Category Archives: $FIT

2CentView performance in 2016

The 2CentView portfolio was up 12% in 2016, which outperformed the S&P500 by 3% but below the FTSE100 which returned 14%.

The objective of the 2CentView system is to outperform the index in rising markets and be at least in line when the major index is flat or falls up to 20%, and outperform if the market corrects more than 20%. The portfolio is benchmarked vs. the SP500 (50%, up 9.5% ) and FTSE100(50%, up 14%), so the outperformed by 0,75% in 2016.

Overall return since 2013, 86% (21.5% annually).

2016 was a volatile and difficult investing year, starting with a sell off in February, triggered by low oil prices and a distressed energy sector. This was followed by Brexit and the election of Donald Trump – both results proving the polls are meaninigless! Many pundits advocating ‘sell all’ following both of these events, but the key was NOT too panic, and look at these events as potential buying opportunities – quality companies will always do well no matter who is in power!

Where it did badly:
2 Core positions were savaged – $FIT (FitBit), $SPWR (SunPower) – both these core positions were down 30% following results, so they traded way through long term stops – 2Centview eventually did exit – the overall pain was not great as 2CentView always sells higher up to reduce the overall cost basis and protect you from the ‘wide arcs’, as the legendary investor Bill Miller says

“Stocks, markets, and money managers’ performance are subject to enantiodromia, the tendency of things to swing to their opposites. Those swings can have wide arcs, and unsustainable trends can sometimes persist beyond the ability of one to endure. That is why most investors are out of stocks at the bottom–they are tired of losing money–and fully invested at the top–they believe their good performance will persist despite their stocks or the market’s being overpriced.”

Trades in $SPD (Sports Direct), $EZJ(EasyJet) [ post Brexit trades],$SKX (Skechers), $VRX (Valeant) were all stopped out.

Where it did well:

Core positions which did well: $MS up 60%, $Z (Zillow group), $ACA (Acacia Mining – gold trade) up 109% were the best performers with other core positions in Apple, FaceBook, Celgene, DLG up between 5 and 15%.

Trades that did well : $LNKD (linked in) – bought by $MSFT, $BOO – boohoo.com (bought after sell off following Trump victory). $DVN – Devon energy  doubled.

Also taken a position in AK Steel and IAG following Trump Election (up 30% and 5% respectively).

The portfolio benefited a bit from the rally in the US$, but the currency exposure is broadly hedged using the $PUS contract.

Main lesson learnt from 2016 – DO NOT PANIC – exiting the market was the worst possible thing you could have done in 2016 – but STICK to your stops if the market or an individual position continues on a downward spiral (both $SPWR and $FIT $9 exit stops were hit).

2CentView is that 2017 could be a great opportunity to make 15-20% if Trump delivers on his election promise, tax cuts and infra-structure spending could really boost company earnings. More on the next tweet for themes for 2017.

Happy 2017  from the 2CentView team.

$FIT, $GPRO – savaged after results…

Shares in FitBit crashed out over 30% – 2CentView has lowered its overall cost basis by selling shares much higher up – so it is more of a disappointment rather than financial pain!

Disappointing from the sense that they are struggling to create businesses which are more than just commoditised hardware products

Healthcare companies have recognised that fitness wearables reduces their overall health care costs – Aetna just signed a deal with Apple – FitBit has the potential to get in this market, but their products and their software are not differentiated enough to really fend off competition from Garmin and Samsung.

FV now $10 post results.

GoPro which reached a whopping $90 last year on hype over a potential media channels, traded down to $9.30 in the after-market post results, but has recovered. They recently launched a drone but they have production issues and are competing with Chinese companies – Earnings estimates did not change after the launch of the drone.

Fair value = $11 for GoPro, post results.

As Samuel Beckett said, “Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better”

However, the Golden rule – take some profit when the stocks are higher up – this cushions the blow and allows you to keep trying for the next potential Amazon or FaceBook!

2CentView has a core position in $FIT, Cost basis = $8. Considering selling the position but in no rush – waiting for better opportunity.

 

The beaten down and back from the dead stocks…if only…

We look at beaten down stocks who trade at significant lower levels from their all-time high and as they subsequently recover, we think I wish I bought some Twitter at $15, GoPro at $11, FitBit at $12, Micron at $11 – all these good quality companies are now trading much higher than their lows – but still significantly lower than their all-time highs…

2CentView was fortunate enough to buy $FIT at $13, and is up over 30% with stock trading just below $17.

There are some common features in all these stocks

– They are all good quality companies with good management and positive earnings and healthy balance sheets

– They all traded at a base level for than a moth

– The 2CentView Fair value ranges from the base value to up to 75% higher than the base value. For example, my historical data shows for the past 3 months, $FIT (Fitbit) Fair value to be around $25 (including the CASH) with stock trading much lower and setting a base between $12 and $13. Similar pattern can be seen for GoPRO, Twitter and Micron.

So, will be sending out a tweet called the Beaten down and Back from Dead – with up to 4 stock ideas where returns can be significant if you they do come back. The criteria will be as follows:

– Trading at a base level for more than a month [bottomed out]

– Have at least 50% upside from the base

– A reason why it will come back e.g. Gopro launching a Drone + Hero 5

– Be a quality Company with good management and good balance sheet.

You should own one of the top 4 tech companies in the world (Google, FaceBook, Amazon or Google – 2CentView owns all 4), you should also look to own one of the beaten up and back from the dead – 2CentView owns $FIT!

$FIT – FitBit results tomorrow..

Kept the position in $FIT after last results saw share price drop back to $13, as the company invests in its product line.

You need to give companies time to implement their strategy and one quarter is not enough.

Let’s see how they are getting on tomorrow – but a sell off below $10, could see an exit visa being issued.

Fair Value Still $25, if you include the $4 cash on the balance sheet.

Update on recent trade ideas :$FIT and $LNKD

$FIT – after a nice run up to $18 from $13, the stock has pulled back following results.

Bit gut wrenching that it failed to reach the target of $21 after such a nice run up…will now have to wait for the next set of results.

The company is investing in its products, which seems to scare Wall Street, who likes to see EPS growth now – not in a years time!

The danger with this market is that it can be become saturated – barriers to entry not that high….keeping margins up and sales growing will be a challenge, but their products are best of breed and worth waiting for another quarter. Don’t forget, always looking for the companies which yield great returns over the long term.

Fair Value is unchanged at $25 (includes the CASH), even after the results – so Analysts not as pessimistic as the market.

2CentView is still in the trade posted in March.

$LNKD – received a bid from $MSFT at $196 – bid unlikely to be trumped given the clauses in the agreement – given Microsoft’s record of failed acquisitions, would take profit here and look for a another opportunity.

2CentView exited the trade at $191.

$FIT – FitBit, FV=$24 vs $13 good risk reward if you like this company…

FitBit reached a high of $50 mid-summer post the IPO in June of last year.

With the stock trading at $13, this implies a 2017 P/E Ratio of 7x (ex-Cash of $3 per share) based on consensus EPS Forecast of $1.40 per share.  This is  cheap for a company with growth potential – the cheap valuation is partly due to lawsuits over the accuracy of the heart monitor on earlier products.

http://www.theverge.com/2016/1/6/10724270/fitbit-lawsuit-charge-hr-surge-incomplete-heart-rate-tracking

Assuming the lawsuit  is priced in and will not have a major impact, this could be good time to buy this Fitness device company, which also has ambitions to provide wellness services by monitoring your health via software tools.

Many companies are moving into this space, but being an early mover has an advantage – as long as they can keep ahead of the competition and make sure they tie in their customers via the services.

2CentView FV = $24  or  $21 ex Cash. Consensus target price = $23

Worth a trade here at $13 if you like this company.

Suggest trade:

Buy here at $13, Take Profit target $21 , Stop $9.