“Top Ten Stocks” Update (and note to HMNY watchers): AMC & GAIA Report Stellar Earnings!

Long-time readers should note some significant changes in how I communicate in the public domain. The primary purpose of this forum is now to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

Accordingly, this document should not be construed as an endorsement or recommendation of the companies or securities discussed herein. I am not an investment advisor and this is not an investment thesis. It is merely one part of the story, which I present for debate in hopes of determining all risks and upside potential. The disclosure at the end of this piece is critical to understanding the content of this document. Further, I frequently trade my positions and may buy, sell, or short the securities mentioned herein at any time, regardless of the facts or perceived implications of this article.

 

On March 13, I presented “Quick Update: The Top Ten Stocks I Own“. The article highlighted AAPL, AEHR, AMC, CALM, DIS, FB, GAIA, RDCM, SMSI and WDAY.

Since then, the S&P 500 has fallen by 4%. Despite this, AAPL has risen 2%, AMC is up 10%, DIS has added 5%, GAIA has popped 10%, and SMSI is up a fantastic 35%

The rest of the names (AEHR, FB, RDCM, and WDAY) have all matched or outperformed the S&P 500.

 

Tonight’s news kept the momentum going. After the bell, Seeking Alpha broke the news that GAIA reported great Q1 results.

GAIA: Gaia beats by $0.14, beats on revenue • 4:13 PM
Niloofer Shaikh, SA News Editor

  • Gaia (NASDAQ:GAIA): Q1 EPS of -$0.39 beats by $0.14.
  • Revenue of $9.62M (+66.4% Y/Y) beats by $0.34M.
  • Press Release

 

Highlighting the business momentum, GAIA has seen a decrease in its customer acquisition costs. In fact, this metric compares so favorably to its lifetime customer value (LTV) that the company announced plans to accelerate its marketing expenses with the intent of hitting the 1 million subscribers mark by the end of next year.

It all illustrates and validates what I presented in my April 2 article, “GAIA vs. MoviePass: CAC Shows Which One Is A True Mini-NFLX

I bought more GAIA today and am happy I did. As I’ve said before, this should be a great stock to own until they miss a quarter (which, given management’s conservative nature, is not likely to happen anytime soon).

 

As with all of my favorite positions, I’ll continue to maintain my large core holding, even as I seek opportunistic trading strategies along the way. Speaking of which, I recently sold the AMC May 17.50 calls as a covered call strategy to hedge my long position in the stock.

AMC didn’t disappoint. In fact, the shares are currently trading right around those levels (which is perfect for that strategy) after reporting the following (as presented by Seeking Alpha):

AMC: AMC Entertainment rallies after earnings • 4:37 PM

Clark Schultz, SA News Editor
  • AMC Entertainment (NYSE:AMC): Q1 EPS of $0.14 beats by $0.05.
  • Revenue of $1.38B (+7.8% Y/Y) beats by $30M.
  • AMC Entertainment (NYSE:AMC) shoots higher after a solid earnings beat.
  • The company reports adjusted EBITDA was up 10.7% to $278M during the quarter.
  • Admissions revenue increased 7.0% to $875M, while food and beverage revenue was up 2.1% to $406M.
  • “We are confident that the pedigree of franchises from which a dazzling array of films will be released over the next several months has the potential to propel the industry and AMC even higher,” says CEO Adam Aron.

CEO Aron’s comment is exactly why I advocated buying AMC and shorting HMNY several months ago. Since that time, investors who followed that strategy have been richly rewarded. HMNY has fallen 85%, while AMC had risen more than 12% (plus another 5.5% in after-hours this evening):

hmnyamc

With the summer blockbuster season officially underway (and in a big way!), investors can look forward to a strong Q2 for AMC.

The same can’t be said for MoviePass, which suffers more when blockbusters are in the theater. Neither Disney, nor AMC, nor anyone else needs a lot of help selling tickets to movies like Black Panther or Avengers. Because of this, they are unlikely to receive anything except advertising revenue, while footing the full brunt of $10+ movie tickets.

I continue to root for MoviePass to succeed, but won’t move back to being bullish (as I was back in September) until I see light at the end of the dilution tunnel.

I agree 100% that they have been helping the theater industry. I also believe that they deserve to get a fair piece of the pie. However, in the business world (and life, for that matter) people and companies don’t get what they deserve… they get what they can (and do) grab…

…and for now, MoviePass still doesn’t have the critical mass to grab what they deserve.

In the meantime, parent company Helios is currently printing and selling approximately 70 million shares into the open market! Investors who don’t know (or understand) this should see my recent reports on HMNY.

 

Bottom Line: After a surreal 2017, we’re off to a great start in 2018… and we’re off to a great start to this busy earnings week! We’ll look for the good tidings to continue when DIS reports (tomorrow evening), followed by SMSI on Wednesday after the bell.

I’ll provide some insight on SMSI in my next post, coming sometime tomorrow morning.

Stay Tuned!

 

More Research:

 

To get my posts in real-time, just follow/subscribe to this free blog.

If you only want to receive my most critical reports, simply sign up for my MailChimp mailing list instead. If you’re on that list, you will only get key articles and occasional recaps of all the work I’ve recently done.

 

Disclosures / Disclaimers: I am long AAPL, AEHR, AMC, CALM, DIS, FB, GAIA, RDCM, SMSI and WDAY. However, this is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.

I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.

I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter.  Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.

I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article. The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

Advertisements

12 thoughts on ““Top Ten Stocks” Update (and note to HMNY watchers): AMC & GAIA Report Stellar Earnings!

  1. Hey Mark;
    Thanks for the timely update!

    Any clue as to why SMSI isn’t trading in the $2.14 – $2.21 range of the last capital raise?

    Thanks for the response!

    Like

      1. Thanks for the reply! Only ask the question b/c it’s the 1st time I’ve ever seen this – that someone pays more than what the market thinks it’s worth ( I thought I was the only one that did that! )

        Understand it on a buyout where the stock will come within 5-10% of the buyout price, due to the risks of the deal closing, etc.

        Have a nice evening!

        Like

    1. Hey Wayne, maybe I can help, as you know when an offering is done BELOW current price the shares drop to approx. the deal price, however when done above current price and the deal closes there are many factors that the “retail” investor isn’t privy, i.e. contracts in the pipeline, positive earnings being released soon, etc. essentially news that will absolutely move shares up, however, paying the higher price will almost always be below what the “insiders” truly feel the shares are worth with that news. Now, why aren’t shares trading at/near/above the deal price, possibly because there are enough large investors who don’t necessarily believe what is being put forth by the co.

      I haven’t been involved with SMSI for very long, so I don’t absolutely know the credibility of mgmt. you or Mark may have better insight than I do, but that would be the best/only reason I can think of. If either of you two or someone else can answer that question may be helpful.

      Have a great day

      Like

      1. Good post 🙌🏼👍🏼

        FYI, I spoke with the company “recently” and have learned how to read them well. I’m very confident that we can expect some exciting things to be discussed on the call. 😊

        Like

  2. New 8k for HMNY released, seems like one was more a forewarning of their cash burn and how much cash they have on at hand. What’s crazy is that they haven’t been aided by the annual subs like we all had originally thought! Almost seems like the end of HMNY, sad to see but glad I got.

    Liked by 1 person

      1. Agree. There’s lots of nasty evidence out there. “we won’t need any more funding“ and the line of credit incident were both egregious in my opinion.

        Poetically, if this unravels, Ted might lose his entire bonus to bankruptcy.

        Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s