Trades 2020-07-18 through 2020-07-21

Bought a stake in Miso Robotics

This is my first ever seed investment. This looks like a company that has the potential to eliminate a lot of jobs. That's the future of robotics. The future is about earning money in jobs that robots can't do yet, and generating profits off of jobs that they already do well. This is a relatively early startup. Pre-money valuation of $80 million. There is always the question of execution for this sort of investment, and a high risk of losing all the money invested, but I think there is also 1000x or more potential for this company. I've looked at quite a few crowd-funded startups over the years, this is the first one that has stood out to me as obviously executing well on an obviously good business plan.

Had a bunch of options expire

Most of these expired out of the money. I ended up liquidating the majority of my ownership in CVNA which expired in the money, and expanding my position in LTHM a little. My CVNA position had grown to be one of the biggest positions in my portfolio, so this freed up a substantial amount of cash.

Sold BILI

I've been planning to do this for a while. I was just waiting for the covered calls I had against it to expire.

Bought Sunny Optical (HK 2382)

Since I've been planning to sell BILI but not planning to reduce my exposure to China, I've been researching Chinese tech companies for the past week to try to find the one I thought looked best. (I only looked into about 25 companies in any detail, so there's a good chance that I didn't find the absolute best opportunity, but I'm pretty confident of my thesis that investing in Sunny Optical is trading up from BILI, and I like them a lot better than the rest of the companies I looked at.)

Sunny Optical is a rapidly growing and dominant player in a few optics related markets, most interestingly embedded video cameras.  They have rapid revenue and earnings growth, a relatively low P/E and are well-aligned with "Made in China 2025." Every once in a while I'll be reading the reports from growing Chinese companies, and their size and growth is so ridiculous its funny. I had to laugh a few times when I read their annual reports from 2019. One of my favorite

Bought PLNT up to round lot

Planet fitness has been one of my smaller positions. I had 50 shares, and I decided I needed to choose between liquidating those 50 shares and buying up to a round lot. After investigating, I continue to be impressed with their revenue growth and earnings growth in addition to their overall position in the market, as a large player that nonetheless has much room for further growth. The franchise business model is always good, and I was particularly happy with the amount of unrecognized revenue that they collected in Q1 but are deferring due to lockdowns. It alleviates any concerns I had that they were going to be particularly adversely affected by these lockdowns.

Bought ALK up to a round lot

I more than tripled my stake in Alaska Airlines but it is still one of the smaller positions in my portfolio. I went from 30 shares to 100. It's got a really low valuation relative to past earnings. I realize those are being adversely affected due to the lockdowns, but they are also being somewhat helped due to fuel prices. I'm too worried about Alaska Airlines weathering this downtime. Neither is management. One of the things that has capped growth of small airlines is that a lot of airports, particularly airports where it's possible to fly into and out of particularly profitably have been at capacity for flights for a while. With bigger airlines cutting back on flights during this lockdown, Alaska Airlines has capitalized on the opportunity to add routes. I'd assume they've also invested in futures in fuel during the drop in fuel prices. Overall, I expect the long term effect of these lockdowns to end up being beneficial to ALK.

Sold covered calls on RDFN and MU

I'm longterm bullish on Redfin, but I think their stock has been running a little hot this year. I'm willing to sell them at 40, but I'd rather sell covered calls slightly higher whenever it crosses that threshold, since they are pretty volatile. That's what I did.

Micron is a cyclic company that everyone knows has a tendency to become a value trap, which seems to cause it to be an inverse value trap. When they were at the top of their price cycle and everyone knew prices were about to contract when I bought them, they looked and (time has indicated) were undervalued. Now, pricing is moving a bit back in their favor, and analysts are super bullish again. Based on the last cycle, I want to collect profits on my stake significantly before their cycle peaks. I sold a call at 50 last month, and I sold a call at 50.5 this month. I'm happy to liquidate at current prices, and I'm happier to take a little bit extra every month.

Bought David Gardner's number one recommendation for right now

I'm not going to explicitly name stocks when I buy them specifically because another service that I subscribe to recommends them. However, I will say that this is a stock that I've been considering for a long time in an industry that I believe has extremely strong growth potential. Every once in a while, there is a company that 

I really like Motley Fool research. A lot of my positions overlap with their recommendations, and I subscribe to a few of their services. However, this is not always as causal as it might seem. For instance, at the time they first recommended the stock I've most recently mentioned in this write up that they've recommended in a service to which I subscribe, that was already the biggest initial investment in my portfolio. (I had two other positions that had started out smaller but grown to be bigger than that one. Whereas, that one was still mostly flat.) I do not believe in some of their advice, particularly their particular approach to the philosophy of "winners keep winning." I'm not trying to leak any of their recommendations, so when I buy something specifically because they recommended it, I will leave the position unnamed.

Maybe, I'll just label it for my reference in case I want to write about expanding or contracting the position. I'll just call it X0.

In the past, I was more willing to invest in stocks that they recommended simply because they recommended them, particularly if they were diversifying my holdings. However, I think that my own approach to analyzing valuations is additive when combined with theirs, and I've generally done very well with stocks I've chosen without their recommendation even though I do think that using their services overall has improved my investing. One of the biggest difference between my approach to investing and their recommendations is that I'm much more willing to sell. When valuations have increased dramatically relative to earnings and revenue in symbols I own (relative to general appreciation in the market), I sell. I buy stocks looking for 20-30% annual returns over a 5+ year holding horizon. If I get 400% returns in two years and it's not abundantly clear to me that those returns are justified, I'm happy to exit the position.

I think the Motley Fool does a fantastic job of finding companies about which some story like this can be told, but typically without grounding them in the numbers in a way to make their stories concrete. Given their long history of success, I think someone can quite reasonably expect to radically outperform the market by just trusting the Motley Fool's recommendations. However, I still believe it's possible to outperform the Motley Fool's advice by doing my own independent analysis.