Archive for June, 2017

Closing 1 Trade ($AMZN, $ETSY)

By: ispeculatornew | Date posted: 06.23.2017 (6:19 am)

As much as Amazon has been in the news, Etsy has been on quite a streak and my short position has not done well in recent weeks so I will be closing the trade on this morning’s open. I do remain very skeptical about ETSY’s longer term prospects but it does look like it will be able to have a shot in competing against the likes of Amazon so it will be interesting to follow. As is always the case, you can see my 2017 (and previous years) long & short tech stocks here:

http://www.intelligentspeculator.net/livetrades

 

New Trade: Long Paypal (PYPL) & Short IAC Interactive (IAC)

By: ispeculatornew | Date posted: 06.21.2017 (5:53 am)

Today I am opening my 12th 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 ValueBetaEarningsRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
IACIAC/InterActiveCorp102.9636.9824.3261.09-2.824.523.511.138/2/201739.233.7833.02
PYPLPayPal Holdings Inc52.5244.0524.9334.117.244.3312.231.187/20/20178.96N/AN/A

Revenue growth for IAC has come down quite a bit and I do think that PYPL will be able to keep up its current growth in the short to medium term.

 

Long Paypal (PYPL)

Paypal is a very interesting story right now. Not only does its main business participate in the growth of ecommerce and online payments but it also owns Venmo, an incredibly popular P2P payment solution. Paypal has been in the news a lot recently as the big ecosystem players continue to take stabs at its main business. Just recently, Apple announced it would be possible to do P2P payments through Apple Pay using iMessage which does sound like a big threat. I do think it is and I continue to believe Paypal will struggle to remain dominant against these much bigger players. The threat does seem a bit overblown at this point though and I do think PYPL will continue to do well in the short to medium term. Why? Because online payments are a very fast growing business and more than one player will do well so I think PYPL is very well positioned.

 

Next earnings: July 20th 2017


Short IAC Interactive (IAC)

IAC Interactive continues to be an interesting stock to follow but to me the main story remains that IAC has struggled to come up with the next big thing which has translated into slower revenue growth. The stock did see solid acceleration and that has been mainly caused by improved profits but as you can imagine, that will be more difficult to sustain without better top line growth.

 

Next earnings: August 2nd 2017

Disclaimer: Prior to opening this trade, I do not hold a position in PYPL or IAC

How will Deregulation Affect the Financial Sector?

By: ispeculatornew | Date posted: 06.20.2017 (6:46 am)

President Donald J. Trump has been mired in controversy since he was sworn into office. His agenda has been hamstrung by obstructionist Democrats and more than a handful of skeptical Republicans. His ambitious objectives such as building a border wall, imposing tariffs on foreign countries, repealing and replacing Obamacare, and deregulation have been stopped dead in their tracks, or have they?

While the media focuses its attention on drawing parallels between the Trump campaign and Russian election interference, the Trump White House has been quietly going about passing legislation to undo the Obama-era doctrine of extensive government involvement in most every aspect of corporate America.

Foremost among the changes sought out by Trump and the Treasury Department is the redrafting of Dodd-Frank. This comprehensive piece of legislation was passed in 2010 as a response to the global financial crisis that developed after Lehman Brothers collapsed. This set into motion a cataclysmic series of events that wiped out trillions of dollars from global markets and threatened to spiral into a global depression.

Obama and his team sought out legislation to prevent banks from over lending, by requiring them to meet with minimum stress test requirements. In early June 2017, landmark legislation was passed by the House of Representatives to radically transform the manner in which the financial system operates in the United States. The banking system remains the structural bedrock of the US economic engine. Too many changes and lackadaisical regulations may seriously undermine the performance and the credibility of the US financial system.

Banks and Financial Institutions Abuzz with Trifecta of Policies

Banks are strong when they promote lending, investment and saving – those are the 3 tenets of economic growth and prosperity. Back in the 1930s, the Glass-Steagall law was passed which recognized the separation between investment banks and commercial banks. That has since eroded, and the law was repealed in 1999. Banks have turned the corner when it comes to liquidity and credibility since the passage of Dodd-Frank in 2010. The stringent regulatory requirements inherent in the legislation ensure that banks will not over lend and are capable of withstanding significant stresses in the economy.

These measures also enhance client protection and ensure that a modicum of solvency, respectability and structural strength remains intact. Any failure in the performance of the economy or the bank should not adversely affect the economic system overall. There are now calls for the stress tests to be revisited, amended, and updated to meet current market conditions. We see evidence of renewed interest in bank stocks according to  Lionexo options trading experts. The financial sector is buzzing with the multi-pronged approach to revamping it in the form of Fed rate hikes, deregulation, and decreased taxation.

What Sort of Legislation Would Be Beneficial to the US Banking Sector?

Banks will be well served by determining issues like share buybacks and increasing dividends once the stress test results have been acquired. Banks are also currently limited in the amount that they can invest for the own profit/loss portfolio. Fortunately, the global community has toiled long and hard to create a standard to prevent a return to the conditions that precipitated the global financial crisis.

Unfortunately, US regulatory agencies have dismissed global standards as insufficient and have gone further to impose strict limitations and performance criteria on US banks. This has negative ramifications and could result in the US financial system being defunct. The CEO of Morgan Stanley (MS), James P. Gorman, believes that the US financial sector should take the time to digest the current rules and double down on what the economy requires to generate job growth, investment, and increased savings.