Adding 2 New Stocks To Stocks I Follow (SNAP, SHOP)

By: ispeculatornew
Date posted: 03.17.2017 (3:00 am) | Write a Comment
Today I’m happy to confirm that I’m adding 2 new stocks to the list of stocks that I follow:
Snapchat Inc (SNAP)
Shopify (SHOP)
Shopify (SHOP) is a Canadian based company that has a platform making it very easy for merchants to start selling their stuff online. That means making it easier for merchants to build a website, list their items, process orders, etc. There is of course a lot of competition in the sector but it’s fair to say that SHOP has emerged as a market leader and given the fact that my web company does have items to sell (not on this blog though), I did end up going through their website quite a bit as well as look for competitors. I then spent a bit more time looking at its financials and while I doubt I’ll be trading the company anytime soon, I will start following it, listening earnings calls (or reading transcripts), etc. So you should expect some commentary in the coming months.
Snapchat (SNAP) is a fascinating company. If you exclude Uber and Airbnb, it is the one company I was most looking forward to turning public. There has been an incredible amount of buzz about Snapchat and I’ve personally read at least 15-20 good pieces about Snapchat. As is the case for other IPO’s, I don’t expect to trade the stock anytime soon but I am excited to get going. With LNKD’s purchase by MSFT about to close, we’ll be down to Facebook (FB) and Twitter (TWTR) in terms of listed social media stocks. I know that SNAP considers itself a camera company 🙂 Here are my main takeaways so far:
-SNAP’s user engagement is very impressive I’m much more interested (at this point) about that evolution than in revenues or profits
-SNAP’s user growth is a major source of concern. There is no way that SNAP can livve up to its valuation if Instagram truly stopped or slowed down significantly enough SNAP’s user growth.
-Evan Spiegel, SNAP’s foudner and CEO does so far look very impressive in terms of product ideas and execution. Given SNAP’s listed shares are non-voting, this is a similar case to Facebook’s where SNAP’s future to a large extent depends on Spiegel’s performance. Tough to ask him to be the next Mark Zuckerberg but this will be interesting to follow
Overall, I personally would and will stay on the sidelines for now. I’d be very afraid to be both long and short at these levels until I see a few more earnings/numbers come out.
I’d love to hear your thoughts if any on Snapchat though. Are any of you long? 

New Trade: Long Priceline (PCLN) & Short Travelzoo (TZOO)

By: ispeculatornew
Date posted: 03.16.2017 (3:00 am) | Write a Comment

Today I am opening my 10th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
PCLNPriceline Group Inc/The1767.9828.2420.4520.6616.474.62200.221.23217.0719.0224.87
TZOOTravelzoo Inc9.219.3621.67-3.19-9.2931.311.359.18-3.44N/A

Revenue growth for PCLN unsurprisingly has been very steady over the years while TZOO is not seeing much positive

 

Long Priceline (PCLN)

Priceline has been one of the most consistent stocks not only in the tech sector but in the overall market for over 10 years. It has been able to improve its core products but also make timely acquisitions to cover areas that it was lacking. Priceline is the clear leader in the online travel space and while I do expect to see TRIP gain ground at some point, there really is no one that can challenge PCLN giving me confidence that they will be able to maintain steady growth on top and bottom lines as more of the travel booking dollars move online.

Next earnings: May 3rd 2017


Short Travelzoo (TZOO)

Continues to be challenging for me to understand how Travelzoo (TZOO) could be trading at a comparable forward P/E to Priceline. Not only has the company displayed very little top or bottom line growth but I’m not seeing much in terms of product innovation in a fast changing environment. I personally see TZOO’s model in a similar way to what Groupon was built on which still works but is clearly not doing as well these days.

Next earnings: April 27th 2017

Disclaimer: Prior to opening this trade, I do not have a position on PCLN or TZOO

Crude Oil Is Not Yet in the Clear Despite OPEC’s Cut

By: ispeculatornew
Date posted: 03.15.2017 (3:00 am) | Write a Comment

OPEC succeeded in getting its member nations and some other non-OPEC producers to agree to a deal to cut their oil output last year. The output cuts were necessary in order to halt the supply glut that has depressed oil prices for much of the last three years. The supply of crude oil has outpaced the demand due to the return of producers such as Iran and Libya as well as an increase in U.S. shale oil production.  However, it seems that the deal might be unraveling at the seams because some countries are not committed to holding their ends of the deal.

U.S. Shale oil cast dark shadows on the prospects of oil

Crude oil has managed to find support around $55 per barrel up from its $30 lows at the beginning of 2016. However, one would have expected OPEC’s deal to cut oil production to propel oil prices faster and higher towards the 2014 $100 per barrel price. The main reason oil prices haven’t spiked in tandem with OPEC’s move to reduce output is that the supply glut in oil is still persistent.

Interestingly, the supply glut situation has remained unchanged because U.S. Shale oil operators are now increasing their output from shale basins because of the uptrend in oil prices. Alex Poldoski an analyst at Saxon Trade observes that “the weak $30 price of oil made oil production unprofitable for shale oil drillers but the recent uptrend is encouraging shale operators to return to the markets.”

The U.S. Energy Information Administration said U.S. oil output increased by 1.7 million barrels in the week ended March 3. Interestingly, OPEC’s secretary-general Mohammad Barkindo acknowledges the influence of shale oil produces when he said “we did confess that we do not have sufficient understanding of how they operate and their impact on us.”

Saudi Arabia wants other countries to pick up the slack

Saudi Arabia oil minister Khalid Al-Falih expressed cautious optimism about the OPEC deal during his remarks at the CERAWeek that held earlier this month in Houston.  Al-Falih started by noting that the compliance level in deal to reduce output has outpaced the low expectations on OPEC’s ability to pull off the deal. In his words, “the market had low expectations, which we have exceeded by a large degree… We are definitely on the right track and are picking up speed in terms of delivery.”

However, the deal to cut production hasn’t done much to end the supply glut in oil; in fact, one can argue that OPEC’s supply cut is providing U.S. shale oil producers to increase their output. There are indications that OPEC might need to extend the deal to cut output beyond the first six months of this year if it really wants to end the supply glut in oil.

However, Al-Falih says there’s no point discussing the possibility of extending the deal beyond the first six months of the year if the other participants in the deal are not ready to uphold their ends of  the bargain. Last month, OPEC reported about 85% compliance in the deal to but the high compliance level was recorded because Saudi Arabia went out of its way to cut its output beyond its initial promise.

In Al-Falih’s words, “it is not going to be fair or acceptable that some countries will carry the burden for all… We’ve been willing to do it for the front end but we expect our friends and partners to pick up the slack as we move forward.”   Al-Falih’s also noted that Saudi Arabia “will not bear the burden of free riders… Saudi Arabia will not allow itself to be used by others. My colleagues have heard that privately, and now I’m saying it publicly.”

New Trade: Long Salesforce ($CRM) & Short Twitter ($TWTR)

By: ispeculatornew
Date posted: 03.06.2017 (3:00 am) | Write a Comment

Today I am opening my 9th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
TWTRTwitter Inc15.75N/A37.33-3.1314.052.66.381.483.687.05N/A
CRMsalesforce.com Inc82.22N/A50.1920.7625.874.7310.771.0912.229.49-155.43

Revenue growth for TWTR is in freefall while CRM remains steady:

Long Salesforce (CRM)

Today I am taking the rare step of trading 2 names that could end up seeing M&A activity. In many ways, Salesforce is in a very tough spot as it continues to compete with the likes of Microsoft (MSFT) and Oracle (ORCL), two giants that among other benefits, already have strong and deep corporate relationships making it more challenging for Salesforce to get its foot in the door. For that reason, Salesforce has been rumored to be for sale and has also tried to make its own splash by (among other moves), making a bid for LinkedIn, strongly looking at acquiring Twitter, etc. In the end, CRM remains in a solid position thanks to an extremely solid offering and like many other SAAS product, it has tremendous loyalty from its customers over time. I do think it’s valuation is tricky and would hesitate to go long outright but I do think that when compared with Twitter, this is a solid trade opportunity.

 

Next earnings: May 25th 2017


Short Twitter (TWTR)

What a mess… I wrote an in-depth article about Twitter recently on SeekingAlpha:

http://seekingalpha.com/article/4043423-sad-story-twitter-told-recent-headlines

The company now seems serious about combating abuse but it is likely too little too late to stage a big turnaround. I do think that Twitter might end up being bought and as a user I’d like that to happen sooner than later to give it a better shot but as last year’s action clearly showed (where Salesforce the one serious bidder ended up not making an offer), finding a solid acquisition seems unlikely for the time being.

 

Next earnings: April 25th 2017

Disclaimer: Prior to opening this trade, I do not have a position on CRM or TWTR
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New Trade: Long Amazon (AMZN) & Short Etsy ($ETSY)

By: ispeculatornew
Date posted: 03.03.2017 (7:35 am) | Write a Comment

Today I am opening my 8th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
ETSYEtsy Inc10.66N/A38.73-9.2533.443.672.971.883.21N/AN/A
AMZNAmazon.com Inc848.91173.3644.9713.7627.084.7440.431.21286.8920.2453.25

Revenue growth for ETSY is quickly declining to AMZN’s levels despite being much smaller:

Here are the Google trends charts:

AMZN

ETSY

credit: Google Trends

How is it that Etsy, the much smaller player in a fast growing ecommerce sector isn’t growing much faster than AMZN? To me that is a tremendous warning sign.

Long Amazon (AMZN)

A few days ago I published a lengthy post about why I think despite its difficult valuation, AMZN is a must hold. I do recognize it will have its share of volatility, especially in shorter term periods but I think it’s a guaranteed (or as close to it as you can get) long term winner, you can read the full post here

http://seekingalpha.com/article/4049918-amazon-nearly-impossible-value-yet-remains-strong-buy

Next earnings: April 27th


Short Etsy Inc (ETSY)

I just closed a trade on ETSY after very disappointing earnings for Q4. I continue to be highly skeptical of ETSY’s current valuations, I don’t think it will be able to compete with the likes of AMZN and while it targets a different customer segment in many ways, AMZN has a tremendous effect on ecommerce in general putting high standards in terms of shipping, ecommerce, etc. That is putting pressure on smaller retailers like ETSY and I don’t think it can live up to its current valuation.

 

Next earnings: May 2nd 2016

Disclaimer: Prior to opening this trade, I do not have a position on AMZN or ETSY
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Closing 2 Trades (PCLN, TWTR, NFLX, ETSY)

By: ispeculatornew
Date posted: 03.02.2017 (7:06 am) | Write a Comment

This morning I will be closing 2 of the remaining 6 live trades which will open a couple more spots which will hopefully mean adding a new trade tomorrow. On February 1st I opened a trade going long Priceline (PCLN) and short Twitter (TWTR) which has done well and currently stands at +31,35% after a continued collapse by Twitter and once again Priceline beating on earnings. As always, you can see my 2017 (and previous years) long and short trades here:

http://www.intelligentspeculator.net/livetrades

The second trade that I’m closing was traded a couple of weeks ago when I went long Netflix (NFLX) and short Etsy (ETSY). Yesterday, ETSY got crushed after disappointing Q4 earnings so that trade now stands at +25.63%.

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Closing 1 Trade (MSFT, TZOO)

By: ispeculatornew
Date posted: 02.28.2017 (6:59 am) | Write a Comment

This morning I will be closing one of the 7 currently live trades which will open 1 spot to open a new one, hopefully tomorrow morning. On January 4th I opened a trade going long Microsoft (MSFT) and short Travelzoo (TZOO) which has done well and currently stands at +20,22%. As always, you can see my 2017 (and previous years) long and short trades here:

http://www.intelligentspeculator.net/livetrades

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New Trade: Long Netflix ($NFLX) & Short Etsy ($ETSY)

By: ispeculatornew
Date posted: 02.21.2017 (3:00 am) | Write a Comment

Today I am opening my 7th trade of the year and surprisingly they are all still live. So far so good but no need to jinx it at this point. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
ETSYEtsy Inc12.9N/A59.279.6839.833.833.061.893N/AN/A
NFLXNetflix Inc142.22338.1260.1514.7130.263.956.231.4620.5923.4695.62

Both of the two charts that follow are tremendously bullish for AMZN. That it’s seeing revenue growth accelerate while much newer player Etsy’s growth is quickly declining and as you can imagine that is also reflected in the interest from Google trends.


credit: Google Trends

Long Netflix (NFLX)

I have a long term very bullish view on Netflix that I hope to write about very soon but suffice to say that I think the company is starting to gain incredible leverage from its position in the market and I do think that while it will hit occasional stock price hits (difficult to avoid them when trading at such high P/E’s), the company remains tremendous value at these levels and I do expect Netflix to keep driving both the top and bottom line forward in the coming years thanks to its position in the market where consumers see it as a must have and content producers are in many ways forced to sell their content to help their long term competitor.

Next earnings: April 24th


Short Etsy Inc (ETSY)

Etsy is another one of those great businesses from a client perspective but that I have strong doubts about from a investor’s point of view. I don’t think any of the users of Etsy directly competes with eBay and Amazon. I would disagree 100%. Fact is that both sellers and buyers can find/sell some of those items at eBay and Amazon and that will end up putting huge pressure on margins for Etsy making growth both on top and bottom lines more difficult. Customer service, shipping, the overall experience all end up being components where Etsy is competing with the sky-high standards that players like Amazon have created.

Next earnings: February 28th 2016

Disclaimer: Prior to opening this trade, I do not have a position on NFLX or ETSY
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How to Turn Investments Into Tax Write-Offs

By: IS
Date posted: 02.17.2017 (12:30 pm) | Write a Comment

Investing has many benefits: it supports the economy, breathes life into new ideas and businesses, and can lead to profit further down the line. In general, it’s a very good idea to invest a portion of your savings as early as possible, since the benefits reaped increase as time passes.

While most of these are long-term benefits, there are some short-term benefits as well, such as the potential for tax write-offs. In certain situations, expenses incurred while investing can be written off, reducing the amount of taxes you need to pay each year.

Capital Losses

 

Similar to how capital gains are taxed when investments have gained value, capital losses can be written off when investments have lost value. In this way, capital losses function as the opposite of capital gains. These losses can only be deducted when they are realized, meaning the only way to write off depreciating value of your investments is if they have been sold that year for a lower value than their buying price.

The maximum value of capital losses that can be written off in one year is $3000—any greater losses will roll over into the next year. In the event of a married couple filing separately, that maximum is split evenly between them, so they can only deduct $1500 each.

 

Investment Interest Expenses

 

If you’ve taken out a loan in order to purchase investments or securities, the interest paid on such loans can be deducted as a tax write-off. This even includes interest on loans taken out to purchase property, provided that the property in question derives interest or royalties, or if you take a passive role in the property’s business activities.

The maximum deductible investment interest expenses you can write off on your taxes is found by taking your net investment income and subtracting any miscellaneous itemized deductions, which are outlined below.

Miscellaneous Itemized Deductions

 

This category includes general expenses that are greater than 2% of your adjusted gross income. The main sources of miscellaneous itemized deductions are usually interest on home mortgages, charitable contributions, and taxes from property and income. However, certain expenses relating to investments are able to written off in this category as well.

As investments are considered by the IRS to be income-producing activities, fees incurred through the investing process can be deducted if declared as such on your tax forms. Some deductions that can be written off include custodial fees, clerical and attorney costs, and fees for transportation and safety deposit box rentals.

Investment expenses that count as miscellaneous itemized deductions:

 

  • Attorney costs for collecting taxable income
  • Accounting costs for collecting taxable income
  • Expenses for owned real estate that collects income
  • Rental fees for safety deposit boxes
  • Subscriptions to finance-related publications
  • Costs from transportation to financial advisors and brokers

Conclusion

 

Taxes are an unavoidable fact of life and can be very stressful when they sneak up on you. However, just as there are a seemingly limitless amount of taxes that are charged on your assets, there are many ways to write off these taxes as well. Losses incurred through investing can easily turn into a short-term boon, and may eventually become tax breaks in the years to come.

In addition, standard operating costs to acquiring and maintaining successful investments can be written off, however miniscule these write-offs can seem. Several small tax write-offs do add up, and the money saved from these breaks can be used to pursue future investments and increase the value and diversity of your portfolio. However, it is still important to consult with a tax professional before pursuing any of the potential tax breaks outlined here.

Christine Sato founded the CPA Review Courses website – an online resource dedicated to helping professionals pass all four sections the CPA Exam on their first try. Christine provides reviews of best cpa study materials and gives expert cpa study tips to ease the process of becoming a CPA.

 

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New Trade: Long Apple ($AAPL) & Short IAC Interactive ($IAC)

By: ispeculatornew
Date posted: 02.10.2017 (6:50 am) | Write a Comment

Today I am opening my 6th trade of the year between between 2 names that I have traded quite a bit over the years. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
AAPLApple Inc132.4215.813.114.5-7.734.5424.811.214/25/201739.4211.5612.27
IACIAC/InterActiveCorp76.8228.0317.4217.78-2.824.323.841.085/2/201739.237.0547.37

 

Long Apple (AAPL)

The surprise here of course is not that I’m going long AAPL but rather that I wasn’t already long (apart from that long term speculative position). I continue to feel like the market is undervaluing AAPL but last year that trend clearly remained and I didn’t want to keep going against it. I do feel like that might have started reversing following its latest earnings release and continue to believe that there is a lot higher for the stock to go given its valuation. Yes, growth will remain a challenge for AAPL given its sheer size but it is also being priced much cheaper than the overall S&P500 and is the cheapest stock among the stocks that I follow in terms of forward P/E ratio. That is TOO cheap for a stock that will continue to grow steadily thanks to iphones but also services.

 

 

Next earnings: April 25th


Short IAC Interactive (IAC)

IAC has been proving for over a decade now how well managed it is and I expect that to continue. It has a very diversified business and has been able to knock out hit after hit over the years, spinning out several of those (EXPE, TRIP, MTCH for example) but I do think its valuation, especially when compared with Apple’s is expensive. IAC has been especially good at improving its bottom line in the past few years but AAPL has actually improved its top line at a higher pace.

 

Next earnings: May 2nd 2016

Disclaimer: Prior to opening this trade, I do have a long AAPL position
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