VIDEO: Recapping Our Gains and Shares Swapping

In today’s Daily Rundown video, Chris Versace recaps all of the Portfolio’s moves this week, from locking in big gains with Morgan Stanley MS and Marvell MRVL shares to swapping the position in Elevance Health ELV for more shares of Applied Materials AMAT and Elastic ESTC. 

With 85% of the S&P 500 basket yet to report, he also explains why we’ll continue to focus on comments from suppliers, customers and competitors for our holdings ahead of their upcoming quarterly reports. 

"We have to acknowledge that other parts of the investment landscape are going to be impacted by things like Hurricane Helene and Milton, so we're going to have to be very careful as we navigate earnings expectations," he says.

Transcript

CHRIS VERSACE: Hey, folks. Chris Versace here, Friday, October 18. And we are closing out what has not only been a very busy week for the portfolio, but another positive one for us as well. In the last few days, you probably noticed that we've made a number of moves really coming off strong confirmation for a number of our positions as we've digested earnings that have unfolded this week from Taiwan Semiconductor, Netflix last night, and earlier this week, Morgan Stanley.

The combination of all those reports, and the learnings, and the impact on the stock price has led us to make some moves with the portfolio that you've probably seen by now. But to quickly recap, we did some prudent portfolio management with the shares of Morgan Stanley and Marvell locking in, as you know, some very big gains along the way. We also picked up more shares of applied materials and elastic, our newest holding this week.

We swapped into more of those shares using the proceeds from closing out the portfolios position in three rated Elevance. Yesterday, they reported very disappointing earnings. And there was something, candidly, I have to say that was a little fishy. As it relates to the reimbursement timing that led to the earnings shortfall and led the company to also dial back its earnings expectations for the current quarter.

Our thinking is that, yes, it was a three rated stock. But more importantly, there are other better well positioned fish to fry, if you will, as we move into the last few months of the year, which tend to be seasonally strong. And we continue to go further into 2025. Also to today, just recapping all of the things that we've done this week, we also use the strength that we saw in Taiwan semiconductors, September quarter results. But also its guidance to lift our price target on NVIDIA, and coming off of Netflix's earnings and their comments about their advertising business model, which we're very constructive for our shares of Trade Desk. We also lifted that price target as well.

Now, when you push back and think about all the things that we did this week, you might notice that of all the positions I just mentioned that we did something with, the only one who reported was Morgan Stanley. So this really underscores the importance of following the customers, competitors, and suppliers for our holdings, especially as we move deeper into the current earnings season. As we do that, we will be playing-- excuse me, we will be paying close attention to the aggregate earnings for the S&P 500 relative to the consensus forecasts.

Over the last several weeks, few months even, we have shared with you our expectations for the second half of the year compared to the first half have been falling. I believe the last figure that we touted to you was around 6% EPS growth, down from more than 11% in July. Now, as we move through the earnings season, we have to consider that all the economic data we've been getting for the third quarter has been candidly better than expected. That's in terms of the number of jobs created over the last few months, but even the overall GDP expectations.

Earlier today, we shared with you the most recent update for the Atlanta Fed GDP now model, 3.4%. That's a very different GDP figure for the September quarter compared to what people were thinking we might have gotten back in early July, even early August. So there could be the likelihood of stronger than expected earnings, not only for the September quarter, but the guidance might be a little better than expected.

So we're going to continue to watch that. Because if the aggregate reports indicate that is true, that could be something that helps propel the market even higher. Now, you might say, but Chris, we've already got some earnings reports and they seem to be doing better than expected. I would say, true. But remember, by and large, that was really clustered around the financials. And we have about 85% of the S&P 500 yet to report. So it's going to be extremely busy over the next two really three weeks.

What we have heard case in point from Taiwan Semiconductor bodes very well for tech earnings. We feel very comfortable there. But we have to acknowledge that other parts of the investment landscape are going to be impacted by things like Hurricane Helene and Milton. So we're going to have to be very careful as we navigate earnings expectations.

And as we do so, we'll also be mindful of what all the data and comments that we get could mean about Fed policy. I talked about that in the work that I shared with you this morning regarding September housing starts. And my thoughts, candidly haven't changed in the last few hours about that. So with a very busy schedule coming up, and one that could make or break the direction of the market, I would say friends, fans and friends, please be sure to check your emails, check your alerts as we go forward over the next couple of weeks.

We want to make sure you're getting our latest thoughts as we digest the latest data. But more importantly, too should we make any moves with the portfolio like we did this week. We want to make sure that you are right there with us.

Thank you so much for a great week. Enjoy your weekend. Be sure to check back tomorrow for the latest from the headline signals for our portfolio holdings and our investment strategies. And I will see you back here Monday.

At the time of publication, TheStreet Pro Portfolio was long MS, MRVL, AMAT and ESTC.