June 14, 2019 

Portfolio Allocation

Current Position Performance

Highlights from the Week

Biggest Winner: Revolve Group (RVLV)

Revolve Group (RVLV) is the millenial IPO – a fashion company utilizing small production runs and social media to transform the way the kids buy their clothes, gaining 23.56% this week after only just IPO’ing last week.

For more details about what makes this nutty IPO so special, check out This Week’s Trades since we also just opened a position in the stock.

Biggest Loser: Nio (NIO)

Although Nio (NIO) hasn’t been the biggest loser for multiple weeks in a row, Nio’s definitely been the biggest weekly loser more often than any of our other positions. At this point, the stock is a source of ongoing pain, losing an additional -12.32% this week to create a cumulative Year-To-Date (YTD) loss of -60.52%.

This Week’s Trades

BiliBili (BILI): #!$% Fat-Finger Buy ERROR #!$%

It doesn’t matter how long we’ve been doing this, mistakes happen. In this case, we made a “fat finger” error and accidentally placed a buy order on BiliBili (BILI) on Monday when we were intending to place a limit sell-order, purchasing shares at $15.10, lowering our per-share cost slightly to $15.69 and increasing our position size.

A “fat finger” is Wall Street speak for someone who makes a mistake when placing an order whether it’s buying or selling too many shares, entering the wrong price, or, as we did here, entering the opposite order than what was intended. Yeesh.

By the time we noticed the error, the market had closed on Monday. BiliBili’s trading action did indicate that it was in the middle of an upswing, but any Fat Finger Error should be rectified as quickly as possible, even if it seems the mistake might have a positive result since the unplanned trade doesn’t fit the thesis.

After popping to $15.62 Tuesday morning, BiliBili pulled back to exhibit a support pattern on the 4-Hour chart at the 50-increment Exponential Moving Average (EMA) of $15.05. This kind of trading action can indicate a stock that wants to trade higher, and inspired us to stay in the trade momentarily to see if BILI is preparing for a breakout higher.

At this point, you’ve heard us say this so many times, FOLLOW YOUR RULES.

Instead of fixing our fat-finger error as our rules dictated, we’ve now ridden our BiliBili position back down to a weekly close of $14.27, losing -5.5% from where we committed the error. Had we fixed it when we had the chance, this wouldn’t be an issue. The rules will save your a$$ every time.

Our next buy order targets are $13.30 and $12.45. 

Gossamer Bio (GOSS): Profit-Taking

Gossamer Bio (GOSS) continues to act contrary to the market, heading higher when the market’s down and dropping lower when the rest of the market is heading up.

Friday was no exception when GOSS popped – once again on no news – triggering a sell order we had in place at $20.52, lowering our per-share cost to $15.50. We adjusted our buy target accordingly, and will not add to the position unless it hits $15.61, a key support level. We’re planning additional profit-taking at $22.00 and will take out our entire initial capital investment to let the profits run if GOSS reaches $24.50.

GOSS closed the week at $20.26, down -1.27% from Friday’s sell order.

Nio (NIO): Added to Position

Nio (NIO) continued to get pushed down by short-sellers this week, reaching an oversold breaking point (or so we thought) on Tuesday, where we added to our position at $2.57.

Sometimes, stocks act like elastic bands: when stretched too far, they spring back in the opposite direction with great force. This goes for both overbought rallies and oversold selloffs. While believing Nio was the latter, it wasn’t, and Nio headed even lower.

The combination of Nio being a Chinese company while also existing in the incredibly speculative Electric Vehicle (EV) sector makes this position extremely risky. To make matters worse, car sales in China have dropped a horrifying 16.4% last month, according to Market Realist. The Chinese consumer seems to be done buying cars.

At this point, we have no additional buy targets unless we see Nio completely collapse to unheard-of lows where we might double-down and enter “full-gambling” mode with this position (we’re thinking below $1 a share…). A complete loss in our Nio position will vaporize 4.15% of our portfolio at these levels. We’ll still be up 8%+ overall for the year, however, we’d prefer not to see that kind of devastation.

Truly, like Tesla (TSLA), we believe there’s a lot of potential for Nio and the EV sector, but this kind of highly-speculative market definitely cuts like a knife with so many negative possibilities waiting on the sidelines to destroy value.

NIO closed the week at $2.42, down another -5.84% from where we added Tuesday.

Revolve Group (RVLV): *New Position*

On Thursday, we opened a position in Revolve Group (RVLV), a fashion company targeting millenials by using an innovative inventory-management system and excellent social media tactics.

RVLV’s IPO price was $18 a share, but it opened in public trading on Friday, June 7 at $25.16, nearly 40% above its IPO price and it didn’t stop going up from there, hitting a high of $44.77. The stock calmed down slightly this week, allowing us to hesitantly open a very small position at $39.06.

RVLV is already profitable, incredibly unusual for an IPO particularly in this environment, and has a proven business plan, however it is wildly overvalued at this point. That being said, the intended purpose of Trades in Play is to speculate, so we’re being far more aggressive than we would if we actually invested in RVLV as a standard long-term holding (which we don’t recommend at this point).

Despite our aggressive entry, we are targeting much lower levels for adding beginning at $34.94, more than -10.5% lower than our initial buy and proceeding much lower with targets at $31.00, $29.40, $27.85, $26.15 and $24.80.

RVLV closed the week at $42.01, up +7.55% from where we opened our position on Thursday.

Tradeweb Markets (TW): Added to Position

Tradeweb Markets (TW) pulled back violently during Tuesday’s reversal, losing more than 5% in a matter of hours, and triggering our buy order at $40.90.

This buy raised our per-share cost to $38.20, but still 2.6% lower than our first buy in April, now with a much larger allocation. Our next buy target for the stock is at $39.04, a lower key support level.

TW closed the week at $41.44, up +1.32% from Tuesday’s buy.

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!