Podcast 49: Shiny Object Stocks or Argentina?
Plus Carvana....
Issue 1 of The LongVol Report is out tomorrow, get a 15 day free trial and 2 copies here.
Quick Carvana Notes:
I am short this but it’s a small position at this point (and I’ve been short for about 6 weeks) and if you listen to the show this week I explain why - in short, there are too many better ideas in the markets to deploy capital too. But, we run a L/S portfolio so having some short exposure is required and it just so happens this is one of them.
Do I think they go bankrupt? No, and I don’t think that’s the right question to be asking given the Hindenburg report and further, you can run solvency analysis to see that they’re not in trouble, at least yet.
Do I think the valuation is ridiculous? Yes, but so are the valuations of hundreds of other Companies. The differentiator in this name, in my view, is the Hindenburg report — if you listen to this weeks LongVol Report Podcast I talk about a few things as to why their voice matters.
That alone should get this name to come back to reality and it already has the last few weeks.
Look at the FCF back in 2022 and their debt + cash, that was a different era/situation.
Today is not the same as it relates to the financials.
The arguments of self-dealing and other nefarious items highlighted by Hindenburg may or may not be illegal; attorneys and the SEC will decide that. Obviously, them pointing it out on this large of a scale does not help the stock sentiment but anyone that wants to argue valuation FOR these numbers is in my view one of two people:
a) Someone that cannot read a balance sheet
b) Someone that wants the grift to continue because they can’t generate any other ideas aside from riding retail momentum
Paying 70X earnings for a Company is asinine but then to overlook the dilution is also another thing…plus these guys sell into retail (or whoever) any chance they get.
And you want to tell me this is prudent investing?
It may work, getting lucky, here and there but when you have a bad process and lack of framework for generating ideas it’s like Russian Roulette; sooner or later you’re going to blow your brains out.
I think it’s important in the investing process to remember the end goal: to generate P&L — you don’t get rewarded (unless you’re an anon day trader calling SPY 0.00%↑ levels) for I told you so’s.
The reward is the P&L.
So, sure, this should trade lower but there are so many other ideas coming in Q1 that are going to be 1 and 2 baggers that are worth the mental and real capital to focus on.
I talk about one of those in the Podcast this week.
There are also a lot of new adds to The LongVolReport which is out tomorrow.
Weekly LongVol Report Podcast: #49
Chapters for The Show
11:20 - 17:15 Broad Market Review
17:15 - 27:00 Mag 7 Stocks Frothy?
27:00 - 32:45 Charts - SPX, Nasdaq, GLD, XLE 32:45 -
42:40 Simply Foods Company (SMPL)
42:40 - 51:15 Japan Rate Hikes?
51:15 - 58:50 Hindenburg Research: Carvana
58:50- 1:17:30 - Argentina Stock Market
1:17:30 -1:14:50 Q&A