The Long and The Short of It
By Michael Hlinka
I’ve been at this for half the year now, and 20-20 hindsight, I realize that I should stipulated a couple of things at the git-go. On both my long and my short selections, I should have established a 25% threshold if I was ever wrong… and I’ll explain this right now. It’s a trading rule I generally follow in my own portfolio. If a long position is down 25%, I will either close the position or double-down. If a short position is down 25% (which really means that shares have increased by 25%), I will almost always close the position. As well, I update my price targets when new information comes to light, so with no further ado, here are the five long selections with revised price targets:
|
Stock |
Original Price |
Current Price |
% change |
Original Target |
Revised Target |
|
BGFV |
$9.99 |
$9.16 |
-8.3% |
$20.00 |
$15.00 |
|
MMM |
$107.73 |
$100.09 |
-7.1% |
$150.00 |
$135.00 |
|
C |
$46.89 |
$46.04 |
-1.8% |
$80.00 |
$70.00 |
|
MPW |
$8.77 |
$9.26 |
+5.6% |
$20.00 |
$17.50 |
|
VZ |
$35.63 |
$37.19 |
+4.4% |
$47.50 |
$45.00 |
LONG PORTFOLIO: –1.4%
As you can see, my selections have essentially flat-lined when you factor in the dividends that have been received along the way. And I’ve pulled back on all of my price targets for one simple reason: It appears to me that interest rates will not be coming down as quickly as I thought.
My short selections – with the important exception of NVDA – have played out pretty much as I thought they would:
|
Stock |
Original Price |
Current Price |
% change |
Original Target |
Revised Target |
|
PTON |
$12.93 |
$7.69 |
-40.5% |
$2.00 |
$2.00 |
|
BYND |
$17.84 |
$12.98 |
-44.0% |
$10.00 |
CLOSED@ $10.00 |
|
NVDA |
$277.77 |
$423.02 |
+25% |
$135.00 |
CLOSED@ $347.21 |
|
ETSY |
$101.31 |
$84.61 |
-16.5% |
$75.00 |
$75.00 |
|
AMZN |
$120.65 |
$130.36 |
+8.3% |
$120.00 |
$120.00 |
SHORT PORTFOLIO: –13.5%
Yes, I was spectacularly wrong about NVDA and if I would have kept the position open, I would be down by more than 50%. But because of the 25% trading rule, I capped my losses, which means that I live to fight another day.
At the beginning of March when BYND was $17.84, I suggested that within two years it would hit $10 at which point I would close the position – and on May 12th, BYND dipped below $10, bottoming out at $9.81 before it rallied to where it stands today. I was happy to close at $10 and lock in a 44% profit.
You’ll see that I haven’t changed my mind about Peloton: I believe that in order to survive it will have to issue additional equity which will be highly dilutive. I continue to believe that ETSY is overvalued and may well pull back to $75 after the next earnings report which will be in late July. And finally, I suggested that AMZN would essentially be dead-money at $120.65 and although it’s rallied quite nicely, I stand by that three-year price target.
Have a great summer, everyone!
All articles published by PAIP Canada Inc. are for informative purposes only, and do not constitute advice. We recommending consulting by a subject matter expert before making any financial decision(s).