WYMTW - Ep. 14
Carvana & NFP
Here is a recap of what you missed this week (WYMTW).
The video is below, you can subscribe to that, and I am opening up Q&A again for a weekly Q&A on these posts. Email in to submit - Q&A is at the end of this week.
Subscribed
NFG had blowout earnings this week. (Article)
Apple announced a massive buyback (Barrons)
Jobs Growth slows (Barrons)
AIG and MetLife announced buybacks (LongVol)
Happy Saturday - I am back to studying for this exam today and headed to a Derby party with some friends in Phoenix. I got in a quick 15 mile ride around the hood today before getting this out.
Robert Kyosaki lives relatively close to where I am so every time I pass by his house I can’t help but think he was the original guru - don’t get too offended, I know some of you read his book but I’m not a fan.
Phoenix is home to a lot of characters in business.
University of Phoenix founder John Sperling (we shorted his stock in 2011/12)
A lot of shady cats…but that makes it fun especially when it comes to investing in markets where it’s not the mundane day-trading/technical stuff.
Carvana Earnings
Look, I want to keep this brief - a lot of people have emailed in the last week about this because of the original video I made a few years back. I get that it’s cool to talk about but since then there have been countless of monster trades and investments and Carvana (like University of Phoenix in 2012) is just another ticker on the road profits.
The earnings are pretty clear - I am not sure what clarification I can add to it that you all can not already see or that is public info but why not.
Please stop asking me how I am going to short it, I am not going to be rude but you don’t get the sauce for free. If you are going to make money from my ideas then pay for it, it’s nominal in comparison and if you’re one of those people who are the “I’ll go get it for free” by all means but cheap is expensive.
I talked about it in this Portfolio Update for the AST Portfolio and I will update the structure of the trade in the coming week.
There PIK interest is still (and has been a known) an issue
Unrealized gain from ROOT Warrants (actually a baller move)
Gain on Loan sales - same thing they were doing the first drop
So really nothing new. The circle jerking-on FinTwit with the usual bros who genuflect before Cliff Sosin continues and on paper it looks like a comeback story.
But what’s the move from here if any? I am not sure there is one to be honest that makes it worth a “big short” like it was back in 2022. I see a lot of people get tied up in trying to point out fraud because it gives them something to do - I point it out because it makes me money — the first time it made a decent amount but if I didn’t have my head up my ass it would have been more. Is there “fraud” there — that’s subjective. Is there a short-trade that can make a lot of money? Sure, maybe.
However, there have been and are other trades that are less watched and worth it where my mental capital and real capital is better served.
In Q1 energy longs were the move and it made a lot of money.
There were also some tail-risk style trades in March that were big P&L drivers
The point is, don’t be obsessed with your desires Danny -
I’m half joking with that but trying to make a point — that point being that separating your ego/need to be right and making money is important, I struggle with it a lot so it’s something that I have to keep in check.
As much as I think this stock is worth much less it’s hard to allocate too much capital and mental resources to it because of the unknowns it presents.
My guess is that they are going to issue shares here before the next earnings report and that will drive the price lower 20%-30% pretty quickly then we’ll see what tricks (and rest-assured there will be) will be presented at the next earnings event.
So, ya, I am going to get short but no it won’t be of anything of relevance like it was the first time. Additionally, if I have to obsess over one stock/trade idea to drive P&L then I am just simply not doing my job as an investor and while that might work for Uncle Cliff and his crew of “value” bros it doesn’t work for me.
Moving on….
The Market at Large
For those new here - I don’t really care about the direction of the market at large; it’s irrelevant to what I trade/invest into but some of you do so a few thoughts.
I think you’re going to see the last leg in home-builder stocks higher here into the Summer on anticipation of a rate cut. My view is really simple on this. There is not going to be a cut, in fact, they may hike and that is going to be a problem. Again, I don't care either way right now because buying the index and holding the same stocks for the momentum trade is not really what I do in the core/hold side of my books. However, paying attention to policy does matter because it makes me want to position into a few things soon.
The inflation-trade is still on for me and so is mean reversion to Chinese equities which got it’s start last week.
Enjoy your Weekend.