What do you guys think? I'm likely talking to the choir since anyone here is probably a value investor like myself, but i figured it was time to get short on some of these that I have been watching.
CRM - the jan 14 $120 puts, and common
CVLT - short common
ULTI - short common
FB - jan 14 $20 puts
CCI - short common
EXP - short common
The common shorts are all around the same size positions, as are the put positions. Theres some room to breathe on some of the common in case i need to avg up.. but not planning on doing much of it. Figurative stops around 7% higher on most, but luckily ive skinned pretty close to the 52 wk high with most of them today. Just was curious of your guys' opinions on whether i'm out to lunch here or if any stand out as a really bad idea.. all are trading at enormous valuations.
James, of your originals, CRM has been grossly overvalued IMHFO for a decade, yet it has huge institutional sponsorship evidently and it's one of those stocks, like AMZN, that just never really sells off for any period of time no matter what. Does it deserve it's multiples? No. Will it retain those multiples? Most likely. It's now just broken out to alltime highs and whereas volume wasn't huge, and the technicals were only fair, it's likely to sustain that breakout because in this world of one-way algos and FED intervention, the trend (always up) is your friend. Unless you're AAPL of course lol!. Algos no doubt have a big impact there, and there are a certain type of algos know as "stop hunters" that as the name implies, take out short sellers' stop losses. CRM could be suicide... also AMZN. They just don't trade rationally.
You have to remember that Bernanke's QEternity programs are designed to push the markets UP, no matter what - capital markets today are nothing more than the enactment mechanisms for FED policy statements - and this has destroyed the long term price discovery mechanism that the market's had followed forever, and he is really the only big player out there. It's well known that FED traders place trades directly through Citadel (illegally), and he has half the prop desks (or more) on Wall Street front running him with THEIR algos. It's choreographed... how many times in the past 3 years have we seen markets sell off hard, break down through their 200 SMA and then reverse... bernanke and dimon and the rest just wait for that breakdown to suck the shorts and then they crush them. It's a totally rigged game and it's destroyed the function and structure of the capital markets, permanently. Some of your stocks you're looking at SHOULD be much lower, heck, the whole market should be much lower on a fundamental basis, but there is one force and that's the bernank, may he rot in hell, and if you go short you'll be in his cross hairs.
That said, FB should have seen it's top last week. The other other shorts you and the others mentioned I'll hold off on discussing, except for one - I disagree on GMCR - they have the wind at their back after their last earnings report and could go quite a bit higher before increased competition sinks them again.
I should mention that i have done this a cpl times now, with OPEN and NFLX. At first, I was selling calls on NFLX and buying puts and short common on Open in late 2010. The calls were sold in nflx at around 190 area, and i covered half before 3q earnings came out in low 180's. The following day, the stock gapped open to 205, and i covered for a loss overall. I ended up going short common at 274 and 292 again the next year. I remember when the day they crossed 300, Goldman Sachs upgraded them with at PT of 330, and within the day the stock reversed and never looked back. I got out too early, covered the lot around 204-210 area, but it was a good ride. And here Goldman is again - seems i have a knack for trading with them. (assuming they were in on the nflx crash, just like they are in ANR on their own PT cuts and coal downgrades) i was pretty fortunate with OPEN too, made some really good money there.
As for amzn Bill, i have passed it over. There are just too many other better candidtes with thicker premium and for the reasons you cite. i just don't think it's the right play right now. CRM is risky because it feels a lot like NFLX, and aint is very right with the consideration that it could just keep going higher, as nflx moved against me originally, since been sustaining these valuation premiums for a while now. Irrationality longer than solvency and all that good stuff. Very valid points, and this is part of the reason i'm scaling in. small put positions here and wait if it moves higher. And never selling calls naked (learned that lesson fast at NFLX).
Finally decided to take the plunge on LNKD after covering EXP and CVLT today. Also sold SBAC and WDAY as well, see how it goes.
I was debating AMZN, but they have a pretty low revenue multiple which seems to be keeping a floor under the stock to some extent. they were some of the cheapest puts, likely related to that, and would have a slower valuation correction i thought... Obviously i disagree with you on ANR