Chat transcript from this week: Markets, economy, trading, and stock picks

Here’s the transcript of today’s chat. We broke the questions and answers down into two sections as usual — Economy/markets/trading/strategy and Stocks. By the way, if you guys want an icon to show up here in the chat when we meet, you can upload a photo to and it will show up here next time you visit. See you next week at 2pm EST at for more Q&A where you can ask me anything.


Q: Cody, is it time to buy, or is there more down side to come? Great call on BK. Thanks!
A: As I’d noted this morning…feet to fire, I’d say that we likely put in a significant bottom yesterday, then again, that doesn’t mean we’ll just explode to the upside from here. But yeah, I’m a buyer, not a seller.

Q: Hi Cody, with the earnings season, can you put in the table dates when our stocks do report? Thanks.
A:I’ll see if I can get one of my helpers to do it starting next earnings season perhaps. You can find the earnings schedule for any stock here though

Q: I come from Europe, my optimism slowly evaporates with the recent market. Shall we change our strategy when the market gets more nasty and we get below 10K (do intra-day shorts for example)?
A: If anything, a drop in prices is more likely to make me buy, not short. That’s a function of my bullishness on the markets and the idea that we’re being forced into yet another stock market bubble with the policies of the Fed/government.

Q: Since we are subject to Euro headlines, do you see any way around significantly funding the EFSF (I’ve read $2T Euro is needed)? Given Germany’s recent refusal, won’t this continue to dog the market or will they cave into the idea before it’s too late?
A: I’ve no idea how to game the day-to-day headlines about the need for Europe to push the losses of bank shareholders and lenders onto the general public, i.e., the latest EU/Greek/Whatever bailouts. But I don’t think I could care any less about whether or not the EU survives or disappears forever when it comes to whether or not I should be trading/buying/investing in Google.

Q: How do you see the Christmas season will stack up, any plays there?
A: Good question about the Christmas plays. Let me work on that. I’ve been focused on this upcoming earnings report and the broader economics/policies driving this market that I’ve neglected to incorporate Christmas season into my near-term outlook as much as I should be. Stay tuned for some jolly, jolly Christmas trades for our stockings.

Q: A little anecdotal evidence for Q3 tech earnings. I work for a major software company that missed our numbers in Q2. Q3 we hit our numbers and maybe a little over, and we do a lot of business in Europe. Fingers crossed that this bodes well for the rest of tech.
A: Thanks for the insightful anecdote. While we’re in here chatting, can you please provide any additional insights into fundamental tech trends that you saw last quarter and/or into this new quarter?

Q: Well, speaking of RVBD, we’re actively evaluating WAN optimization for our global network. We are down to two vendors: Silver Peak and Riverbed. We’re a Cisco shop, but their WAAS offering pales in comparison to the above two so we quickly scrapped that as an option. Of the two we like RVBD but it’s very $$$$$$, so I am not sure which way we’ll go at this point. I am concerned about Riverbed maintaining margins moving forward. There is lots of interest in Cisco’s unified computing among us and many of our customers; this seems to be picking up lots of momentum in the data center.
A: More great insights! Please keep us attuned of who gets the gig, Riverbed or another.

Q: Who will benefit the most from video on tablets—smartphones?
A: Not an easy answer. Lots of moving pieces in the video-over-tablets/smartphones industry. Five years ago it was thought that Adobe and its Flash had all but won the industry-standard wars. Now it’s not so obvious. Stay “tuned,” this revolution will be televised.


Q:Cody, thanks for the heads up on the VIX calls, but I got out last week after booking a nice gain. Might we be looking at VIX puts now, say November or December?
A:I like your flexibility in wanting to go from betting VIX long to betting VIX short, and while I’d agree that there’s probably downside to the VIX both in the short-term and in the intermediate-term, I wouldn’t get greedy and go the other direction with the markets and Europe still as tumultuous as they are.

Q: Cody, what are your thoughts on Priceline? Also, does the lawsuit against BK cause you to want to add to the short?
A: I like Priceline and it’s in the new book that you get for free as a subscriber to Here’s the write up from the book:
“Remember the huge dot-com bubble and its subsequent crash? You know, back in the late 1990s, when and others were worth billions of dollars only to crash and never be heard of again? Well,’s shareholders don’t. Because this is one of the rare companies that truly had a brilliant and sustainable, high-margin business model. And PCLN is up huge from even the bubble days of 1999 and 2000 as any shareholder who had the guts to hold on through the collapse and subsequent return of this stock over the last decade. And true enough, Priceline’s business model continues to provide not just big earnings, but also continued growth of those earnings. Hardly any debt to go with the nearly $2 billion in cash on the balance sheet is the result of smart financial management by this company and its board over the years. And at 16x next year’s earnings, despite continued growth of well over 20% on the top line, this stock ain’t expensive. Revolution Investing Rating: 7/10.”

Yes, the lawsuit from the US government against BK emboldens my short stance. Like LPS, I have a feeling that I’ll always wish I’d shorted more and bought more puts in these two as the roosters come home to chick (flip that).

Q: I think a lot of people would like your current take on GOOG and AAPL as they have both been crushed.
A: I, like most people, was disappointed in Apple not releasing a new iPhone5 yesterday. Any new kind of a new form factor or slimmer design or something was required to keep the momentum going in the stock. Apple’s going to be a little bit listless til we get to earnings, which I’d expect will be good enough to make everyone forget the iPhone5 til next quarter. GOOG near or below $500 makes my mouth water. I’m likely to buy more very soon.

Q: Cody, have you had a chance to do any research regarding FIO yet? Interesting company, though with a high p/e at this point.
A: I’ve got a call into and am meeting with several optical-industry experts in the next week or two, so I’m still not done with FIO.

Q: Hi Cody. I would love your feedback on Chinese gaming stocks PWRD and CYOU.
A: Long story short on the Chinese Internets is that the only ones I’d risk capital on would be the biggies, and specifically BIDU. I wouldn’t touch the little guys like PWRD and RENN, as I don’t trust the numbers.

Q: Hi Cody, any change on your views about Riverbed? I know you are a contrarian and I’m sure you like everybody downgrading RVBD. Latest I read was a price target of 24 (insiders stopped selling 2 or 3 weeks ago but I would like to see them buying).
A: I used to date an executive at a publicly traded fashion company. She called me up once and asked me what she should do with her vested shares as she was growing increasingly worried about the company’s prospects for the near- and intermediate-term. I told her I always think it’s a bad idea to depend on your company’s stock as a vehicle for your capital when you’re already depending on said company as a vehicle for your income. She sold her stock and the company did report a horrid quarter and the stock dropped and eventually came back. I also know of a ton of executives who have sold shares over the years only to regret it as the stock kept climbing and climbing when business improved. Point is, I do like Riverbed here a lot, but I also have some concern about the upcoming guidance that we’ll get out of the upcoming earnings report. I’m a holder of my Riverbed common and calls for now and will maintain a vigilant and contrarian approach to it as always.

Q: Cody, any opinion on auto stocks, Ford, GM, Toyota, etc?
A: I like F a lot here near $10. I like VC even better near $50. And I don’t much care for GM or Toyota.

Q: Any price point in mind to short more into LPS? Thanks.
A: Have you ever seen a stock head more steadily straight down than LPS has since we shorted it in the mid-$30s? At this point, my answer is almost: You can probably short LPS anywhere above $0 and make money on it! Ha. Sorta ha. Sorta serious.

Q: Any thoughts on NUAN now that it appears to be even less of Apple’s AI/Siri strategy than some had expected?
A: Why don’t you think Nuance is a key part of the new iPhone lineup of iPhone 4LPS (wait, it’s not LPS, is it?). Seriously, here’s some info from Raymond James on Nuance just this morning on this very topic:

“Yesterday, Apple unveiled the latest version of its iPhone, the iPhone 4S. While the 4S launch may have underwhelmed relative to expectations for an iPhone 5, we believe the enhanced speech recognition functionality on the new 4S is potentially a major step forward for the speech recognition industry and Nuance. As we had mentioned previously and observed from Apple’s demo yesterday, one of the main enhancements was the improved speech recognition capabilities, particularly via the Siri personal assistant (Apple acquired Siri in early 2010). While neither Nuance nor Apple has issued any comment, we continue to believe that Nuance is the provider of the underlying speech recognition technology, based on our checks and as has been speculated in the industry and press. Based on the demo, it appears that the speech recognition functionality is far superior to that of the previous iPhone, which allowed basic voice-activated dialing and music control and additional features through the Dragon apps. The iPhone 4S seems to have a more voice-centric user interface activated by the home button, which allows the user to use voice instead of (or in combination with) typing or touch navigation. Such a voice-enabled UI allows for improved and more seamless command & control, internet voice search and dictation. In terms of economics, as we have stated numerous times before, we believe Apple-related revenue is largely, if not completely, baked into FY11 guidance. We believe the larger opportunity is for the Apple deployment to potentially drive broader speech recognition technology adoption across mobile (handsets and auto) and other verticals. Moreover, as we have estimated before, we believe Nuance is likely to receive a fixed flat recurring quarterly fee in the $5-10 million range, likely at the upper end. This implies ~$40 million in annualized revenue over the contract life, which we estimate at two to three years.”

Q: I’m holding some $28 calls on ADSK for this month. Any catalysts worth watching on that? It’s been all over the place these last few weeks (like everything, I suppose).
A: I don’t know what would catalyze ADSK near-term other than a good update on some healthy fundamentals and a better acting market.

Q: What’s your take on AMZN with the current Kindle Fire craziness? Do you think it is a buy now? Thanks!
A: I like Amazon a lot and this new services/tablet/eventual handset business model is going to drive a whole new revenue stream for this incredible company.

Q: What is a good buy point for SNDK?
A: Below $40 I was a buyer and sometimes aggressive buyer of SNDK. I still think it’s cheap as all get out, and if the stock can finally find some sustainable momentum, it could run to $60 in a heartbeat. But we’ll probably need a better overall acting market for that, too.

Q: Any views on OCLR?
A: OCLR is in the new 100 Most Important Tech Stocks on the Planet book, too! OCLR is another newly-minted tech penny stock. The company sells components against competitors like JDSU and they all had so much overcapacity back in the late 1990s that they’re still slugging it out trying to rightsize their ships. At less than $5 and with $2 per share net cash per share, this is another one I like just because it’s so down-and-out cheap. If they can actually earn 25 cents or more next year, this stock will be closer to $10 a share, but I’d expect it to struggle to ever get much above that recent $18 a share high it saw late last year. Revolution Investing rating: 6/10.

Okay guys, that’s it for this week’s chat. It was a fun one! (But where are all the kind words and nice feedback that I get to paste into the transcript?) Just kidding. Thanks for subscribing and joining me in the chat here today. See you next week!