Pandora – A Small Short Position

Yesterday, I put together a quick look at Pandora as a short investment.  I currently have a small short position @ $8.03.  My notes and summary are here:   https://drive.google.com/file/d/175JqV5Nh1YF-v2ydqk49PVrZzFaG6Stz/view?usp=sharing 

Bottom line – there’s money to be made on short side, but the risk of purchase or partnering could erode that opportunity.  I will probably NOT add more to the position.

Customer orientation

A recent article which I am assuming is accurate at least at the root highlighted a view of ‘Orientation’ by companies.

https://www.cbsnews.com/news/kroger-threatens-to-ban-visa-cards/

Now … I find the ‘corporate profit orientation’ above that of the customer.  Would not a retailer want to provide convenient and customer choice modes of payment?  I get it the op costs could be higher with different vendors, but would you rather have happy, loyal customers?

Swings: WELL & HBAN = looking long; UA = short again

Three stocks floated across my desk this weekend for possible actions next week

  1. WELL (Welltower)
    • I lost 200 shares this month due to an open Call sell at $60.  Still own more than that, but …
    • The senior healthcare housing market is a tough segment right now
    • WELL is my top selection amongst the group – above OHI and VTR for sure imho
    • Earnings call was interesting – especially the specific questions (in the QA) and management’s characterization of ‘bouncing around the bottom’
    • The situation appears as if management is positive looking forward (tough times, we’re bouncing at the bottom and we’re making the right plans), but analysts are highly skeptical
    • If stock drops below $60 without a varying narrative, I will look to add more
    • Earnings call https://seekingalpha.com/article/4191416 
  2. UA (Under Armour)
  3. HBAN (Huntington Bancshares)
    • I owned Oct 15 calls – sold most of them
    • There were some interesting points management brought out in the earnings call and this post highlights them well
    • This could be a decent EOY ’18 swing trade, but i would like an entry point below $15.25 – if the current breakout above RL2 continues — too late (want a short pullback before opening additional positions)
    • https://seekingalpha.com/article/4191622

Accounting Gotchas in Canada Weed

https://seekingalpha.com/article/4185105-understanding-cannabis-industry-gain-biologicals

This is a great article (the comments criticize as expected but are still worth reading).  For me, i have not even tried to value weed stocks w/ any due diligence / discipline.  It’s always been a speculative trading vehicle and focused on the 3 bigs:  CGC, APHQF,  & ACBFF.  Speculative positions that by pure luck made enough profit to sit on very small positions in all w/ earned capital.  If they make it big, great.  If they crash, oh well … it was fun.

While the exercise of valuing those companies is something people are going to do and it will help us who will not … i think 2019 is the earliest we get anything to make investment decisions on … the big money (tobacco and alcohol have yet to really show their hands)

OHI – My Problem Child REIT

OHI is in trouble both, i believe, as a business and as a stock.  My total position is small relative to my historical holdings at <350 shares.  Two posts in the last 24-48 hours suggest that i am not the only one with this problem child.

Both of these articles are well researched and detailed about OHI and the market segment challenges and opportunities.  I have NOT changed my mind, however.  LTC will remain my REIT in this segment.  WRT OHI, i am just trying to figure out the right exit … and how much risk i will assume to minimize the loss to the exit.  The political, labor and ‘old people preferences’ headwinds even out into 2020-25 are just too strong in my opinion to carry OHI risk / reward.

I will look to exit by EOY ’17.

Low cost Toronto Weed Stocks

I bought a couple Toronto weed stocks last month and am looking to expand positions as entry points allow … TWMJF, APHQF and ACBFF were the target set.  I have small positions in TWMJF and APHQF (after reducing both by 50% after >25% gains in last 30 days).

I looked at APHQF and ACBFF as possibles due to the lower prices … i took Yahoo Finance numbers for annual financials … looking at these numbers at face value there is only 1 choice … next step is to verify these numbers with deep dives into different sources … then decision about additional investments (speculation?).

Variable

ACBFF

APHQF

Price

3.14

6.72

Assets

248,463

233,930

Liabilities

79,884

31,170

Tangible

112,995

200,472

Op Cash Flow

-8,090

3,942

Rev

12,363

12,806

Op Income

-8,618

-1,030

Net Income

-9,985

3,108

More Q3 Quarterly 2017 Reviews

Last night i read thru 3 earnings conference call transcripts:  HASI, FIT and BEP

  • HASI … debt strategy and their willingness to take on that strategy was positive and well articulated.  No change to my positions (mid-point positions in both taxable and non-taxed portfolios) … will, however, add to positions if entry point lowers
  • FIT … seemed to me there was a bunch of hand waving (old corporate saying for we do not have much positive news to talk about so we’ll wave our hands enough to distract everybody) … the one key thing that surfaced in their prepared remarks was alarming (but maybe this was a transcription error)
    • “G&A spend increased 48% year-over-year to $35 million. Research and development spend was up 1% year-over-year to $71 million, and sales and marketing declined 4% year-over-year to $74 million” …
    • they are spending more on Sales / Marketing than R&D? … way, way, way bizarre imho
    • I have VERY small position in FIT and will exit if price hits $5.50 with a 10% loss
  • BEP … this one is getting way interesting and another executive team that seems like they really know what they are talking about and how to talk to investors.  I will be looking to add to this position in non-taxed account as entry point opportunities surface

UMPQ Q3 2017 Quarterly Review

UMPQ is ~3% of my taxable portfolio, with a cost basis around $12.  Their recent quarterly report, conference call and slides can be found here.

What i liked:

  • less discussion on rearview mirror and more discussion of 3 year strategy and included 2 rate scenarios within the strategy
  • exiting the car loan business and rational reasons for doing so
  • talking about their employees and how the strategy evolution impacts them and what the company is doing about that

What i did not like:

  • no discussion of competition
  • analysts asking questions that focused on their ability to build a revised model rather than really digging into the strategy

Conclusion for me? …. somewhere between $18-19 i would consider adding more to my position … but will watch carefully for now