Episode 81: Jackson Hole & Small Caps

Ever wondered why managers can’t beat the S&P500? Because they’re sheep and sheep get slaughtered. - Gordon Gekko

That’s why we created a new approach: The LongVol Report - a report that delivers actionable idea flow to empower investors them instead of confusing them. We think independently, we are contrarian and we actually do the work.

🤝 New Here? Here Are Some Ways I Can Help

1. The LongVol Report PDF, Sent out each Sunday - 21 Day Trial & Free Copy

2. For Busy Professionals: The AST Swing Portfolio Alerts 

3. Bustamante Capital Management: An Unconventional Asset Manager

4. The Weekly Long Vol Report VideoCast/Podcast - Spotify & YouTube

🤝 Here Are This Weeks Top Market Headlines

This week in our PDF Report titled “The Bears Are Back in Town” our views were still that the market had some steam left in it but that certain names and sectors would become shorts. Two of those ideas were shorts in $HIMS ( ▲ 1.34% ) and $OKLO ( ▲ 0.93% ) which paid off well for readers this week. We’ve been bulls in $HIMS ( ▲ 1.34% ) since $6/share here and $OKLO ( ▲ 0.93% ) has been a great long/short trading sardine for us.

Fed minutes came out this week and they were a bit more hawkish than expected and as we head into Jackson Hole I would be surprised if he hints at not cutting. Again, I think they do and we’ve positioned client portfolios in basket of interest-rate sensitive names from a few months back.

The only reason this macro-framework comes into play for how we run client portfolios are on certain interest-rate sensitive plays. There is a meaningful tailwind there that will have a cause/effect but the reality is most of what we do is find good companies that are overlooked, beaten down or ready to turn around.

Speaking of our portfolio, I gave commentary to Business Insider this week as they asked about Michael Burry’s positions in $LULU ( ▲ 0.03% ) , $EL ( ▲ 1.33% ) , $VFC ( ▲ 1.4% ) and a few others and here is what I had to say below…..

We own this name in portfolios and have since last Summer - I’ve since traded around it a few times (sold into the Q1 highs, bought back for $13 avg. cost basis w/ LEAPS) recently and we like the name. In fact, I like it so much that in that interview I told them that the new head of Van’s, Sun Choe, is the equivalent to Steph Curry for them!

This was an interesting piece of data this week on small-caps and all I can say is that when the market gets too confident on one side of an idea you usually want to take the opposite side. We like select small-caps here into this cycle we’re in but finding the right names takes some work.

In fact, one of those small-caps we own in portfolios was up +17% today and up about +42% since the entry - we decided to trim some gains on that today. (Sorry, not in the report or here, some idea flow is proprietary for our money management clients 🤓

Another small-cap we own is Astronics ( $ATRO ( ▲ 3.46% ) ) - We did add this one to the weekly LongVol Report PDF and we’re pleased with where it’s gone, and will go, in the near future. For subscribers I wrote an in-depth thesis on the idea here this week that you can read.

Celsius Energy ( $CELH ( ▲ 0.19% ) ) continues to perform extremely well from earnings a few weeks ago and the stock is not showing signs of stopping. Their acquisition of Alani Nu has been a powerhouse and it showed in the earnings.

We took a position in this name a few weeks prior to earnings for client portfolios and cashed out most of it this week sans some LEAPs that are still owned.

💼 The AST Swing Portfolio: Deep In The Money Options For A Passive Portfolio

Below is a preview and format for the AST Swing Alerts Portfolio where we use deep in the money options instead of shares to provide readers with ideas they can put on and leave alone.

The biggest issues I have seen with those who are DIY investors is that they don’t have the time to research or even manage a portfolio which leaves them with really one option; outsourcing to an investment manager like myself - or sadly, other managers who use the 60/40 approach which I am no fan of.

Now, when we manage money for our clients we use a long/short approach meaning we are not reliant on the broad market momentum to generate returns. We often invest into names nobody talks about, use LEAPs for leverage and take short positions as needed. But, not everybody has the time to do this, the know how or capital required to run a strategy like this.

You don’t have to sit at the computer all day watching the charts, researching or even worry about watching the trade each day. Why? Because the AST Swing Portfolio approach is designed that way, on purpose - and it can be adjusted based on your portfolio size.

We leverage time with +90day (and sometimes 12 month) expirations with a deep in the money option. What you get here is an idea that has a low cost of capital, with time to be right and the best part leverage when it works without having to size up.

This doesn’t have to be your only portfolio strategy but it can be part of it.

📈 Stock Charts & Commentary

$OKLO ( ▲ 0.93% ) was one of the “Best Ideas” in the PDF report this week as a short and it proved to be a tidy move lower. We’ve traded this name on the long side for the last 3-months of this bull run and may again but it proved to be a great short in a week of red.

$HIMS ( ▲ 1.34% ) also found it’s way into the “Best Ideas” section of the report this week as a short and a short it was this week. So far it’s been saved by the 200SMA but we still think there’s trouble ahead. I wrote about the +35% long idea last month the day before it took off - so don’t shoot the messenger, this is the trader in me trading the name.

$ATRO ( ▲ 3.46% ) is a name we own in client portfolios and a name I wrote about this week here for members. This fits in nicely as a turnaround to growth story which is one of our main strategies for our long-term, core portfolio holdings. It just so helps that we’re on the verge of a 52-week breakout as well but we bought it for the balance sheet and other reasons discussed in that article.

📮 In Case You Missed It

Last weeks Podcast: Thematic Investing Here

Members Post Monday: Video on Market Highs