OT: Stock and Investment Talk

[T2Kplus20]

Breakdown of Q2:

14 Charts On New Bull Market for Stocks, Mixed Returns for Bonds in Q2

A look back at the market’s second-quarter performance as investors wrestled with a changing outlook for the Fed.

www.morningstar.com

 

[RU-05]

I think that someone was also him ^^^^^. Sadly, I didn't buy it either.

I think I mentioned it then but i bought MMM recently and likely bought it too early as it was still in falling knife mode. Though its maybe showing signs now of gaining some traction. Needs to break $105 i think.

Another that I mentioned and bought recently was MP. Was in a downward trend but broke through on new today I f rare earth from china being restricted to sell into the US.

Do wonder if WOLF is running into a head and shoulders. Look out for the $70 level.

 

[T2Kplus20]

I think I mentioned it then but i bought MMM recently and likely bought it too early as it was still in falling knife mode. Though its maybe showing signs now of gaining some traction. Needs to break $105 i think.

Another that I mentioned and bought recently was MP. Was in a downward trend but broke through on new today I f rare earth from china being restricted to sell into the US.

Do wonder if WOLF is running into a head and shoulders. Look out for the $70 level.

I have MP in my custom EV basket and also RIVN (yeah!). By the way, if you want some new ideas, you should check out the FS Insights deal via The Compound. I created a 2nd custom basket based on their stock list and started DCA'ing into it on Monday. Lots of great analysis (both Macro with TL and Technical with MN).

 

[rutgersguy1]

I think I mentioned it then but i bought MMM recently and likely bought it too early as it was still in falling knife mode. Though its maybe showing signs now of gaining some traction. Needs to break $105 i think.

I’ve been watching MMM but not getting in with the lawsuits overhanging. 6%+ dividend is mouth watering for a cream of the cream dividend payer, like I think 50-60 years.

But those lawsuits could be existential and I’ve mentioned here before I could see almost the unthinkable, that their divy could get cut. Just a week or so ago I saw a Barrons article mentioning just that. I’ve mentioned maybe 60-70s as a place where it could get interesting but that’s still like a 30% drop. We’ll see if that happens and if I’ll have the guts to step if it does lol.

 

[T2Kplus20]

I’ve been watching MMM but not getting in with the lawsuits overhanging. 6%+ dividend is mouth watering for a cream of the cream dividend payer, like I think 50-60 years.

But those lawsuits could be existential and I’ve mentioned here before I could see almost the unthinkable, that their divy could get cut. Just a week or so ago I saw a Barrons article mentioning just that. I’ve mentioned maybe 60-70s as a place where it could get interesting but that’s still like a 30% drop. We’ll see if that happens and if I’ll have the guts to step if it does lol.

From Morningstar 2 weeks ago:

Upon further review, we move our 3M Uncertainty Rating to Very High. Consistent with our June 23 note, we think estimating 3M’s legal risks is a highly uncertain exercise. We reiterate that we think the settlement payment poses a risk to the dividend, particularly after the upcoming healthcare spinoff and with additional lingering legal risks like per- or poly-fluoroalkyl substance-related personal injury or additional environmental claims. That said, we still think the stock has value, and $20 billion for total PFAS liabilities (inclusive of the settlement), and nearly $4 billion in Combat Arms liabilities remains our base-case assessment, which is meaningfully lower than the market's estimates. We will continue to update investors as additional facts surface.

 

[rutgersguy1]

From Morningstar 2 weeks ago:

Upon further review, we move our 3M Uncertainty Rating to Very High. Consistent with our June 23 note, we think estimating 3M’s legal risks is a highly uncertain exercise. We reiterate that we think the settlement payment poses a risk to the dividend, particularly after the upcoming healthcare spinoff and with additional lingering legal risks like per- or poly-fluoroalkyl substance-related personal injury or additional environmental claims. That said, we still think the stock has value, and $20 billion for total PFAS liabilities (inclusive of the settlement), and nearly $4 billion in Combat Arms liabilities remains our base-case assessment, which is meaningfully lower than the market's estimates. We will continue to update investors as additional facts surface.

That’s about my thinking on it as far as uncertainty as a whole. For the legal liabilities, I’ve read 20-25 billion for the forever chemicals but haven’t seen an estimate for the earplugs but in the end who really knows.

IMO, it’s kind of like the tobacco companies and the lawsuits overhanging them with the government a couple decades ago. It’s a giant cloud until it’s resolved.

 

[T2Kplus20]

That’s about my thinking on it as far as uncertainty as a whole. For the legal liabilities, I’ve read 20-25 billion for the forever chemicals but haven’t seen an estimate for the earplugs but in the end who really knows.

IMO, it’s kind of like the tobacco companies and the lawsuits overhanging them with the government a couple decades ago. It’s a giant cloud until it’s resolved.

Any resolution, even bad, may turn out to be a good thing (due to the resolution).

 

[RU-05]

I’ve been watching MMM but not getting in with the lawsuits overhanging. 6%+ dividend is mouth watering for a cream of the cream dividend payer, like I think 50-60 years.

But those lawsuits could be existential and I’ve mentioned here before I could see almost the unthinkable, that their divy could get cut. Just a week or so ago I saw a Barrons article mentioning just that. I’ve mentioned maybe 60-70s as a place where it could get interesting but that’s still like a 30% drop. We’ll see if that happens and if I’ll have the guts to step if it does lol.

Ya I read that article.

Overall, 3M might have to take on as much as $30 million in debt to cover all settlements, according to Wolfe Research analyst Nigel Coe. That would take debt levels to about five times earnings before interest, taxes, deprecation, and amortization, or Ebitda, based on 2023 estimates -- well above the typical ratio below two times for S&P 500 nonfinancial companies. What's more, that debt could add more than $1 billion in annual interest expense, which would eat up roughly 20% of projected free cash flow and push annual dividend payouts to more than 80% of projected free cash flow.

"The 3M board faces some hard choices," writes Coe, who also rates shares the equivalent of Sell and has a $92 price target on the stock."It isn't a question of whether, but how much, the dividend resets."

& this:

"A dividend cut will likely come when 3M completes the spinoff of its healthcare business, slated for the end of 2023. The new healthcare company is expected to have more debt than the parent company, which will help 3M's balance sheet. But the spin will also remove healthcare's earnings, some $2.4 billion in 2022 Ebitda, or 36% of profits, before corporate and other expenses. 3M will hold about 20% of the healthcare IPO, which could be worth $5 billion, but that isn't enough to shore up the balance sheet, given all the legal woes."

Looking at the 3 year chart again, there is a downward trend line it's going to have to contend with pretty soon. If it doesn't hold $98 tomorrow I probably cut my losses.

 

[RU-05]

I have MP in my custom EV basket and also RIVN (yeah!). By the way, if you want some new ideas, you should check out the FS Insights deal via The Compound. I created a 2nd custom basket based on their stock list and started DCA'ing into it on Monday. Lots of great analysis (both Macro with TL and Technical with MN).

Me and my buddy were talking about RIVN recently. After TSLA it is pretty easily the most common EV I see, and as the lone truck manufacturer, it's building a lead there much as TSLA did with cars.

Today I saw one towing some jet skis.

IT's actually cheaper then TSLA on a price to sale's metric with significantly better rev growth.

Topped out at $21 earlier this year before selling off to it's all time lows.

 

[T2Kplus20]

Me and my buddy were talking about RIVN recently. After TSLA it is pretty easily the most common EV I see, and as the lone truck manufacturer, it's building a lead there much as TSLA did with cars.

Today I saw one towing some jet skis.

IT's actually cheaper then TSLA on a price to sale's metric with significantly better rev growth.

Topped out at $21 earlier this year before selling off to it's all time lows.

I seriously tightened up my EV basket from about 20 stocks, now down to 12. Plenty of stocks are on my watchlist, but I'm only including those with profit or a pathway to making money. I have RIVN at an 8% weight (now 9% due to the recent pump), but they made the cut for a few reasons. Still a crazy amount of cash on hand, renewed commitment to cutting costs, love the consumer products, and they also have the commercial/delivery truck for AMZN. Still a few years from profitability, but I like their plan and operation.

 

[RU-05]

I seriously tightened up my EV basket from about 20 stocks, now down to 12. Plenty of stocks are on my watchlist, but I'm only including those with profit or a pathway to making money. I have RIVN at an 8% weight (now 9% due to the recent pump), but they made the cut for a few reasons. Still a crazy amount of cash on hand, renewed commitment to cutting costs, love the consumer products, and they also have the commercial/delivery truck for AMZN. Still a few years from profitability, but I like their plan and operation.

They are so new we shouldn't expect profitability, we should just want growth.

The market though is still not shining on companies with that profile. But that maybe the oppurtunity.

The AMZN backing is big.

 

[T2Kplus20]

They are so new we shouldn't expect profitability, we should just want growth.

The market though is still not shining on companies with that profile. But that maybe the oppurtunity.

The AMZN backing is big.

Any profit for RIVN is 2025 or beyond, but their investor deck and outlooks seems reasonable. This is the basket holding with the longest "get to profit" timeline. :)

By the way, time for a TLT / TMF play?

 

[RU-05]

Sold MMM. Falling knife. lost 10%.

Also sold C. 20% loss there, will likely transition to MS.

Sold ATVI. Pretty much dead even. Waiting on the sale to MSFT was getting me nowhere.

So I have a couple bucks to work with.

 

[T2Kplus20]

Sold MMM. Falling knife. lost 10%.

Also sold C. 20% loss there, will likely transition to MS.

Sold ATVI. Pretty much dead even. Waiting on the sale to MSFT was getting me nowhere.

So I have a couple bucks to work with.

Idea for you:
Whatever Dan Nathan is shorting, buy long! :)

 

[RU-05]

Idea for you:
Whatever Dan Nathan is shorting, buy long! :)

On yesterdays MRKT call it sounded like he was changing tack.

 

[T2Kplus20]

On yesterdays MRKT call it sounded like he was changing tack.

So we are at the top now? :)
Seriously, I have an increasingly difficult time understanding the bear thesis in light of inflation falling and the economy still being solid.

 

[RU-05]

So we are at the top now? :)
Seriously, I have an increasingly difficult time understanding the bear thesis in light of inflation falling and the economy still being solid.

High valuations outweighing growth prospects.

 

[RU-05]

Nope Nathan is On The Tape today, still bearish.

 

[T2Kplus20]

High valuations outweighing growth prospects.

Valuations and stock prices are not as correlated as most people think.

 

[T2Kplus20]

Nope Nathan is On The Tape today, still bearish.

He missed out on so much the past 6 months. There were a few shows where he was downright angry that the market is going up. Funny and sad at the same time.

 

[RU-05]

Valuations and stock prices are not as correlated as most people think.

In the longer run they are I think.

And a high valuation is probably predicting higher earnings in the future.

So the question here is, is the market predicting higher earnings in the 2nd half of this year, 2024 and beyond, then the street expects? And if so is that prediction accurate?

 

[T2Kplus20]

In the longer run they are I think.

And a high valuation is probably predicting higher earnings in the future.

So the question here is, is the market predicting higher earnings in the 2nd half of this year, 2024 and beyond, then the street expects? And if so is that prediction accurate?

The two are definitely correlated, just not as much as many think. There are some analysts/pundits that act like they should move in sync almost all of the time. That's crazy. Sentiment, fundamentals, and technicals. They all matter.

As Tom Lee points out:
After the Volker bear market, from 1983 to the end of the decade (about 7 years)
Stock prices increased 230%
Earnings increased 8%

 

[rutgersguy1]

Also sold C. 20% loss there, will likely transition to MS.

As I've said here before, the banks are a no touch for me after the crash. The one time, I've been burned badly by my knife catching mindset.

I don't trust any of the CEOs (except Jamie Dimon) to really know what the hell is going on in their banks. You'd think the stress tests should put that fear to rest but the gov't was supposed to be watching the regionals and look what happened to some of them. If the CEOs can't figure out things in a regional, how much harder and how much more oversight do you need at a money center bank. I used to think Ken Lewis (the guy who built BAC) was good too at one time and he ate the biggest crap sandwich almost ever buying Countrywide during the crash. I thought to myself surely the gov't forced him and are providing backing but nope and it opened up BAC to tons of liabilities. So it's hard to trust any of these managements. Also look at GS and its misadventure into consumer/retail finance with Apple.

I won't touch any of them but if you're inclined in that space, JPM while Dimon is there is the only one worthy IMO. If he leaves, they go on the scrap heap with the rest of them lol. If a institution has wealth management that's also good but if there's too much credit risk in other parts of the business then I'm back to I don't trust them.

 

[rurahrah000]

RIVN breaking through big time.

 

[T2Kplus20]

As I've said here before, the banks are a no touch for me after the crash. The one time, I've been burned badly by my knife catching mindset.

I don't trust any of the CEOs (except Jamie Dimon) to really know what the hell is going on in their banks. You'd think the stress tests should put that fear to rest but the gov't was supposed to be watching the regionals and look what happened to some of them. If the CEOs can't figure out things in a regional, how much harder and how much more oversight do you need at a money center bank. I used to think Ken Lewis (the guy who built BAC) was good too at one time and he ate the biggest crap sandwich almost ever buying Countrywide during the crash. I thought to myself surely the gov't forced him and are providing backing but nope and it opened up BAC to tons of liabilities. So it's hard to trust any of these managements. Also look at GS and its misadventure into consumer/retail finance with Apple.

I won't touch any of them but if you're inclined in that space, JPM while Dimon is there is the only one worthy IMO. If he leaves, they go on the scrap heap with the rest of them lol. If a institution has wealth management that's also good but if there's too much credit risk in other parts of the business then I'm back to I don't trust them.

Looking at my entire portfolio, I am underweight financials. It's hard to get a read on their earnings sometimes since they deal with AUM, not just pure revenue and profit. Regardless, I still own a lot of WFC, JPM, and MS via several value funds. Besides tech/growth, I am also always overweight health care.

 

[T2Kplus20]

RIVN breaking through big time.

Happy I stuck with it, but obviously, a long way to go to profitability. It is the most speculative holding in my custom EV basket, but I love their products.

 

[jtung230]

Their SUV will be a big seller. Much better than the truck.

 

[T2Kplus20]

JPM - Time for the Fed to stop being stupid:

 

[rurahrah000]

Happy I stuck with it, but obviously, a long way to go to profitability. It is the most speculative holding in my custom EV basket, but I love their products.

RIVN can go up another $10-20 from here. There is resistance at ~$28. Look to sell $30 calls for next week if this is still climbing.

 

[T2Kplus20]

RIVN can go up another $10-20 from here. There is resistance at ~$28. Look to sell $30 calls for next week if this is still climbing.

Any thoughts on PSNY? They are selling a ton of cars and have a very low market cap. The manufacturers in my basket are: TSLA, LI, PSNY, and RIVN.

 

[RUinPinehurst]

JPM - Time for the Fed to stop being stupid:

View embedded media

.25 hike (July) + .25 hike (September). Then we'll see from there (November). Plan for it.

 

[T2Kplus20]

.25 hike (July) + .25 hike (September). Then we'll see from there (November). Plan for it.

Not when CPI is so low. They will raise .25% at the end of the month, which is completely meaningless and then we'll see from there.

 

[RUTGERS95]

raising rates here just demonstrates that the Fed is using old world economics and they all have blinders on

go after the reserves!

 

[T2Kplus20]

raising rates here just demonstrates that the Fed is using old world economics and they all have blinders on

go after the reserves!

They did 500 bps already and the labor market is giving them the middle finger. Something else is going on. Wages and jobs are tight due to non-monetary reasons (i.e., long-term impact of COVID). The old playbook isn't going to work anymore.

Inflation is gone, as per the data. Time for the Fed to move on.

 

[RU-05]

RIVN breaking through big time.

bought this morning at 23.50. Wanted to make sure it cleared $22.


Looks like smooth sailing up to $30

 

[RUTGERS95]

They did 500 bps already and the labor market is giving them the middle finger. Something else is going on. Wages and jobs are tight due to non-monetary reasons (i.e., long-term impact of COVID). The old playbook isn't going to work anymore.

Inflation is gone, as per the data. Time for the Fed to move on.

spending, loan growth etc.......need to change the reserve and liquidity requirements. Spending is done overwhelmingly by credit, housing with loans, business expansion etc etc. Hit the flow of money that keeping this going

as for employment, they are also missing that the exagerated 'jobs numbers' are really part time filling in for full time. no one hitting 40hrs in services industry per se. manufacturing and other similar are in contraction for employment

 

[T2Kplus20]

as for employment, they are also missing that the exagerated 'jobs numbers' are really part time filling in for full time. no one hitting 40hrs in services industry per se. manufacturing and other similar are in contraction for employment

Mega +1 on this point. The JOLTs and job #'s are both a joke.

 

[RUTGERS95]

gov't hiring needs to slow down as well

ridiculous how big the fed gov't has become

 

[rurahrah000]

bought this morning at 23.50. Wanted to make sure it cleared $22.


Looks like smooth sailing up to $30

~$22 was the take off point so good call there. I was fortunate enough to get in around $16.5 at the end of June. Looking to hold until $40-50 unless there is a breakdown. I will continue to sell weekly calls against my position. If I get called out then I will jump back in,

 

[rurahrah000]

Any thoughts on PSNY? They are selling a ton of cars and have a very low market cap. The manufacturers in my basket are: TSLA, LI, PSNY, and RIVN.

PSNY will take off as well. It delivered good news on delivery and is technically well set up for a rise. Polestar is not as well known as Rivian and it may not generate as much alpha as RIVN.