May 10, 2019
# of Positions
Target Position Size
Desired Cash On-Hand
Current Position Performance
Cypress Semi (CY)
Canopy Growth (CGC)*
IDEXX Labs (IDXX)
GW Pharma (GWPH)
JP Morgan (JPM)
Take Two Inter (TTWO)
* Indicates a position where the capital investment has been previously sold.
This figure represents the profit returns made on the original capital investment.
Highlights from the Week
Biggest Winner: Take Two Interactive (TTWO)
Is Take Two (TTWO) using a cheat code to achieve these gains? Despite the video game sector selling off and the market-wide selloff due to U.S.-China Trade Woes, TTWO gained +1.73% this week and has capped off +3.13% for the year… and it hasn’t even reported earnings, yet!
While we appreciate the strength in what we consider the Best-of-Breed in the video game space, we’re definitely wary of any stock rising into earnings, especially in this climate.
Biggest Loser: Nvidia (NVDA)
Continuous bad news from Intel (INTC) is taking down its semiconductor sisters, particularly Nvidia (NVDA) with Team Green taking a -7.7% hit this week, earning it the biggest loser spot in our portfolio. Not to be outdone, sisterly semiconductor maker Cypress Semiconductor (CY) also pulled back a painful -7.17% this week, too.
This Week’s Moves
Apple (AAPL): Taking Profits
Astute readers of Get Irked may have noticed that Apple (AAPL) has been an overweight position in our portfolio for quite some time, holding the #1 spot as our biggest position at 6.67% of our entire portfolio just last week.
When Apple bounced early in the week following the market digesting the Trump China tariff tweets, we decided to reduce our position size to fit the target allocation for our portfolio. After a successful put option protection around $200-205 last week, we used a Trailing Stop order to sell half of our holdings if Apple pulled back, which it did and we took out all remaining initial capital along with additional profits by selling half our position at $207.76, up +4.33% from its $199.16 low before earnings last week.
We still feel Apple is an excellent long-term investment, but given the current market conditions, we want to ensure our portfolio is properly balanced in terms of position allocation.
Apple closed the week at $197.18, down -5.09% from where we sold on Monday.
GW Pharmaceuticals (GWPH): Taking Profits
Despite China’s sell-off leading the market lower on Monday, GW Pharmaceuticals attempted to reach for new highs, triggering our trading discipline to further reduce our already-small allocation by taking profits at $179.79, reducing our per-share cost even further to $111.03
GWPH is a supremely volatile stock that is currently approaching overbought conditions on its Daily, Weekly and even Monthly Relative Strength Indicator (RSI). Although we like its long-term prospects, this stock requires a hybrid investing-trading strategy resulting in us taking additional profits on the position.
Good news from GWPH after the bell on Monday regarding its epilepsy treatment caused the stock to rocket to new highs on Tuesday, nearly touching $200.00 a share, however the China news caused the stock to pull back to the low $180s the same day. We may have missed a good deal of upside on the shares we sold, but no one ever got hurt taking a profit.
GWPH closed the week at $178.31, down -0.82% from where we sold.
Take Two Interactive (TTWO): Position Management
Take Two Interactive (TTWO), the video game company, was slammed during February when earnings from the video game sector revealed that popular free-to-play multiplayer game Fortnite was eating all the industry’s profits. TTWO, along with competitors Activision-Blizzard (ATVI) and Electronic Arts (EA), pulled back substantially following their Q1 earnings.
Knowing TTWO has long been considered the Best of Breed in the video game sector, we added more to our position at $84.95 when TTWO dropped below $85 in February, increasing our size far beyond our full allocation target leaving us extremely overweight and exposed to a higher amount of downside risk than we typically prefer.
However, since its February lows, Take Two has made a slow but steady (and quite remarkable) 20%+ return to above $100 per share. When the China trade news caused a market selloff this week, we set a Trailing Stop to protect the gains we had made on our February purchase, despite the stock’s current price being below our per-share cost basis for the overall position.
Our Trailing Stop filled at $101.06 during Monday’s trading, capturing a 18.96% gain on the shares we purchased in February, but raising our per-share cost from $106.13 to $108.31. However, the sale served to lower our allocation from 6.04% in our portfolio to around 4.25%. Although we are still slightly overweight compared to our target allocation, we feel the new sizing balances risk versus reward.
Monday’s sale protected our position against a negative report by capturing gains from February’s purchase while freeing up capital to re-invest should TTWO once again make a deep dive into the $80s following earnings.
EA reported good earnings after the bell on Tuesday, and while that may offer good news for the video game sector, the fact that EA made those earnings based on the popularity of their brand-new multiplayer free-to-play game Apex Legends does not bode well for Take Two, which currently has no free-to-play offering.
However, TTWO’s plans to introduce additional online gameplay with microtransactions to its incredibly popular Red Dead Redemption 2, a strategy that proved very popular for TTWO’s Grand Theft Auto 5 offering with years of significant profits from the single title.
With TTWO earnings coming up next week, we believe a positive report will likely send prices far higher than our new $108.31 cost basis offering us opportunities to take profits, however a negative report may create a “buying opportunity,” potentially sending TTWO back to February’s $85 lows. We’ll have to wait and see how TTWO fares.
TTWO closed the week at $103.38, up +2.30% from where we sold.
Want Further Clarification?
As always, if you have questions any of our positions or have positions of your own that you’re curious about – feel free to leave a comment below!
See you next week!
Disclaimer: Eric "Irk" Jacobson and all other Get Irked contributors are not investment or financial advisers. All strategies, trading ideas, and other information presented comes from non-professional, amateur investors and traders sharing techniques and ideas for general information purposes.
As always, all individuals should consult their financial advisers to determine if an investing idea is right for them. All investing comes with levels of risk with some ideas and strategies carrying more risk than others.
As an individual investor, you are accountable for assessing all risk to determine if the strategy or idea fits with your investment style. All information on Get Irked is presented for educational and informational purposes only.