what are you selling today?

[Gregmal]

Sold trading position in TWTR

[Spekulatius]

TRV as it reached my price target.

[CorpRaider]

FCNCB

 

Whelp.

[Spekulatius]

Shorted some SAM. If we're in for a world of hurt, fake craft beer and summer beach seltzer's probably arent at the top of peoples shopping lists. Nonetheless, all time high...

 

Maybe people expect their sanitizer sales will sky rocket...

 

https://www.cnbc.com/2020/04/24/coronavirus-kegs-are-going-bad-boston-beer-has-a-solution.html

 

I think SAM May benefit from the demise of some craft brewers. As far as I can tell, booze sales have been pretty good so far during the pandemic. I certainly did my share buying beer, wine and cider.

 

The valuation is egregious, but that’s true for a lot of stocks including those with much crappier fundamentals than SAM.

 

I wish I had gone long this one at ~$460. Their sales have been gangbusters. They have category killers in craft beer, ciders and now hard Selters.

 

Aaaand maybe, hoping to hit $12 in EPS for CY20. Jim Koch and insiders continue to dump their shares all over.

 

Cant really think of too many better recession hedge stocks than this. Competition is coming from all over with the new seltzer releases....just like it did with soda and cider.

 

I didn’t even realize the stock is up ~25% today until now , my comment was solely based on business performance. In my opinion, they have done a great job with the Dogfish acquisition and now with Truly Selters, which at least here near their. Home base (MA) seems to be winning over White claw in terms of display. They are also grabbing market share in beers (call it craft beer or not).

Anyhow, as a consumer and just an observer how they do on retail or just looking at their financial performance, they do a great job.I can see them using their stock to roll up region craft beer producers (maybe Sierra Nevada to get a west coast stronghold) and growing organically with new products. They are clearly better operators than TAP or BUD. Eventually, they may get into spirits too.

 

The stock is overvalued, but so what. Overvaluation alonein my opinion is almost never a good reason to short something.

 

Yea, I definitely brought it on myself. I dont care to look back on the posts, but this was/is a pure valuation short/hedge. I added a bit more today around $800. I've got a stop at $1050 and will cost myself about 250 bps if hit. I actually did a reasonably amount of work on this some years back when the stock was trading around $175. Figured upside on a sale was $4.5B or so. Was long for a little bit. Hard to imagine Truly is a $6B brand, but who knows in todays market. I dont think this is a "great" company. But its definitely not a bad one. In relation to one of your other posts on shorting, Chanos often mentions the 3 Fs. Frauds, failures, and fads. Ive found the first two are reliable, but fads are highly subjective. One of my best longs in recent years was Sodastream, a 7x trade(left a bunch of upside on the table selling too soon) even though many thought it was an obvious fad. Fads are fads until theyre not. Will probably be the case here. Just another case of "dont short on valuation alone".

 

An acquaintance sent me an email today on this. Made a rather funny remark about how given the market, you'd think the only thing people did during lockdown was eat Wingstop and drink Sam Adams...

 

OK, this is rubbing it a bit in, but SAM popped another cork on Friday +18.85%

 

So how go shorts go about risk management?

 

Disclosure: No position

I did buy a caseworker Trulia Lemonade for “research purposes” and because my wife wanted to try it and we both don’t like it and consumption is slow. Taste seem artificial and somewhat metallic (for lack of better terms). I think we will stick with Mike’s hard lemonade despite the calories.

 

[Gregmal]

Yea, stopped out on this one. Nothing really to learn. Already knew valuation alone was a poor reason to short. Thought the VIC writeup was on point. Really just lack of discipline/looking for hedges a little too aggressively. Byproduct of generally being greater than 100% long. Risk management is simply done via sizing the trade and sticking to your entry/exit. Here it was 2.5% at risk in the worst case.

[Spekulatius]

Yea, stopped out on this one. Nothing really to learn. Already knew valuation alone was a poor reason to short. Thought the VIC writeup was on point. Really just lack of discipline/looking for hedges a little too aggressively. Byproduct of generally being greater than 100% long. Risk management is simply done via sizing the trade and sticking to your entry/exit. Here it was 2.5% at risk in the worst case.

 

I think there is always something to learn, if a stock does something vastly different than expected. I think shorting on valuation alone is a bad idea generally speaking, there has to be something else to make a stock a short.

 

I mentioned this before, but ai gave up on shorting be sure for me, it doesn’t seem to be worth the brain damage and seem to add risk rather than reducing it. The only thing I would short is going short an index, but even in this case, I would rather buy a put, because with put, I make a bet with limited downside.

 

Right now, puts are not really affordable which is why I don’t own any.

 

Sometimes a good process produces a bad outcome, but I felt the VIC writeup to fairly weak. Is it just me, but I feel the quality of VIC write ups has really gone down the tubes the last two years or thereabouts.

[Gregmal]

Yea I agree with much of that. Shorting is immensely time consuming and the payoff is mediocre over the long haul. I do screw around and make a lot of hyperbolic statements regarding covid but I do think caution was/is warranted which kind of led me back to shorting and hedging much more aggressively. I just dont like selling longs(core positions at least) really ever. Selling quality companies over the long haul IMO is a losers game. So giving up some of the upside in unique scenarios is how I try to balance that. On the investment(as opposed to trading/hedging side), I try to stick to only shorting frauds or failures as Jim Chanos put it. Fads are too hard to predict and a fad is a fad until its not and by then its ripped your face off if you are short.

 

With SAM, there was no other way to put it than a valuation short, which is always dumb. The post mortem would simply be a self inflicted selection which wasted much of the long leg of my FIZZ investment. At the end of the day is it a wasted gain on FIZZ, a good trade and a bad one, or simply the cost of doing business? Same with the long CWH short YETI I had for a while, but the only difference was it became clearer to me anything outdoor related would have a tailwind and was able to cover at only modest losses...nevertheless if I am not short/hedged than I am definitely not as aggressively long so there's a case to be made that without the short/hedges I dont have some of the longs that did ok. If the netted out difference is, say +3%(just making up a figure) over a year...as you alluded to, was it even worth the brainwork?

 

Even in the most dire times, it seems to continue to be evident betting against stocks is not wise.

 

[thowed]

Yea I agree with much of that. Shorting is immensely time consuming and the payoff is mediocre over the long haul.

 

Even in the most dire times, it seems to continue to be evident betting against stocks is not wise.

 

+1.

 

Wirecard in Germany has turned out to be a massive fraud, but the smart people who worked this out early on suffered years of the share price going up and up, so made little net return when the whole thing collapsed.

 

There are only one or two Long/Short funds that I think really can do Shorting well, and even they have struggled in the past 5 years - I think I'm done with it.

[Spekulatius]

Sold $EIX and $SRE ( price target reached)

[Every Banana Counts]

I sold half of my TPB shares.

[jgyetzer]

All of KTB position.

[KJP]

Alexander's

Equity Residential

 

[if history is any guide, these are good buy signals.]

[BG2008]

Alexander's

Equity Residential

 

[if history is any guide, these are good buy signals.]

 

Yes, if there is a tax increase.  ALX may pay a big special dividend to get ahead of the Biden tax increases. 

[Lance]

BTLCY

 

Thanks

Lance

 

[Castanza]

Alexander's

Equity Residential

 

[if history is any guide, these are good buy signals.]

 

Wrong thread?

[Gregmal]

I think he meant he sold those, and that if history is a guide, his sell decisions are typically buy signals. At least thats now I interpreted it.

[KJP]

I think he meant he sold those, and that if history is a guide, his sell decisions are typically buy signals. At least thats now I interpreted it.

 

Correct. 

[Spekulatius]

Sold my RTX, PCYO and GRA.

[LC]

Change your mind on RTX?

[Spekulatius]

Change your mind on RTX?

 

No, but I liked the price I got. Pure play Defense Play NOC and LMT have barely moved. The way I see it RTX is half defense and half commercial aerospace, so If I consider defense didn’t move (much) then commercial aerospace is worth 25% more than yesterday? I don’t think so.

[bizaro86]

Took some money off the table on "risk on" names. Reduced AER, TZOO, and a tiny bit of ALX.

[Gregmal]

Trimmed a smidge of ESRT on the spike to $8. Fought every instinct to continue being a total pig but ultimately settled on taking a mid single digit % of the position off to pay down some margin and free up some funds. Also sold rest of FSR as well as a few of the warrants.

[fareastwarriors]

Trimmed a smidge of ESRT on the spike to $8. Fought every instinct to continue being a total pig but ultimately settled on taking a mid single digit % of the position off to pay down some margin and free up some funds. Also sold rest of FSR as well as a few of the warrants.

 

That's surprising considering we are probably still in the early innings of the recovery for office REITs. Why now?

 

Do you have higher margin than you like? No other income coming in?

[Gregmal]

Trimmed a smidge of ESRT on the spike to $8. Fought every instinct to continue being a total pig but ultimately settled on taking a mid single digit % of the position off to pay down some margin and free up some funds. Also sold rest of FSR as well as a few of the warrants.

 

That's surprising considering we are probably still in the early innings of the recovery for office REITs. Why now?

 

Do you have higher margin than you like? No other income coming in?

 

Lottaaaa margin on these. Leveraging underlevered public RE companies was something I thought compelling the past 6 months. Some of the stuff, like ESRT, MSGE/S, PCYO, JBGS, FRPH....you have literally zero risk of 0's or bankruptcies wiping you out because of the balance sheet strength. So I modeled out some extreme worst case scenarios and used that as the basis for my assumptions and then gradually bought the daylights out of them because at 1-2% margin rates it just kind of seemed stupid not to. But in some cases we're up like 40-50%+ in a week and change and I'd rather remain flexible and not ignore the possibility that we could retrace some of this. I'd rather add/subtract the noncore(maybe 20% or so) part of the position than be that guy who goes "Its worth $12 and I won't sell a single share for a penny less than that!"...The piece of ESRT I took off for instance, I added on Monday(of the announcement) at $6.40 and sold a few days later at $7.85...no need to be super greedy. Just greedy. With borrowed money its not yours to begin with so the gains are risk gravy.

[KJP]

Vornado

a bit of Paramount Group