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Aurora Went Up In Smoke This Past Week Too

November 17, 2019 Published by

The Four Horsemen of
Cannabis, Canopy Growth, Tilray, Cronos, and Aurora Cannabis announced earnings
this past week.  The end result was all
four companies announced dismal results. What was once one of the hottest
sectors a year ago, has now burned up in the smoke.   Valuation
just got way ahead of the reality. At one point, Tilray was more valuable than
50% of the companies on the S&P 500…that’s just crazy.

One of the biggest reasons is a supply shortage, as a lot of Canadian growers waited too long to expand their capacity. There’s also the issue of cultivation and processing application backlogs, as well as high tax rates in the U.S. and a significant delay in the launch of the derivatives market (derivatives are products like edibles, vape pods, and infused beverages. Plus, there’s the regulatory and accounting issues that have left investors cold.

Source

Aurora Cannabis Inc. produces and distributes medical cannabis products in Canada and internationally. The company has one of the broadest international footprints, with operations in 24 countries and production capacity that may exceed 700,000 kilograms per year at peak.  But this past Friday, Aurora shares fall the most in five years when they announced disappointing numbers and said they were cancelling or delaying plans for multiple further facilities.  Nine analysts cut their price targets on the stock after the earnings announcement, with the lowest price target being $2.80.   

What would help the industry
out a lot is making cannabis legal on the federal level in the US.  If and when this happens, you will see financial
institutions flood the industry with capital. 
At the moment most companies in the industry are cash strapped.  It’s why Aurora converted C$155 million in
debt into shares as it seeks to conserve cash. 
But many private companies aren’t in the same position Aurora is in.  For example, many companies had to resort to
buying their storefronts because landlords weren’t willing to rent them the
space. So with banks not giving these companies the time and day, with the
equity markets drying up, these companies are being forced to sell off their
assets…their real estate.

What would also help get
more capital into the industry is the passing of the SAFE Banking Act.

Sept. 25, 2019, the House of Representatives passed the Secure and Fair Enforcement Banking Act, commonly known as the SAFE Banking Act. The SAFE Banking Act, if made into law, would provide protection from federal interference for financial institutions that choose to provide financial services to CRLBs. Specifically, the SAFE Banking Act would provide a safe harbor for banks by mitigating the legal risks associated with providing banking services to state-legalized cannabis businesses.

Source

Aurora’s future remains bright nevertheless.  In December when President Trump signed the Farm Bill into law to legalize the production and sale of hemp and cannabidiol (CBD) derived from the hemp plant.  Aurora will be a significant player in the U.S. as it make inroads into the U.S. hemp CBD market.  

Also, Aurora will be the
top cannabis company in the fast-growing European cannabis market. Aurora
already ranks as the leader in Germany, the most important European medical
cannabis market.  In addition, it’s acquisition
of Agropro, the largest organic hemp producer in Europe, and Borelas, another
European hemp producer and processor, sets the company up for success over the
next ten years.

 Thus, at these depressed prices, if Aurora is priced at fair value, the market suggest to go long at the monthly demand at $2.00.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Dillard Bucks The Retail Trend

November 15, 2019 Published by

Dillard’s, Inc. operates retail department stores primarily in the Southeastern, Southwestern, and Midwestern areas of the United States. The company’s stores offer a selection of merchandise, including fashion apparel for women, men, and children; accessories; cosmetics; home furnishings; and other consumer goods.

Image result for dillards

Can’t say I ever heard of Dillard as I live in the Northeast.  Either way, Dillard can’t hide…not from me, but from Amazon. The rise of ecommerce outlets has made it harder for traditional retailers to attract customers to their stores and there is no bigger culprit than Amazon.

The Amazon effect is the ongoing evolution and disruption of the retail market. Retailers closed over 102 million square feet of store space in 2017 and 2018 and in 2019, over 8,000 stores will close their doors.

However, Dillard got a victory today for retailers such as Macy’s, J.C Penny and Nordstrom. 

 Dillard’s Inc. DDS, +0.17% stock soared 17% in Thursday trading after it reported a surprise profit, and lifted other department store stocks with it. J.C. Penney Co. Inc. JCP, +0.90% shares jumped 5%, Macy’s Inc. M, +1.06% shares climbed nearly 3%, and Nordstrom Inc. JWN, +0.05% stock was up almost 2% on Thursday. Many department stores haven’t reported their latest quarterly earnings, heading into a holiday season with both bullish forecasts for sales but concerns about the shortened shopping period. Dillard’s stock has gained 32% for the year to date,

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Dillard is really bucking the trend.  I had no idea Dillard was up 32% this year.  I’m actually licking my chops…could this be a shorting opportunity…wow…this was a shorting opportunity.  The big picture shows a monthly supply zone at $104,

But my eyes are draw to the wicks near $85.  In the last four years, price has only been able to close above $85 once on the monthly chart.

Taking things down to a daily chart, price pierced the upper Bollinger Bands.   Bollinger Bands are a type of volatility indicator developed by John Bollinger. Bollinger Bands are lines plotted at a standard deviation level, typically two SD above and below a simple moving average of the price.  In sideway markets, meaning markets that aren’t trending, price will typically bounce off of one band to the other.

In the case of Dillard, price pierced the upper band and has since pulled back which presented a great opportunity for a short.

Personally I think price is going to fill the gap, but it doesn’t matter any longer as the trade set-up came and went.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Currency Analysis Report 11/14/19 – The Kiwi Surprises Everyone

November 14, 2019 Published by

The Reserve Bank of New Zealand has already cut interests rate three times this year with the most recent cut being in August.  Back in August the Bank of New Zealand cut rates by 50 basis points.  The drastic cut shocked the Markets because the Markets were only a 25 basis point reduction.  At that time, Reserve Bank Governor Adrian Orr hinted at further easing by any means necessary in order to hit their inflation rate targets.

Twelve out of 15 analysts polled by Reuters expected the Reserve Bank of New Zealand (RBNZ) would cut rates to 0.75% this week from the current 1%.  However, nobody saw it coming yesterday evening.

The New Zealand dollar surged Wednesday after the country’s central bank defied expectations for an interest rate cut, and left policy unchanged. The kiwi dollar NZDUSD, +1.2954% jumped 1.1% to 0.6402 U.S. cents. In a statement, the Reserve Bank of New Zealand said at it was leaving the Official Cash Rate at 1% as economic developments since August “do not warrant a change to the already stimulatory monetary policy setting at this time.”

Expectations had widely been calling for a cut of 25 basis points, said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note to clients.

Source

The RBNZ left the door ajar for further policy easing saying it was “prepared to act” if required. The central bank’s own projections imply a 50/50 chance of a cut next year.

So where is the Kiwi headed next, lets go to the charts?

Monthly Chart (Curve Time Frame) – monthly supply is 0.7600 and monthly demand is 0.6300

Weekly Chart (Trend Time Frame) – the trend is still down.

Daily Chart (Entry Time Frame) – the chart suggests you can’t consider going long until price closes above 0.6450.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Chewing

November 12, 2019 (updated November 12, 2019) Published by

“What’re you doing up here?”

Categoryanimalphotography
Camera ~ LensNikon D3400 DSLR ~ 55-200 mm
LocationAustralia

Prompt / Theme: What’s the most important thing on your mind today? Work? Family?

Giveaway 🎁 – 2 winners
Prize A: 1 Steem Basic Income Unit
Prize B: 100 DEC

Winners will be chosen randomly after post payout. Please specify if you want a particular prize from those listed above.

Rules:
  • 👊 No Upvote, No Resteem, No Follow – just your responding comment required to enter.
  • Comment a reply directly to this post within 7 days. A genuine (family friendly) comment responding to the theme / prompt is required.
  • Posted or Commented 5 or more times during the week this post is active.
  • Not be on @cheetah’s blacklist.

Thanks for having a look 👍

If you liked this photo follow @kiokizz for more.

Look For Roku To Benefit From The Streaming Wars

November 10, 2019 Published by

Microsoft licenses its operating systems to manufacturers of computers back in the day. Today, the name Microsoft is synonymous with PCs and laptops. Just like Microsoft is synonymous with PCs and laptops, Roku is synonymous with smart TVs.

Roku was founded in 2002 is taking advantage of the cord cutting trend. According to Roku’s most recent shareholders’ letter, “roughly 50% of U.S. cord cutters are Roku customers.

Roku offers an easy way to access all the top streaming services. Roku estimates that more than a third of all smart TVs sold in the U.S. have Roku’s operating system built in. The list right now includes TCL, Insignia, Sharp, Hisense, Hitachi, RCA and Philips. Roku’s free channel has also secured a partnership with Samsung.

Image result for streaming wars

Source Image

Roku is well-positioned for the streaming war. As the streaming war rages between Netflix NFLX, Amazon AMZN, Disney DIS and others and more people spend more time streaming their favorite shows on more services, Roku makes more money. So no matter which streaming service comes out on top, Roku should benefit.

It’s the reason why Roku was up as much as 400% this year at one point. In just under a year, Roku went from a small/mid cap stock to a large-cap. The firm’s sales growth has been accelerating with year-over-year growth of more than 50% for the past 3 quarters. In addition, Roku just reported its 8th straight top and bottom-line earnings beat. However, on the news the stock sold off. Wall Street will tell you their valuation got to rich, but a month ago I talked about where the chart suggested the Sellers were.

Is Roku’s Reign Over???

Although I thought the weekly demand would have been a better buy, price reacted to the monthly demand at $95. Thus, the chart suggests price will rise to the daily supply at $148.

It’s not a coincident, price sold off at the daily supply at $148, the news just served as a catalysts. Just another example of why the Markets are not random.

So where does Roku go from here?

Highlighting how well the company is monetizing its platform, Roku’s average revenue per user over the trailing 12 months is 40% higher than Netflix’s most expensive streaming plan. What’s particularly surprising, however, is that current trends indicate there’s still plenty of upside left for this metric to move even higher.

In Roku’s third-quarter update, management said its ARPU was $22.58. With 32.3 million active accounts (1.7 million of which were added in Q3 alone), this robust ARPU has helped Roku deliver $633 million in trailing-12-month platform revenue.

While Roku does benefit from subscriptions to third-party streaming services on its platform, advertising is the company’s most important growth driver. In fact, monetized ad inventory on its platform more than doubled year over year in Q3 — a trend that has been consistent with recent quarters.

Looking ahead, Roku believes this is just the beginning when it comes to advertising spending on its platform. Only 3% of TV advertising budgets are currently spent on connected TV, yet connected TV accounts for 29% of U.S. viewing, Roku’s general manager of platform business, Scott Rosenberg, noted in Roku’s third-quarter earnings call, citing research firm Magna Global.

Source

Thus, the chart suggests to go long at the daily demand at $107 and ride price back to the daily supply at $148.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Will Google Buy Fossil Next???

November 10, 2019 Published by

Fossil Group, Inc. designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. Its principal products include men’s and women’s fashion watches and jewelry, smartwatches, handbags, small leather goods, belts, and sunglasses.

Although Fossil sales other things beside watches, their bread and butter and what they are known for are their watches.  However, watches are a tough business these days in the era of smartwatches.

Thus, Fossil has been expanding its smartwatches and wearable portfolio.  This holiday season, Fossil is selling their most advanced hybrid smartwatch, featuring text messages, alerts, caller ID, heart rate and activity tracking and a two-week battery life, but the smartwatch market continues to be dominated by Apple.

Image result for Hybrid HR is Fossil Group's most advanced hybrid smartwatch technology

Fossil reported earnings this past week.  The stock tanked after a surprise quarterly loss and said its sales fell 11%. Fossil said it lost $26 million, or 51 cents a share, in the third quarter, versus earnings of $5 million, or 10 cents a share, in the third quarter of 2018. Sales also declined to $539.5 million from $609 million.

Among the challenges that Chief Executive Kosta Kartsotis outlined on the earnings call, according to a FactSet transcript: a tough consumer environment, difficult sales trends at wholesale channels in developed markets, and lack of interest in traditional watches. “Based on these factors, we’ve lowered our sales expectations for Q4,” he said. “[G]iven the trends we saw in the third quarter, we think it’s prudent to plan our sales number assuming these trends don’t change near term.

Source

Earlier this year, Fossil announced that they were sell technology related to its high-end watches to Google. Google paid $40 million to Fossil in exchange for intellectual property needed to make the watches.

Fitbit was the pioneer in fitness trackers and was doing well, that until the smartwatches were also able to track fitness activities.  And at the point this was the beginning of the end for Fitbit. And after years of struggling and trying to remain relevant, they finally waved the white flag and sold to Google. Google was seen as a potential suitor for Fitbit prior to the deal announcement, as the two companies struck a partnership last year and have vested interests in the health space.

So why would Google buy Fossil.  Googles mission for its Wear OS is to create “a diverse set of devices” for their smartwatch platform.  Fossil owns and licenses 14 brands, including popular names like Kate Spade, Michael Kors, Armani, DKNY, and Diesel. Each of these brands already have their own Wear OS watch in its own signature style.  Thus, buying Fossil would be in alignment with Googles mission for Wear OS.

If Google is going to buy Fossil, the chart suggest, to wait for price to hit the monthly demand at $5, which would represent a 44% discount from the current price.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Rental Price Growth Gets Cut in Half From A Year Ago

November 9, 2019 Published by

Rental prices have seen aggressive growth over the past five years, but the gas tank may finally be getting low with prices over the past year growing half as much as recent years.

Raising Rents as an Investment Strategy May Get Difficult

A lot of this is market dependent and growth could certainly kick up again, but the rates have been steadily strong prior to this year so it’s worth keeping an eye on this data going forward and adjusting strategy if needed.

Nationwide Rate

As a whole rental prices increased 1.4% year over year, according to apartmentlist.com data, while the month over month change for October was 0.1%.

Picking Growing Markets Is Important

Many real estate investors in recent years, especially those doing large multifamily deals have used a strategy of acquiring under performing properties, sprucing them up and raising rents as units are turned over.

Then, with the cap rate higher due to the increased rents they can refinance out of an original loan and pull a good chunk of equity or just sell outright for a profit.

It is a solid strategy, but we can’t just blindly assume higher rents will be supported indefinitely.  Capital improvements will help attract higher rents, but in the end the market dictates the ultimate cap regardless of how nice a place is.

This is why it is imperative to pick strong growing markets.  That doesn’t just mean in rental prices, it means a growing population with increasing job opportunities.

That will help provide the market growth needed, but will also hold up the best if we hit a period of stagnation in the future.

Growing vs. Shrinking

Here is a glimpse at some states with the best and worst year over year growth.

  • Arizona: 3.5% growth
  • North Dakota: 2.9% growth
  • North Carolina: 2.7% growth
  • Nevada: 2.6% growth
  • Delaware: 2.4% growth

Rental prices falling:

  • West Virginia: -0.8% growth
  • Louisiana: -0.6% growth
  • Alaska: -0.3% growth
No Red Flags, but Pay Mind

As you can see there are some leaders and some laggards of the 1.4% national average.

The good news is we still have growth in rental prices, the bad news is growth has slowed a considerable amount over the past year.

Again, it is data worth watching, especially for those with the business model of aggressively raising rents on new projects as growth projections may not keep pace compared to recent years.

Barrick Gold Still On The Prowl

November 7, 2019 Published by

Barrick Gold Corporation explores for and develops mineral properties. The company primarily explores for gold, copper, and silver deposits.

According to Oilprice.com Barrick Gold Corp is one of most promising gold miners in 2020. Barrick Gold made headlines earlier this year when they attempted to acquire Newmont Mining which would of created the world’s largest gold producer. Barrick wanted Newmont Mining because of their adjoining assets in Nevada.

Needless to say, Barrick eventually pulled its $18 billion offer for Newmont Mining Corp and agreed to form a joint venture in Nevada with Newmont Mining.

The world’s second largest gold producer reported earnings yesterday and said it would be at the top end of its production targets for the year and the lower end of cost estimates.

Thanks to the rise in gold prices over the last year and gold production increasing to 1.31 million ounces from 1.15 million ounces over the last 12 months, profits rose to $264 million, or 15 cents per share, in the quarter ended Sept. 30, from $89 million, or 8 cents per share, a year earlier. 

And if that news wasn’t good enough, Barrick also announced that its Board of Directors declared a dividend for the third quarter of 2019 of $0.05 per share, a 25% increase on the previous quarter’s dividend.

Although the Newmont Mining deal didn’t materialize, Barrick’s late founder Peter Munk vision of building the world’s largest gold producer remains on the table.  The latest talk on the Street is now combining with Freeport-McMoran.

Freeport-McMoRan (NYSE: FCX) engages in the mining of mineral properties in the United States, Indonesia, Peru, and Chile. The company primarily explores for copper, gold, molybdenum, silver, and other metals, as well as oil and gas.

Barrick Gold Corp.’s chief said there’s a logic to combining with Freeport-McMoran Inc. as a way to expand into copper, but isn’t committing to any deals yet.

A tie-up with Freeport could bolster Barrick’s U.S. presence, where it already operates gold mines in Nevada, said Chief Executive Officer Mark Bristow, who cautioned that it’s not something currently being considered.

“Everyone has been fingered as a potential suitor of Freeport,” said Bristow, when asked if he was interested in a combination. “There’s a bit of work for us to do before we can get our head around broadening our scope.”

Source

In general, the mining stocks do better than gold when the price of the metal rallies.  Although gold prices have pulled back, I think it’s just part of any normal uptrend, in the cause of gold, a longer term uptrend that started in late 2018.

So where is the price of Barrick headed next, lets go to the charts go to long on the pull back to the weekly demand at $15.30 with a target right before the weekly supply zone.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Natural Gas Analysis Report 11/6/19 – Yep The Bottom Is In

November 6, 2019 Published by

The last time I talked about natural gas was two months ago,

Natural Gas Analysis Report 9/5/19 – A Bottom Has Been Put In

There was this huge base at $2.00 on the monthly chart going back 18 years.  In September, I noticed a monthly hammer candle had formed in August.  If you are aware of the common candle stick patterns, a hammer candle usually occurs at the bottom of a down trend.  However, what confirmed the end of the downtrend was on the daily chart, price has formed a demand zone, on top of a demand zone.  I call a zone on top of a zone, a level on level and is one of the most powerful formation when trading supply and demand zones.   Thus, the chart suggest to go long a pull back to the daily demand levels and go long with a target at $2.700.

Please note, there are typically two seasons for the U.S. gas market: Summer (April-Oct) and Winter (November-March). Gas is injected into the ground in Summer and gas is withdrawn in Winter to meet demand that rises well above production.  Please note, today is November 6th.

Natural gas prices surged higher on Monday climbing nearly 4% after rising 5.25% for the week. Short-covering by funds should continue. The weather is expected to remain cooler than normal through most of the eastern portion of the United States over the next 6-10 and 8-14 days.

Hedge fund traders reduced some of their short position in futures and options and added to longs, but remain exposed to a short-squeeze. According to the most recent commitment of trader’s report released for the date ending October 29, 2019 managed money reduced short position in futures and options by 21.5K contracts while increasing long positions in futures and options by 11K contracts. The current net short position at 299K contracts is nearly 3X the open interest that is short futures and options, providing the backdrop for a short-squeeze.

Source

Overall, the Smart Money is still net short natural gas, but are being forced to recover the positions due to being short squeezed.  In this case, the short squeeze is occurring because of the excess in demand for the contract and lack of sellers.  Since price has moved up rapidly, the short sellers are covering to preserve some of their gains and/or cap their losses, resulting in additional buying, which is causing price to move higher.

So where are prices headed next, the chart suggests price is heading to the weekly supply at $3.100.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Another Sub Prime Auto Lender Setting Up For A Short

November 5, 2019 Published by

Yesterday, I wrote a post about Santander Consumer,

Santander Consumer Is Setting Up For A Short Position

Santander Consumer is one of the largest subprime auto lenders in the market. Delinquencies for auto loans in general, including both prime and subprime, have reached their highest levels this year since 2011.

Santander Consumer had $26.3 billion of subprime auto loans as of June 30 that it either owned, or bundled into bonds, According to a report from S&P Global Ratings, Santander Consumer has more than $25 billion in subprime auto loans which is almost 50% of the company’s total managed loans.

Today, I want to introduce another auto lender, Credit Acceptance Corporation

Credit Acceptance Corporation provides financing programs, and related products and services to independent and franchised automobile dealers in the United States. The company advances money to dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps various amounts collected from the consumers.

Don Foss is known as the pioneer of the subprime auto loan market.  Back in the days, General Motors and Ford would only lend money to folks with good credit.  So Don started selling cars on credit to people with shaky finances.  Don was charging customers crazy high interest rates and could because nobody else was issuing loans to this particular population with bad credit. So in 1972, Foss founded Credit Acceptance (CACC) to handle financing and debt collection for his used car business. Today, CACC is a major player in the U.S. subprime auto loan market and its market cap is a little under $8 billion.

Credit Acceptance Corporation’s CACC third-quarter 2019 earnings of $8.73 per share missed the Zacks Consensus Estimate of $9.13. However, the bottom line was up 12.6% year over year. 

Provision for credit losses increased 37.9% from the year-ago quarter to $19.3 million. Moreover, allowance for credit losses at the end of the third quarter was $509.1 million, up from $461.9 million as of Dec 31, 2018.

Credit Acceptance is well poised for growth in revenues, given the continued rise in consumer loans. However, persistently increasing expenses and deteriorating asset quality are near-term concerns.

Source

So as the economy slows, companies hire less and layoff more, customers’ confidence decline, the more sub-prime auto loans default.  And when this chain reaction fully materializes, CACC’s stock will crash. 

At the moment, there is a nice band of support/resistance at the $450 level.

However, because this band of support/resistance was breached last month, the chart suggests to short price at the weekly supply at $460.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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