Cody Kiss & Tell: Portfolio Reviews, The Scutify Acquisition and Get Yourself Some Cheap Sunglasses

Here is the transcript to this week’s Live Q&A chat. Join me next Wednesday at 2pm EST at http://tradingwithcody.com/chat or send me an email with your question at support@tradingwithcody.com.

Q. Hi Cody. I have a question regarding hedges, such as the SPY put or VIX calls. In general terms, what percentage of a STOCK PORTFOLIO (caps to clarify not other assets) would you invest in those derivative hedges? My intuition might be to put 1-2% per hedge but would love to hear your methodology/reasoning for the amount that you invest in these hedge plays. Thanks.

A. Great question and yes, you’ve got it about right. As always how much you expose to any position relative to the rest of your portfolio (and net worth) depends on a variety of factors like income, income potential, risk tolerance, etc. I have less than 1% of the stock portfolio in SPY common short and even less than that in SPY puts right now. If the SPY rockets higher, I’ll lose probably about 0.3% of my portfolio’s value on those two positions. But obviously, I’d expect that the net long positioning of my portfolio overall and that my long picks will far outperform that 0.3% loss on those SPY hedges if the SPY does rocket from here.

Q. On a side note, is your portfolio review offering still available? I have sent a couple of emails detailing my situation and inquiring into the service with no response. I emailed on the 13th and 20th. Thanks.

A. I’ll do a portfolio weighting review on Friday. It’s a lot of work to do it frankly, just because the weightings in the stock portfolio change and I try very hard to accurately reflect the real “notional value” of each position in the portfolio relative to the others.

Q. Thanks for the hedge answer. On the portfolio question, I was actually referring to your personal portfolio review service that you were promoting on the site. I reached out on both the 13th and 20th to inquire but have not received a response. Are you still offering the review service or swamped with inquiries?

A. Oh, yes, I am happy to talk to you and set you up with a Cody Willard Deep Dive on your portfolio. We’ve been inundated with requests for the Deep Dive since we launched it and I’ve fallen way behind on them, but I didn’t realize I’d missed a request entirely. If any of the rest of you have tried to request a Deep Dive and didn’t hear back, please let me know at cody@clwillard.com. And if you are one of the folks waiting for me to finish your Deep Dive up, don’t fret, I’m hard at work developing the concept and creating the deliverable product.

Q. Cody, what percentage of your portfolio long/short? Thanks.

A. Sonny??? Where have you been? Is this the same Sonny who brought me my favorite Vince Young UT cap to my Fox Happy Hour Show at the Waldorf a couple years ago? And who has been a subscriber of mine for many years???

Ha, that’s me! I’ve been MIA for too long. Missed reading your stuff!

Great to reconnect, man! Thanks for that hat. People give me crap about it cuz they know I typically boycott college sports, but I tell them Sonny gave it to me and I like the way it fits so what the hell!

To answer your question, it’s hard for me give a straight “I’m this long vs short” these days since I’m not running an outright fund. I’m still mostly net long and not very short at all, though we added some SPY puts and shorts recently. I’ll send out a full Cody’s Latest Positions update on Friday which will help get you back in the Cody Willard groove here, Sonny. Rock on!

Q. Cody: In your email today thinking the Twitter and Alibaba IPO and the bursting of the bubble a few months after. How does / will that affect your stocks and their targets / goals you have for them FB 100, AMZN X 3 where it is today, AAPL, GOOG, etc.?

A. It doesn’t. I’d expect that FB will be closer to $100 and Amazon closer to $1000 and so on if and when that Twitter IPO gets here and this current iteration of the latest stock market bubble truly blows its top off.

Q. Scutify, great site but on the app for iPhone print is very small for reading, can you get it enlarged.

A. Great feedback on the scutify app. I agree with you and there are several other cosmetic upgrades and new features that we’ll be adding to the iPhone app in the next week or two which means it will be available for download to you in the Apple App Store in another week after that.

Q. I was not able to locate Scutify for the ipad. Is it available?

A. Unfortunately, we don’t have a Scutify iPad app yet…it is also a few weeks away. When we joined forces with Scutify by acquiring their company, we saw an absolutely incredible jump in app downloads, sign ups, traffic, etc and it hasn’t slowed yet. The site and the app just launched in August and with registrations up 8000% this week, we now have tens of thousands of users of Scutify and we have gotten tons of requests for iPad and Android apps, both of which were already in the works, but we had no idea the demand we would face as this thing has taken off like this.

I do use the Scutify iPhone app on my iPad all the time though, and it works great. Stay tuned, this Scutify platform is going to be huge, I do believe. I’m pumped, as you can image. Thanks and please do go review the app in the Apple App Store and also spread the word about it to your friends!

Q. 8001% You mean. I am downloading the app as I type!!

A. I can’t believe you’re JUST NOW downloading the Scutify app, Elad. (TWC ref throws a flag and issues Elad a penalty of two yards.)

Busted!

Cody: I like my cnbc app! 2 more yards to tack on as its also available on the ipad as well.

Q. Thanks, please advise when new download is available.

A. I will let you guys know how this Scutify ride works out as we do it. Thanks for all your interest and feedback in the Scutify apps, folks!

Q. Cody- Another Question about the scutify app. If Twitter and alibba are as now planning their IPO for Q1 2014 and a few months after that you think the tech eco app bubble will burst, what’s the thinking behind buying / getting involved with the scutify app? If indeed things pop and crater? Who will want to watch their portfolios crater and thus use the app? Do you then think certain stocks will outperform? Gold start to rise, etc.?

A. Amazon is currently nearly 10x its high from the top of the dot com bubble before it crashed and bottomed in 2002. I think there will be app companies worth billions of dollars in ten years, even if there is a crash along the way to get there. As for market audience — #1, there’s millions of traders and investors out there in up and also down markets who need to be serviced. And I will tell also that the highest ratings Fox Business has EVER HAD to this day were back in 2008 during the crash.

Q. Cody, is Scutify hiring? My son lives in SF and is looking for a job.

A.  Scutify is based in Australia believe it or not. But I do think we’ll be hiring some people soon, so will let you know.

Q. Just an idle question (since you’ve caught up): is Scutify the first app-related purchase “your companies” have made?

A. Hmm, sort of. As Thomas Edison once said about the light bulb, “I didn’t fail 10,000 times, I just found 10,000 ways that didn’t work”. I’ve certainly put a lot of time, energy and money into app development and have almost merged with a couple other app-centric companies, but this is the first time we’ve out and out bought an existing site and app.

…and do your subs get super-special preference when you IPO (after the crash)?

Yes, sure, I like that idea. Remind me in five years, all right?

That’s an awful lot of subscription fees I’ll be paying for a weak promise, is all I have to say.

I think you’ll get more than your money’s worth from my brilliant trading and investing guidance along the way, of course. 🙂

Q. BBRY is closer to $8 then the $9 per share buyout offer… would this be a good buy now as I imagine the floor should be $9? I am sure I am missing something huge; it’s never that easy.

A. Ha, that’s a great line — “I am sure I am missing something huge; it’s never that easy.” I think you’re probably onto a decent trade there, with low downside risk below $8 a share. But then again, your potential upside is only 10%, so it all depends on a personal choice from your own analysis which makes perfect sense. All of your analysis there, that is, “BBRY is closer to $8 then the $9 per share buyout offer… would this be a good buy now as I imagine the floor should be $9? I am sure I am missing something huge; it’s never that easy.”

Q. Cody, the price action n volume of BBRY indicate many are not believers in the Fairfax deal working out. Also if stock is near 8 now instead there a greater likelihood that others in the Fairfax consortium will not want to pay such a premium? Bottom line is this stock still a nice short?

A. I like the earlier logic that BBRY might be a short-term long than a short at all right now. I’ve cashed in my latest BBRY put profits and have moved on.

Q. Darn! I just added to both shorts and puts on BBRY cause the deal smells like an act of desperation from the largest shareholder. Friday earnings are going to be pivotal. Thanks for the reply. I will watch the trade a bit more and act if it pops.

A. I don’t think Friday’s earnings will change anything for BBRY now. The company’s likely to go private at some point, so the earnings and fundamental outlook for the business are no longer the primary drivers of the stock action, IMHO.

Q. About your ZNGA trim. Sounds like a move right in with the Willard Philosophy: (1) make the hard decisions (b) don’t go for the top (c) trim and tranche. But here’s the question: will you tell us when you’re getting back in if and when it gets soft again? I know it’s one of your basket/forever stocks.

A. I don’t know that I even plan on ever buying back an ZNGA at lower levels. I’ll just ride out what I’ve got but I will certainly let you know if I go back in and buy any back.

Q. Cody — could use a little explanation re ZNGA and “basket stocks.” If an equity deserves to be in a lifetime basket (like ZNGA) because it’s part of a major Revolution, i can see the logic of trimming some profits on the way up…but unless one doesn’t believe it still deserves to be in that basket looking ahead, why not refill the basket if it has a hiccup (say, goes back down to $3 or so). you’re not betting worried about ZNGA and its new CEO, are you?

A. I am a bit worried about the way ZNGA’s business model has had to morph and they’ve had to change CEOs, etc. It raises risks.

Thanks for that insight.

Q.  Hi cody, ZNGA is making big move this morning. I have a small position. Should I take profits? Thanks.

A. I can only tell you what I did myself to answer your question and that is that I trimmed 1/10th of my position because I think that is the best approach right here right now.

Q. Hi, what do we do with Oct 500 calls on AAPL? Stay or roll? Thanks!

A. Cutting it close on the October $500s, especially as the stock’s been funky here after that pop Monday. My big concern here for the near-term is that the iPhone 5C has sold like the Microsoft Surface Tablets did when they rolled out…meaning, not well at all. It’s great that the higher-margin 5S is selling like cheap sunglasses at a ZZ Top concert (I once drank beers on his tour bus and talked about our mutual love for Mescalero, NM with Billy Gibbons after hanging side-stage and backstage at his show at the Beacon theatre in NYC and they’re gonna be in Mescalero next month). Anyway, the AAPL stock has lost its recent mojo and has become a battlefield stock once again, so for the next three weeks, it’s anybody’s guess. Feet to fire, I’d hold ’em, but it’s a tight window. Good luck. And “go get yourself some cheap sunglasses!“.

So…I’m guessing he will NEVER forget to get some cheap sunglasses!

Q. Do you still see GDX as a viable way to play the metals into year’s end?

A. Yes, I like GDX into year end as a high-beta bet on the metals, but I sure don’t like the way its been acting for the near-term lately. I like GDX even more looking out 12 months from here.

Q. Cody, are you still under the belief that the market is in for a large dip or correction in the near term and that GDX could head much higher by the end of the year?

A. My short answer…yes.

Q. Juniper has been on a steady slide recently after a nice run up. An opportunity for a common add or a call? I trimmed heavily at the peak but still have a 1/4 position or so. Anything changed with Juniper to consider one way or another?

A.  Nothing’s changed with our thesis with Juniper that it’s rolling out new faster, upgraded routers to its primary customer base, the telcos and cablecos around the world, just as they are boosting spending on router capacity in the network…I wish I’d trimmed more at the highs, but I probably will buy a tranche here soon.

Q. Afternoon, Cody: quick thoughts on the ECTY bankruptcy buy? Think we ought to cash in at about even, a bit up? Or is there life in it yet? Also — any current thoughts on the world’s biggest enigma company and stock, TSLA?

A. The recent BK trades like ECTY that ended up working out for us took a couple weeks to really play out. I’m sticking with this for another week or so.

TSLA’s stock is a great example of the current stock market bubble we are in. Who knows where that thing will top at…or when. But when it does, it’ll be a long way to the bottom.

Thanks!

Q. Cody where do you see FSLR and CREE heading near term? FSLR is hitting 50 dma barrier, and CREE seems to just be churning around with good upside potential. I’m thinking of trimming both, and opening up a tranche of XONE. Thoughts?

A. Solar stocks are strong today but yea, that FSLR has had a dickens of a time getting through $41. CREE’s in Wall STreet’s penalty box after that quarterly blow up that is the very same thing that gave us our entry. I don’t know about any of those three vs each other for the next year or so, that’s why I’ve got all three about weighted equally (XONE is smallest cuz it’s part of a basket while the other two are just standard positions).

Q. What is your take on JPM? It went up today. Are you still holding shorts on the banks?

A. Yes, JPM is part of my shortside hedges. And I’m still holding them.

Q. Also, just a housekeeping thing. I don’t care THAT much, but a few weeks ago, you said you wouldn’t often be offering access to the normal chat room for non-subscribers (except for promotional periods). Today, as happens occasionally, I got on TWC without (yet) logging in…and saw that chat AND this one (the weekly) don’t need a login to comment. Could it be they’re both “unlocked” by mistake?

A. Great catch! I’m about to do a few clean ups on the TWC site this weekend but I’ll fix both of those tonight.

All right folks, that’s a wrap.

As Keyser Soze would say: “And like that, he was gone.”