LNDK

Short orders placed

After yesterday’s study I decided to place the following short orders:

ETFC: BUY PUT APR. 2015 20 @ LIMIT 1.40

EBAY: BUY PUT APR. 2015 45 @ LIMIT 1.25

SONC: SHORT SELL @ LIMIT 25.50

NFLX: BUY PUT JUL. 2015 355 @ LIMIT 30.80

BBRY:  BUY PUT MAR. 2015 9 @ LIMIT 0.66

TSLA and LNKD were also on my short list but they have upcoming earnings so I will wait for those to pass.

I need the market to grow a bit more for those orders to get executed, and then turn and dive. I intend to collect profits on them in tranches after each 5% fall in the market.

I also placed an order to sell my remaining (pretty big) position in BIB (the biotech leveraged ETF) with a limit of 114.80.

Short candidates for the upcoming bear market

The anticipation of the end of QE this month and the start of rate hikes next year has prompted the market to do a correction and has moved volatility into multiple year high territory. This may very well be a multi-year top being formed. And so we should use the current rebound to look at some good short candidates for a bear market.

I have some long bets (mostly AAPL and BIB) and I would like to hedge them using some shorts (put options). My ideal short is:

  • high flyer/close to a recent all time high;
  • has a broken model, or at least losses or an impossible high P/E and PEG;
  • has lost a lot of value during the Sept-Oct correction;
  • as high beta as possible.

So far I found the following:

Screen Shot 2014-10-23 at 19.12.02

The most interesting to me are:

ETFC – E-Trade is an online broker that will fall quickly when it won’t be profitable for retail investors to be long in the market anymore.

TSLA – Apart from their bet on self-driving cars (which is still a number of years away) they don’t have much growth coming, are still not profitable and overvalued. They fell a lot in the recent correction and even Elon Musk publicly admited that they are overvalued. I still like their vision and I am very sorry for listening to Cody and not betting on them at $77 as I wanted to. But now they must come down to Earth, especially in a bear market.

EBAY – Just pleased Icahn and decided to spin off PayPal, which is being disrupted by Apple Pay and its value has colapsed. And the online market business is attacked by BABA and AMZN. And they are not profitable. So there.

BABA – A lot of speculators here. And more shares coming to float in the next months. And overvalued, though their PEG is not as bad as Amazon’s. Little history, little insight into corporate governance, so wild card, but I guess in a bear market it will fall a lot.

YHOO – Profitable but overvalued and with low growth, and their only prop is the fact that they still own about 10% of BABA and the cash from selling another 15% at IPO.

LNKD – It’s been around forever, and I never liked it. They sell services to recruiters, but they are not profitable. But it fell already.

SONC – this smaller cap greasy cheap food chain shorted by Cody is priced to perfection while its business model is under attack from the green/healthy food movement. Profitable and with a big short ratio, it may continue to surge for a while.

NFLX – pressured by the cable operators with which they need to partner while they intend to disrupt, and not able to offer latest movies because of its cheap rates, NFLX has lost a lot after its last report and may rebounce a little, but its high valuation will come under attack in a bear market.

What do you think guys? Any edge on these stocks? Any other short ideas?

Unbundling: AOL, Facebook and LinkedIn

The core of LinkedIn is that it’s the universal CV database. You need to have your CV there for people to find it, to look you up – in some circles not  being on LinkedIn is almost a professional failing. For specific verticals (programming, design) this isn’t the case, but for white collar professionals it is. For some people an online presence per se (your blog, twitter etc) is a de facto CV and is how you build your reputation (and Klout is poking away at this), but most careers are not built in public, and most people cannot blog about their job, even if they had the time and inclination.

So it seems to me that the low-hanging fruit is the stuff that LinkedIn just isn’t doing while it pursues the Huffpo dream. Connection and meeting management (Evernote Hello). Introductions (Emissary.io). Pre-meeting stalking (Refresh). Bit by bit a graphic just like the one for Craigslist gets built up.

The puzzle is at what point that matters to LinkedIn. The core business is about selling CVs to recruiters. So long as it remains the CV registrar, does it matter if the users only visit the site once a month, or once every six months? Indeed, if all of these apps use LinkedIn as a data source, arguably they actually reinforce its position.

Perhaps the answer is that tech history is full of dead companies that had mediocre product but great lock-ins. Eventually, the lock-in always goes away – we have Blackberry this week to remind us of that. LinkedIn has a great lock-in and product that’s mediocre for the users who enter their CVs, but pretty good for the recruiters who pay the bills. How will that play out?

via Unbundling: AOL, Facebook and LinkedIn — Benedict Evans.

LNKD going down? La un P/E de 700, as paria pe asta.