UBS upgrades global financials to Overweight from Underweight on a healing global economy, rebuilt capital, and the sector's shift "from being a net issuer to a net distributor of cash." Furthermore, the U.S. banking sector (XLF) is taken to Overweight as balance sheet strength and attractive valuations play well with the housing market recovery to create compelling opportunities. European banks (EUFN) are lifted to Neutral "with a preference towards Nordic and U.K. banks." Financials respond in London with LLoyds Banking Group (LYG) +2.3%, Royal Bank of Scotland (RBS) +3.3%, and Barclays (BCS) up 0.5%. [View news story]
Is this a joke?
They downgrade the whole sector last may, and they are now upgrading them after the avg global financial stock probably doubled.
To be frank statements like 'i wouldn't count them out' are not very substantitive. Management has already warned you on the call the margins will be flat this year, and the way they mapped it out that is more like a 'flat at best'. 66% of ebitda growth last year can be attributed to margin expansion. Furthermore, this company's actual tax expense has been running well below their long-term rate and after this year you should start to see that revert. 2000 bps of reversion will wipe out a lot of net income growth. This wont be the first or last stock to witness a crazy multiple expansion because of a one time splurge in the bottom line that is out of line with their growth trajectory. Like i said in the article, you are buying 70% trailing growth ahead of 10-15% growth at best....this quarter was the warning sign....the next one will complete the drop....now the question is do you risk waiting till then when you can do very well without event risk in between.....
How To Play The Sina Corporation Earnings Announcement [View article]
This is an unbelievably dangerous stock to play a calendar spread on. It has been a perennial underperformer for a good six months now, and on a relative valuation scale looks about as cheap as you are going to get for a prime web asset. This stock is waiting for an excuse for a 20% rerating higher, and while i see no reason to think earnings will provide a surprise the event might just be the catalyst. We pretty much now know revenue guidance for weibo is going much higher courtesy of the alibaba deal, so why you would wait for mgmt to make that official on a cc with the way the crappier chinese net names have been moving is beyond me. If i wanted to play an options strategy here id be selling puts as the alibaba deal puts a nice floor under the name.
Umm the point is the recent conference call just gave you that. The next call could stabilize it or lead it to bounce, but as it hasnt even started falling yet that shouldnt be your focus. Hence the short it now mantra. Listening to the call i really expected the stock to fall on the open as its not really a liquid name so i put little stock in the 4-5k it traded pre mkt. I chose to write the piece when i saw it open and hold its ground. I could write a much more detailed piece on the name getting into what actifio is doing and veeam as well as why fundamentally speaking it is ludicrously priced based on past m&a deals in this space going back almost a decade. But really i wrote this because if you listen to that call and go back and listen to the previous calls you should pickup on what i picked up on which was a soft warning. A soft warning for a company that has been firing on all cyclinders for two years with a perfecto priced stock is a dream come true for someone like me. I even punted on some may 10c options on the open which are now over a buck. You dont have to get into scenarios until this has fallen 20% plus at which point you have the sector, the rest of the market, and of course their performance to factor in. We can't predict all those variables...what we can do is on a risk/reward basis take the best possible positions we can find and reasses later....and in this case its not time to ponder whats the next catalyst as most longs in the name are still trying to figure out what the hell happened today. On a side note, when stocks peak permenantely; they tend to do it in the manner cvlt exhibited today. Big gap ups that get reversed just like big ones down that do the same are great indicators for long term price direction changes. What do you think attracted me to deckers?
I wouldn't really focus on a target. This will be a miserable laggard till they shift their tone which basically means you have a holiday to remain short till next earnings. If they can deliver what they have promised i think it can remain a 50-60 stock. If they warn in the next quarter or two we are looking at something closer to 35-40, but at that point takeout risk elevates signficantly. The way I look at it is from here on down to 60 or so should be a stress free ride. But its not like the business model is blowing up. They are executing and in a good position; they just suffer from a grossly unattractive share price that needs to be balanced out relative to their immediate growth trajectory. And i will be frank...it seems actifio will ipo this year which is never a good thing competition wise as they will be aggressively hiring and chasing the same biz ...people seem to forget that a boat load of ipos ultimately ends up being a bad thing for business which btw is something to think about in the SAAS sector for those fishing for other ideas.
On a side note I just took a look at the report and there is nothing in there that changes my view on the stock. The growth is slowing markedly and if anything competition is now on firmer footing so the range of negative outcomes may increase not decrease from here going forward. If you actually are a capable short seller who knows how to manage positions and is not looking for max bang for the buck this is without a doubt reshortable here. I'll read the transcript tmrw am, but all I see here is some slight levg which came back and a guidance tweak. Stock move is more explainable by the general euphoria in equities and its huge underperf then anything company specific
Gary you are troll. Nothing more. Reality is you no very little about the markets or investing. I could be a stubborn guy and come on here and say omg its a fantastic short again, but fact of the matter is i have made a good 600% trading whole foods the last two earnings. Did i post something on this one? Have i recommended it to anyone on my newsletter lately? Answer to both those questions is no. And if you follow me you would know Im quite willing to flip sides. Look at lnkd i was recommending shorting it at 120, but second time around I passed and went long after the results. Why? Because the whole sector had reflated. I am always amused when people confuse macro for micro. My long book in groceries has supervalue and krogers . Might want to check out how they have done. Supervalue has doubled and Kroger is up 40%, while your favorite place to shop is -3%. Also starbux which is up 35% since i last shorted wfm at this level. So effectively speaking this is a stock that is flat over 6 months while the sp 500 has rallied 20%. And its not like this is the only name that i have shorted that has reflated lately. Bottom line is people are running out of things to buy and punting on some major laggards. Furthermore, I'm event driven so it is no coincidence i get the timing as right as I do. I had at least three emails asking whether i'd short it into earnings and i told them all the same thing...weather hit from last quarter will reverse this quarter so better to pass especially considering that the amount of more appealing shorts has exponentially increased. Reality is this multi year run in equities is coming to a close...and for me that is the new opportunity i am focused on as i see a point where making money short will be like shooting fish in a barrel .....if after the low hanging fruits are gone wfm is still there for the taking i will take a look....but for now i have better things to expend my energy on
$24-$77 in incremental enterprise value from $55...so 80-132 sina stock if you want to get hypothetical with respect to enterprise value missing. You could take the view that portal is worth 1billion...cash off 1.3billion and 70% weibo between 3.2-10bil gets you 5.5bil- 12.3bil which is a giant range of 84-186 for the stock.
I'm mostly an event trader. And typically options. So, for example on lulu into last quarter i bagged 220% in precisely 3 days. Ulta 400% in a day. Wfm 190% in 3 days (that one i did two quarters in a row as it came back). Apkt 130% one day...though that was pure luck as oracle bought them the day after i opened the position. Deckers 500-600% but over two months. Rackspace ...almost 900% but very small position. Cmg last july 700%......of course when you are wrong its 100% loss more or less and generally speaking doing this you typically will trader around two quarters with one working and the other not as you try and time it. So how you size is key, and as this is basically prop style trading your p/l plays a big role in sizing. But to sum...yes it is quite lucrative....but it is also not easy.
This is not a very bubblicious momo stock here so I would not be worried about protective stops. If you are physically short this is not a stock to be losing sleep over, and I would not cover here. I personally had options so it was a different ball game and i bought them over 70 before the news. Exiting for me was easy, but i know a bunch of people have retained some with my 58 target in mind. Moves like this happen about 1/8 times and the main reason for them is short term overcrowding. I do think you got a mini squeeze here and that there were some specialists at work taking advantage of it. I had the same headache in deckers in jan with a big call position ....thought no way it would close below 40 again and lo and behold in two days we went from 42 to 36 as we approached expiration. That nonsense cost me a considerable chunk of change. But all i did that day was rollover into higher strikes for the next month. In lulu's case at these levels you are going to make money shorting it this year, and what you may have to endure along the way is nothing close to what you usually face in a short with similar characteristics. Personally my reasons for being out had less to do with the stock and more to do with the fact that i am simply shifting to a fund structure from a prop/managed account structure and am in the set up process otherwise i'd have started shorting this again when it hit $67.
I recommended buying acme packet two days before it was taken out...deckers before it rallied 80% and did like four pieces on that...ulta at a peak...whole foods at a peak....shorting the yen at 77...steering clear of gold....shorting mlnx at a peak....crus at a peak....dumping apple..shorting cmg at its peak....buying google....shorting lnkd at 120... before it fell to 90....and then not shorting it at 120 again and actually buying calls at 145.....and of course buying puts on lulue when it was 70 in the front months and two days before it warned and fell to 58......oh and a whole bunch of shiat you have no clue about because well ....you have no clue...but i will admit i am still quite preplexed by sina and pnra. Lulu has bounced on what id say is more front monthoption/short interest dynamic than anything else.....but frankly speaking i could give a damn if i was 60% with the event driven option trading i do.....my goal is return...nothing else.....i don't dwell on price action....i learn from mistakes....i accept luck when it comes....and i always move on
Open Sesame [View article]
UBS upgrades global financials to Overweight from Underweight on a healing global economy, rebuilt capital, and the sector's shift "from being a net issuer to a net distributor of cash." Furthermore, the U.S. banking sector (XLF) is taken to Overweight as balance sheet strength and attractive valuations play well with the housing market recovery to create compelling opportunities. European banks (EUFN) are lifted to Neutral "with a preference towards Nordic and U.K. banks." Financials respond in London with LLoyds Banking Group (LYG) +2.3%, Royal Bank of Scotland (RBS) +3.3%, and Barclays (BCS) up 0.5%. [View news story]
They downgrade the whole sector last may, and they are now upgrading them after the avg global financial stock probably doubled.
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I recommended buying acme packet two days before it was taken out...deckers before it rallied 80% and did like four pieces on that...ulta at a peak...whole foods at a peak....shorting the yen at 77...steering clear of gold....shorting mlnx at a peak....crus at a peak....dumping apple..shorting cmg at its peak....buying google....shorting lnkd at 120... before it fell to 90....and then not shorting it at 120 again and actually buying calls at 145.....and of course buying puts on lulue when it was 70 in the front months and two days before it warned and fell to 58......oh and a whole bunch of shiat you have no clue about because well ....you have no clue...but i will admit i am still quite preplexed by sina and pnra. Lulu has bounced on what id say is more front monthoption/short interest dynamic than anything else.....but frankly speaking i could give a damn if i was 60% with the event driven option trading i do.....my goal is return...nothing else.....i don't dwell on price action....i learn from mistakes....i accept luck when it comes....and i always move on
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