JP Morgan has set up a “War Room” to cope with the blitz of executive orders and memos that have been pouring out of the Trump White House while Fisher Phillips (law firm) has set up hotlines for clients who have their workplaces raided by INS agents – a rapid response legal team. Manufacturers and Retailers are putting together legal and accounting teams to work around the clock on tariff legislation.
Akin (law firm) has a “Trump Executive Order Tracker” that is already 5 pages deep with 8 orders per page but at least it has a nice keyword and category search but some of the categories are kind of broad like “Initial Rescissions of Harmful Executive Orders and Actions” which “rescinds executive orders from the Biden administration that are contrary to the values President Trump has supported in his campaign.” Four years worth of executive decisions reversed in one line – very efficient!
I’m not going to go on and on about all the madness coming from the Trump Administration because people think that makes me anti-Trump and I certainly don’t want our Glorious Leader to add me to his list so we’ll just see if we can find ways to make profits from the policies – kind of like getting the oven contract at Auschwitz – may as well make a few bucks under the new regime, right?
We already discussed GEO, who are going to build a lot of those glorious detention centers. GEO was a Trade of the Year runner-up on Dec 3rd and we decided to add them to the Long-Term Portfolio (LTP) on the 10th with this glowing recommendation:
“In short, this is a despicable, evil company that’s like calling Auschwitz “A good business plan“. I leave it up to your own conscience if this is the way you wish to make money but it’s a very strong pick that we did, in fact, vote for. It’s not like Trump didn’t say he was going to lock up and deport millions of people – this is just the process of doing it…
I guess we can track them in the LTP with:
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- Sell 20 GEO 2026 $25 puts for $5 ($10,000)
- Buy 40 GEO 2027 $20 calls for $14.20 ($56,800)
- Sell 40 GEO 2027 $30 calls for $10.00 ($40,000)
- Sell 10 GEO Jan $30 calls for $1.40 ($1,400)
That’s net $5,400 on the $40,000 spread that’s $32,000 in the money to start with $34,600 (640%) upside potential. Such a good trade to be ashamed of making!”
So far, so good as the stock is up $6.46 (23%) in just over a month (you’re welcome!). On the options spread, the Jan $30 calls expired at $5.35 ($5,350) on Friday and the short puts are $4 ($8,000) and the $20/30 spread is net $4.50 ($18,000) so net $4,650 is down a bit because our first short call sale went poorly but now you can sell 10 April $35s for $5 ($5,000) and hopefully get some back (our Members already sold March $37 calls in our LTP review last week). Since GEO is already over our $30 goal, the spread is right on track for the full $40,000 – which means the upside potential of just the spread is still $35,350 (760%) and the short call selling is just bonus money along the way (when it works!).
We’ve also already discussed LMT, XOM, PLTR and NUE with our Members as potential Trump trades so let’s look at a couple of new ones the play off the themes of:
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- Surge in demand for regulatory compliance guidance
- Increased M&A activity requiring legal oversight
- Need for tariff and trade policy navigation
- Immigration policy changes requiring legal expertise
- Corporate restructuring opportunities
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- Thomson Reuters (TRI – $163.20) – Currently trading at reasonable valuations with strong fundamentals. Their legal research and compliance tools will be in high demand as companies navigate regulatory changes. They’re already seeing increased demand for their regulatory tracking tools.
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- CNA Financial (CNA – $48.80) – Trading at attractive multiples with a B-grade rating. Their focus on professional liability insurance for law firms positions them well for increased legal activity. Law firms are expanding rapidly to handle transition-related work and that growth makes this usually boring insurance specialist very exciting now.
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- Huron Consulting (HURN – $128.75) – Specializes in healthcare, education, and commercial sectors. Their expertise in regulatory compliance and strategic advisory services makes them well-positioned for the transition period.
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- Robert Half (RHI – $72.19) – Another nice, boring company that finds itself in the right place at the right time. RHI is a professional staffing firm that should benefit from increased demand for compliance and legal professionals.
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- KKR & Co (KKR – $160.86) – Already up 84% in 2024, they’re positioned to benefit from increased M&A activity and corporate restructuring opportunities. At $142.75Bn, they made $4.2Bn (34x) in 2024 but 2025 can easily pop to $5.5Bn, which would be just 26x and, with that kind of growth – it would be more than fairly priced – and they would be just one major deal away from another Billion!
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- CBIZ, Inc (CBZ – $85.50) – One of the most prominent publicly traded accounting firms in the US. It offers accounting, financial, advisory, and insurance services to businesses based in the US and Canada. They acquired Marcum LLP for $2.3Bn and that will turn them into a more-recognized powerhouse.
We’ll take a closer look at these opportunities and others in today’s Live Trading Webinar with our Members at 1pm, EST. Join us there!
“In an age when people always asked what can one gained, they said: Health is the greatest gift. We say today, however, that health is also the greatest duty, for Germany does not need sick or weak people, and you have the duty to be sure that you are fresh and healthy boys and girls.”
If you thought Thanksgiving dinner was insufferable with your Trump Uncle ranting and raving at the table, just wait until your Trump Nephew comes home from college! “He alone, who owns the youth, gains the future” as Hitler said…
Speaking of mind control – we survived the 14-hour TikTok ban but it’s Netflix (NFLX) that is really controlling the eyeballs – and the shriveling brains that are attached to them. NFLX added 18.9M new subscribers in Q4 – which is like taking over Poland! This beat the expectations of analysts, who thought they would be satisfied with Austria, by 100% and, now that they are entrenched – NFLX is planning price hikes (13%) as well.
The double-feature of blowout subscriber growth and price hikes sent Netflix shares up more than 14% after hours Tuesday. That follows an already strong run that has boosted the stock by 80% over the past 12 months. Netflix’s market capitalization now exceeds the COMBINED value of streaming rivals Disney (DIS), Comcast (CMCSA), Warner Bros. Discovery (WBD) and Paramount (PARA).
$1,000 for NFLX is $426Bn and they are on track to make $10Bn in 2025 on $44Bn in revenues but add 13% to those revenues ($5.7Bn) and drop that pretty much straight to the bottom line bumps them up to $15Bn and that would “only” be 28.4x – so 13% was the number they needed to get back under 30x earnings and THAT is why you’ll pay more next month.
DIS is trading at 20x, CMCSA is at 8.4x, WBD LOST $10Bn in 2024 and still has a $27Bn market caps at $9.77 with $40Bn in debt and needs to be taken out back and shot and PARA is supposedly getting bought for $15 but you wouldn’t know it with the stock price at $10.48, which is $7Bn and they “only” have $12Bn in debt and they are MAKING over $1Bn so how they are priced at 1/4 of WBD is simply amazing to me.
Something else we can discuss in the Webinar – time to start our trading day!
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- Phil
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