The Ugliest Headline is a Buy

For trades I try to mostly buy stocks in areas I know a bit about. If something is tied deeply to the web I have a better than random chance of maybe knowing something about it that the market doesn’t & the confidence to hold (or is that hodl?) if the trade goes against me.

If I can get a few percent in a day on a trade then I will happily exit it, but I try to buy stuff I wouldn’t mind either quickly exiting if it just didn’t work, or stuff I wouldn’t mind holding for years if I thought the trade was going to go astray temporarily but the longterm trends were good.

I am not sure if it was on Stocktwits or his blog, but Howard Lindzon mentioned a great interview of Salem Abraham which I listened to while I was doing some tedious HTML editing a couple days ago & in the interview he mentioned that inevitably his best trades were often those that were the hardest to put on & had the most visceral emotional reaction. He stated (badly paraphrasing here!) with trades you are largely trading against the psychology  and emotional behaviors of others. When everyone is on one side of the boat whoever goes to the other side stands a better than even chance of having a good trade set up. If something looks so ugly that nobody would want it, maybe it’s a buy.

Shortly after listening to the interview I was catching up with tech related news & kept coming across the story about the CEO of JD & the stock was off another 7.47%, and is down about 40% since Google invested $550 million into it about a quarter year ago. JD is still growing over 30% YoY & are valued at a song on a price to sales basis (about 0.5) when compared against other leading internet retail stocks.

After the recent swoon (terrible rape story) on top of swoon (decline in Chinese tech stocks tied with a slowing domestic economy from trade war ratcheting up this year after China tried to pop their stock market bubble a few years ago & housing bubble last year) it would seem there is no reason to buy JD, which is why it went up about 4% today.

I sold it shortly after the market opened along with my eBay.

MakeMyTrip has been sliding & dropped again on news that hotel chain OYO was raising a billion dollars from Softbank & other investors. I messaged a friend about how that story didn’t make a lot of sense to me:

Indian hotel booking app valued at $5 billion. Expedia is under $20 billion & leading India publicly traded online travel agency MakeMyTrip near 52-week lows, off 3% today on the competitor funding, and valued at $2.7 billion, in spite of owning almost half the OTA market including doing bus ticketing or train ticketing for core travel infrastructure. I sometimes wonder if Vision Fund is dropping a billion or more at a time, why not buy out the leading public competitor as well? like if you do $1B for a minority investment in a fast growth startup, why not spend $3b more & own a controlling stake in the combined entity?

The above exchange sounds like I talked myself into a position, but unfortunately I did not!

Someone else apparently viewed some similar string of logic as sound, as MakeMyTrip ramped up as high as 17% today before pulling back to closing the day out up 9%.

I love the look of MMYT in the search results.

Clever use of sales copy in the page title & who doesn’t love some  ✅ action in the description? 🙂

+1 to their SEO team.

After hours Bed Bath & Beyond fell into a deep slumber as  BBBY tanked about 15% on top of falling about a half-percent on the trade day due to declining same-store sales.

“These poor numbers…need to be set against the context of a robust consumer economy where spending on homewares and home-related products has been strong. Framed in this way, the numbers are little short of terrible and underscore the myriad of missteps Bed Bath & Beyond is making,” said Neil Saunders, Managing Director of GlobalData Retail.

I bought a few shares hoping for at least a dead cat bounce in the morning.

Now that the divorce rate is falling if only we can get more people married & birthing children before open tomorrow, this will be a great trade!!!

Sheinhardt Wig Company is not all that far from testing 2009 lows. Will they soon be soaring? The headlines certainly are ugly enough.

 

 

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