really no downside – other than the irrational fear that you'll "miss" a rally.

There are always plenty of stocks to buy.  Even as worried as I am about the broad market being overbought, we still added a new Top Trade Idea on Monday (see our recent Top Trade Review for other ideas).  There's always something to trade and something is always on sale so there's no such thing as "missing" a rally unless the only way you know how to make money is in a bull market.  

Fundamentalists don't need bull markets, we only need traders and analysts to be idiots and let perfectly good stocks (like ALK, ABX and GE) go below their fair values because they have no idea how companies actually operate other than whatever profit prints out on a spreadsheet on their quarterly report.  

  • The ALK trade puts $4,600 in your pocket and uses $2,787 of ordinary margin.  Pays up to $4,600
  • The ABX trade puts $150 in your pocke and uses $1,768 of ordinary margin.  Pays up to $17,500
  • The GE trade costs $2,075 in cash and uses $1,453 of ordinary margin.  Pays up to $14,000

So that's how we can make $37,775 by Jan 2020 on those 3 trades that I still like which pay you a net cash credit of $2,675 and uses just $6,008 of ordinary margin on the puts.  See – ALWAYS something we can trade!  

More and more I am struck by how AWFUL most analysts are and the crap that passes for Financial News these days is a total joke but, of course, what do you expect for nothing?  We give away plenty of free picks but our Members know the really good stuff costs money and many of them join after making money with our free picks – it's a subscription that pays for itself!  

Speaking of hot stuff – best wishes to those in Hawaii – our hearts are with you…

Have a great weekend, 

- Phil

 


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  1. The people complaining that Mueller is taking too much time didn't seem to be bothered when Whitewater lasted all these years (and found nothing):

    https://fivethirtyeight.com/features/how-muellers-first-year-compares-to-watergate-iran-contra-and-whitewater/


  2. Did the baby boomers kill America:

    http://time.com/5280446/baby-boomer-generation-america-steve-brill/

    Lately, most Americans, regardless of their political leanings, have been asking themselves some version of the same question: How did we get here? How did the world’s greatest democracy and economy become a land of crumbling roads, galloping income inequality, bitter polarization and dysfunctional government?

    As I tried to find the answer over the past two years, I discovered a recurring irony. About five decades ago, the core values that make America great began to bring America down. The First Amendment became a tool for the wealthy to put a thumb on the scales of democracy. America’s rightly celebrated dedication to due process was used as an instrument to block government from enforcing job-safety rules, holding corporate criminals accountable and otherwise protecting the unprotected. Election reforms meant to enhance democracy wound up undercutting democracy. Ingenious financial and legal engineering turned our economy from an engine of long-term growth and shared prosperity into a casino with only a few big winners.


  3. Phil/RTY

     

    Do you still have your RTY short?  Do you have a target?


  4. Is that a healthy market:

    Three of the Five Horsemen contributed nearly 60 percent of the S&P 500 index’s total return year to date, says S&P. Contribution to YTD gains:

    Amazon ….. 25.5%
    Apple …….. 18.2%
    Microsoft … 15.5%
    TOTAL ……. 59.2%


  5. Good Morning.


  6. Phil, or perhaps BDC or anyone else who has some knowledge in the area;

    any thoughts on REGI? apparently they had some poor aquisitions in the past and valuation is hard due to the many subsidies they receive, but the person who mentioned it seems to think they have turned a corner. 


  7. Good morning!  

    Once again, 2,710 is bouncy on /ES, 1,625 on /RTY, 24,700 on /YM and 6,866 on /NQ so watch 24,700 to break if we're heading lower.  

    Big Chart still generally bullish with no one likely to fail any major lines today.

    Too much time/StJ – What a completely BS thing to say but, then again, they are talking to a very uneducated base who think 12 months is a lot in an investigation – especially when all the parties involved refuse to meet or turn over requested documents.  I like that chart, more indictments than Watergate already and the idiot Republicans still try to say it's a "witch hunt".  I remember when Trump used to say just pleading the 5th means you're guilty and shouldn't hold office – indictments are WAY past pleading the 5th!  

    Boomers/StJ – So they are saying Democracy doesn't work.  Time for me to throw my hat in for Benevolent Dictator.  

    Image result for kill all the lawyers

    My first 100-day plan is already shaping up!  

    /RTY/Jeff – Yes, I have 5 short at 1,627.12 because I was working on the post when it hit 1,624 or I'd have just 2 short now but then would have gone back to 4 at 1,630 for a 1,627 average anyway (but there would have been a profit on 2 at 1,624, of course).  

    Healthy?/StJ – Not at all!  

    REGI/Crs – I don't follow them.  They seem pretty erratic in earnings but probably do well when oil is expensive, so there's that.

    Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
    Revenue $m 1,015 1,498 1,274 1,387 2,041 2,158 2,429 2,400 2,217 +16.3%
    Operating Profit $m 15.9 193.3 85.5 -154.7 59.4 -68.5 155.8      
    Net Profit $m 22.3 186.4 82.6 -151.4 44.3 -79.1 151.2 263 67.3  
    EPS Reported $ 1.27 5.00 2.00 -3.44 1.06 1.14 6.84     -2.1%
    EPS Normalised $ 1.27 5.00 2.00 -0.86 1.41 1.96 7.59 6.68 1.70 +9.1%
    EPS Growth % -15.1 +294.9 -59.9     +38.7 +560 +241.6 -74.6  
    PE Ratio x           8.51 2.19 2.49 9.79  
    PEG x           0.035 0.009 n/a n/a
    Profitability

  8. Phil – CELG is quite the falling knife.  It's now selling at less than 10 times expected 2018 earnings and 8 times 2019 estimates.

    Is it getting cheap enough to be of interest  ?


  9. CELG – albo,  I have been watching it too.  The Jan 20 $65 puts are at $4.90, but the momentum is quite negative and i feel we may have a better opportunity in the future.  Would love to hear Phil's thoughts. 


  10. I don't know if it's a market sign but that's the biggest crow(??) I've ever seen and it's been parked on that branch all morning – probably looking for a child to snatch from our park!

    Image may contain: tree, plant, bird, sky and outdoor

    CELG/Albo – Well, nothing we didn't expect.  Now the question is, is $80 a fair price?  I'm just so down on the JUNO deal that I'm not even sure I like them at $80 ($58Bn) as the forward earnings estimates are still speculative at best but let's say $6/share puts them around $13 and $5 would be more than 15x earnings so I think I could say $60 would make me very comfortable – but I doubt the go that low.  Nothing to rush into meanwhile… 

    Submitted on 2018/01/08 at 4:03 pm

    CELG/Stock – They are getting generic competition for a drug that's half their revenues.  Look what happened to TEVA when 20% of their revenues went generic.  GILD I still like, but need to see them pull back a bit. 

    Submitted on 2018/01/22 at 10:36 am

    CELG/Albo – I didn't pick them this year because I thought they didn't have enough in the pipeline.  This is their fix. 

    Submitted on 2018/02/05 at 2:56 pm

    CELG/Stu – I do not like what they are spending on JUNO or the fact that it indicates that, internally, they are out of ideas.  They are spending $10Bn to buy a company that doesn't actually make money and has no sales?  Really???  


  11. CELG – Thanks.  Wish I had shorted them in January following your comments !


  12. That looks like a well fed crow – there must be some good eats in the hood!


  13. Long-Term Portfolio Review (LTP) Part 2:  Only one adjustment was made in Part 1, we'll see if Part 2 goes as smoothly.  For all my complaining about how hard it is to trade this market - these are some awesome positions!  

    • DIS – Brand new and already moving our way.
    • F – On track and paying a nice dividend while we wait. 
    • FNSR – We got aggressive on these but it's likely to be a slow recovery.
    • GE – We got aggressive on these and earnings were good but it's going to be a long, slow recovery as well. 
    • HBI – Glad we waited for earnings.  Still a bit below our track but close to even is a big improvement!  

    • HMNY – I would rather have the stock at this point but if we sell the calls for 0.33 and buy the stock for 0.66 then we spend 0.33 but if the stock falls to 0.33 and we buy then, then we're still spending 0.33 so we can't really lose at this point – which means there's no point in doing anything other than waiting. 
    • HRB – Just last month it was still good for a new trade.  Now it's move on up.
    • IMAX – I got bored banging the table on this one, now it's gone.
    • LB – We made some moves last time – not helping yet!  

    • MO – Recent addition (the bull spread added to short puts) and still good for a new trade.  
    • MT – On track.
    • NLY – Waiting to sell short calls at a better price.  Hopefully we can get $1 for the $12s. 
    • OPK – Double entered by accident, still good for a new trade.
    • SPWR – Finally taking off!  

    • THC – Nothing to do here but wait to collect the rest of our money.  
    • UCTT – They beat on earnings (4/26) at 0.69 but guidance was flat so not much of a bump.  I say give them another Q (0.57 expected) as I really think this is a good bottom for a $16 stock earning over $2/yr.
    • VRX – We called a PERFECT bottom on this one, working out like THC.  
    • WBA – Still good for a new trade.  Slow roll with the merger.  

    • WPM – Our 2018 Trade of the Year is on track even though silver hasn't moved much.

    So NO adjustments at all in Part 2 yet we're making good money and even finding a few things to add each month – I think we deserve a vacation!  


  14. NXPI – NXP Semi ticks higher following encouraging comment out of Beijing regarding the QCOM/NXPI deal approval – Dow Jones  


  15. Another shooting @ high school in Texas. 8 students dead so far!! Just another day in NRA paradise.


  16. Love it-Jack is cut to 100 from 110 by analyst? when it is already @ 80? I shorted it thankfully b4 earnings.


  17. CHK!


  18. NXPI very happy:

    OPK/Albo – Yikes!  

    Shooting/Pirate – So sickening.  This weekend will "not be the time" to talk about doing something, of course.  

    JACK/Pirate – I like them but they spun off Qdoba, so hard to determine what they are really worth now. 

    Even if things are good, barely $4/share in earnings.  

    Here's trump all smiles as people applaud him as he's about to speak about the school shooting.  Only God can fix things, he says… In case you missed it, that's 3 shootings since last week.

    On Wednesday, an Illinois school resource officer shot and wounded a former student who fired a weapon near a graduation rehearsal at Dixon High School, authorities said. The suspected gunman faces three charges of aggravated discharge of a firearm.

    On May 11, a 14-year-old boy in In Palmdale, California, went to Highland High, his former school, and began shooting a semiautomatic rifle shortly before classes began. He was taken into custody and is accused of attempted murder. One person was wounded.

    Doesn't even count if there's not multiple homicides.  If only we could figure out how to stop this sort of thing – such a puzzle….  Trump is right, praying is our best course of action…

    Image result for trump praying cartoon


  19.  MAT

    May 8:  ~~•Mattel  early strength attributed to speculation that Hasbro (HAS) could make another bid for the company.

    Today:   MAT – Mattel said to have rejected a merger approach from MGA Entertainment (run by Bratz creator Isaac Larian), according to the WSJ.

    Added some more short $12 puts.    Where there's smoke ?


  20. Here's an example of 1 death versus 13,000.

    ONE.

    But yeah, keep saying idiotic shit like "guns don't kill people…" because being idiotic and stupid is what idiotic and stupid people are good at.


  21. RTY/Phil- holding the shorts into the weekends?


  22. Gun license/BDC – My kids go through that much trouble to get a driver's license and no one screams that's unfair…

    /RTY/Dave – I have 3 short at 1,629.93333 at the moment so yes, I'm happy with that into the weekend.

    Oil and /RB came down a bit – they overreached.  

    Not honey badger though, he don't care…

    Finally gold pops a bit.

    Explosive devices in the school too!  This guy was really going for it.

    Farm Bill fails 198-213 – what idiots.  That should cause a sell-off but it's Friday so 50/50.


  23. GIS/Phil- we added GIS to LTP, I cant see it in the review


  24. Must have missed adding it.  


  25. GIS/Phil- does it need any adjustments? seems pretty okay even though the stock trades close to the 40 long calls


  26. TSLA having a bad day.  

    Oh, I see, we missed GIS from the last cycle, the trade was:

    GIS also nice and boring and well-priced at $45, those should go in the LTP in the very least selling puts.  Let's make this play official for the LTP:

    Sell 10 GIS 2020 $45 puts for $5.15 ($5,150)

    Buy 20 GIS 2020 $40 calls for $7.50 ($15,000)

    Sell 20 GIS 2020 $52.50 calls for $2.20 ($4,400) 

    That's net $5,850 on the $25,000 spread that's $10,000 in the money to start.  Profit potential is $19,150 (327%) and, of course, once we're at $50 we can sell some calls like 5 short July $50s for $1+ and, if we collect just $500 every quarter, that's another $3,500 we can bank on the trade.  

    Certainly no trouble filling that one as they are lower now.

    No, Dave, nothing to adjust, they are simply testing $40 and hopefully forming a base.  Oh look, The Street agrees with me:

    General Mills Could Improve Here as Part of a Base Pattern

    Berko: General Mills' turnaround worth an investment (plus you get a holiday gift box)


  27. OPK/Phil- still like OPK? I didnt get fill the last time, was thinking given the sell-off this can be opportunity for me to get in


  28. OPK/Dave – Though it's not final, this ruling by Medicare can severely impact OPKs main test.  That puts them back on the outside track and it's very unlikely this will turn around quickly as these reviews can drag for more than a year.  In THEORY though, the 4Kscore test is a relatively inexpensive way to avoid a biopsy – so it's not going to go away – this is just one key coverage approval they didn't get.

    The 4Kscore test has been included in the National Comprehensive Cancer Network Guidelines® (NCCN) since 2015, and European Association of Urology Prostate Cancer Guidelines since 2016.  Recommendations are based upon expert panels’ assessment of peer reviewed literature to provide clinical standards for prostate cancer care. Both guidelines recommend the 4Kscore test can be used as an aid in decision making before a first or repeat prostate biopsy in men with elevated PSA or other clinical symptoms.  4Kscore test has 95% sensitivity and 93% Negative Predictive Value for the identification of aggressive prostate cancer in patient population recommended by NCCN.

    The 4Kscore test has been ordered by more than 9,000 practicing physicians worldwide and extensively studied with results presented in 18 peer-reviewed scientific publications involving more than 25,000 patients.  Results of five new studies covering the 4Kscore test will be presented at the American Urological Association's 2018 Annual Meeting this weekend in San Francisco, including the second study demonstrating the 4Kscore test’s ability to predict prostate cancer mortality in men with elevated PSA.  A study will also be presented at the American Society Clinical Oncology meeting in June 2018 demonstrating the 4Kscore has clinical utility for management decisions of men diagnosed with low and intermediate risk prostate cancer due to its strong association with radical prostatectomy pathology outcome. 

    “The 4Kscore test has proven to be a significant benefit to my patients, by both identifying those men who are at higher risk of significant prostate cancer who would benefit from a prostate biopsy, while also helping me to avoid biopsies in men who are at low risk,” said Edward Schaeffer, MD, PhD, Chair of the Department of Urology at Feinberg School of Medicine and Program Director of the Genitourinary Oncology Program at the Robert H. Lurie Comprehensive Cancer Center of Northwestern University. “There are numerous cases where the PSA may not have led to a biopsy, but an elevated 4Kscore led to finding aggressive prostate cancer early enough to be beneficial.  It would be a real loss if 4Kscore was not available to assist in making the best decision for my patients.”

    So this may be your last chance to get out before they get killed or the last chance to get in before they are approved and the stock doubles…

    That's why it wasn't in the OOP – too risky.  Not a very big position for the LTP either with 10 short $5 puts ($5,000)

    Long Call 2020 17-JAN 3.00 CALL [OPK @ $4.06 $-0.82] 30 5/9/2018 (609) $5,400 $1.80 $0.18 n/a     $1.98 $-0.54 $525 9.7% $5,925
    Short Call 2020 17-JAN 7.00 CALL [OPK @ $4.06 $-0.82] -30 5/9/2018 (609) $-2,400 $0.80 $0.00     $0.80 $-0.40 $0 0.0% $-2,400
    Short Put 2020 17-JAN 5.00 PUT [OPK @ $4.06 $-0.82] -10 5/9/2018 (609) $-1,950 $1.95 $-0.08     $1.88 - $75 3.8% $-1,875

  29. BBBY – Up.

    Trading in the gap.


  30. I was trying to do some basic valuation modelling of some of the larger Cannabis companies today (Aurora Cannabis, Canopy Growth, Aphria) but quickly realized that the combination of short history, rapid recent growth and potential massive changes in regulation/customer base in the near future makes estimating a future value very difficult for such companies….

    So i've started to turn my focus a little. There has been a real flurry of acquisitions in the industry. My latest idea is that I'll go through the earnings reports and MD&A and try to put together a bit of a hit list of likely acquisition targets.

    go through the reports and see where the larger companies are looking to expand, which aspects of the business and where geographically.

    then look at what is available for the smaller companies in those segments to see which fit the bill

    any thoughts? suggestions? advice? 


  31. " MAT

    Added some more short $12 puts.    Where there's smoke ?"

    Premium has been rich in there all year, sometimes it really gets pumped up when the rumors start flying. Selling it on both sides has been great! 


  32. Atitlan – Well done !


  33. CRS-I've been searching and researching the cannabis from way back. Was into GWPH for quite awhile and  it paid off. Cron is a Canadian company that is traded here and has had good revenues and is going heavy into the CBD oils which are popular. My long shot trade is RVVQF @now .66, but it is involved with the native Canadian Indians entry into the market. They can grow, distribute without the gst as they are exempt and therefore be more profitable and desirable to the general populace. (might be). But it is a small investment so it will be interesting to see if it plays out.


  34. Not a big surprise:

    https://yro.slashdot.org/story/18/05/18/1339246/satellite-data-strongly-suggests-that-china-russia-and-other-authoritarian-countries-are-fudging-their-gdp-reports

    China, Russia and other authoritarian countries inflate their official GDP figures by anywhere from 15 to 30 percent in a given year, according to a new analysis of a quarter-century of satellite data. The working paper, by Luis R. Martinez of the University of Chicago, also found that authoritarian regimes are especially likely to artificially boost their gross domestic product numbers in the years before elections, and that the differences in GDP reporting between authoritarian and non-authoritarian countries can't be explained by structural factors, such as urbanization, composition of the economy or access to electricity. Martinez's findings are derived from a novel data source: satellite imagery that tracks changes in the level of nighttime lighting within and between countries over time.

    China's GDP could be 1/2 of what they say it is…


  35. Phil:  I purchased 2400 SKT for an average cost of $21.82.  I was able to sell 2020 20 calls for for 1400 shares at $4.02.  My orders for calls to cover the remaining 1000 shares never filled.  At the moment the 2020 20 calls would sell for $2.30.  I've also sold 24 2020 short puts at strikes ranging from 15 to 22.50.  Sentiment seems increasingly negative on SKT.  My question is:  would you simply cover the remaining shares with the 2020 20 calls at the current price?  Or would you take the loss and perhaps sell lower strike SKT or other short puts to make it up?  What is your general take on SKT at this point?

    Here is a recent S&P update on SKT:  "05/02/18 13:21 pm ET … CFRA LOWERS VIEW ON SHARES OF TANGER FACTORY OUTLET CENTERS TO SELL FROM HOLD (SKT 22.32**): We lower our 12-month target price by $6 to $18, equal to 7.5X our 2018 FFO per share estimate, in line with Class B mall peers. We lower our FFO per share estimate by $0.05 to $2.40 for 2018 and by $0.10 to $2.45 for 2019. SKT posts Q1 FFO per share of $0.60 vs. $0.58, $0.02 above consensus. However, 2018 FFO per share guidance was lowered by $0.03 and same store net operating income (NOI) guidance was lowered due to continued retailer bankruptcies. Portfolio occupancy was 95.9%, down from 96.2% in the prior year, while same center NOI was down 1.5%. We lower our view given SKT continues to execute short-term (less than 12 months) leases to keep occupancy above 95%, but this is forcing SKT to accept increasingly lower rents. Total re-leasing rates were down 2.4% on a cash basis and new disclosures imply the short-term leases were renewed at rates nearly 26% lower. We also note the percentage of short-term leases grew to 16.4% of all renewals from 15.0% in the prior quarter.."

    Thank you.


  36. Cannabis/Crs – Don't forget the fact that they are all nothing to PM and other big tobacco, who will either buy them or wipe them out before their dreams of national legalization are fully realized, so the upside is not what people think.  Also, the price of pot will fall and fall as more state legalize the supply.

    Overall, though there will certainly be huge winners – it's not much different than betting on which 3D printing company will dominate (still no winners) or which cryptocurrency will catch on (crap shoot) so I haven't been motivated to look too hard.  

    MAT/Ati – The problem with MAT is they lost Star Wars and Disney to HAS so now they are Barbie, Barbie, Barbie – not much growth likely.  Seriously, this is a list of their top-selling toys.

    GDP/StJ – I don't think China exaggerates GDP that much but it's debt-funded GDP – that's the real hidden difference. If they stop spending, that whole thing collapses.  

    SKT/John – It depends.  If you are just in it for the 6% dividend, then cover up.  How CFRA goes from $18 to $6 based on a 0.3% decline in occupancy is beyond me!  I guess they think rents continue to trend lower but again, short-term leases went from 15% to 16.4% so all this hand-wringing is over 16.4% of their portfolio declining 2.4%?  I'd certainly DD at $6 or even $9 and then again at $6 but, for now, I'd sell the 2020 $20 calls for $2.30 because that's net $22.30 and the stock is at $20.35 so WHY WOULD YOU NOT DO THAT???  If you are worried – aside from the obvious why would you hold a $50,000 worth of a stock you are worried about – then sell the $17.50 calls for $3.70 (net $21.20) and you have more protection.  

    Let's say I buy 1,000 SKT now for $20.37 and sell the 2020 $17.50 calls for $3.70 and the 2020 $17.50 puts for $1.90.  That's net $14.77 ($14,770) and I collect $1,400 in dividends.  If I get called away, at $17.50, I get $17,500 back for a gain of $2,730 (18.4%), which is way better than the dividend and my put obligates me to start again at $17.50.

    If it goes below $17.50 and I get assigned, I have 2,000 at net $16.135 ($32,270) and let's say it drops to $6 and I never sell any more calls or puts so I buy 2,000 more at $6 ($12,000) and now I have 4,000 shares for an average of $11.067.  If they are still paying $1.40 dividend – what do I care what price the stock is?  Only if they cut the dividend is this a problem (like FTR did) but then you can still sell 1/2 cover of $7.50 calls for $1 to pick up 0.50 per $11.067 (5%) while you wait.  

    So, as long as $50,000 is not a big part of your portfolio, don't worry about a dividend-paying REIT that already survived the 2008 crisis.  If $50,000 is too much – scale back now to an amount you'd be HAPPY to double down on at $11.

    People thought the World was ending in 2009 and SKT held $10 and they were doing about $350M back then vs $490M now.  If you don't think 15.3M square feet of real estate is worth $2Bn ($130/foot) then this is not a stock for you but if you think they can get more than $10/foot from tenants – then what's the difference if they go out of favor for a while?

     


  37. PHIL  /  crs101010 

    Cannabis

    What about

    The Scotts Miracle-Gro Company (SMG)


  38. Phil,  Thank you for such a detailed response to my question. 

    FYI, S&P did not drop their price target to $6.  They dropped their price target on the stock BY $6, from $24 to $18.

    Have a good weekend.


  39. SMG/QC – They are poised to take advantage and they even acquired some pot-focused equipment makers but you didn't discover this, they shot up from $65 last year to $110 and now back to $85, which is not a bargain but a more realistic assessment of the new opportunities.  

    $18/John – Oh, that's way more realistic then!  As I said, I'd buy the crap out of them at $6 (or $11).  

    Have a great weekend folks! 

    - Phil


  40. CRS. Canada is on the verge of nationalizing cannabis for medicinal and recreational use. That's why these are mostly Canadian company's.


  41. Bezos might throw in a couple of billions to help defeat Trump next time:

    https://talkingpointsmemo.com/livewire/trump-amazon-us-postal-service-rake-hikes

    President Trump has been urging the postmaster general to double the U.S. Postal Service rates for Amazon, the Washington Post — which is owned by Amazon founder Jeff Bezos — reported Friday. Some administration officials told the Post that many Trump attacks on Amazon — which include accusing the Washington Post of being its “chief lobbyist” — are driven by articles in the newspaper he didn’t like.

    U.S. Postmaster General Megan Brennan has tried to explain to Trump that the contracts that establish postal rates go through a regulatory commission, according to the Washington Post, and that the U.S. Postal Service has benefited from its relationship with the online retailer.

    I guess Trump needs more explaining. Just like HIV and HPV! What an idiot…


  42. As pot becomes legal less people use it. There's no more thrill to it. Read freakonomics, they explained it well.


  43. House Farm Bill Collapses Amid Republican Disarray


  44. 2 weeks after Hawaii volcano eruption, residents say it’s getting worse


  45. stjeanluc 

    Maybe Jeff Bezos should run to be the president.


  46. Bezos / qcmike – I guess we could do worse (clearly right now for example) but if I had to choose I would rather have Bill Gates! But it would be great to see Bezos destroy Trump's business and clearly he has the means…


  47. stjeanluc 

     Bill Gates would be good





  48. AI Made These Paintings




  49. The World’s Most Powerful People 2018


  50. Brazil- do we have any members based in S.A. ; Brazil in particular. ?


  51. Hi Phil, do you mind giving me your thoughts on PLAY?  This was an old recommendation, and I'm currently short the 2020 $45 Puts, with a basis of $6 (currently $10) with the stock at $37.  Far from a disaster.  Revenue is trending in the right direction, but same store sales have been declining in the last couple quarters.  They are having a hard time getting customers to keep coming back to their stores.  I suspect they will figure this out, and at least get same store sales to stabilize.  It looks like they are only worth about 15x next years earnings, which seems cheap for a company that should be able to continue to grow at impressive growth rates.  What do you think?   Roll my $45 puts down to 2x at $35 for about even money?  Time for a bull call spread?


  52. Good morning! 

    Futures are popping over trade war being postponed.  Deal seems to be that China will not decrease exports to US but will increase imports, which really just screws some other countries, which is why all these trade deals are nonsense.  

    Anyway, Dow up 1%, /ES right back to 2,728 (as usual) but /TF limited pop (1,632) as they also didn't care in the first place (80% US business).  

    Some countries in Europe are closed, including Germany, so it will be an extra-thin, extra-meaningless day.  I have a lunch meeting but I'll be back hopefully not long after 1pm.

    PLAY/Palotay – I liked their deal with SHLD to open stores within stores but it doesn't seem to be helping either of them.

    PLAY's numbers are good but not great but, at near $3/share, $38 is a bargain, overall.

    Year End 04th Feb 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
    Revenue $m 608.1 635.6 746.8 867 1,005 1,140 1,242 1,364 +13.4%
    Operating Profit $m 43.7 51.0 46.3 103.7 150.5 165.1     +30.4%
    Net Profit $m 8.78 2.17 7.64 59.6 90.8 120.9 106.6 120.1 +69.0%
    EPS Reported $ 0.22 0.055 0.21 1.39 2.10 2.65     +63.8%
    EPS Normalised $ 0.22 0.055 0.70 1.72 2.34 3.09 2.61 2.98 +68.9%
    EPS Growth %   -75.3 +1,160 +145.6 +36.5 +31.9 -15.4 +14.0  
    PE Ratio x           12.3 14.6 12.8  
    PEG x           n/a 1.04 n/a
    Profitability

    There's not a lot of debt either and the market cap is just $1.5Bn and I think VR will be good for them as most people aren't going to have major rigs in their homes – so they'll go to the arcade to play.  You're in for net $39, so I would not worry about it – more like it's time to buy the bull call spread!  I'd rather put money into that and save a possible 2x roll for if there is real trouble (and 2021s might be out by then). 

    Dave & Buster's Offers Compelling Upside After Recent Sell-Off

    Dave & Buster's: The Selloff Is Overdone. Upside In Unit Growth, Buybacks, And Potential Sale

    Dave & Buster's: Short-Term Volatility Provides Attractive Entry Point

    Dave & Buster's: A Value Stock With A Clear Growth Path

    We should add it to the LTP later.