May 3, 2019 

Current Position Performance

Highlights from the Week

Biggest Winner: Gossamer Bio (GOSS)

Gossamer Bio (GOSS) finally bounced this week, gaining +8.50% to become this week’s winner. However, this “win” is short-lived given the stock is down -7.95% year-to-date.

Biggest Loser: Yeti (YETI)

Trades swapped Yeti (YETI) for the new IPO hotness this week (did you see Beyond Meat (BYND) more than double its first day out?!), grabbing the weekly position with a -9.87% loss following an excellent earnings report. We expect this one to bounce (in fact, it already started on Friday), but, wow, what a difference some pretty IPOs make to those who’ve already aged (even though Yeti went public only six months ago).

This Week’s Trades

Canopy Growth Corp (CGC): Profit-Taking

Canopy Growth Corp (CGC) saw a significant pop in Monday trading, offering us the opportunity to pull some profits at $51.74 as it started to pull back from its rise. We have about 1/4 of our desired position on at this point, and will wait further price action before making additional buys or sells.

CGC closed the week at $49.08 with our position up +190.98%.

Cronos Group (CRON): Profit-Taking

Cronos Group (CRON) saw a 3.3%+ pop in Tuesday morning trading, leading us to take small profits at $17.48 a share, lowering our position’s per-share cost to $13.94.

CRON closed the week at $16.57 with our position up +18.87%.

EventBrite (EB): Closed Position

EventBrite (EB) rocketed skyward into its earnings report this week, breaking through one of our target levels and having us take profits at $24.78.

Unlike overbought, growth play Yeti (YETI) which we discuss below, our position in EventBrite was made as an oversold bounce play, so rather than take all of our profits, we sold a significant majority of our position, keeping a small amount into EB’s earnings as the stock price had just crossed above its 50-day Exponential Moving Average (EMA), a possible indication of support.

When going into earnings for any position, particularly our speculative ones, we cancel all outstanding buy orders in case a disappointing report results in a substantial drop. After-hours trading means open buy orders may fill on the way down, resulting in purchases at potentially undesirable levels.

It’s better to miss buying at the bottom rather than try to catch a falling knife.

This strategy was right-on as EventBrite (EB) released a horrendous earnings report, its second in a row, with poor Q1 earnings and weak forward guidance, crashing nearly -40% in after-hours trading to plummet to an all-new low of $15.50.

We chose not to follow the Three-Day Rule before closing our trade. Instead, we waited for EventBrite to bounce from its $15.50 lows in the next trading day allowing us to close the position at $16.93 with a respectable 8.27% total gain on the trade. “Respectable” given our remaining position survived a nearly 40% drop with some profit intact.

HOWEVER: If we had followed the Three-Day Rule, EB ended up hitting a high of $18.57 on Friday. Waiting an extra day could have made us an extra 9.69% in profits! The lesson is always – ALWAYS – stick to your trading rules; they’re there for a reason!

Two negative earnings reports of this magnitude puts EventBrite squarely in the penalty box for at least one full quarter until they prove themselves. If EB keeps this up, they could be headed for the Land of the Penny Stocks.

EventBrite (EB) closed the week at $18.41, a change of +8.74% from where we sold.

Tradeweb Markets (TW): Profit-Taking

Analyst and investor sentiment in Tradeweb Markets (TW) turned sour over the weekend, leading us to place a stop-loss order to protect our profits by selling some of our position on Monday. The order filled later that day at $38.88, reducing our per-share cost to $37.41.

We placed buy orders at key lower levels if TW decides to have a decent-sized pullback as a result of this change in sentiment at: $36.63, $33.73 and $31.71.

TW closed the week at $39.17 with our position up +4.70%.

TransEnterix (TRXC): Closed Position

TransEnterix (TRXC) didn’t regain support over the past week and once again fell under $2.00 a share, prompting us to take the loss and close the position.

We’ve had a bad feeling about TRXC ever since it lost $2.00 support a few weeks ago, despite trying to capture some of the downside by adding at $1.90. Upon further thought regarding competitor Intuitive Surgical’s (ISRG) disappointing quarter, we have no reason to believe TRXC is going to pull off a miracle when it reports next week.

When analyzing historical price action, if TRXC reports a truly disappointing quarter, the stock has the potential to drop significantly below $1.00 a share – a 50%+ loss from these levels that we want to avoid at all costs.

We placed a stop-loss order on Thursday in case TRXC lost support – which it did – and our order filled, selling our entire position at $1.92 for a total trade loss of -13.35%.

As difficult as it can be to stomach a loss, any trader will tell you that risk management is key to trading (and investing, for that matter); we needed to protect the capital remaining in TRXC so we could live to trade a future day.

Naturally, TRXC saw a pop after we sold (that’s our luck), touching $2.10 during trading over the next day, however, as we mentioned, the potential downside risk in TRXC has overwhelmed any enthusiasm or faith we had in the trade.

TransEnterix closed the week at $2.05, a change of +6.77% from our sale price.

Yeti (YETI): **Closed Re-Opened Position**

Yeti (YETI), the outdoor product manufacturer, cooked higher on Tuesday, making new all-time highs, and inspiring us to close our entire position when it broke $36.50, frying the Weekly Relative Strength Indicator (RSI) that we use to determine how overbought or oversold a position has become.

To clarify, most stocks are considered overbought when their RSI reaches higher figures on the 4-Hour or Daily charts – a high RSI figure on the Weekly chart indicates extreme levels of being overbought.

That’s simply too hot for us. We sold our entire position at $36.51.

Yeti reported an outstanding earnings report, but, as we expected, there was nothing Yeti could do to make investors happy enough.

Yeti pulled back more than -18% during Wednesday and Thursday trading to a low of $29.81 before bouncing back over $30 a share. We re-entered Yeti when it dropped even lower to $29.18 on Friday with our next buy target around $27.50-$28 a share.

Yeti closed the week at $31.50, with our “new” position up +84.48%.

Questions?

As always, If you have questions about how we’re playing different positions or anything at all, really, feel free to leave a comment below!