Happy mid-autumn festival to you!


First, let's take a look at the state of Llama Portfolio. It is now at a position of -0.07% against its original value of 50,000 :) 2 weeks of tumble rumble effort has gotten some results in rescuing the Llama portfolio.

Cash is maintained at a high level to capture the next opportunity. Be it in Tumble Rumble, or in any big news ahead. Meanwhile, attention is on oil as US-Iran relationship warms up, pushing oil prices low. ECB has also lowered its interest rate; implying that US is about to do the same too.

My principle is to see where oil prices move. If it goes down, I buy some. If it goes up, I will stay out.

Let's move on to talk about the actions in Llama portfolio for this week then.

Napco Security Technologies Inc (NSSC)


Above picture to give you a sense of what the company does. It is a profitable and growing company.

Reason for tumble mumble: Growth rate and forecasted guidance was not up to market expectations.

Made a small 2% loss on this position. It was trading higher prior to a year before hence i was trying to minimize risk. When it first tumble mumbled, I entered at $26.50 and got out at $29 within hours.

I then re-entered at 26.15 the next day.  I exited at 25.25. Clearly a bad price to exit as it is now at 27$ range. Well, it had low volumes and I learnt a lesson not to re-enter without good holding power.

This was first identified to be an opportunity as this company exceeded expectations in terms of revenue announced on 3 Sep 2019. It was profitable too. EPS met expectations. It is basically a company that deals in physical security and technology (internet of things).

It was punished to close to 25% as seen in the charts below. Yellow regions are entrance points, while blue-circled regions are exit points.






Paysign (PAYS)



I have not realised that this is a tech stock that IPOed recently. Stocks that IPO recently enjoy greater swings and volume.

This is a tech stock in the prepaid payment sector.

I have entered in 3 tranches - once at 9.98, once at 9.51 and the next one at 8.75.

They were all sold off at 10.04. It closed at 11.32 on friday 13th Sep. This did give a good boost to the llama rescue plan.

Reason for mumble tumble: Lowered future revenue and profit guidance. Currently it has good revenue growth and well exceeded analyst expectations in the quarter ended June 2019.



ZScaler (ZS)



I would not wish to mention this stock as it was part of the Investments I made previously. Impressive company that has never once failed to exceed analyst expectations in the cloud security sector.

The sad thing is that I bought into this stock at a price of $74 with the intention of holding it for the long term. It is now trading at ranges of $48-$50. I averaged down at $48 after its most recent impressive results - ESP of $0.07 (non-GAAP) as compared to analyst expectations of $0.01.

Well, the company is now profitable. However, it tumble mumbled as it lowered next year's revenue and performance estimates.

Looking at examples like Meredith and Medallia, I believe this has some room for a spike up in due time as buy-side firms pick up such tech stocks. I believe they will, a good chance to do so, because where else can you find growth?

Holding it for some time. Will average down if it drops further. At a loss position of about 12% now for this counter.

Farmer bros (FARM)



This stock fell 30% on 11 Sep Wednesday. It announced a poor EPS of -0.52 as compared to expected EPS of -0.19. However, I have read through the earnings call transcript (a conversation between cEO, CFO and various research analysts from various brokerage houses) and found that the company is implementing many good strategies to return the company to the profitable state it used to be.

Strategies included in better SKU (product code) management, and improving of logistics and customer relationships. It did indeed seem positive.

I entered at 10.40 and exited at 11.15 within hours, giving a 7.2% gain. It has just closed on Friday at $13.13.

This is something I wish to document to create a proper Tumble Mumble trading operating procedure.

Medallia (MDLA)


Recent tech IPO. Similar to ZScaler. I entered at 30.70 and 27.15 and exited at 28.25 and 30.50 respectively. 

It is a bad move as volume was rising and price was rushing upwards fast. This made me realise that technical analysis has some logic to it. After selling off at 30.50, the stock continued to rally to 31.80.

Reason for tumble mumble is similar to ZScaler - Lowering of FY 2020 guidance. It has also always exceeded analyst expectations in EPS and Revenues, well, not the expectations of the market though.

Let's take a look at the 1 week price chart below. Yellow highlighted are entry points while blue circles are exit points. A little loss made, another lesson learnt.



Mastercraft boats (MCFT)

The tumble mumble for this stock was only about 20% pre-market. I got in too quickly just as market opened at $14.85, and it got to lower levels around $14. 

Reason for tumble mumble was once again, lower future guidance. However, it did exceed analyst expectations in terms of EPS, but not Revenue on 12 Sep 2019.

The company is pretty legit in my opinion. Have not closed my position and will monitor it further.

You can take a look at below price chart :) Once again, yellow highlighted is entry point.

You can see that EPS is indeed steadily rising along the years. This made me buy into this stock.


ESP for Mastercraft Boat from Investing.com:



Tailored brands (TLRD)



Yes, Forever 21 is facing liquidation. Yet, this particular company attracted me as it is still profitable. Debt- Equity is somewhere below 1. In the most recent quarter, EPS exceeded expectations at $0.82, 8 cents above expected $0.74. Revenue met expectations.

Despite exceeding expectations, this company is indeed in the downtrend for its quarterly EPS and revenues. However, I believe that this does not warrant a 30% drop in company value. Similar reasons for tumble mumble - Poorer future guidance.

In the earnings transcript, it is indeed a threatening trend that most companies are adopting a more casual dress code. The management did reflect this in the transcript and are working towards stocking up more on casual clothing. At least, they are doing something.

Trading wise, I entered it at 5.25 range. Same mistake as I did for Mastercraft Boat, it was entered just after market open, and I could have gotten a better price at $5.05.

Its fluctuating between $5 to $5.50 range. I am holding on to the trade till next week.



Conclusion

Its interesting to see that the trend of company's tumbling and mumbling despite beating analyst expectations. Most businesses are lowering future profit guidance. Does this say one thing or two about the economy?

Or are companies managing expectations in case they are unable to hit them?

Well, a clearer picture will help in trading. Meanwhile, I would be focusing more on price and volume movements, and Mr Market is my teacher.


Good luck to me and to you. Cheers~

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