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The Most Explosive Stocks of 2017

The Most Explosive Stocks of 2017 (IPI, LPG, WLL, CCJ, URRE, CENX)

Wanna buy SPY? You’re better off torching your cash instead. At least you’ll get a viral instagram video out of it.

The largest 500 stocks have been uptrending for the last 8 years and have little room left to go…   Read more

Woof Woof Long Trupanion Inc

Woof Woof – Long Trupanion Inc. (TRUP)

Trupanion Inc. (TRUP) is a momentum play breaking out of a 19-week ascending triangle. Read more

the end of apple

What’s Really Driving Apple?

Narratives are a fundamental part of our human existence. They’re the key to how we process information. Just as the mind instinctively searches for visual patterns in nature, it also seeks to derive patterns and meaning from information flow. We create stories to help us understand.

We see this in financial markets all the time, though it’s not always a good thing. You’ve heard the talking heads on CNBC. They hop on camera and try to attribute every little market gyration to one news story or another. This type of narrative creation doesn’t make much sense. Most of the day-to-day movement in the markets is just noise.

But pull back a bit and you can see where narratives become useful. For example, why has gold been on a tear since the beginning of the year? Its narrative revolves around the loss of faith in central banks. Investors have stopped believing in their ability to support and stabilize markets and the currency. And so they turned to gold for safety.  Read more

Workday Short

The Cloud Breakup – Workday Short (WDAY)

Ah… Valentine’s Day. A day to cherish your significant other. Take them out to dinner. Sip some bubbly. Or wine if you prefer. Whatever you do, you just have to show your love. That is… if you actually remembered what day it was today. (You’re welcome for the reminder.)

Our team at Foundation almost never forgets this made-up holiday. We are gentlemen and scholars. And also very smooth, much like Teddy Pendergrass. But hey, it wasn’t always like this. We remember the days back when V-day used to make us sweat.

We’re a bit nutty over here, so we see everything in terms of markets. V-day used to always be a giant inflection point for us. Sort of like a company’s earnings release. Do you want to hold through earnings, or do you want to cut your position and run? Same with V-day. Do you really like this person? Because if you successfully perform the whole Valentine’s gig, you may be stuck with him/her for a while. So if you don’t like that person too much, you should probably cut and run before the big day.      Read more

Expectations Blockage – Short Spectranetics Corp (SPNC)

It’s important to understand how to evaluate a company. But it’s even more important to know how to evaluate other investors.

It all comes down to expectations. What is the majority expecting? How can they be surprised? These factors are what move a stock’s price.

And nowhere is this phenomenon more prevalent than in growth stocks. 

Take The Spectranetics Corporation (SPNC) for example. From 2012 to 2015, this cardiovascular medical device maker rocketed 345%.  

How’d this happen? Did it have consistently strong earnings? Read more

Short UPS: What Brown Can't Do For You

Short UPS: What Brown Can’t Do For You

  • Amazon’s potential delivery service is not a significant threat to UPS.
  • The real problem they face is a slowdown in the economy.
  • The faltering economy along with lower oil prices and a stronger dollar are tanking UPS’ stock price.

When it comes to the United Parcel Service (NYSE:UPS), investors love talking about the threat of Amazon (NASDAQ:AMZN). There’s constant chatter that Amazon is creating a delivery network to crush UPS. And that’s why you should sell.

Yes, it’s true. You should sell UPS. But not because of Amazon. Amazon may be a long-term threat, but investors are blowing it out of proportion. The real reason you should sell is because of massive macroeconomic headwinds. These macro drivers trump any problems Amazon may cause.

UPS is in the business of making deliveries. They’re the busiest and most profitable when the economy is booming. But that’s not what’s currently happening in the US. Our economy is slowing.

The faltering economy along with lower oil prices and a stronger dollar are killing UPS.

But before we get into that, let’s first clear up the confusion about Amazon. Read more

ConocoPhillips: The Dividend Isn't Worth The Potential Squeeze

ConocoPhillips: The Dividend Isn’t Worth The Potential Squeeze

  • A bet on ConocoPhillips is a leveraged bet on oil.
  • Why there’s a good chance the dividend will be cut.
  • There are safer plays for a dividend investor looking to put money into an E&P.

I’ve heard many income investors pitching ConocoPhillips (NYSE:COP) as a great value at its current price and 6.4% dividend (one of the higher yields among large E&Ps). Their analysis relies on two assumptions. First, current oil prices are unsustainable and will soon rebound. Second, ConocoPhillips’ dividend is sacred to management and is therefore safe from being cut.

I believe these investors have fallen prey to a bit of recency bias and a lot of wishful thinking. Dig into the assumptions and you find that buying ConocoPhillips as a value income play is far from a sure thing – and in fact comes with quite a bit of downside risk.

A bet on ConocoPhillips is a bet on the future price of oil. Read more

Apple: There Will Be No Asian Miracle

 

  • Although cash flush, AAPL isn’t exciting investors anymore
  • Its growth story hinges on China, where the macro picture is deteriorating
  • India shows lukewarm demand as well
  • AAPL isn’t innovating like they used to and is instead depending on stock buybacks

Read more

Drop That Chicken! (BRFS Short)

  • Brazil’s economic and political climate are toxic for its companies.
  • BRF is closely tied to Brazil’s economy. Where Brazil goes, so does BRF.
  • BRF’s margins are being attacked on all sides which has in turn hurt its bottom line.
Brazil is a mess. With a toxic economic and political environment, it is not a good place to put your money. But that doesn’t mean you can’t profit from the those who do invest there.

Brazil is currently facing its worst financial crisis since the Great Depression. As seen in the graph below, GDP shrunk 4.5% in the 3rd quarter from a year earlier. This is the 6th consecutive quarterly contraction. It’s also the lowest number recorded since Brazil started using their new GDP system in 1996.  Read more

Par Pacific’s Recent Share Offering And Price Decline Doesn’t Make It Any Less Valuable

It’s been a wild few weeks for Par Pacific Holdings (PARR).

After a major move to the upside caused by strong Q3 results, PARR plummeted almost 14% on November 23rd on news of a brand new share offering.

PARR announced that it was selling 3.4M common shares at $22/share in a registered direct offering. At $22, these shares were priced at over a 20% discount to the stock’s closing price a day before. PARR was able to raise approximately $73.74 million with this offering.

The market’s immediate reaction to this news was to sell-off. PARR has since declined further and is now hovering around $22.

We believe the reaction to the share offering was overdone and that the price decline is providing a great buying opportunity at a discounted rate. Read more