VIDEO: Let's Discuss the Portfolio's Recent Trades and the Road Ahead

In today’s Daily Rundown video, Chris Versace recaps the portfolio’s moves this week, and explains the strategy it will follow going forward. 

He goes into more detail behind today’s action to close out the portfolio’s position in Axon Enterprise AXON and previews a new Sunday feature we’re calling the "Sunday Soup."

Transcript

CHRIS VERSACE: Hey, folks. Chris Versace here, Friday, November 8. We are, as you probably have realized, closing out an extremely busy week. Not only do we have the 2024 election and of course, yesterday's November Policy Meeting by the Federal Reserve, but there were numerous earnings from companies reporting during the week, and almost half a dozen or so of those included portfolio positions. That really prompted us to make a handful of moves as the market reacted in some respects, some might say overreacted in the very short-term to the outcome of the election.

But nevertheless, we did make some moves, locking in some meaningful gains in the portfolio this week. Morgan Stanley, as you know Bank of America, and yesterday, shares of Dutch Bros. And then again, today, we locked in a very, very profitable trade and exit in the shares of Axon. If you saw the Alert, then you understand that we did this because of the short covering that is really driving an extended move in reaction to the company's earnings today. If history holds, and it usually does, this means that as the short covering subsides in a day, maybe two, maybe three, we should see some gravity take hold of the shares and bring them back to more reasonable levels.

For that reason, and because we continue to the longer term prospects in Axon's business, which includes a combination of TASER adoption, body camera adoption, the mix shift towards the higher margin cloud business, and some potential opportunities in AI and drones in 2025 and beyond, we placed Axon shares in the bullpen. And the key here is really simple, that it's this real pop due to the short covering that extended the shares, pushed them past not only existing price targets, but even revised price targets. So the risk reward from here, at best, balanced? More likely, it skews towards the risk side.

So that is really why we opted to take the profits and move on, so to speak. Also this week, we did pick up some additional shares of Meta. But I think the thing I want to talk about today is that was it a good week for the market? Yes.

Was it a good week for the portfolio? Indeed, it was. But here's the thing, folks. It would be a mistake to think that the work is done. We all know that the market is an evolving landscape, and that means we will continue to do what we do day-to-day, week-to-week. And by that, I mean continue to focus on finding and investing in well-positioned companies with superior earnings at price levels that offer compelling risk to reward trade-offs. And when those trade-offs become more balanced, or maybe skewed so that there's more risk than reward or even short-term factors like a short squeeze, move the shares in such a way that is likely unsustainable, we will take prudent action.

In other words, it will be business as usual for the portfolio going forward. We see no reason to deviate from what has worked for us. And in fact, we will continue to focus in on those strategies. Now, with that in mind, we do have some important economic data coming next week-- October CPI, PPI and retail sales. The earnings season is going to continue with a about to happen shift towards retail and retailers. And what they say about the holiday shopping season is something that we're going to focus in on as we digest not only their earnings reports, but really the earnings conference calls and the related transcripts.

And next week, we see the return of a familiar group. That's right, because the Fed's November Policy Meeting is over and done, bringing, as we discussed yesterday, few, if any surprises, a number of Fed speakers will be out in force next week. And that includes Fed Chair Jerome Powell, who just happens to be speaking after the October CPI and PPI data are published. It's going to be some interesting, interesting comments. Maybe we'll get some. Maybe we won't.

But what we do get, we will digest and share our thinking with you. Now, it may not be as quite as busy next week. But as I just mentioned, if the work continues, we will keep our nose to the grindstone. And with that in mind, we do have some things coming your way over the weekend.

Saturday, the next installment of the ripped from the headlines signals that we look for, these are these articles and other things that just show us and give us additional perspective context about the strategies that we have in the portfolio. Sunday, we've got something new, something we're calling the "Sunday Soup". This is going to be a collection of articles, streams and other things that we're enjoying and we want to share with you.

And from time-to-time, there may be some things that relate to the market, the economy or the portfolio. Like, for example, in this Sunday's edition of the "Soup," you're going to see a deep-dive podcast on the shares of Meta Platforms by the wonderful folks at Acquired. These two guys, they roll up their sleeves and they do some intense homework. The conversations that they have don't span 15 minutes, 20, 30 minutes. We're talking, in some cases, multiple hours. And they did a wonderful deep-dive on Meta. I really think that you're going to enjoy it. I highly suggest that you give it a listen. And take your time, because they do cover quite a bit.

Now, that's going to be it for today. Remember, that we do have the next installment of the weekly Roundup coming tonight. Please keep your eyes peeled for Saturday and Sunday, those items that I mentioned. And again, we will see you back here as we continue to do the work that we do. Have a great weekend. And when we return from the weekend, believe it or not, we have just over 30 trading days left in 2024.

So we're going to be busy laying the groundwork not only to finish the year on a hopefully strong note, but we'll also be laying the groundwork for 2025. I don't want you to miss it, so please check those weekend Alerts, but also continue to check your regular Alerts so you can get all of our thinking. And if we make any moves with the portfolio, you can be right there with us. Thanks for watching.

At the time of publication, TheStreet Pro Portfolio had no positions in any securities mentioned.