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Buy Hold Rant - Stocks and Investing
Buy Hold Rant is a fast paced investing podcast that cuts through the noise of the markets. Each episode dives into stocks, company earnings, and the market moves that actually matter.
Hosted by Hamid Shojaee and Dustin Alper, the show breaks down their latest investments, the thinking behind every buy and sell, and the surprises that shake markets in real time. Insightful, opinionated, and refreshingly honest, Buy Hold Rant is where real investors talk markets without the fluff.
Buy Hold Rant - Stocks and Investing
Ep 39: $MU and $RKLB Go Hyperbolic, Plus $IREN, $EOSE, and $ASTS Earnings
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Episode 39 of the Buy Hold Rant podcast is here! On this episode, hosts Hamid Shojaee and Dustin Alper dive into the biggest investing stories of the week, including why they both decided to trim their Rocket Lab ($RKLB) positions. What’s really happening with Rocket Lab, and has the market gotten ahead of itself? They also break down AST SpaceMobile ($ASTS) earnings and compare and contrast ASTS and Rocket Lab.
Plus, the guys discuss:
🧠 What analysts may be getting wrong about Micron
📊 Why company valuations should be tied to revenues, profits, and future potential, not historical stock charts
⚡ EOSE earnings reaction
💻 IREN earnings and outlook
🎧 Listener questions and discussion
They also give a preview into the latest features of their company Savvy Trader.
NOTE: This content isn't investment advice. Always do your own research.
Don't forget to check out:
The Best (and Free) Earnings Calendar: https://earningshub.com/
Hamid's Savvy Trader Portfolio: https://savvytrader.com/Hamid/my-actual-portfolio
Dustin's Savvy Trader Portfolio: https://savvytrader.com/dustin/rvr
#micron #rocketlab #eose #iren #astspacemobile #asts #earnings #earningsreport #stockmarket #techstocks #investing #investingpodcast
Dustin, I can't believe this is episode number 39. Do you feel like it do you feel like it's more or less? No, it I like it just feels like we started just a few weeks ago and we already have 39 regular episodes plus two bonus pods. So that's actually 41 episodes in total.
SPEAKER_01So it's funny that you say this because originally every week I felt like wow, I can't believe we're on episode 10 already. Like we just started. But now I'm like, I can't believe we're not on episode 52. Like I feel like I've been doing this for at least a year. So something has changed.
unknownOkay.
SPEAKER_01I don't know what.
SPEAKER_02It just feels very natural now. Every Wednesday, we're like got this routine now.
SPEAKER_01Now yeah, I remember I used to get so nervous before we would start, and now I just don't feel anything. Similar to like, you know, how I feel about investing.
SPEAKER_02Well, hopefully you feel a little bit of excitement for the sake of our audience.
SPEAKER_01Oh, I'm excited. I'm just not nervous. Oh, okay. So it's in my mind. Yeah. Of course. Of course. All right. What do we what do we have for today? Okay. We we both uh made some similar moves, a bit of a different style, but similar moves in our portfolios this week. Um, a lot of earnings to talk about. ASTS, uh, iron, EOS. Of course, we're gonna talk about Micron. We're gonna double-click on uh analysts' thoughts on Micron. I know we touched on it last week. Uh and I think listener questions, and that that should be you know, a good show. So let's start with uh let's start with what we sold this week, which was Rocket Lab. Did you hear the drumming? Did that pick up or no? No, but uh because I have the the noise cancellation on, so that was a bad and not worth it. Okay, so you maybe sold Rocket Lab a hundred times in the past weeks. Is that right?
SPEAKER_02Well, you know, collectively, it's funny because I was actually adding it all up collectively. I have probably sold a little over what 35% of my Rocket Lab uh in the past month, month and a half. Uh and and uh, you know, every single time, but by the way, I think today it's gonna have a new high, all-time high. So you can easily say that that should be a very regrettable set of sales, you know. But the the way I look at it is that the idea behind investing is to buy low, sell high. Like fundamentally, that's that's what I subscribe to. I want to buy things at a low price, and I want to sell them when I think that they're overvalued. Now, uh, Rocket Lab is trading at 110 times its revenue rate, uh, current revenue rate, roughly speaking. Um, and at that revenue rate, it's hard to argue that it's undervalued. So um historically, when I was younger as an investor, I might think, okay, something is overvalued and sell everything. But as I have learned that the market has this sort of like bipolar mentality where it takes things down way further than it should, and it takes things up way further than it should. Um, I've learned to buy slowly when things are on their way down and sell slowly when they're on their way up. So um do I think my Rocket Lab is overvalued? Yes. Uh, do I think it's a fantastic company? Yes. Do I want to um trim uh at you know 110 times revenues? Yes. You know, would I buy the company today if I didn't have any? I would still love the company just as much, but I probably would not be a buyer personally at this uh uh at this price. Uh and despite having sold 35% of my holding uh a month and month, month and a half ago, uh Rocket Lab made up roughly 20% of my portfolio. And it still makes up 20% of my portfolio because it has just gone hyperbolic. It's gone up so much. Uh I think it's up like 50%, maybe more in the past month or so. So it's been insane. Yeah, it's absolutely amazing to see. Uh the company continues to crush it though. They they had a great earnings report, they raised their uh guidance for the next quarter. Uh, their neutron is very exciting. They're starting to have a build a backlog of Neutron launches, which is this is their reusable rocket that competes with Falcon 9, for those who might not know details about this company. Um so they're in fantastic shape to take advantage of the space economy as it continues to grow and explode over the next 10 years. But it just feels like a very high-risk uh company because if the price were to go down 50% tomorrow, but just for sake of argument, market crashes, adjustments, whatever happens, because again, market tends to be bipolar. You can't argue that even at 50% off of today's price, that the that the company is extremely cheap, you know, then it would be like 55 times revenues, which is still very high, right? So that's the reason I've been trimming. Now, I noticed you have been trimming Rocket Lab as well.
SPEAKER_01So curious to know I've been trimming. And I'm just looking here because you said if the stock were to drop or like 50%, we would be back around where the stock was in April. So that's right. That's right.
SPEAKER_02So that's it's like it's very much a possibility. But more importantly than you know what it was at in April is you know, like, is it cheap on a fundamental basis if it were to drop 50%? And the answer is that it's still not cheap on a fundamentals basis if it were to drop 50%. So um love this company, love Peter Beck's execution. In fact, I'd love to get Peter Beck on the podcast as our guest. Uh, he would be amazing. So we'll put out a uh open invite to Peter as well. I did. Um, but uh but yeah, it's uh and I love what this company is doing. Now I want to know why you've been trimming.
SPEAKER_01Well, so I just did one trim. So unlike you, where you you trim after every like five dollar increase when the stock's going up this much, you know, it's a lot of sales. I was I was specifically waiting for a big milestone, which was a 30x return on my initial investment. And I only did a small trip, I only sold roughly two percent.
SPEAKER_02Um well a 3,000 percent increase means that that two, you know, 1.8% or whatever is roughly uh more than 50% of your original investment. You got from that one sale that was less than two percent of your current asshole.
SPEAKER_01But that's pretty incredible. Between this and other sales that I've done, and we can click in here. Um pull up my other actually, let's go to this chart. Yeah, you could see. Should we do this? Yeah. So you could see how I've been selling over the last, let's call it two years. And between these sales, I've made multiples on my uh initial investment. And Rocket Lab is still my largest stock position by far at roughly 20% of my portfolio.
SPEAKER_02Oh wow. I I didn't realize your uh yours was also around 20% of your portfolio. Mine is also now around 20% despite having sold so much.
SPEAKER_01But yeah, it's hard to keep it lower than 20% if it just keeps going up. It just keeps going up.
SPEAKER_02It's it's been an amazing ride. Uh huge props and thank you to Peter Bag for uh and the the Rocket Lab team for like incredible execution. And of course, the uh retail community has just been a huge fan of this stock as well. So it's it's really nice to see it uh exploding.
SPEAKER_01Absolutely. So let's uh compare this to another space company that reported recently, which is ASTS. Uh and you know, I just like to get the the crowd or the internet to just go against you every once in a while. Yeah. That that happens all the time, by the way, like almost daily. Yeah, but it's very easy to poke the bear. Um pun intended. So who's the bear? Me or the crap. Oh, okay. You you are the bear in this case. Uh I feel like the internet is the bear. Okay, but uh anyway. Well the internet, I think, is a little more bullish than you are on ASTS. Um, now their earnings this quarter was not very strong. Arguably, at least the headline numbers, arguably, that's fairly irrelevant because it's all about building out the satellite network um and proving the technology, not so much what their revenue is going to be this quarter. It's about future quarters. Uh, I believe management is claiming that everything is still on track to launch. Uh I forget the number of satellites that we've been talking. 45, yeah. 45 is what they need to get the yeah, service up and running. Yeah. So they're on track to do that. Now, even with all that said, it seems like ASTS and Rocket Lab have uncorrelated or decorrelated uh from each other where they are no longer moving together, and instead Rocket Lab has gone up and ASTS has gone down. This is where I poke the bear. Why do you think that is?
SPEAKER_02Well, ASTS doesn't have a business yet, right? Uh fundamentally, they have a fantastic, phenomenal idea that has never been done before, and is questionable as to whether or not they can they are the ones who can get it done. Um, the idea, you know, direct satellite to cell phone service is a phenomenal idea. Like that who wouldn't want that, right? You could have cell service anywhere in the world, same cell service and um high high bandwidth, and you could be in the middle of the ocean and still have cell service. Everyone and their mother would want that service. And you don't need new hardware for it. And you don't, and with your existing phone, you don't need new hardware. I mean, the the idea is phenomenal, right? Um, but you know, like the idea has been around for some time, and the the question is whether or not this company can pull it off. And this is where sort of like me and the ASTS, uh, they call themselves the Space Space mob, uh you know, diverge in opinions. My view is that ASTS hasn't done anything for me to believe that they can pull this off at scale. You know, we're talking about billions of potential cell phones uh uh users, you know, to sign up for their service.
SPEAKER_01Emphasis of at scale, because they've shown tests where they've shown off the technology of uh a satellite connecting to a phone without any additional hardware and it working. So we know that piece works.
SPEAKER_02That's right. And to be clear, they've shown it off two or three different occasions using a single phone call that they have told us about at a time. So, for example, in their latest earnings call, they uh they talked about how they achieved 98 uh megabits per second in the middle of the ocean. Phenomenal. Just one call, as far as we know. Like they didn't say we established, you know, like 17 calls at the same time or 1700 or 17,000. That would be more impressive. But no, one freaking connection at 98 megabits per second, and this is what we're supposed to be excited about, or the STS community is excited about. But um, my view is that at scale, they will have a lot of challenges. I don't know if this is the company that's gonna be able to pull it off. And uh literally nothing they have said in the time scales that they have said has come to fruition yet. Now, you could argue that about Tesla or Elon or uh Rocket Lab, Neutron's uh, you know, Rocket Lab's Neutron is behind and so on and so forth. So you could argue this about almost every great company that, like, yeah, you know, products run behind schedule. That's fine. Um, that would be a valid argument, and they're running behind schedule, not a big deal. But they run behind schedule in what appears to be blind spots. Like they should know. Like, as of like, I've been listening to their earnings calls now for over a year. Uh, last July earnings haul, they were saying, or June rather, earnings call, they were saying how um they are going to have two uh satellites put put into orbit starting from the following month, and they did, you know, obviously missed that deadline, uh, and then up to six per month by the end of the year. Now, so far, they only have launched two of these satellites into orbit that they have wanted to. One of them got deorbited because uh they launched it on Blue Origins rocket, and it didn't get it into the right altitude that it needs in order to stay in orbit. So that may have been the best thing that could happen to them because they could deflect the blame on someone else. But even if these satellites get into orbit, which they need 45 of them according to themselves, uh, to be able to provide mass scale for US and Europe, um the the the technology still has not been tested at scale. So, you know, I I am very skeptical as to whether or not this uh this company can pull things off. Now, um the fact that they get compared to Rocket Lab, which is one of my largest holdings, obviously, is like it upsets me. It's it's just like why these these you know companies are not at all alike. Um so that's the reason why I I talk about ASTS at all, is because it's sort of like on my radar, it comes up all the time in the same discussions as Rocket Lab, but I don't think it deserves to be.
SPEAKER_01Okay, let's move on to Micron. Um so, like I said before, we touched on it last week, but we briefly touched on it. Um that analyst ratings for Micron have been fairly odd. And I just wanted to double click. Um I'm working on pulling up the latest ratings right now. Uh here we go. So majority says it's a buy. The lowest target in the last six months is three hundred and ten dollars, which is basically sixty percent downside. The highest target is a thousand dollars per share. That's 25% upside from here. And the average is a $530 target, which is roughly a 35% downside. Um, and you can see how the average monthly targets have climbed uh as basically stock prices price.
SPEAKER_02Yes. The analysts are that brilliant as the stock price goes up, they raise their targets. That's that's phenomenal. Yes. Um and I who was it who was the one you called out last time? Well, let's give a little bit of credit where credit is due. If you scroll up to the to the top there, um is that the DA Davidson Gil Luria maintains a thousand dollar uh buy target? So that there's a person who seems to be getting it. Uh TD Cohen did raise, you know, back in April 28th. So before most of this run-up, uh, they raised their target from 550 to 660. So that was before I think it hit 660. So uh it wasn't after the fact. Um, so some of them, you know, have pretty decent targets on it. Uh the one that was sort of like fascinating to me was uh if you scroll down, I think it's Citigroup. Uh this this one in particular, Atif Malik, uh, he lowered his price target from $510 uh on March 31st to 425 after the earnings had come out, crushing everything, raising the guidance for the next quarter, and then uh he lowered it down to 425 after having all that additional information. So you know, the biggest thing I wondered about this particular analyst is what was he thinking that he thought um deserved a $510 price target? And then what happened uh in his mind that based on the results, that he thought, okay, now I'm going to lower them. Um and this this is what you know fascinates me about analysts and the way in which they go about um um uh doing these price targets. So you you know, obviously I don't pay a lot of attention to the analyst ratings, but I have been saying for some time on X posts that um I I believe that you know Micron deserves to be roughly an $800 stock uh based on its historical performance and based on the criticism that uh uh uh memory has been historically cyclical. Um, you know, taking that into consideration, even that memory is cyclical, okay, we'll give it a discounted price, but even that discounted price deserves roughly an $800 valuation. That's that's what you know what I had come to the conclusion of. And then if they actually meet or beat the expectations of this quarter, which is you know, $32 billion in revenue and $19 per share of profits, then in that scenario, they might need to actually be a thousand dollar or greater uh stock price because um those prices just uh those kind of that kind of revenue and profit performance justifies an even higher valuation. Um, and um what when I was saying that the stock was hovering between three and four hundred dollars, and then you know, all of a sudden it has shot up in the past couple of weeks to about eight hundred dollars, right? So so now I'm like, okay, you know, this seems reasonable. Uh by the way, at $800 a share, it has a forward PE of roughly nine, which is you know, about a third of everybody else, you know. So that's still get discounting it by about two-thirds from everybody else, what the the price that everybody else gets, uh, whether it's Nvidia or uh Microsoft or Apple or Google or um, you know, if you go to AMD and Intel, they get like ridiculous valuations going, you know, with forward uh valuations. And Micron is getting a discount to all of them. And you know, so you you can't tell me that Micron, you you can't convince me that Micron is an overvalued stock uh at $800 per share when it has a forward PE of nine. So uh that's been my perspective on it. Uh that said, you know, as the price starts to climb and as it becomes a larger and larger portion of my portfolio, it's already hovering around 30%. I might start trimming. I mean, like, you know, I have a lot of it. I bought a lot more of it than I even wanted to when uh you know, you know, after this quarter when the price sort of plummeted. Um, so I might sell some of those extra shares, if you will, that I that I bought, but I haven't started selling. I have so far I haven't sold uh uh any shares.
SPEAKER_01So does it make you uneasy how quickly uh Micron has played out? Because you started investing in January. Typically, the stocks you invest in, you're holding it for at least a year before they actually start moving. And it's not like they're stable. Typically they're going down and they're going up, they're going down, right? Uh, Micron has played out, at least from my perspective for you, fairly seamlessly.
SPEAKER_02Um so it's it's interesting because normally when a stock comes on my radar where I love it, uh it's on its way down, and that's the reason I love it. Like uh and that that has occurred with Netflix in the past and meta and uh Uber and uh I there's like a whole bunch to to sort of like name. And um, and because of that negative momentum, oftentimes they start they just keep going. And you know, like more recently, things that I have in my portfolio currently, Ribbian or Bumble or you know, they go down for some period of time before the turnaround eventually happens and uh and the companies start to like skyrocket. With Micron, I uh did spot it at a time that it had upward momentum at the end of the year, and I ended up buying it at an all-time high. Uh, and normally I buy things slowly because they're on their way down, but with Micron, I bought it very quickly. I don't know if you remember, but like within uh yeah, within a very short period of time was 10% of my portfolio because you know, like it had this upward momentum, and I didn't want to miss out. So it's rare that something has upward momentum and it's undervalued. So the that the combination of something having an upward momentum and being undervalued is super rare. So, yes, like uh, you know, some buying something and having the price double and more than double, I think it's like now two and a half times what I my average buy-in is, uh, is super rare. I mean, like that just doesn't happen in four months. Um, but in Micron's case, it had the upward momentum and it had the the added uh parameter that it was very undervalued. And that's the reason, and that's the reason it has um just skyrocketed in such a short period of time.
SPEAKER_01Got it. Um Okay. Let's talk about you made, and we're gonna stick on this micron train. You made what I thought was a really interesting post on. An X. Let me pull that up. Oh. Where you highlight seven different stocks. You didn't say what the stocks were. You just showed some key fundamentals. And your point being more or less, you shouldn't need to look at a uh stock chart or price chart to know if a stock is um a good or bad investment. This is what you should be looking at.
SPEAKER_02Yeah. Okay, so so to be clear, the reason I put together this this chart is so that uh people like I think people in general put too much emphasis on the historical price chart of a stock. Um now it it is true that if the historical price chart of a stock happens to be like it's making new highs or new lows, that's considered having momentum in a particular direction. Um, but you never know when that momentum ends. And what happens is the reality of the company's revenues and performance and profits uh catches up to every company eventually. You know, well, maybe I mean maybe that uh is not true for every company, but it generally will will it it's generally a true statement. It's this sort of like Warren Buffett of uh style of investing where you're buying things that uh uh are at reasonable price, right? And that's what you want to do, and you want to avoid things that are not at a reasonable price. So if you were to sort of like take those fundamentals, and what are those fundamentals? It's revenue growth, it's the um it's the earnings per share, right? It's uh the growth of earnings per share, it's their current PE or their forward PE, which sort of reflects the uh uh price-earnings ratio uh based on projected growth. Um, if you take those sort of like basic parameters and look at them for a handful of stocks, and uh these are like seven stocks that I picked, which one looks attractive to you? And you know, there's uh sort of like no question that some of them look very unattractive, like whatever number seven is here, uh it's very unattractive because it has a current PE of 388, a forward PE, even after it grows for the next year, roughly 184 forward PE. Um, or you know, there's one number four. It's 117 forward PE. It doesn't even currently have profit. So um so you know, this if you were to look at this chart, there's like one clear, uh like amazing opportunity here. That's number five. Uh, and then there's others that seem like more reasonable, like number six has a forward PE of 25. Okay, that's more reasonable. Number three has a forward PE of 30. Uh, number two has a forward P of 32. So, you know, which socks would you want to buy? And you know, that might be interesting for whoever's watching right now. If you guys wanted to say what number you would be interested in, that that would be or what what sock do you think that correlates to which uh uh number? Yeah, that that but anyway, so I I put this uh uh together, and you know, of course, uh there's sort of like this this is sort of to debunk in my view that like price history matters a lot for um for what what a good stock is, and you know, I don't view it that way. And that's the reason for uh for this tweet. So do you want to show us the uh the version of it that has the yeah, okay. I think it would be unfair if we didn't. Yeah, so and do you have the version that has uh meta in that as well? I should. So you added one after the fact, right? Yeah, I had forgotten to put include meta in the version that didn't have the um uh the names. So so you know, adding the names to this chart, basically, for those who are listening, Micron uh out of out of the following companies AMD, Apple, Google, Intel, Micron, Nvidia, Tesla, and Meta, Micron has the best uh fundamentals, right? If you if you take away the fact that, you know, like Micron might be cyclical or you know, the arguments, I should say, not not the fact, but the arguments that Micron is cyclical and uh memory prices might eventually plummet or whatever. If you take those arguments uh out of the picture for a moment, um Micron has the best fundamentals by far. Everything else on that list, every other stock has a premium uh that is anywhere from 138% on the low side of the premium that you have to pay for that stock uh all the way to a 2,200% premium uh on a relative basis, on a per dollar of profit basis uh relative to micron. And the 2,200% premium is a company called Tesla, right? Uh but even Intel, for example, which is also in the semiconductor business, has a 1,300% premium over micron. AMD has a 488% premium over micron on a per dollar of expected profits, future profits in the next year. So uh taking all that into consideration, Micron, even at $800 per share, to me feels like it's still undervalued, relatively speaking. Um and then the second company that I love on that list, of course, is Meta, which is also relatively speaking, relative to Google and um and Apple and Microsoft, is still uh seems extremely undervalued and growing faster.
SPEAKER_01Right. Um now, with all of that being said, obviously there are things outside of the context of these metrics that can affect uh the stock price and and and could be correctly affecting the stock price, right? Like um if a company is changing businesses or transitioning, um that's really so so it this isn't a uh end all be all per se, but I do think it's a really interesting way to look at the the market. Um and I commented on this on on Twitter, but I did, as you know, recently bought Micron and recently sold Tesla, and it was because of of the of the the fundamentals and how it was pretty clear um Tesla just wasn't making sense anymore in my portfolio, and it wasn't making sense not to have micron uh in my portfolio. Very cool. Uh and it this also highlights which you kind of got into, but I just want to say it again. It highlights why you're not buying uh AMD or Intel, but you're very interested in Micron, is they're two very different stories, and even if they're in a similar uh space.
SPEAKER_02Yeah, that's exactly right. So let's let's just take the argument that AI is in a bubble right now as a fact. Well, if AI is in a bubble, would you want to own something that is trading at 100 PE, or would you want to own something that is trading at 9 PE? Because if it's in a bubble and their profits drop and they get cut in half, or maybe their profits drop at 70 or 80%, well, guess what happens to the stock price if the uh you know, like if uh they're trading at 100 PE and all of a sudden their profits drop 80%. Well, now they're trading at a uh five times higher PE at 500 PE, as opposed to one that's you know trading at a PE of nine and its profits drop by 80%. Well, five times higher than nine is now it's trading at 45 PE, assuming the price doesn't move, right? So again, like if the price gets adjusted and everything gets traded at roughly the same PE, this is sort of like how I think about it. Uh, then a company like Intel or AMD has far more to fall than a company like Micron.
SPEAKER_01So okay, let's talk about uh some more earnings. So Iron reported earnings. Um, I believe it was Thursday of last week. So just to set the stage a little bit, last quarter uh Iron Investor was mostly upset after earnings, not because headline numbers uh weren't weren't great, but because they didn't announce any new uh hyperscaler deals. Uh and that you could just tell that it was testing a lot of investors' patience. For me, I recently started investing in Iron, so it uh I wasn't too bothered. It just seemed like inevitably they're going to sign some contracts. That's not a big deal. So cut to this quarter. The headline numbers are still not great as they're building out capacity, and um the these contracts are starting to come online. Uh, they missed revenue in EPS by roughly through 35%. Uh that's mainly due to Bitcoin underperforming right now because they do have a Bitcoin mining business that's currently a big a significant portion of their revenue. Um, but they're also moving a lot of their hardware from Bitcoin mining to uh AI GPUs that's also affecting revenue. Um that makes sense. Now, getting to that, the what was the big deal um for for for this earnings? They announced a partnership with uh Nvidia, which the market was fairly happy with. So Nvidia is going to be spending $3.4 billion um over the next five years, uh, for I believe 60 megawatts of power. Um iron. Okay. That's a pretty big deal. It I I think it's a pretty big deal, yeah. Because that uh $3.4 billion over the next five years is roughly $700 million a year for the next five years. Iron's current annual revenue is $750 million. So this basically locks in their current annual revenue for the next five years. And this is just one piece of many deals that they they have. Okay. Um, in addition to that, Nvidia has the option to invest $2.1 billion um into Iron at $70 per share, which is currently higher than I think they're at like around $50 right now uh per share. Uh $55 per share. Okay. So that I don't I don't I think that's just the cherry on top. Uh that could be a nothing burger because Nvidia, it's just an option. Um I'm more interested in that Nvidia is uh client. Okay. Uh in addition to that, they increased their total um energy target from 4.5 gigawatts last quarter to five gigawatts this quarter. That's due to an acquisition they made where now they own a data center company in Spain, which I believe is their first European uh data center exposure. Uh wouldn't they stock? Oh, sorry, go ahead. Oh uh this the stock went up fairly significantly. Let me pull up uh their chart. So you see like earlier in the week it was like ranging between 50 and 40 dollars, I should assume. And then it shot up to like $60 and has since gone down back to around $55. Okay. When did they report? Was it last week? Yes. Uh did I say, yeah, this is this is the monthly chart. Sorry. The weekly chart. So I think their earnings was right here. Uh right before they yeah, so they they were at $55 and then it went to 60. But I think before hours it it shot up to $70. I think part of that was because uh Nvidia has the option to to buy the shares at $70 and the market like had a knee-jerk reaction to that. I saw um can you scroll to the top to see the earnings uh hub score uh fundamentals? So it's interesting because when I started investing in Iron, it actually had an A score. Oh, really? Uh and over and over time it has received a D. But also, as I've said, their earnings reports have not been great. It's that in the near future, they're going to start to uh materialize. And I'm gonna hit on that. I mean, I could hit on it right now. Um so their end of year ARR target also increased from 3.4 billion to 3.7 billion. Okay. Of the 3.7 billion, 3.1 billion is already under contract. 61% coming from their original deal with Microsoft, which happened a little while ago now, 23% coming from the NVIDIA deal that they just signed, uh, like a fifth of that Nvidia deal because just for one year. Uh, and then 16% from others. And this $3.7 uh billion dollars is being generated off of 480 megawatts this year. So again, their total uh megawatt target long term is five gigawatts, and they're generating 3.7 billion off of 480 megawatts. Um, now one other piece I want to call out is this slide. What are they? Do we do you know off off the top of your head? I don't know off the top of my head. But uh so this slide shows their current target uh is 480 megawatts in 2027 next year, 1210 megawatts, and then in the beyond five gigawatts. Now, I this is my biggest issue with their earnings. This 1210 megawatts should have been branded 1.21 gigawatts. Gigawatts would have been a perfect number to 1.21 gigawatts, and they would have had enough energy to go back to go back in time. This would have been huge.
SPEAKER_02You would have seen the psych the stock 10x from that number, has to be a tribute to to back to the future, right? Because there's no way you would have 1.21, uh 1200.
SPEAKER_01Yeah, it's very specific, you know, like uh but bringing this back down to reality. I did do some back of the knack and math of if they're so right now they're roughly making um 750 or their target is 750 million dollars of ARR per 100 megawatts. So if we assume they're going to continue that, and the Nvidia deal was actually better than that, I'm just averaging out all the deals. So if we assume they they stick to something along those lines, in 2027, the expectation would be, and again, this is just my numbers, not theirs, uh target of nine billion uh dollars in ARR by the end of 2027. So, and again, their current end of year target is $3.7 billion. So I'm I would like to think that's conservative under the assumption that they can execute. Um, but we will see. Overall, I thought the earnings was very positive. Um I I liked everything that I was seeing. Um but yeah, I don't know. Did you I'm assuming you didn't listen to the earnings call for this one?
SPEAKER_02No, it's it's out of my wheelhouse. And I and I think you know, one of the things that uh bothers me about some of these companies is that their margins are extremely low. Um, so they're like operating uh heavy um or like very capital intensive businesses that are very low margin and on huge amounts of debt as well. So like the combination of these things are things that turn me off. And you know, this company could quadruple over the next three months. I I like still wouldn't be in it. You know, obviously I I will have missed out on it, but um yeah, I end up sticking to to the stuff that I know.
SPEAKER_01But yeah, no, that's a fair point. There's going to be a lot of dilution for uh shareholders as they it doesn't it takes a lot of effort and and cash to get to that five gigawatt number. Um it's not it's not an easy road.
SPEAKER_02Um should we cover some to the the two others real quick as well? The earnings?
SPEAKER_01Uh it was just EOS that we wanted to cover after this because we already used ASTS. Uh so for EOS, they just reported this morning. Um, it was their first well, let me set the stage for EOS as well. So last quarter they missed uh expectations and guidance fairly dramatically. And a lot investors uh they lost confidence with a lot of investors because they kept reiterating that they were going to hit these targets and they didn't even come close. Um my read on it, and maybe I'm just ignorant, was they were just overly optimistic and they need to work on setting proper expectations. So this quarter was important, it was to me extremely important that they either met or exceeded expectations. So this was their first double beat. Uh, they beat on revenue and EPS with a caveat, which was there was a one, as always, there's a one-time, you know, event that caused EPS to skyrocket. Um but revenue they did genuinely beat it. And this is the first time they beat revenue expectations in over a year. Um, and revenue is what they're setting uh guidance for, they're not setting guidance for EPS. So that's what really mattered to me. Uh, they are still expecting target total revenue by the end of the year to be 300 million to 400 million dollars. This is what they've said um since last quarter. The big piece of news, and I don't know how I should feel about it, is they partnered with uh uh Sebus, I think it's what it's called. Cebus. Um they're a I think investment company, private equity company, uh, to it start a joint venture venture called Frontier Power USA, which is an independent power producer. So this is a totally separate entity. Uh Cebris is putting up $150 million, EOS is putting up $100 million. And the reason why I'm a little like iffy on it is they are basically generat they're creating a customer for EOS, a fairly large customer for EOS, where this new entity, Frontier Power USA, is uh set to have uh two gigawatts of of EOS storage, right? So it with Iron, when we talk about like these gigawatt numbers, they're generating power. In uh EOS's case, it's their storing power. Uh but two two different companies that don't uh work together, at least not yet. Um so I'm not sure if this is an example of like it's it's almost like a company dog fooding their product at like an extreme scale, uh, especially when it's a newer technology to kind of show off that it works um at scale and they felt like this was either needed or beneficial to the business. Or is this a red flag where they're not getting clients as quickly as they would like and they feel like they need to do it themselves? So I'm not sure which side of this I I land on just yet, but I don't think it's like a very clear win. And to me, it just feels a little messy, is my own.
SPEAKER_02What percentage of your portfolio is is uh in this company?
SPEAKER_01Uh I think like two percent, okay, maybe last.
SPEAKER_02Yeah, two percent. But you two we've been increasing it though.
SPEAKER_01You still you're still sort of like a buyer of uh so I I have been increasing it, but when everything went down due to the war, I actually didn't increase EOS because they're kind of on the chopping block for me, uh where I'm kind of assessing them over the next let's say call it three months. Uh whereas I was buying iron, I was buying mic micron, I was buying meta. Like there were other things I was adding to where EOS, I'm I'm I'm I'm figuring it out. Gotcha, gotcha. What are your thoughts? I know, I know it was the very high level.
SPEAKER_02Yeah, no, I mean I I also for similar reasons, I'm not in EOS either. Um, not in my wheelhouse right now. I haven't started looking. I'm also not like looking to deploy cash to other things. I I want to actually build a larger cash position. So yeah, I'm I'm not actively looking for uh more investments, but uh Uh speaking of investments, uh, a new feature that uh you're largely responsible uh for the release of in uh savvy trader, uh, to address a lot of questions that come up because people ask me all the time, like, what is the drawdown of the portfolio or what's the um sharp ratio, which I still don't know what that even is, or the risk factor. Don't don't tell people that. Say I totally know what that is. Yeah, well, I mean, I I get the concept, yeah. You know, um, but if I can't calculate something on my own uh very quickly, then it's probably too complicated for me to take it into consideration for from an investment standpoint. But um people have been asking for all kinds of statistics, and then you came up with a major uh update for Savvy Trader that shows all the statistics. You want to you want to pull it up uh real quick? Yeah, let me because I I love I love these.
SPEAKER_01Uh I'm gonna switch to your portfolio because we all know that's what people really care about. The analytics tab. Yeah. So that's the same thing. Yeah, so we have a brand new tab.
SPEAKER_02Yeah. Um do you want to run through it? Well, I'll run through like my favorite things on here. The monthly returns uh section is beautiful because it shows, you know, like uh since April of 2022, which is when my portfolio first went live, um you know, like the ups and downs. And what's funny is that, you know, I I created Savvy Trader to show that like my historical performance was for real. And you can see like that first year, it was like awful for my portfolio because no one believed that I had like you know, historically, for the previous 20 years, I had like 30% annualized returns. And uh, when I would tell people that, it that nobody would believe me. People who understood what that meant didn't believe me. And then people who didn't didn't know that that was a big deal. And and then that first year I had like negative 12%. Then it's like shows it, you know, month by month is yeah, it was pretty hilarious. And that was the launch of Savvy Trader, you know. It's like, oh look, you can see my portfolio and how bad it's doing, um burning cash. But then, but then starting the next year, like uh you can see month by month how it has done, and then 82% for the second year, like 2023, 104% 2024, 101% 2025. And then this year we were down 18, 19 just a couple months ago. And then now all of a sudden, what a turnaround because of Micron and Rocket Labs up 27 uh here to date. So that's my favorite, the monthly returns. And then the daily activity is kind of interesting, but like not doesn't really add anything, in my opinion.
SPEAKER_01Um, to me, the daily activity, what that shows, if you're because basically majority of the analytics tab on Savvy Trader, you can see on anyone's portfolio. You don't have to be subscribed to them. So it's a good way to like suss out if this is um a portfolio that you should. So the daily activity uh section is a great way of seeing are they uh the type of investor that that you align with? Are they too active? Are they not active enough? Um or maybe if if you have a portfolio on Savvy Trader, it's a good way to put up put up a mirror. And you know, if you think you're a long-term investor, but you're actively going in and out of stocks, then maybe you're not so much a long-term investor. In this case, you're just constantly buying uh, you know, the stocks that you already own.
SPEAKER_02But or selling or selling, yeah, like slowly, buying slowly and selling slowly, yeah. Um, but the number of trades is is kind of small. There's some additional stats on the left there. But yeah, and we do show like you on average you you do seven trades a month. Yeah. Uh I I thought these stats were pretty cool. And then scroll down. There was something else that I I love the drawdown one. Um, the correlation, the correlation one is kind of like eh, in my opinion, but uh I'll let you talk about it if you want to. But but the max drawdown is super interesting because this is sort of like what's the worst that the portfolio has done? And this is you know, like pretty cool because you can see that my portfolio has been down as much as 30%, and the and that was roughly around April of uh last year when the tariff things happened. Um, and then but but even cooler is that you can compare that to the SP 500, which is pretty cool. So if we do, you know, you can kind of see what's the worst of the SP 500, about 20, 20 drawdown around the same time frame? Yeah, 19 versus 30. So you can kind of see like how does this compare to like the SP 500 and stuff or a portfolio, not necessarily mine, but um, so I thought these analytics were a great ad, Dustin. Great job. And if you want to talk about the correlation, feel free.
SPEAKER_01Yeah, I'll talk about a couple of things. So max drawdown, I don't I don't think we ever talked about it, but you I built this widget and then you were like, oh, it'd be great if we can compare the S P. And then I was like, you know, it would be even better if you could compare anything. So you can come you can compare any stocks drawdown. So like I'll give a more extreme example, like Rivian, who um had you know a crazy IPO, never came back from that drawdown.
unknownRight.
SPEAKER_02Oh, interesting. But during but but this also like forces it to be during the time frame of my portfolio. Like you don't you can't take the start date, but yeah, okay. At least for now. This is not based on when I started buying, for example.
SPEAKER_01Um, and then you could also, and I shouldn't be doing this, but you could compare it to other portfolios. So if you compare it to mine, you could see that I've had a bigger drawdown. Um my biggest drawdown was roughly 40% uh more recently. Wow. Um where and even like during your max drawdown, mine was 36% drawdown versus 30.
SPEAKER_02So you you could have higher risk with bigger drawdowns and lower performance if if some okay. I just I just want to confirm that that's how we should be reading this. Higher risk, yes, lower performance, bigger drawdowns. And and and that's what's his portfolio versus mine.
SPEAKER_01I'm not giving him shit. Don't worry. No, no, no. But it you know what sums this up so nicely? The sharp ratio and the sortino ratio, where you could just look at those numbers and you'll see. And I don't, I'm not gonna do a side by side, but your numbers are higher than mine, which is better. And that exactly means you have better returns for the volatility that your portfolio uh is going through. And that's why people love those those metrics. That's hilarious.
SPEAKER_02Um, I'm I'm only I'm only giving you a hard time, but uh no, it's fine. It's I deserve it. Fantastic as well. I mean, like some of this is just luck, too. You know, like I I don't control the markets or decide when things should go up or down.
SPEAKER_01No, over time, I feel like maybe you do control the market. Like, I mean, this micron move seemed too easy. Um okay, correlation matrix. What I like about this is if you're uh looking at someone's portfolio and you're debating on investing in in some of the stocks that they're holding, this gives you a sense of are multiple holdings too correlated where maybe they're not they're not providing any real uh diversification, and you could just pick one of the two stocks that are very correlated. So, an example in my portfolio, I own both Bitcoin and Ethereum, and they're very correlated, and you would see that their little rectangle is like bright green. So that could be a red flag of like maybe you should just invest in one and not both.
SPEAKER_02But by the way, so your your whole thing has been uh our argument, ongoing argument about Robinhood and Bitcoin has been that those are pretty correlated. Um and they shouldn't be, in my opinion. But you know, you're like, it doesn't matter your opinion. It it has been the market has been sort of correlating them, and that's with the 0.53 right there.
SPEAKER_01You want to hover over that? Only 0.53 here. But if you go down to the month view, oh wait, uh or maybe one year view, maybe it's three month, three-month view, you'll see it does go up a bit to point six. Uh so which the tool to call is a moderately positive correlation. Okay, what's the max uh max time frame? Max, I think, yeah, 0.58. So it's all like close between 0.5, 0.6. Yeah, six months, 0.6, 0.5. Yeah. So it kind of ranges there. So it's not like they're super, super correlated, but relative to the other stuff we hold in our portfolios, they are more correlated. Um yeah.
SPEAKER_02All right. We should probably move on to uh listener questions since we're almost out of time. Yeah, Adrian, you want to hop in here?
SPEAKER_00Hey guys.
SPEAKER_01Hey, hello. How are you, Adrian?
SPEAKER_00Okay, good. Um, okay, so we have some good questions. I'm just gonna launch in. Um we kind of okay. Hamid, if the current bull run continues, are you likely to build your cash position back up to the 30% plus level? What is the largest percentage of cash you've ever held at any time?
SPEAKER_02Uh so yes, I think as the um market and my position specifically run, I I do uh want to build up my cash position. And unless something is very attractive, I'm not looking to deploy. Uh and this is where kind of I was already in December before I just before like Micron came on my radar, and I just couldn't pass that up, which is why my cash got depleted so quickly. Uh, that and the fact that I had a pretty large tax bill. So the combination of those things is what caused my cash to be uh way lower than I wanted it to be. So um, but yeah, I I think uh given the exceptional run that my portfolio has had over the past three and a half, four years, um I I want to build up cash to probably over 30%. Now, what's the highest cash that I have been in? In 2021, I thought the market was pretty overvalued and I went more than 50% in cash. And even um the stocks that I held were uh a significant portion of them were cash alternatives, meaning uh they they were dividend stocks that were paying four or five percent dividend, uh as opposed to buying bonds that at that time were giving sub 1% returns. So what's uh what's your cash uh uh current cash target, Dustin? Are you comfortable?
SPEAKER_01Target, I uh I think anywhere between 10 and 15% right now, and I'm at 12.3%. Um I'm not sure. Yeah, like I'm happy with where I'm at. I'm not actively trying to build it up. Uh that doesn't mean I'm not gonna sell things to build it up like uh I just sold Rocket Lab. Uh again, that wasn't so much to build up cash, but more because Rocket Lab was rocketing. Yeah, yeah, like it was doing what what the name says.
SPEAKER_02So Adrian, let's go to the next one.
SPEAKER_00What do you guys think of LRCX and TSMC?
SPEAKER_02Dustin, why don't you take this one?
SPEAKER_01I don't know what LRCX is. That's what that's what I'm thinking. I don't know LRCX. Uh TM TSMC. Uh I like them as a company. I never really looked into them as an investment. Um they have here, let me shouldn't share my screen. Uh they have an earnings hub score of an A. Uh where P is 33, PS is uh 15, revenue growth is up 37%, EPS growth up 54%. Um obviously there there's uh like foreign concerns of what China will or won't do and how much of that is valid or not valid. Um being that the other companies based in Taiwan.
SPEAKER_02But how do these numbers compare to Nvidia? 33, 24, a PE of 33, forward P of 24. Let's remember that when we has a B.
SPEAKER_01So 33 versus 45, 24 versus 25. No, no, 28. The forward actually is 28. Okay. Can't remember all these at once.
SPEAKER_02Um yeah. TSMC is a good company. They're they're sort of like manufacturing most companies as chips, including Nvidia's. So I I think it's a solid company. Um, but okay, so like at a high level, if AI bubble bursts or if AI slows down, TSMC will also get affected. And and so will everybody else. And and then again, it goes back to the same sort of uh viewpoint that I would rather own something that is cheaper than more expensive. And for for for me, my semiconductor investment is in Micron.
SPEAKER_00Guys ready?
SPEAKER_02Yeah, let's do it.
SPEAKER_00Also, TSMC is not an American company, so it is Taiwanese, yeah. Yeah.
SPEAKER_02Um they have a massive uh uh plant in in Arizona in particular, and uh and I think other uh places in the US as well.
SPEAKER_00Okay. What about Intel?
SPEAKER_02So we we talked about Intel a little bit when we showed that chart, and uh Intel has had an incredible run, but without the actual financial performance yet. Um, over the past year, the stock is up, I don't know, four or five hundred percent, but uh the financials haven't followed, right? And uh and they're not even expected to follow in the next year. Uh and this is the exact opposite situation that we have for Micron, where the stock is up, but also the financials are up even more than the stock is. So um I'm I'm not a huge fan of uh Intel over like what I already own, which is Micron.
SPEAKER_01It seems like with Intel, the stock market was probably overly negative on their business that they were kind of losing to Apple Silicon and ARM, and now uh it's swung the other way as it tends to do, where now it the market is maybe overly positive. The bipolar behavior of the market. Yes.
unknownYou ready?
SPEAKER_00Okay. Um sysperson, have you guys anything super exciting on your watch list?
SPEAKER_02I haven't been actively looking to be honest. Um nothing exciting. So I actually a lot of my watch list persists of companies that we all already know. It's it's the you know, Nvidia's and apples and Microsoft and you know Tesla and so on and so forth. Uh, but uh but when it becomes attractive to me is when their valuation becomes uh uh interesting. And uh none of them are in super interesting right now, but that's the way in which I I think about my watch list.
SPEAKER_01What about you, Dustin? Yeah, so I don't typically keep a very long watch list as like I'm not actively looking for new opportunities, they just tend to come to me, mainly from you. Um but the the one stock I have on my watch list is and which we've talked about on on this program is Once Upon a Farm, which is a children's food company that um I love. They just reported earnings uh last week. I still need to listen to the call. Um, but I think I I I think it's a great business. It's very different than anything in my portfolio, which I like. Um, I'm not necessarily close to investing, and I don't know if I will necessarily invest in them, but um that that is like the one company on my watch list that I am literally just watching. Very cool.
SPEAKER_00Adrian, let's take one more and then maybe this is a question for Dustin. Since Rivian has dropped to under $15, would you buy more Rivian shares?
SPEAKER_01So yeah, short short answer is yes. Um, I'm definitely open to adding to my Rivian position. The reason why I laughed is this is an example where, as we've talked about again on this program, um I like to set entry targets. And sometimes those work really well for me, a la a micron, and sometimes they don't. And this is a case where uh it didn't, where Rivian, I forget exactly what the setup was, but it was maybe like 30 cents off my target, and I didn't buy in. And this is like a couple months ago. Um, and I haven't bought in since. So I'm uh what one could say I should just bite the bullet and buy now, but I'm too stubborn for that. Uh, and this is part of the issues that I'm working on as an investor and as a person. Uh but uh yes, I I am interested in buying more Ribbian and may or may not do it sooner or later or never.
SPEAKER_02All the options are on the table. I feel like you you bought some micron in the 300s when it went down. Um, but then when we were talking about it, it had gone up to like the 500s, and you wanted to buy some more, but like you're like, I'm not gonna buy it at all-time highs at 500, and it never came back down, right? Like yeah, like you wanted to buy more on a micron at one point.
SPEAKER_01So uh for Micron, I had two price targets. I had like a $320 price target, which it hit like spot on when it did this drawdown. Um, and that was luck. That was not any sort of skill. Um, and then I had like a crazier price target of if it really dropped. I forget exactly what it was, which it didn't get anywhere close to. Um, and though those were the only two price targets. As the stock goes up, would I have liked to have bought more? Sure, but I need to be confident in when what I'm buying. Like if I'm if I I don't want to feel like I'm FOMOing in.
SPEAKER_02Um, I I I feel like it was two or three episodes ago. I think it was two episodes ago. It was after you had bought the three 320, and then uh I think the stock price was around 500, and you were considering buying more, but you were like, I'm not buying at all-time highs. Uh it was something along those lines, but I could be mistaken.
SPEAKER_01I don't think I was like, I don't I don't think I was considering buying at 500 because I it was I think it was just I wasn't going to, I would like to own more, but I'm not going to buy at that's what it was. That's what it was. Yeah. And that's and and then we've talked about this, but like I'm more times than not, buying at all-time highs for me has not done well. And I understand that the fundamentals tell a very different story, but it's just a hardline rule I currently have set to it's like bowling with bumpers, just to that's protecting.
SPEAKER_02Yeah, that's what that's what we were talking about. And I and I think that and you know, to be honest, that's probably generally a good rule, um, especially for people who uh not not necessarily you, but like a lot of people just don't look at the the the fundamentals, but like uh it's a generally good rule not to buy at all-time highs because that's when a lot of people are fumbling into a a stock, and oftentimes that's the worst time to be buying. Um like even the housing market, this happened in 2008 where or 2007, where people were buying houses at four times the the price of 2004, just like a few years before. And uh and of course, prices started falling in housing, which had never done to that extent in 2009-10 timeframe. So um, yeah, that that does tend to be a generally good rule.
SPEAKER_01I mean, also the the other piece to that, and then we'll we'll wrap up. I'm just looking at the numbers so I get them right. Um, the the other piece is Micron's fundamentals were great, but it was hitting all-time highs, and this is before I bought, and there was a 20%, 30% correction um, or pullback. So, like this is just something I've experienced as an investor, is when yes, stocks can move up very straight, very quickly, but they also can have these like breather moments, and it's hard to know when that's going to be. Right. And there was a world when you started buying at around like $300 a share, which was right, exactly. It could have had that 20% drop then. It didn't, it continued to run to like I don't know, $400, right? 40 maybe. Yeah, and then it it dropped to that 320 mark, and then that's when I felt more comfortable buying in because the risk was lower. Um, and then once it started going up, I I felt good about my position. And Micron is my second largest stock position now, not including crypto. Uh so it's Rocket Lab Micron. That's awesome.
SPEAKER_02Yeah, exciting. Awesome. Let's uh end it there. Thank you everyone for watching. If you love the podcast or if you love this show, tell your friends, subscribe if you love that. Thanks everyone. Bye.