In Case We're Wrong About Nvidia

Jun. 04, 2018 3:58 AM ETNVIDIA Corporation (NVDA)25 Comments
David Pinsen profile picture
David Pinsen
18.77K Followers

Summary

  • Nvidia was a Portfolio Armor top name in January of 2016, and has been periodically since then, including on February 22nd, when it appeared in my top names subscriber post.
  • Since then, it's up modestly, but questions have been raised about whether it's gotten too pricey.
  • For investors looking to stay long while limiting their downside risk, I show a couple of different approaches.

Nvidia booth at ComputexNvidia booth at Computex (credit: Ymodtech)

Too Pricey Now?

Nvidia (NASDAQ:NVDA) was a Portfolio Armor top name back in January of 2016, when it was trading at under $28 per share, as I noted in an article last year (What Happens When We're Right). It was also a top ten name as recently as February 22nd of this year. It's up since then, but more modestly. Last week, Seeking Alpha contributor Rong Huang, CFA raised the question of whether Nvidia was overpriced.

Although he concluded its growth story justified a higher share price, here I'll show a couple of ways NVDA shareholders can stay long while limiting their risk over the next several months, in case the market gets second thoughts about that growth story. First, let's recap how NVDA and the rest of my February 22nd top names cohort have performed since then.

Nvidia And Our February 22nd Top Names

Each week since June 8th of last year, I've been presenting Portfolio Armor's top names to my Bulletproof Investing subscribers. These are the names that, out of the subset that are hedgeable against single-digit declines, the site estimates will have highest potential returns over the next 6 months. So far, their 6-month performance has been fairly strong, as you can see in the table below (clicking on a starting date will pull up a chart showing the individual names that week, and their performance).

Starting Date Portfolio Armor 6-Month Performance SPY 6-Month Performance
June 8, 2017 14.49% 9.99%
June 15, 2017 19.85% 10.97%
June 22, 2017 24.46% 11.27%
June 29, 2017 18.24% 11.68%
July 6, 2017 21.03% 14.81%
July 13, 2017 28.25% 14.85%
July 20, 2017 25.04% 14.62%
July 27, 2017 33.52% 17.10%
August 3, 2017 20.72% 12.66%
August

To see this week's top 10 names, you can sign up for a free two-week trial here.

This article was written by

David Pinsen profile picture
18.77K Followers
I developed the hedged portfolio method of investing at Portfolio Armor, and I run a Marketplace service at Seeking Alpha based on it called Bulletproof Investing.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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