LendingClub & ARK Innovation
“Finding investments is easy, waiting is hard, waiting is the hardest part”
-Clay Baker
The Portfolio Performance
The portfolio is up 5.05% YTD
Adding to LendingClub
By the time you read this, I will have added 1,065 shares at $24.19/share to our existing position in LC. See the portfolio for details. The Stay Invested portfolio is now holding a full position in LendingClub (LC).
I'm taking advantage of the fact that LC is below its 200-day moving average and has a Relative Strength Index of just 30, which is roughly the long-term low for this company. LendingClub trades at just over 16 times forward earnings. Since the same quarter one year prior, revenues grew 152.3%. Growth in the company's revenue appears to have helped boost the earnings per share. Powered by its strong earnings growth of 168.42% and other important driving factors, this stock has surged by 168.20% over the past year.
LC reported stronger earnings per share improvement in the most recent quarter compared to the same quarter a year ago. During the past fiscal year, LC reported poor results of -$2.08 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings ($0.13 versus -$2.08). The gross profit margin for LC is currently 21.27%, which has increased from the same period last year. Net operating cash flow has significantly decreased to $85.67 million or 79.57% when compared to the same quarter last year. This concerns me, but I feel there are enough tailwinds in 2022 and going forward to warrant taking a bigger stake at this time.
My biggest concern with LendingClub is that the acquisition of Radius Bank may give the broader market the feeling that this company should get priced with a multiple similar to banks. In fact, this may be true across the FinTech space. I think that's a mistake, but we must remember not to fight the tape. The market can remain irrational longer than you can remain solvent.
I'm taking this position in LendingClub with the warning to my readers that while this company is profitable and growing, it is also a speculative company with risks of loss. Only own this company in a well diversified portfolio and do not allow it to be overweight for long periods of time.
Adding to ARK Disruptive Innovation (ARKK)
By the time you read this I will have added 24 shares at $98.03/share to our existing position in ARKK. See the portfolio for details. The Stay Invested portfolio is now holding a full position in ARK Innovation (ARKK). This is a long-term, speculative position to have exposure to the most disruptive companies that are innovating in the most important growth sectors for the future. I'll likely hold this position permanently in the portfolio.
Other things I'm looking at
Within the portfolio I'm looking at selling the (GLD) gold position and the iShares Clean Energy Fund (ICLN). We have enough cash in the portfolio that I don't need to sell those positions yet, but neither one of them is doing what they are suppose to do for the portfolio. The ICLN was intended to provide global exposure to clean energy, where the CNRG is providing mostly US based exposure to clean energy. The CNRG is clearly proving to be the better stock to own. The GLD was added long ago as a hedge against all uncertainty. The stock market seems to be going through a change, where gold is not long considered the safe haven asset. Bitcoin might be replacing gold, bond market proxy stocks, or high quality/high dividend stocks may be taking over that role. I'm watching those positions carefully and thinking about where that money could be better deployed.
"Markets don't go to zero, Portfolio's do.
Buy quality, be patient...and look twice for motorcycles."
- Clay Baker
Stay Invested,
Clay Baker
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Keep Me Honest 2021
The S&P 500 will achieve year-end earnings of $170-$175 (1-1-2021).
We are likely to have a significant pull-back during the 1st quarter, about 5%-10% (1-1-2021).
Stock picking will outperform algorithmic trading again as it did in 2020 (1-1-2021).
S&P 500 will reach 5,000 by year-end.
Clay's Rules
Rule #1: Don't lose money
Rule #3: Portfolios go to zero, markets don't, Stay Invested
Rule #4: When good stocks you own drop 10% below your cost basis, add shares
Rule #5: Bull markets aren't sustained without the Transports
Rule #6: When Forward P/E is lower than TTM P/E, expect earnings to increase
Rule #7: When an investment bank sells below book value, buy it
Rule #8: Tips are for waiters. Do your own homework.
Rule #9: Don't sell a stock because you're bored with it. Do your own homework.
RULE #10: Being early and being late is the same as being wrong...move on.
Rule #11: Investing is easy. Waiting is hard, waiting is the hardest part.
Disclosure: I am personally invested long in some or all of these stocks or funds that appear in the Stay Invested portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the Stay Invested portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. I am invested long in these securities mentioned in this post:
AMD, AMRN, AMZN, AAPL, ARKK, ARKG, CNRG, ENPH, FB, GNRC, GBTC, GLD, HRTX, HD, IPOD, MSFT, NVDA, PSTH, TWLO, VBIV
I am invested short in these securities mentioned in this post:
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.
