Shrub's Single Stock Scribbles

28 Jan 2024

It’s a quiet Sunday morning so I thought I’d scribble some notes on a few topics I discussed.

OIL

Since the beginning of the year, I’ve been advocating to have some Oil Upside exposure as a geopolitical hedge (“Crude Joke”). The price action has been frustrating but finally Oil had a run to its 200dma, a nice +10% run since the first Shrubstack featuring those pesky sand people. I closed the Oil calls and kept only the single name exposure in Energy. I may regret it, but they had a good run and I don’t want to hang around for decay. I’ve mentioned it in the past, that I prefer to have cash flow yielding energy stocks instead of Oil calls, due to nature of oil as a high vol asset. Thank you sand people.

MINERS / COMMODITIES (Glencore / Anglo American)

On Tuesday there were headlines about China stimulus in the real economy. Glencore / Anglo are the typical beneficiaries, but they weren’t moving and actually were stuck at their 52 week lows for the whole European morning! It’s like the monkeys stopped believing that China matters. I took a position. They had a 5-6% rally afterwards but they are still down on the year. There’s a significant mining conference next month (by BMO) and I’d be interested on the tone and any deals that come out. I’m sticking with Miners as a broad theme here.

BTU: First discussed here, stock had a 5-6% run since the S&P 600 inclusion. Elliott is now down from 10% to an 8.5% stake, so slowly and surely this Coal is cleaning up. Has results on 8th Feb and I think Elliott can’t sell more until then. Would be interested to see any update on buybacks.

GEO: Apparently the Republicans and the Democrats are nearing a border deal. Whether that’s ultimately good or less good for GEO remains to be seen. Regardless, it’s a stock on 6x EBITDA and is also a “Trump beneficiary” irrespective of the border deal outcome.

ALCOHOL: On things that impressed me this week, LVMH reported a +10% yoy Revenue growth for the quarter on €86bn annual Revenues. Just wow. Seems Wealthflation is encouraging rich people to spend. Another snippet was that LVMH said the worst was behind on Cognac sales and then Remy also came out with a relief print and said that “it doesn’t expect weaker sales trends in China to continue” with significant destocking taking place. I know that in the new age of GLP1, none will drink alcohol in the future, but in case they still do, some of these stocks are high quality and trading near Covid lows (chart below is Diageo, Campari, Remy)

MSOS / Cannabis

Moving on to the next vice, Cannabis stocks have done well too. I wrote about the Rescheduling and its importance here. MSOS is looking overbought, but I think the events are too close to be cute about it, so I’ll stick to a core exposure and trade around the edges. The polls significantly favor the rescheduling of marijuana, so I fully expect the administration to push this before elections. Maybe the trade is as stupidly simple as staying long until 4/20 ? KISS :/

“That” CAR COMPANY

I covered the TSLA short post results. A 27% drop in a month is a great outcome for a short especially of this size, so I took the money and ran. The short thesis was based on EV over-supply, price war and subsequent margin compression. The results were a reset of expectations. But Elon is not someone I want to be betting against long-term so moving on.

Rotten AAPL?

I actually went long the APPLE fruit for a brief spell a couple of weeks ago as it was a laggard vs the Nasdaq and BAML was trying to hype it on AI. I wrote about it here. It had a nice run of $5-7 bucks a share. I’m not involved any more. In fact, I think the next $10 are probably lower. The fruit has results next week and I wouldn’t be surprised if it disappoints. It’s only a $3 trillion company on 30x PE, what can possibly go wrong?

NDX / QRA / Fed and other nonsense

With so many results next week, the QRA and the Fed, I took a February 17,000 put on Nasdaq as a way to cover all this nonsense. Not a bad spot to take protection, even though it’s generally been a waste of money, but we did hit Demark 13 on some Indices and all it takes is one Apple miss or one QRA surprise to knock it down a few hundred points.

The Nasdaq can drop 5% and STILL be in a bullish trend on its 50 dma. Or it can drop 12% and STILL be in a bullish trend on its 200 dma.

So we aren’t talking science fiction here…

OK that’s all from me. Enjoy the weekend all!

Disclaimer:

This isn’t financial advice.

This is the trading blog of a shrub.

By now you should know: Don’t be Stupid.

Like, seriously … Don’t be stupid …