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Too Much Tuesday? Amazon Shows the Sky May Actually be the Limit

Down 10%?

That's right, Amazon (AMZN) is down about 10% from that big post-market spike it took to 3,650 on 4/29 on the release of their earnings.  Despite earning $27Bn in the past 12 months (through 3/31) it's hard to rationally support a market cap of $1.85Tn at 3,600 as that's 68 times those earnings and those earnings came in a year which was perfecft for Amazon, with everyone staying home (with Government checks) and ordering on-line for an entire year.  In all likelihood, this may simply be as good as it gets for AMZN.

Expectations for 2021 are for another $27Bn to be put in the books at AMZN but I'm betting they miss those targets as people begin going outside again in the second half of the year.  Whatever the case, it's all about trade-offs and sales at AMZN's Whole Foods were off 16% last year – despite the fact that people still eat food.   In fact, had not Prime Moved up to a record 200M Members in 2020 – AMZN would not have had an earnings beat at all as Prime Revenues are now $25.2Bn, accounting for almost 100% of the company's profits (much like Costco).  

Like Tesla (TSLA) trading Bitcoins, it should bother you when the company you invest in doesn't actually make money doing the thing they're supposed to be doing – like selling cars or selling merchandise.  Bezos and Musk have the same problem as neither one of their core businesses is inherently profitable that way Microsoft is with software or Google and Facebook are with selling search ads.  Investors tend to treat them all the same and that's why you have these insane P/E ratios for AMZN (68x) and TSLA (686x) but more normal ones for MSFT (34x), FB (27x) or GOOGL (31x).  Investors are trying to put the square pegs on the round holes…

Part of it is from lazy, poor valuation models that tend to treat all stocks in a sector like they are the same and that's very much in line with the very poor quality of analysts these days.   Most people get their market analyst for free these days and that advice tends to come from bloggers who have no particular qualifications whatsoever but even the "professional" analysts generally suck – even the ones that don't have an agenda to steer the sheeple into whatever their Bankster Masters dictate needs to be bought or sold.

Yesterday, in our Live Member Chat Room, we re-picked our 2020 Stock of the Year, which was Barrick Gold (GOLD) as it was back below the $22 line, which gives them a market cap of $39Bn for a company that made $2.3Bn last year and should do about the same this year.  GOLD is a great hedge against inflation but there's a huge bonus to Barrick who sold 4.5M ounces of gold last year for about $1,050 ($4.7Bn) but also sold 450M pounds of copper at $2/pound for $900M.   

This year, Gold has been above $1,700 and Copper has been above $3.50 – so we will see substantial gains in revenues and certainly profits when they report earnings tomorrow.  That's why we jumped in and we were joined by plenty of others as the stock popped 5% yesterday.  Fortunately, in our Long-Term Portfolio (LTP), we added GOLD on the way down in January and February and have a substantial position with an aggressive $45,000 spread:

GOLD Short Call 2023 20-JAN 27.00 CALL [GOLD @ $22.23 $0.00] -50 1/7/2021 (626) $-18,600 $3.72 $-1.42 $-1.79     $2.30 $0.00 $7,100 38.2% $-11,500
GOLD Short Put 2023 20-JAN 20.00 PUT [GOLD @ $22.23 $0.00] -20 1/8/2021 (626) $-7,400 $3.70 $-1.03     $2.67 $0.00 $2,060 27.8% $-5,340
GOLD Long Call 2023 20-JAN 18.00 CALL [GOLD @ $22.23 $0.00] 50 2/26/2021 (626) $21,250 $4.25 $1.75     $6.00 $0.00 $8,750 41.2% $30,000

We actually collected a net credit of $4,750 (we rolled and doubled down on the original position) and, if all goes well, we end up with a profit of $49,750 (1,047%) if GOLD is over $27 in January of 2023 and already the net on the spread is $13,160 for a $17,910 (377%) gain on cash so far.  The short puts obligate us to buy 2,000 shares of ABX for $20 but we REALLY would like to own them at that price – so not much of a handicap there and the $4,750 gives as a $2+ discount to that price per share.

Yesterday's Trade Idea for our Members was:

We have them in the LTP but, as a new play, I'd go with:

  • Sell 10 GOLD 2023 $23 puts at $4.60 ($4,600)
  • Buy 20 GOLD 2023 $18 calls for $6 ($12,000)
  • Sell 20 GOLD 2023 $25 calls for $2.85 ($5,700) 

That's net $1,700 on the $14,000 spread so $12,300 (723%) upside potential if GOLD is over $25 in 18 months.  Worst case is owning 1,000 shares at $24.70 – 10% higher than it is now.

Would you rather make 723% in 18 months buying a gold miner during an inflationary period with a looming copper shortage or chase after AMZN at 68 times earnings coming off a record-breaking year when people were forced to stay home and shop with money the Government sent them?  Which is more likely to work out in the next 18 months?  

That's it – that's how we find an investing premise and play it.  It's not complicated but you have to learn to tune out all the idiots and focus on some good, common-sense investing ideas that are based on sound fundamentals that YOU know are true.


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  1. Good Morning.


  2. AMZN/Phil – we talked a few months ago about AMZN being a warehousing retailer in most people's eyes, but someone showed that where they make bucks is with their cloud storage – what we used to call "server farms" 20 years ago. Is that piece a money loser as well?


  3. Good morning!

    Still sick, kind of like the flu but mild though so stuffed up I couldn't stay asleep last night.  

    Market down a bit at the open.  

    AMZN/Snow – That's the rest of their profits but $20Bn out of $27Bn is from Prime Memberships and then probably $5Bn from Web services and the retail operation and Whole Foods are break-even at best.  Still, if that's what it takes to drive the profits – that's fine – it's just not infinitely scalable and, therefore, high multiples don't make sense.

    • March Factory Orders: +1.1% to $512.9B vs. +1.3% consensus and -0.5% prior (revised from -0.8%).
    • Fabricated metal products, up six of the last seven months, led the increase, $1.4 billion or 4.0 percent to $35.4 billion. New orders for manufactured nondurable goods increased $3.8 billion or 1.5 percent to $256.0 billion.
    • Shipments +2.8% to $257.6B.
    • Unfilled Orders +0.4% to $1,087.8B.
    • Inventories +1% to $431.9B.
    • Three semiconductors have now warned that a correction is coming, but Citi thinks "it's too early" and expects "more upside before the crash."
    • Analyst Christopher Danely notes that Texas Instruments (TXN -0.6%), ON Semiconductor (ON -0.6%), and Power Integrations (POWI -0.8%) provided guidance for a "below-seasonal quarter due to double ordering."
    • Danely: "We believe it’s too early to downgrade as all three companies are not experiencing a decline in bookings or lead times, they are just concerned that business is 'too strong'."
    • Citi thinks the correction will happen at "some point" but only after the shortages are fixed and lead times narrow, which could happen in Q4 or the first half of next year. The firm expects upside to Q2 and Q3 as lead times remain extended.
    • Citi maintains Buy ratings on Texas instruments and ON Semi and doesn't have a rating on POWI.
    • The Philadelphia Semiconductor Index is currently down 1.6%, slightly ahead of the 1.3% decline from the broader tech sector (NYSEARCA:XLK).
    • Related: Yesterday, Needham raised its ON Semi price target after the strong earnings report.
    • The major averages are declining, as selling continues in Big Tech and momentum stocks and appetite for recovery plays diminishes after yesterday's rally.
    • The Nasdaq (COMP.IND) -1.1% continues to be the laggard, with Info Tech (NYSEARCA:XLK) at the bottom of the S&P sectors.
    • Chip and chip equipment stocks are struggling again and all the megacaps are lower.
    • The S&P (SP500) -0.5% and Dow (DJI) -0.1% are also in the red.
    • Energy (NYSEARCA:XLE) is one of only two S&P sectors moving up, with WTI futures +1.5% at around $65.50, moving closer to highs hit in early March.
    • Financials (NYSEARCA:XLF) are also higher.
    • The 10-year Treasury yield reversed earlier gains and is down 2 basis points to 1.58%. That's another worry for those betting on a reopening rally as New York and Florida further ease restrictions.
    • It's a "pivotal moment" for the reopening narrative as the markets have brought forward a lot of upside, Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, says.
    • "If we can't get a two handle in the first half of the year, it's going to be very difficult to justify getting 10-year yields above 2% before the absolute end of the year when the market starts seriously considering and pricing in tapering," Lyngen told Bloomberg.
    • The market could be seeing a sell-in-May reaction, but BofA Securities says that history suggest a better plan would be to buy weakness in May and sell July and August strength.

    At this point in the market, stocks are just priced so high that nothing they do can justify their current valuation:

    • iRobot (NASDAQ:IRBT) is down 11% in early trading-session despite reporting beat on both lines and raising revenue guidance in its first-quarter earnings results. 
    • Revenue of $303.3M (+57.5% Y/Y) beats consensus by $39.25M.
    • The revenue grew 40% in the U.S., 74% in EMEA and 53% in Japan Y/Y driven by stronger-than-expected demand in major region.
    • Direct-to-consumer revenue of $35M (+146% Y/Y); E-commerce revenue grew 56% Y/Y.
    • Product revenue mix has shown balance during the quarter, reflecting the combination of introducing the i3 Series in major markets outside of the U.S., limited availability of certain premium Roomba robots and lower pricing on certain other product SKUs.
    • Adjusted operating income of $15M, compared with a non-GAAP operating loss of $14.4M a year ago.
    • GAAP EPS of $0.41 beats by $0.62.
    • Recently, the company announced its $50M buyback program.
    • iRobot ended the quarter with $500.8M in cash, cash equivalents and short-term investments.
    • FY 2021 Guidance Highlights:
    • Revenue of $1.67B-$1.71B from prior guidance of $1.635B-$1.675B vs. $1.65B consensus.
    • Re-affirm Non-GAAP EPS prior guidance of $3.00-$3.25 vs. $3.22 consensus.
    • Adjusted gross profit of $645 – $675M.
    • Adjusted operating income to be in the range of $110 -$120M, almost double of GAAP operating income range of $69 – $79M.
    • Seeking Alpha authors are "Bullish" on the stock while Street Analysts and Quant are "Neutral".
    • SA contributor Simple Investment Ideas writes: "iRobot Is Strengthening Its Position."
    • Northcoast Research lowers Domino's Pizza (NYSE:DPZ) to a Neutral rating after having it set at Buy.
    • The firm thinks the pizza chain could see labor and food inflation pressure margins this year.
    • "Going forward, as Domino's laps last year’s extraordinary same-store sales growth in the US, we anticipate a deceleration in comp rate even though average weekly sales volumes should remain stable."
    • In addition, Northcoast doesn't see any major catalysts in the second half of 2021 for DPZ to stoke store sales or profits materially higher.
    • DPZ -0.66% premarket.
    • During the company's earnings call, DPZ execs said the company was absorbing some of its higher labor costs and pointed to a tight market for workers.

     

    • Walgreens (WBA -0.5%) has launched the Same Day Delivery in under two hours for retail products enabling its nationwide client base to order more than 24K items on offer directly from the retailer.
    • The direct same-day delivery is an improvement from its previously launched third-party on-demand delivery made in partnership with Postmates (POSTM), DoorDash, and Instacart.
    • Yesterday, it was reported that Walgreens and its rival CVS were responsible for 70% of COVID-19 vaccine wastage.
    • Meanwhile, to expand the vaccine uptake, Walgreens has announced the launch of mobile clinics in Chicago. The company plans to implement additional mobile clinics across the country over the next two months.
    • The move will likely further enhance the company’s COVID-19 vaccination program which has so far led to the administration of over 15M COVID-19 vaccines.
    • FuelCell Energy (NASDAQ:FCEL) says the U.S. Department of Energy has awarded $8M in Phase 2 funding to continue development of its "ultra-high efficiency" solid oxide fuel cell systems for power generation.
    • The company says the additional funding comes after it showed progress in its ongoing programs, and will help support its drive to commercialize its SOFC technology.
    • "We continue to make progress in advancing our solid oxide fuel cell platform toward commercialization with the aid of key DOE programs in addition to our own capital investment," CEO Jason Few says.
    • Shares are nevertheless -5.4% pre-market after tumbling 12.8% over the previous three days; fuel cell peer Ballard Power reported a larger than forecast Q1 GAAP loss while revenues also missed estimates.
    • Ballard Power (NASDAQ:BLDP) -14.9% pre-market after reporting a slightly larger than forecast Q1 GAAP loss while revenues also came up short of analyst estimates.
    • The company had a tough quarter but remains well capitalized to pursue opportunities in the fuel-cell value chain with $1B-plus in cash, Piper Sandler analyst Pearce Hammond says, according to Bloomberg.
    • Results were soft but its pipeline is growing and better quarters lie ahead, National Bank of Canada analyst Rupert Merer says.
    • Ballard's fuel cell peers, PLUG -6.2% and FCEL -4.9%, also are lower in pre-market trading.
    • "We upgrade Boeing (NYSE:BA) to Market Perform and raise our target price to $229, up from $196," write Bernstein analysts in a new research note, as the stock climbs 0.7% premarket to $237.
    • "We see less company specific risk now that Boeing controls 787 deliveries, 77X expectations have been reset, and free cash flow estimates have been brought down (after a $3.6B Q1 loss). We still view recovery for commercial aircraft OEMs as a long process, given a mixed global recovery path, amount of excess capacity in the market and performance challenges facing many airlines."
    • "International traffic remains very low and vaccine rollouts stay uneven by country. This market view keeps us at Market Perform, as we are for Airbus (OTCPK:EADSY)."
    • "When we downgraded Boeing to Underperform in January, it was for incremental downside due to 787 manufacturing problems, which we saw as much more serious than consensus. Those problems continued and were compounded by 777X delays. Now that Boeing is able to deliver 787s without FAA inspections and 777X issues are known, there should be fewer negative surprises. Boeing should now be able to deliver roughly 100 787s in 2021."
    • Yesterday, Lufthansa agreed to order five Boeing 787-9 Dreamliners, taking the group's order book for the plane to 25.
    • Robinhood (RBNHD) says "people are tired of the Warren Buffetts and Charlie Mungers of the world acting like they are the only oracles of investing" after both criticized the no-fee broker at Berkshire Hathaway's (NYSE:BRK.A) (NYSE:BRK.B) annual meeting over the weekend.
    • "It is clear that the elites benefited from a stock market that kept many families sidelined from participating while they amassed huge wealth from decades of investing – driving a deep wedge between the haves and have-nots," Jacqueline Ortiz Ramsay, the head of public policy communications at Robinhood, writes in a blog. "Suddenly, Robinhood and other online trading platforms have opened the doors of financial markets to everyday people, deeply unsettling the old guard who will fight to keep things the same. But change is bullish. When she comes, no one can stop her."
    • Buffett said it would be interesting to see Robinhood's S-1 for the company's source of income and reiterated his contention that the broker promotes more gambling than investing, calling it a "very significant part of the casino aspect of the casino group that has joined into the stock market."
    • Munger, who has been even more withering with his criticism, said it is "God awful that something like that would draw investment from civilized men and decent citizens."
    • Ramsay writes that the majority of users are buying and holding.
    • "Retail investing in America is thriving today because everyday investors are seizing the opportunity to build their own nest egg. It may never be nearly as big as the billions upon billions that the elites in this country have amassed. But it sure is something to celebrate."
    • In February Munger called the practice of luring in those wanting to gamble on equities "a dirty way to make money" and Robinhood fired back.

  4. SEDG- getting intersintg here – growing at about 30% for the next two years w/ and EPS projected at 8.xx in two years…..   one got them at a 30X to 35 X multiple =. puts them at 250 to 280. – thoughts?


  5. Phil / SEDG- getting intersintg here – growing at about 30% for the next two years w/ and EPS projected at 8.xx in two years…..   one got them at a 30X to 35 X multiple =. puts them at 250 to 280. – thoughts?


  6. SEDG/Batman – Well let's see what we've discussed:

    Good morning!  

    I hope everyone had a nice holiday weekend.  

    SEDG/Batman – They are very nice but they were $36 last year and now $280.  That's like me saying we should look into this Amazon thing, I think on-line retail will be big. 

     

    As I said:   2020/11/15 at 10:25 am

    Power Management has big profits because no one has bothered in the space yet  and I'm a long-term investor – I don't buy things that are going to be hot for a while but that doesn't mean you can't – so there's nothing wrong with ENPH or SEDG if you are playing them for the short run but, at 90 and 66x earnings – I don't consider them a long-term investment until they correct and give us a better entry.

    I think SEDG is better as it's 1/3 cheaper and they will jockey back and forth with ENPH over market share and such but I like their GOOGL partnership, which focuses on EV charging, which makes sense to me as a major growth segment with 200M cars in the US that will go solar over the next 20 years (there's only 100M homes).

    Submitted on 2017/03/27 at 5:52 am

    SEDG/Pstas – They had such a good pop on earnings and then it faded away as oil got cheaper so that's what it's all about.  You may as well just go long oil for a short-term bet but, long-term, these guys are worth a toss.  You can sell 2019 $10 puts for about $2 and that's free money and then you can speculate a bit with the $12 ($5)/17 ($2.50) bull call spread at $2.50 for a net 0.50 per $5 entry.  

    Submitted on 2017/05/10 at 11:34 am

    SEDG/Albo – They look good, nice sales growth and actual profits.  Too bad that's poison in this market.  We made a big profit in PSW Investments last Q and now I have to find some way to lose money or our IPO will tank!  Meanwhile, SEDG is a good niche player but I'm not sure how big the niche is, so I'd play them to be flat.  Looks like you can sell 2019 $17 puts for $4 so that's a nice net $13 entry.  I'd start there and see how next Q looks before getting more aggressive. 

    Submitted on 2019/10/28 at 1:31 pm

    SEDG/Music – Nice entry.  Now the question is, simply, what's it worth now, so let's say $42/34 on the spread is net $8 and you are deep in the money so a very strong chance, say 85-90% that you'll get the full $10, which is 25% more in a year with a high degree of certainty.  The question is, do you have anything BETTER than that to do with your money for the next year?

    Let's say you flip to SPWR and pick up the 2021 $7 ($3.85)/10 ($2.50) bull call spread for $1.35.  That makes $1.65 at $10 so, if you had 10 of the SEDG spreads at $8,000, you could cash those and buy 20 of the SPWR 2021 $7/10 bull call spreads for $1.35 ($2,700) and stand to make $3,300 if all goes well and you have $5,300 in your pocket for other things.

    So, the payoff is clearly better and the capital risk is clearly lower but then you have to decide how CONFIDENT you are in SPWR making $10 vs SEDG holding $70?  I like SPWR and have been waiting to call a bottom and this is just an example but that's how you need to think about these trades if you are getting out early.  Rule of thumb is:  If you have a bird in the hand – don't trade it unless there's at least 2 in the bush!  

    Submitted on 2020/08/05 at 12:11 pm

    SEDG/Wing – Well I'm not one for following TMF but, SEDG is a 50% grower that's actually dropping $150M to the bottom line (maybe not this year) so they are a good play on this space but $206 is over $10Bn so you're paying 60x on revenues that will be off so maybe 100x so I would not chase it – I'd just watch it and catch them when/if they disappoint the MoMo crowd – like they did in March and dropped 50% in 30 days.. 

    That's when I like to buy a stock – BEFORE it jumps up 10x.  I just don't find them as interesting once they are priced at 100x because they become faddish.  

    So, take it for what it's worth as "wrong" on Thanksgiving at $280 because they ran up to $350 a month later before collapsing.  I'm just not a momentum player – if something isn't worth the current price – I stay out.  For future prospects, SEDG sounds nice and will eventually grow into their current $13.5Bn valuation but, in reality, they will be lucky to make $300M this year so you are paying the 3-5 year from now price today.  Would you do that for a home or anything else you seriously wish to own?  No!  So why would you do it with stocks?

    IF they come down to around $6Bn ($100) or even $9Bn ($150), then maybe they are interesting enough to play but 40x earnings – why? 

    INTC (our Stock of the Year) is at $231Bn at $56 and they made $21Bn last year and should make $19Bn this year (chip constraints and new plant production).  THAT is the kind of stock I like to own, one that's a bargain NOW – in actual fact – not one that HOPEFULLY will be a bargain in a few years if they make drastically more money.

    Getting back to Copper, RIO is still reasonable at $85.85, which is $137Bn but they made $10Bn last year and expect to make close to $20Bn this year.  I'd call a normal year $10-12Bn though, so they are in the sweet spot. 

    In the LTP, let's sell 5 of the RIO 2023 $69.07 puts for $7 so we net in for $62.07 worst case and put $3,500 in our pocket.


  7. investing .com is down wasnt working well all morning


  8. Looks like we're creeping back a bit.

    The Nasdaq Composite Index dropped 2.6%, stung by declines in shares of semiconductor companies, along with big tech stocks including Apple, Facebook and Alphabet.245 minutes ago

     
    Who Would Pay Biden’s Corporate Tax Hike Is Key to Policy Debate

    Four years after the 2017 GOP tax law, lawmakers and economists still disagree over whether workers or shareholders shoulder most of the burden when taxes on corporations go up.364

    JPMorgan Chase’s CEO believes a boom is coming in the U.S. economy but warned that the government could waste it away if spending plans aren’t held accountable.57

    The U.S. trade deficit widened to $74.4 billion in March on record demand for imported goods.


  9. QQQ calls.

    GBTC trading at -15% to NAV. Either the market is questioning whether they actually own the BTC they say they do, or the market is pricing in a massive BTC move downward.


  10. Such great earnings for CVS, and reasonable valuation. Non-GAAP EPS guidance of ~$7.7 for the year (GAAP ~$6.40). Cash flow from operations about 12.5B for the year. And even after the runup today, the company is trading at 100B and $81/share. Holding my shares and LEAP calls, and added some short term May/June calls, since the stock appears to be breaking out above $80/share. 


    • Bridgewater Associates founder Ray Dalio contends in a note "that most everything that is happening now has happened many times before for basically the same reasons" and says he finds 1930-45 the most recent period analogous to today.
    • He highlights in both the Roaring '20s and 2000-2007:
    1. Short rates hit 0%. The periods saw debt, wealth gaps, and bubbles during tightenings and the tightening then "led to rises in short rates that led to severe debt and economic downturns that led to big easings." (See Bridgewater chart at bottom.)
    2. The Fed needed to ease more, so it printed money and bought bonds.
    3. With short rates pinned at 0%, borrowing and collecting the carry made holding bonds profitable. But cash was trash with no nominal return and "significantly negative real returns." Those "low interest rates and all that money printing drove up the prices of most everything, most notably gold and stocks."
    4. Wealth and political gaps led to a shift from Republican leaning to Democratic leaning "and big moves to stimulate the economy and redistribute wealth through fiscal and monetary policies."
    • He also sees language from President Franklin Roosevelt echoed by President Joe Biden on:
    1. Fairness, with Roosevelt saying, "revenue laws have operated in many ways to the unfair advantage of the few" and Biden calling for "the wealthiest Americans to finally pay their fair share."
    2. Inequality, with Roosevelt calling for very high taxes to restrict high incomes that "come not only through the effort or ability or luck of those who receive them, but also because of the opportunities for advantage which Government itself contributes," and Biden saying the "labor share of national income has been declining for years, representing a worrying trend for workers and a contribution to rising income inequality."
    3. Corporations, with Roosevelt noting "the smallest corporation pays the same rate on its net profits as the corporation which is a thousand times its size" and Biden looking to "ensure that large, profitable companies pay a baseline amount of taxes."
    4. Inheritance taxes, with Roosevelt saying the "transmission from generation to generation of vast fortunes by will, inheritance, or gift is not consistent with the ideals and sentiments of the American people" and Biden opposing repealing the estate tax, or cutting taxes "on just 7,000 of the wealthiest heirs in our country."

    • Studies show that one of the best predictors of stock price performance is recent performance. In other words, what worked recently is most likely to keep working. So: What worked in April?
    • By style: Stocks with high profitability characteristics led investment factors in April, followed by those with high leverage. Rounding out the top three was value (last month’s outperformers). Should you anticipate what has recently worked to continue to work, here’s a stock screen for the stocks with “A” or greater quant grades in profitability. 

    • Using only ETFs to measure factor performance, Momentum (BATS:MTUM) rose 7.06%, Growth (NASDAQ:IUSG) rose nearly 7%, and quality (BATS:QUAL) rose 4.8%. The worst performing factors by ETF were high dividend yield (NYSEARCA:VYM) up 2.55%, dividend growth (NYSEARCA:DGRO) up 3.4% and value (NASDAQ:IUSV) up 3.3%. 

    • By sector: Real estate (NYSEARCA:XLRE) led, up 8.3%, followed by Financial Services (NYSEARCA:XLF) up 6.5%. The laggards included energy (NYSEARCA:XLE) up 0.7%, and Consumer Staples (NYSEARCA:XLP)  up 1.9%. 

    • By market cap: Large caps (NYSEARCA:SPY) led the market, up 5.3%, followed by midcaps (NYSEARCA:MDY) up 4.3% and then smallcaps (NYSEARCA:IJR) up 1.9%.

    • The best performing individual stocks in April: Picking the right investment factor alone may not have predicted either the best or worst-performing stocks however. Of the top 3 and bottom 3 in the S&P 500 in April, outsized volatility could be directly attributed to quarterly earnings reports for half of the stocks — something that would have been nearly impossible to predict. Upside earnings surprises in Equifax (NYSE:EFX) and  Pool Corp. (NASDAQ:POOL) led to gains of 27% and 22% respectively, while a downside surprise hurt Enphase Energy (NASDAQ:ENPH) shares, which fell 14% on the month. 

    • Dish Network (NASDAQ:DISH) rose 24% in the month, partially attributed to earnings, but also on the heels of a partnership with Amazon’s (NASDAQ:AMZN) AWS unit. Discovery (NASDAQ:DISCA) was among the biggest losers, -13% after earnings disappointed in a month where shares were still reportedly being sold by Wall Street banks in the aftermath of the Archegos hedge fund implosion. And lastly, Penn National (NASDAQ:PENN) dropped 15% in a month riddled with legislative developments in online gambling, and a continued downtrend in shares after recently peaking in March. Shares had risen 700% from mid March 2020 to its peak in March 2021. 

    • Stocks with “Very Bullish” quant ratings: Since 2010, the stocks with “Very Bullish” quant ratings (available to Seeking Alpha premium subscribers) have outperformed the S&P 500 by more than hundreds of percentage points. 2021 to date continued the trend of outperformance. 

    • The annual meeting of shareholders of AMC Entertainment (NYSE:AMC) - previously hotly anticipated for a key share issuance vote – has been postponed from today to July 29.
    • Shares are down 5.5% (though as part of a broad market decline), and setting up for their sixth straight down session. In those six trading days, shares are down 20%.
    • "The date change will provide additional time for its millions of current individual shareholders to have their voices heard and more time to cast ballots on important shareholder matters," the company says.
    • Along with a July 29 meeting date, the new record date for participation is June 2.
    • Today's meeting once held a showdown vote on authorizing 500M new shares for issuance, but the company shelved that plan, opting instead for a 43M-share at-the-market offering.
    • Morgan Stanley analyst Katy Huberty trims Apple's (NASDAQ:AAPL) Services growth estimates for the June quarter after "softer than expected" April App Store data.
    • Huberty moves Services from 19% Y/Y growth to 11% growth. The estimates assume 16% App Store growth in April, 7% in May, and 10% in June.
    • The analyst maintains estimates for the rest of Apple's Services segment. The overall June Services forecast drops from $16.9B to $16.46B, which is still 140bps higher than the $16.23B consensus estimate.
    • Huberty maintains an Overweight rating and $161 price target on Apple.
    • Apple shares are down 4.2% to $127.01. Yesterday, Apple headed to court to defend antitrust claims from Epic Games on the first day of the bench trial.
    • Suncor Energy (SU -0.4%) says it will delay a planned maintenance turnaround at its Base Plant oil sands mine upgrader because of surging COVID-19 cases that led to last week's declared state of emergency for Alberta's Fort McMurray area.
    • The delay will allow the company to reduce the number of contractors in the region until after similar work now underway at the nearby Syncrude oil sands mine is completed, without affecting production guidance, CEO Mark Little on today's earnings conference call.
    • "The third wave of the pandemic in Canada is significantly impacting the region of Fort McMurray," Little said. "Given this situation, and with Syncrude in the middle of turnaround schedule, we've delayed the start of our U2 turnaround at Base Plant until at least June."
    • Suncor produced 519.9K bbl/day of upgraded synthetic crude during Q1, up 3% Y/Y, due in part to efficiencies from completion of a project to add pipeline connections between upgraders at Base Plant and Syncrude.
    • Suncor shares are little changed after the company swung to a Q1 profit from a year-ago loss.

    Check out ARNC flying (from our Future Is Now Portfolio):

    Submitted on 2020/05/22 at 12:27 pm

    • Arconic (ARNC +6.1%) marches higher after multiple insiders bought shares this week.
    • On May 20, CEO Tim Myers bought ~13K shares at an average $10.37/share, CFO Erick Asmussen purchased 20K shares at an average $9.94, Chief Legal Officer Diana Toman acquired ~10K shares at an average $10.49, and two board members also bought shares during the week.
    • Shares spurted higher after Credit Suisse began research coverage with an Outperform rating and $22 price target, saying the company faces a "major inflection point" in Q3 as Ford and GM accelerate production.

    That's more reliable as GM and F are certainly moving to more electrics and need lighter cars.   They made $60M last Q and $144M in Q4 and should be good for about $160M in earnings and you can buy the whole thing for $1.3Bn at $12 so I'd say it's really undervalued as people haven't seen enough after the AA spin-off to value it properly and the virus disrupted their story getting out.

    So, ARNC is a great addition for our Future is Now Portfolio and we can start with:

    • Sell 10 ARNC Jan $10 puts for $1.55 ($1,550)
    • Buy 20 ARNC Jan $8 calls for $5 ($10,000) 
    • Sell 20 ARNC Jan $12 calls for $2.60 ($5,200)

    That's net $3,250 on the $8,000 spread that's currently 100% in the money with a $4,750 (146%) potential gain in 8 months if ARNC simply stays above $12.  Downside risk is owning 1,000 shares at net $13.25 (if the bull call spread is wiped out), so it's a little aggressive but the net margin on the puts is only $617 – so we can easily double down if we get in trouble.  



  11. Mind the GAAP


  12. ARNC    looks like the R & D dept. just discovered the formula for transparent aluminum and informed management


  13. That ARNC spread doesn't look right Phil – is there a typo?


  14. rick, that is an old spread that Phil put up about a year ago.


  15. ARNC/Stock – Good stuff:

    They have that now

    ARNC/Rick – It was right in May when we did it.




  16. ARNC – LOL. Sorry I didn't see that it was an old trade! 


  17. FTR – Looks like they screwed us:

    • Concurrent with emergence, Frontier will issue approximately 244 million shares of new common stock to its senior unsecured noteholders. Together with the 6% of shares reserved under the Management Incentive Plan (MIP), there will be approximately 260 million shares outstanding.

    • Frontier expects the new common stock to begin trading on the NASDAQ on May 4, 2021 under the ticker FYBR.

    • The pre-emergence common stock (trading under OTC: FTRCQ) will be extinguished and will not receive any new equity or other considerations, as provided in the Plan of Reorganization.

    My shares disappeared yesterday.


  18. FTR/Dave – We gave up on them a long time ago and yes, they did screw us by lying about their financial position prior to declaring bankruptcy.  Yet no arrests will be made…