Starting Short Positions in Eaton, Wynn Resorts and Capital One Financial 25 comments
an article to
-
Font Size:
-
Print
- TweetThis
My master plan here is to be net short (substantially so) if and when we get north of S&P 1000 as I expect the already exasperated shorts to just begin heaving (physically). I am simply building a basket of nonsense valuations that is growing by the day - you can shoot them in a barrel; they are everywhere - Whole Foods (WFMI), Whirpool (WHR), any stock that starts with W... ok, not really. Harley Davidson (HOG), etc.
These will all look exactly the same as the ones I added Tuesday morning - stocks trading at 25-40x+ forward estimates (or infinity in some cases as some companies won't be profitable for a few years), with a huge gap in a chart as obliterated shorts were engaged by Kool Aid drinking longs in the past 2 weeks. I am ok with losing money in the short run on these, since a very large move has already been made and shorts before me laid their (virtual) lives so that I may prosper - I hope.
These are all "half" positions if you will (2% exposure each), allowing for more upside in the stocks to add the 2nd leg of the short. Or as with the names I added Tuesday morning - the 2nd leg will be added once they begin to really turn down.
Wynn Resorts (WYNN) - if the stock gods have it, the tiny gap at $34 fills. Won't make money this year, but as bulls remind me, we have to look through the "valley of 2009" to 2010. A bargain at 100x 2010's estimates. Or if WYNN beats the the analysts guestimates by 100% for 2010 as Americans flood back into Vegas, 50x 2010 estimates.
Capital One Financial (COF) - if Cramer allows below $24 this one will go; Jim Cramer penned a bullish piece on this after a nice 50% move in 3 weeks. Talk about the biggest momo investor on the Street. No worries.... no profits in 2009 but "cheap" at 65x 2010 estimates. We've been on the wrong end of this one earlier in 2009 so we'll try again (this was an existing 0.1% position we are adding too)
Eaton Corp (ETN) - If Goldman Sachs allows below $46 we shall see. "Dirt cheap" at only 21x forward earnings for a company who just posted one of the weakest reports of the season.
Roughly 2% starting stakes into each of these names, so a 6% short allocation together for the 3 - with plans to double the exposure on the next run up OR a rollover. You can see volume dying off on each of these as the balls are juggled in the air by S&P 500 orders at appropriate times by "someone".
Short all names mentioned in fund; no personal position
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
snagged the FCX Monday for 2k short @60 and figure today's trip to the double nickel was only the start since the ruling elite already have the 40 something roadmap in hand even though cu only changed by a piddling amount
one thing though I am puzzled on, I mean volume in a host of names has flat vanished this week, I mean 20-40% of 3-6 month averages, do you have any thoughts on this
just moved it to the top. Will see what happens to WYNN today.....
That said I have half a position on at mid $46s and will add if it gets higher from here (gapped up to $50 today)
These are longer term shorts and not my typical slash in and out shorts. If the market gaps up 2% every 4th day, this will be more of an issue ;)
On Jul 29 09:47 PM thechaser wrote:
> i mistakenly posted my comment on WYNN in your Housing piece, same
> with DIA
>
> snagged the FCX Monday for 2k short @60 and figure today's trip to
> the double nickel was only the start since the ruling elite already
> have the 40 something roadmap in hand even though cu only changed
> by a piddling amount
>
> one thing though I am puzzled on, I mean volume in a host of names
> has flat vanished this week, I mean 20-40% of 3-6 month averages,
> do you have any thoughts on this
On Jul 30 10:46 AM Stockstar8 wrote:
> Great call on shorting WYNN ass hole! you couldnt have been MORE
> WRONG!!! Thanks for losing me so much money so fast! I expected
> a small loss but didnt think youd be THAT wrong that I'd lose my
> ASS! Thanks!
For the morons that dont understand risk management, here is how it works.
If you short WYNN with only 2% of your portfolio and say you have a $1 million dollar portfolio, that would be a $20,000 position. Now that you lost 10% on your $20,000 you are out $2,000 which is 0.2% of your portfolio.
And Mark, I like the trade you took even before earnings, It is only a matter of time before the stock trades on fundamentals again.
What is your take on retail? October is usually a taboo month for the market, and given that people will be looking towards what will probably be an abysmal Christmas season, do you see significant falls there too?
I have 30 positions
these are a few, all my trades are within context of how I want to be positioned overall - neutral, net long, net short etc
These are a basket of shorts and they were the first purchase - as I said I did that to allow for upside to put on a 2nd short. I also have long positions. If you take any 1 position you could win or lose, etc.
And if you are following my trades thats up to you. Its not an advisory service :)
I also almost never have people come back and say "thanks for the big win!" lol
On Jul 30 12:00 PM Stock Yid wrote:
> I love these people that take half your advice and dont know anything
> about risk management.
>
> For the morons that dont understand risk management, here is how
> it works.
>
> If you short WYNN with only 2% of your portfolio and say you have
> a $1 million dollar portfolio, that would be a $20,000 position.
> Now that you lost 10% on your $20,000 you are out $2,000 which is
> 0.2% of your portfolio.
>
> And Mark, I like the trade you took even before earnings, It is only
> a matter of time before the stock trades on fundamentals again.
>
Those are the type of stocks people want to be in when they believe the economy will be dandy. We are headed for a technical positive GDP print so we will declare the recession "over" as more people go unemployed. In fact today, some 100K people fell off long term unemployment benefits, and now I suppose go to welfare. Thats a green shoot since people dont look under the hood.
Of course I could be wrong and suddenly 100K people found a job in the past week.
So its not so much what the reality is, its what the markets perception of reality. Retail is a go to place to go when people believe everything will be fine. I dont like the space but the market is not really one to care about anyone's opinion. I few outperformenrs like Buckle, Ross Stores and today it appears SHOO!
On Jul 30 12:21 PM Ricard wrote:
> Thanks for the informed opinion.
>
> What is your take on retail? October is usually a taboo month for
> the market, and given that people will be looking towards what will
> probably be an abysmal Christmas season, do you see significant falls
> there too?
Since valuations no longer matter and we're trading on "better than expected" or "better than a year ago" bulls will have a field day if we are comparing year over year this fall? Fall 2008 was when the world shut down... if all that it takes is to beat year over year, retailers and the like should boom
I am giving you not real logic, but the logic of the markets if it wants to go up. i.e. "during a period of time in October 2008 when the world came to a standstill sales were X, a year later there was 3% improvement. Buy stocks"
Thats a possibility but if we rally all the way into September, I'd be cautious. Again, valuation has to begin to matter eventually. But who knows when.
On Jul 30 12:21 PM Ricard wrote:
> Thanks for the informed opinion.
>
> What is your take on retail? October is usually a taboo month for
> the market, and given that people will be looking towards what will
> probably be an abysmal Christmas season, do you see significant falls
> there too?
On Jul 30 12:32 PM TraderMark wrote:
> One more issue
>
> Since valuations no longer matter and we're trading on "better than
> expected" or "better than a year ago" bulls will have a field day
> if we are comparing year over year this fall? Fall 2008 was when
> the world shut down... if all that it takes is to beat year over
> year, retailers and the like should boom
>
> I am giving you not real logic, but the logic of the markets if it
> wants to go up. i.e. "during a period of time in October 2008 when
> the world came to a standstill sales were X, a year later there was
> 3% improvement. Buy stocks"
>
> Thats a possibility but if we rally all the way into September, I'd
> be cautious. Again, valuation has to begin to matter eventually.
> But who knows when.
I see WYNN is up 13+% today after beating lowered expectations for earnings but not meeting lowered expectations for revenue. Clearly not a sustainable way to run a business especially when earnings and revenue are down YOY..
I wonder if there is any pattern days/weeks/months after for firms beating lowered earnings through cost cutting and not meeting lowered revenues. Seems to me after such earning reports lots of folks buy simply because they know lots will buy with only a minority actually believing this is a good thing for the company.
On Jul 30 11:43 AM TraderMark wrote:
> I have given up on volume now that I see computer algorithims are
> 50-70% of all trading. Volume meant something in the old days, now
> it seems Goldman's computers are trading versus Citadel's and the
> rest of us are just watching.
I call it HAL9000 trading. Been discussing it for 2 years - glad to see the financial media just picked it up ;)
On Jul 30 03:07 PM User 184769 wrote:
> Mark, how can you see that algorithms are the volume? Also WFMI earnings
> next week.
While technically and quantiatively I would not refute your thesis the issue you may encounter is difficulty in shorting ostensible or actual leaders in their respective segment. FBOW, ppl are going to run into names like COF and WYNN on any market upturn and smash the shorts. Can you make $$$ on a material market pullback? Yes, but on any program buying spurts the window of profit evaporates sometimes in minutes or less and eclipses any reasonable stop-loss. Other names to add on to this list include TROW, RHI and WFMI. So tempting to short for a host of sound reasons yet there is huge demand right around the corner for the offer.
Like the old adage; "when you see the trade on the cover of Time Magazine...it's to late to take the trade", on his CNBC post-market show yesterday, Larry Kudlow declared with great fervor that "We are now in the NEXT GREAT BULL MARKET !!!"
He continued his declaration throughout the entire show and prodded each of his guest 'regulars' to accept his pronouncement as FACT, or prove him wrong beyond doubt. Most went along and accepted his statement...and the couple who said "eeehhhh, not so fast, Larry..." were politely laughed off or cut short. I must say, it was entertaining, though disturbing, television.
This decloration, to me, is eerilly similar to that of Jim Cramer's back in the last qtr of 2008, when he spent his whole Mad Money show gleefully dancing around the set saying over and over..."The tide has turned, buy stocks, the NEXT GREAT BULL MARKET has begun !!!" Of course, a few days later, the market rolled over and collapsed to eventually hit the floor in March this year. Those that 'bought' Cramer's call...got whacked...hard.
Well, I guess only time will tell if Kudlow's timing is any better.
We would not be short here either.