Scooping Up More of 2 Holdings Following Company Developments
Here’s why we’re making only modest moves ahead of the Fed’s policy meeting outcome.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
| AXON | Buy | 27 | 442.08 | 415 | 3.0 |
| BA | Buy | 52 | 209.69 | 940 | 3.2 |
After you receive this alert and when the market opens, the Pro Portfolio will make the following trades:
— Buy 27 shares of Axon Enterprise (AXON) at or near $440. Following the trade, we will own 415 AXON shares, accounting for roughly 3.0% of the Pro Portfolio’s assets.
— Buy 52 shares of Boeing (BA) at or near $212. Following the trade, we will own 940 BA shares, accounting for roughly 3.25% of the Pro Portfolio’s assets.
We are making these small moves in AXON and BA shares ahead of the Fed’s policy meeting announcement later today because of company specific developments.
Let’s review…
Last night Axon priced its offering of $1 billion aggregate principal amount of 0% convertible senior notes due 2031 with a conversion price at $652.06. In our view, the transaction brought an extreme amount of pressure of AXON shares, with the stock trading nearly four times its average daily volume yesterday. With that transaction-related pressure poised to ease, we will use the almost 10% drop in the stock yesterday to buy some this morning.
As for Boeing, on Monday we discussed that with the company reaching a tentative contract agreement with the Society of Professional Engineering Employees in Aerospace (SPEEA), which should avert a union strike in October, we were interested in picking up additional shares for the Portfolio. A finalized order for 103 aircraft with Korean Airlines worth $36.2 billion and the pending finalization of another large and delayed order with Turkish Airlines give us a reason to do so as the market’s focus on Boeing and its shares moves back to orders, production and deliveries, and the positive impact the last two should have on earnings and cash flow.
So why are we only making relatively small trades in these shares?
Because there is that Fed meeting this afternoon, and what is said has the potential to move the market. Whether it brings further pressure on the market will be determined by what we see in the updated Set of Economic Projections and how incrementally hawkish comments are from Fed Chair Kevin Warsh.
Because of what is likely to be a binary outcome — either the market trading off or moving higher in response to the refreshed SEP and Warsh’s comments — these small moves allow us to benefit should the resulting combo lead the market to rebound, but also give us room to add further to these positions if the market does sell off.
Subject to what we hear this afternoon and the market’s reaction will determine if we put more capital to work with our current shopping list.
As we make these moves, we will reset our checkpoint for AXON to $390 and maintain BA’s at $185. And as we clear this afternoon’s Fed events, we’ll revisit our AXON rating.
More Pro Portfolio:
- Closing Out This Position as Fed Rate Hike Odds Rise
- 26 Signals Across 9 Portfolio Themes
- Weekly Roundup: A Good Week to Lose Less as Market Stumbles
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade’s executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long AXON and BA shares.
