On Christmas Eve, I said:
“Just a quick update… at the end of today’s action, my trading bias became more bullish on a number of stocks and the market in general.
The second part of that is something relatively new.
I’ve been negative / cautious on the market since September. Selling, shorting, and hedging has enabled me to preserve profits and stockpile cash to take advantage if bargains started to appear in the marketplace.
Despite today’s drop, I’ve still had a great couple of weeks and a fantastic year. More importantly, I have a ton of cash and bargains have indeed started to appear in the marketplace :^)
Euphoria/Panic oscillators finally hit “Panic” on Friday. Simultaneously, we’re now hitting major support levels on the charts. As a result, I think we can start trading for a bounce vs. a further decline.
In a volatile market, it’s generally smart to take profits (on longs and shorts) when they come (and then rinse-and-repeat). That should continue, but my portfolio, charts, and cash position all imply that I should be biased toward buying.
Among the potential buys, I did some more work on MRIN and was alerted to an SEC 8-K filing from April 17 that showed that management will get 1.5 years pay + bonus if they sell the company. This added credence to the hypothesis I presented in my recent article and YouTube video. Between this and today’s drop in stock price, I was a buyer this afternoon.
I get the sense that most people are playing the chart and MRIN’s low float. Don’t be those people. It’s cool to make extra $$$ trading the stock, but spend an hour to go through the story, so you know what you’re dealing with. That will enable you to trade and/or invest with the advantage of knowledge. With a volatile stock like this, that advantage can make a big difference.”
This has been a great environment for making opportunistic trades. Accordingly, I’ve been working my trading positions more than usual. However, netting it all out, I’ve materially increased my exposure to names like Smith Micro (SMSI) and Marin Software (MRIN) over the past couple of weeks.
Watching SMSI lately, it appears that its stock has been moving largely based on ETF-related mechanisms. Fundamentally, the company’s performance has been positive and rising. I expect a steady string of good news to come out over the coming weeks, including it’s upcoming Q4 earnings report.
Meanwhile, Marin has suddenly transformed into an equally fascinating story. I’ve spent the past two weeks communicating with various experts, ranging from ad-industry specialists to investment bankers to traders who are familiar with the stock’s daily action. I’ve also performed a great deal of primary and secondary research into the situation, including discussions with management, a review of MRIN’s financials, ownership structure, and SEC filings.
As I alluded last time, traders have been playing with MRIN like a slot machine, watching the chart for changes in bull/bear momentum. Personally, I’m always fine with that. I’m all for making trading profits.
However, understanding the fundamental story always provides an advantage. In this case, based on the rhetoric in the chat boards, most traders haven’t even read the details of the GOOG deal.
In the coming weeks, I believe that more investors will examine the story. Those who do will start to realize that the GOOG deal will likely flip MRIN from a cash burning company to one that is cash flow positive. In fact, the deal actually requires MRIN to become & remain EBITDA positive.
The chat boards are talking about MRIN’s losses and how they need to raise money. Most of those people haven’t done the math on the GOOG deal (just ask and see what they say!). If they’re simply looking at MRIN’s updated guidance, they’re failing to calculate the impact of guidance on cash flow.
Of course, they have to execute. But win or lose, I like the odds on this speculative situation.
Bottom Line: As far as the stock market goes, I’m still cautious about how 2019 will play out. However, as of Christmas Eve, it was clear that we had gone down too far / too fast. A LOT of bad news had been priced in. Things can certainly get worse, but the consequences have now been lessened. In the process, many stocks have been blindly sold off, creating more valuation disconnects than I’ve seen in years.
As I warned earlier this year, an environment like this isn’t fun for the average investor. However, but its a Godsend for those who take the time to give themselves a leg up on everyone else. As someone who invested in learning how to do professional fundamental research, I couldn’t be happier as we enter the new year.
Happy Holidays & Stay Tuned!
- My YouTube Channel
- The Quick Investor’s Guide To SMSI
- MoviePass Projected To Burn $600M In 2018
- Sprint Finally Rolling Out SMSI’s Safe & Found Nationwide!
- Lose 33% In 9 Months To Make 1,000% In 15?
- GAIA vs. MoviePass: CAC Shows Which One Is A True Mini-NFLX
- Buying SMSI — Today Is The Day I’ve Been Waiting For!
- SMSI: Riding A New Trend & Making Its Latest Comeback
- Mark Gomes Research
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Disclosures / Disclaimers: I am long AAPL, MRIN, and SMSI. 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.