Hedging Your Way To Alpha With Rick Pendergraft (Podcast)

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About: ProShares UltraShort S&P 500 ETF (SDS), PYPL, SEDG, Includes: AAPL, CVX, IEF, IVV, SH, SPY, VOO
by: SA Marketplace Roundtable Podcast
Summary

Long-time contributor Rick Pendergraft sits down with Seeking Alpha's Jonathan Liss to discuss his approach to investing and the current macro environment.

Rick believes in a 3-pronged approach of fundamental, technical, and sentiment analysis to ensure all of his investment picks are built on a strong foundation.

It's an approach he references regularly in his newly-launched Marketplace service, The Hedged Alpha Strategy.

Towards the end of the interview, he reveals some of his top picks.

by Jonathan Liss

I was particularly excited to sit down with long-time Seeking Alpha contributor Rick Pendergraft this past Wednesday (1/30). As one of Seeking Alpha's earliest contributors - Rick first started contributing to the site in April of 2007 - I had been following his work since shortly after I joined SA in mid-2006. Rick has been at this for a long time - nearly 30 years. He has been quoted in the Wall Street Journal, USA Today, the New York Times, and the Washington Post and appeared on Bloomberg, CNBC, and FOX Business Network as a highly sought after macroeconomic analyst and stock picker.

In December of 2018, Rick finally decided to throw his hat into the Seeking Alpha Marketplace ring with his launch of The Hedged Alpha Strategist service. The Hedged Alpha Strategist gives investors access to Rick's unique blend of macro-analysis and a stock-picking approach rooted in what Rick terms "a 3-legged stool of fundamental, technical and sentiment analysis." This stool creates a solid foundation investors can rest on - but remove any of the 3 legs and the stool topples over.

At The Hedged Alpha Strategist, subscribers can expect a mix of both long and short term recommendations via individual equities, leveraged ETFs and Options (these last 2 vehicles are utilized to overlay long single stock picks with a macro-based hedge).

You can listen to our conversation by clicking play above - or on the go via iTunes, the Apple Podcast app, the Google Podcast app, Stitcher, and Spotify.

Topics covered:

  • 2:10 - Rick’s background as an investor and his investing heroes

  • 4:25 - Laying out a holistic approach to investing - the 3-legged stool of fundamental, technical and sentiment analysis

  • 6:55 - The macro picture: When the underlying fundamentals and sentiment diverge

  • 8:50 - Rick’s research process broken down - it all starts with fundamentals

  • 10:50 - Short interest ratio as a leading sentiment ratio

  • 15:15 - How important is institutional ownership as a sentiment indicator?

  • 17:05 - Rick’s biggest successes and failures and as investor and what those experiences taught him

  • 21:45 - Using options vs. leveraged and inverse ETFs (like ProShares UltraShort S&P 500 ETF (SDS)) as a portfolio hedge, with the recent sell-off and rebound as a case in point

  • 26:20 - Risks of using leveraged ETFs

  • 28:20 - Slowing economic growth in the U.S. and China and the prospects for a trade agreement (with some discussion of Apple’s (AAPL) position in China specifically)

  • 33:15 - The global geopolitical picture as well as gridlock in Washington is creating uncertainty in markets

  • 35:15 - The current interest rate environment and what that means for the outlook for equities broadly speaking in 2019

  • 42:10 - The case for SolarEdge Technologies (SEDG)

  • 46:35 - Contemplating the case for PayPal (PYPL)

  • 49:10 - A final look at the macro environment through the lens of consumer confidence readings

What are your thoughts about the current macro environment and what that means about the outlook for stocks and bonds? Please weigh in with your insights and questions in the comments section below.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PYPL, SDS over 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.

Additional disclosure: Jonathan Liss doesn't have positions in any of the stocks or funds mentioned in today's show. Rick Pendergraft may initiate buy recommendations in PYPL or SDS at any time.