When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Technology Letter
February 7, 2020
Fiat Lux
Featured Trade:
(TWITTER’S GROWTH DOESN’T DISAPPOINT)
(TWTR)
Twitter is one of my favorite 2nd tier tech stocks and readers should get into this name on any meaningful dip.
Ironically, “growth” still matters for this company, but it is also profitable which partly offsets investor’s lust for pure user growth.
Remember in the Pre-WeWork apocalypse era, every tech firm was expected to grow irrespective of whether the growth was quality or septic.
Well, Twitter’s financials make sense in many ways and they also benefit from scarcity value.
There is simply no other company that does what Twitter does.
The company has also cleaned up its userbase purging the toxic elements that roil the good spirit of network communication and the trust in the platform, but this could still be improved on.
Nefarious chatbots, fake accounts, deep fakes, and bad actors are actively banished from the platform, and I can confirm that Twitter does a lot more than Facebook on this front.
Buttressed by a string of continuous profitable quarters, Twitter celebrated its best user growth quarter ever.
Even though they fell short on earnings per share, shares were up a Himalayan 17% intraday.
EPS was slightly lower than expected by 4 cents but the 25 cents per share is not the end of the world because Twitter’s mojo doesn’t come in the form of profits.
A more critical milestone was overall top line revenue that saw Twitter finally surpass the $1 billion mark at $1.01 billion vs. $996.7 million expected.
Twitter is finally becoming a big company and will benefit from the network effects and advantages offered to these precious few.
The highlight of the report was easily the Monetizable Daily Active Users (mDAUs) of 152 million which was 5 million more than expected.
The 21% mDAUs expansion is the number that shines brightest and it’s only the third time Twitter has reported mDAUs alone, rather the industry-standard monthly active users (MAUs) it previously reported.
Twitter certainly is still in hyper-growth mode as the company announced plans to build a new data center and add headcount by 20% during the year, which would be about 960 employees on top of the 4,800 it employed by the end of 2019.
Twitter CFO Ned Segal said, “When you add 26 million people to the service when more than half of it is tied directly to product improvements, you build a confidence to continue to execute against your strategy and the execution we’ve been able to deliver over the last few years.”
CEO of Twitter Jack Dorsey plans to work remotely later this year; addressed his previously announced plans to move to Africa for up to six months while running the business, he said he test ran a heavy travel schedule last year and management was able to keep up with the work.
Twitter dropped 20% on the last earnings report due to issues with its Mobile Application Promotion (MAP) product that damaged its ability to target ads and share measurement data with partners, but the bleed-over effect has been largely dealt with.
The technical issue resulted in a short-term 4% revenue drop and guidance won’t be affected moving forward.
Twitter will also carry out an ad server revamp in the first half of 2020 because advertiser sentiment remains strong.
Total ad engagements grew 29% in the quarter driven by improved clickthrough rates and increased impressions due to audience growth.
Cost per engagement fell 13% because of the shift to video ad formats.
Twitter continued to take the moral high road by eliminating political ads because management said it would not be “credible” for Twitter to convince users it’s committed to preventing the spread of misinformation while allowing advertisers to pay the company to target users with political ads.
“Your most unhappy customers are your greatest source of learning.” – Said Co-Founder of Microsoft Bill Gates
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
February 7, 2020
Fiat Lux
Featured Trade:
(MY 20 RULES FOR TRADING FOR 2020)
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
February 6, 2020
Fiat Lux
Featured Trade:
(HOW TO FIND A GREAT OPTIONS TRADE)
Mad Hedge Biotech & Healthcare Letter
February 6, 2020
Fiat Lux
Featured Trade:
(JOHNSON & JOHNSON JOINS THE CORONAVIRUS BATTLE)
(JNJ), (PRVB)
It looks like Johnson & Johnson isn’t walking away from the biotechnology sector anytime soon.
News of a potential exit came following the company’s move to cut down on its investment on Proventio Bio (PRVB) from 6.4%, which is around 2.4 million shares, to a 2.4% stake or 1.2 million. Further reports revealed that JNJ might sell its remaining shares soon.
JNJ’s reemergence on the front page of the biotechnology sector comes in the wake of the overwhelming fear courtesy of the coronavirus, which has already taken the lives of nearly 500 people and placed more than 24,000 patients in hospitals worldwide.
In the company’s recent announcement, JNJ executives disclosed that they are also throwing their hat in the ring in the search for a speedy vaccine to combat the deadly coronavirus.
This means that JNJ is joining Gilead Sciences (GILD), AbbVie (ABBV), and Moderna (MRNA) in the very short list of companies aiming to achieve that.
Taking a page off its success in creating a vaccine for the Ebola outbreak, JNJ is confident that it can not only come up with a coronavirus vaccine but also be able to scale it up the moment they receive FDA approval.
For context, JNJ took roughly six months to come up with an Ebola vaccine, scale the treatment, and deliver it to the public. The company spent around the same time in its efforts to produce a Zika virus vaccine.
As for the coronavirus vaccine, JNJ expects to shave off two to three months from the Ebola and Zika timelines.
While no concrete report on the progress of this initiative has been released, reports point to JNJ working with Chinese researchers to use HIV drugs to treat the widely spreading respiratory disease.
How will this impact JNJ’s performance in 2020?
For one, success on this front would definitely increase the earnings estimate for this year especially since JNJ’s fourth-quarter results failed to meet expectations on the top line. Meanwhile, the company beat the bottom line by one penny, recording $1.88 per share.
As expected, the talcum powder lawsuits continued to exert pressure on the company’s consumer goods segment.
Sales of the baby care products amounted to $421 million, exhibiting an 11% decline compared to the previous performance during the same period in 2018.
Blockbuster prostate cancer drug Zytiga has been struggling with the rise of generic rivals since 2018, slashing 13.8% off its fourth-quarter sales to $677 million.
Meanwhile, the declining sales of psoriasis moneymaker Remicade didn’t cause any major decline in the total revenue of JNJ’s pharmaceutical segment. This comes as a surprise since biosimilar competition has been gaining on the drug, cutting its fourth-quarter sales by 16.4% year over year to record $1 billion.
Despite the so-so results, the report still provided glimmers of hope that all but guarantees that JNJ shares won’t plummet in the future.
In fact, JNJ’s total fourth-quarter revenue increased by 1.7% thanks to the new products released as precautionary measures to pick up the slack from the sales decline of both Zytiga and Remicade.
For instance, psoriasis treatment Stelara managed to impress with a 17.7% increase year over year to hit $1.7 billion.
Another recently launched psoriasis injection, Tremfya, demonstrated a whopping 53.9% jump to contribute $270 million in the total revenue in the fourth quarter.
Meanwhile, younger drugs like blood cancer treatments Darzalex and Imbruvica pitched in $1.7 billion, showing off a 32.5% improvement in sales.
So although it’s unlikely that the stock will be able to produce top-line growth in the double digits as often as we’d like, JNJ remains an attractive investment.
One of its most alluring features is its diversified portfolio, which reaches across numerous business lines in the healthcare and biotechnology sectors.
This diversification has become a pillar of the company, ensuring that it doesn’t topple even in times of economic downturns.
The fact that it offers a 2.6% dividend yield makes JNJ a dream come true among income-seeking investors. It also doesn’t hurt that JNJ has consistently raised its dividends annually for the past 57 years, making it the most stable and secure out there today.
Even its lawsuits don’t seem to have any severe impact on the company’s performance since JNJ managed scores of legal cases in the past and constantly managed to come out in one piece. Taking its history as an indication, JNJ should remain as one of the top stocks in the years to come.
