Let's Go Splunking - Splunk Inc (NASDAQ: SPLK)

I finally get to write about a stock in my line of work -- CYBERSECURITY! So awhile back, I was tracking the DMs of a few friends in my Mansa Musa Network. I don't recall which ones, but it may have been my guys from the A-Billi squad: Mario Gabelli (Gamco Investors) or Jeffrey Smith (Starboard). But long story short is SPLUNK had been underperforming in the stock world. In the regular world it's like the person that has been single for too long and is finally looking for someone to "Put a Ring on It". So, like the horrible reality TV shows of today, they announced they were looking to hook up in a very public way. I saw my buddies mentioning the value in SPLUNK, but I didn't pull the trigger early on. I was tardy and finally decided to pick up some shares ONLY when they finally announced they had found a partner. This partner was the deep pocketed company, called CISCO. They are well known for their enterprise networking and routing equipment. If you don't know what I'm talking about, it's the device most people attach to their home network for internet that allows you to have wireless or WIFI service.

Definitely do not quote me because it has been a while, but I believe the buyout price was set at $157.50. So, what I did was use a well-known trading strategy on wall street. You've heard me refer to it before at the arbitrage approach. This means if I have high confidence that the deal (or hook up) is going to get done, an investor like me can benefit from the "spread" or difference between the price of when the deal is announced and what the final buyout or hook up price is. The risk becomes IF the deal does not get done (if the bride is left at the altar), this situation becomes a train wreck. Is this possible? Yes, it is --- see my posts on Tegna. This deal was thought to be all but certain and then the FTC stepped in and said the deal was harmful for customers across the country. So, you saw a stock go from $17 to nearly $22+ and come all the way back down because the deal was under investigation and ultimately canceled.

Now back to SPLUNK. I wanted to show you all what corporate governance looks like and what ownership looks like from an investor's standpoint. I got an email telling me it's time to vote on whether I think the merger should occur. I've pasted that screenshot here. I hope and believe this means we are one step closer to closing the deal. This is a great example of how hookups can help your portfolio.

Kohl's (KSS) - I Got the Hookup Alert (Jan 2022)

 Many say that 2022 will be the return of the Stockpicker's Only club. What this means in Wall Street speak is that the easy money days are probably over. I would love to see the stats but I'm sure even the Reddit Forums volumes are lower that they've been over the last year. Last year, any stock you touched or bought was red hot! But the difference between the newbies and the veterans is the wisdom of having seen situations like this before...and for other veteran investors: having discipline. If you replay the last year or two on my blog, you'll notice that I primarily moved to options in an attempt to manage my risk. Yes, I owned Gamestop and AMC and ironically got out of these positions after 100 or 200% returns. Many went on to hold for much more higher gains. Unfortunately, too many newbies are still holding and watching those magical gains erode. As I've mentioned here before and had to learn the hard way...it never hurts to take some of your winnings off the table in a disciplined manner. Even I fell victim to this as my investment in Roku skyrocketed beyond belief. It has cratered back down and while I have a measly 4 figure gain it used to represent a large 5 figure gain. I could've done some things a little bit better but AT LEAST, I was trading against ROKU on a regular basis. 

What did I do Right?

1) Hedge - I used options to hedge against my growing holding. This is a way that many of us investors collect INCOME (or as I like to call it a stimulus check). When Roku hit $200, I would write an option betting it wouldn't reach $250, $300, $400, and even $500. As long as those levels weren't reached, I received a small check for my time. I'd have to go back and calculate my win % but it was high, and the gains were steady.

What did I do Wrong?

1) Pay Attention - I was busy building my cyber business and didn't keep hammering my income generating strategy into the end of the year. Not a biggie. If you check every day, investing will consume you. Buy stocks you can purchase and forget for a while. If you have to own stocks you must check daily...that could be bad for your wealth and health. But fair enough I could've taken a peek in the last 5 months of the year.

2) Stop Loss Trade - While many people use this for capping their losses, I could have used this type of trade to simply exit a VERY profitable trade. I didn't put an exit trade on because I was busy (see point #1) but primarily because of taxes. This was a biggie and I saw a huge gain dwindle but happy to still be up thousands of dollars. Why didn't I get out...because I was FORCED to lock in gains from Collectors Universe. When you have a 10x bagger on your hands the gains are astronomical, and I was very concerned about the tax implications of both Collectors Universe and ROKU in the same year. I would have had capitals in the range of what I made in one year in Corporate America on top of the fact that I already have a steady job this would have easily put me into a brand-new tax bracket. Again, this is simply RPP - Rich People's Problems or a First World issue... but I wanted to be transparent on why I personally didn't sell.

What Likely Works in 2022 - VALUE + Mansa Musa Network

Value is often described as a beaten down, unloved stock. You've read before that I like to look for those unloved gems, wait for people to see the shine or polish and then watch them rise. Collectors was like that and that turned out amazing. I'm staying locked into to a few of these trades in 2022. One trade being Kohls, the other being Tegna.

Kohl's - I Got the Hook Up

It goes down in the DM and once again my Mansa Musa Network trade is Kohls appears to be heating up. A beaten down stock is being being courted by hedge funds and private equity funds on Wall Street...don't believe me just watch:

Acacia Research appears to have just slid into Kohl's DM and they wanna hook up at a value of $64 dollars. Considering Kohl's is trading in the mid 40s when I wrote this they may be heading for the Love Boat.

Talk about your DM blowing up. Kohl's has just had another suitor slide into their DMs. Sycamore has joined the party and they want to Netflix and chill.

So stayed tune and be very careful as the easy money days are ending. Don't say you were NOT told as the Federal Reserve has been carefully telling you they are increasing interest rates because everyone is making money...off stocks, Bitcoin, NFTs, trading cards, etc. It means it's time to cool things down a bit. Now is time for my value strategy to shine and occasionally I'll go hunting with some of my Mansa Musa Network friends. Potential hookups like I've written before will offer tremendous value.