Shorting involves timing, because the market only goes up in the long run. The winning strategy is to be a defensive bull. Trust me when I say, I know all the bear thesis and have some of my own (CLO collapse, deflation, etc). What's the point though if I can't time for shit and the Fed probably only brought down the market to pressure Mitch and Trump to pass another stimulus?
Therefore, here's what I bought and why:
BRK.B
Berkshire is trading at book value, which is based on stock prices as of 3/30. This makes no sense when the biggest holdings are Apple, Amazon, and cash. Plus most of their operating companies are monopoly like, which gives them earning power even in a depression.
BB
Blackberry is now a software only company, but it's valued like a manufacturer. It's automotive software business will shrink this year, but it also is one of the largest names in cybersecurity. It acquired Cylance two years ago and that part of the business is exploding right now. Cylance, if valued like it's competitor CRWD, would be worth 3x what Blackberry as a whole is worth.
CCH/WS
This is a warrant for the SPAC for UTZ (the salty snack brand). It's good for four years with a strike of $11.50 on CCH. The stock is valuing the company at about $1.4B, which is below enterprise value.. for what's basically another Frito Lay with higher revenue growth and less debt. Also the investor presentation seems really conservative. The CEO says sales increased substantially more than expected last quarter due to lockdowns.
BHC
Yes this is actually Valeant and they have a lot of debt. However, they rolled their debt and have zero payments until 2029. They are cash flow positive and will remain so for this year (one of the few companies to issue guidance). Their largest segment is OTC products from Bausch and Lomb.
LAKE
Best for last. This company makes PPE. They doubled their revenue last quarter and income exploded, analyst expectations were crushed. Yet the stock is only up about 22% due to this crash. Options are not cheap, but the stock is trading at 50% off its 52 week high from before earnings.
This is not investment advice.
Submitted June 13, 2020 at 06:11PM by moazzam0 https://ift.tt/2BX1Fmy
