Sprint, How A Wireless Carrier Was a Top 2019 Investment?

First things first, happy holidays to everyone out there! Next in my series of Top 2019 investments is Sprint.

Sprint Corp
Ticker: S (NYSE) Industry: Wireless Telecommunications

I have written about Sprint quite a few times so I am not going to spend much time on this investment. Sprint finally turned into an investment literally about one year ago. This was a tough decision because after doing some research on Sprint I felt like they operated more like the Cleveland Browns football team.  If you are not familiar with the Browns, they have not been a very good sports team in quite a long time. But there has been hope in the last few years as they have selected some talented players who are hoping to turn the franchise around (Mayfield, Garrett, Landry, Beckham, etc.). I was NOT a believer but many people anointed them a championship caliber team this year.  How has it gone this year for the Browns and their new look team?  Well in short, it is still dysfunctional and a work in progress.

I am already reading your mind -- and you are wondering if Sprint is similar to the Cleveland Browns, why in the world would I want to invest in them?  Well the nice think about the stock market is you can make bets on the underdog in hopes they can turn it around for a big upside. So using my Cleveland Browns analogy, I would have reminded Browns fans that I DON'T think this is the breakout year but I DO think they are headed in the right direction. As for Sprint, they, as well as the whole industry, will be looking good in future years due to the transition to 5G technology. T-Mobile appeared to like this future outlook as they made a bid to acquire Sprint which initially caused the shares to spike in 2019.  I was handsomely rewarded in 2019 on various bets I placed on Sprint and closed but was also surprised to see the T-Mobile deal still remained open.  Even though Sprint and T-Mobile squeezed through Federal regulator approval in 2019, the deal is hung up because roughly 13 states and D.C. think the combination would be bad for consumers and pricing.  I actually agree with the states argument that if there are only 3 major carriers (ATT, Verizon, T-Mobile) the aggressive pricing decline we've all benefited from probably slows down. So Sprint strangely is making the argument that they are on a path to go out of business.

Hope all you Sprint customers are listening, In short, here is what I've learned about Sprint:
a) they never did a great job with the Nextel Communications acquisition (remember push to talk Nextel, yeah Sprint ran that into the ground)

b) they made a major bet on which 4G technology would win and lost (Sprint WIMAX was shut down)

c) these events have caused them NOT to invest as much into their wireless infrastructure (not a good statement if that is one of your biggest responsibilities is to invest so cell phones work properly)

d) they own Boost Mobile and spent more time trying to convert pre-paid customers into customers like you and me who get a monthly bill and can get billed for overages (not really stealing customers from the other carriers)

Final Summary -- So even though I empathize with the states, it would look bad if the Sprint deal falls apart only to have that company FAIL in a few years. That also would result in the industry consolidating to 3 major players and the same concerns return over customer pricing. I've made a small bet once again on Sprint that this deals get done in the New Year.

TESLA - MY BEAUTIFUL DARK TWISTED INVESTMENT

TESLA #2 IN 2019

Kanye West's "My Beautiful Dark Twisted Fantasy" was named the album of the decade. And being a hip hop head I struggled with this designation until I recently revisited the album. Why did I hesitate to recognize the greatness of this album?  Well considering Mainstream Media gave this designation without consulting me...I did consider the source at some point they missed the target (Kendrick Lamar gets a strong nod for the crown). I think it is because of how polarizing Kanye West has become. It's hard to discuss him without someone having a strong opinion so I've drifted away from his music.  

How does this tie into my blog, investments, and my 2nd best performing stock of 2019 (Note: Symantec's last minute run pushed Tesla out of the #1 spot). Simple, Elon Musk and Tesla remind me of Kanye West.  Elon is one of the most polarizing people on the planet and his technology for a gas guzzling American culture is NOT far behind. I drive a plug-hybrid SUV (600+ miles per fill up) and I think my Midwestern state is purposefully taxing me extra for putting a fuel efficient car on the road through an electric vehicle tax I paid to register the car. Like Kanye, if you get caught up in Elon's antics you forget the greatness of his mind.

This year in March, I witnessed a polarizing discussion around Elon Musk tweeting about Tesla. I had not followed the stock much because it usually trades in a nose-bleed range of $300 to $400 dollars for one share of stock.  The SEC and Musk were going back and forth in the news about how his tweets could impact the stock and Musk was not shy is his feelings about the SEC.  

March 19 2019 - I believe the SEC held Elon in contempt for not having the company pre-approve tweets that could materially move the stock. I know it sounds childish, like Kanye taking the mic from Taylor swift, but this was somewhat serious and putting pressure on the stock. I decided to stake a claim on the side of genius because at the end of the day the electrification of cars is pure genius and actually is a business that can make help improve our planet.

April 2019 - Around the end of April, I have 25th in my notes Tesla was having an annual shareholder's meeting. I had my if it wasn't broke don't fix it moment and invested again. Elon discussed that the issue plaguing Tesla isn't a demand issue (the Media and Analysts were saying demand was waning for Tesla's). In fact, he said noted that orders and sales for the Model S, X, and 3 were ahead of production...which likely means there is a backlog developing (good for business) and an opportunity for them to produce and deliver a new record amount of cars. Kind of like how people keep by Yeezy's I guess.

July 2019 - Around the 11th, Tesla had to report earnings again  I dipped my toe into Tesla waters again as the picture being painted was they were figuring it out. Elon was sleeping on the production floor this year, burnt out but hell bent on figuring out how to produce more cars each week. I remember when they could barely produce 5,000 cars in a week. Earnings was a mixed picture which was in-line with my thesis: I just don't need Tesla to crater.

October 2019 - Yes, I traded Tesla yet again. They have stayed focus and were rewarded with an earnings record. They jumped by the largest amount in 6 years on increased production and better margins. What had analysts been knocking them on...margins. Like Kanye, I don't always agree with many of the things he does but one can argue the music and his drive for fashion is genius.  Tesla I believe is a game-changer as an investment, its good for our planet, and the pressure it's putting on the auto industry. There are a few people not afraid to compliment the strangeness of this company like my buddy Ron Baron and a lady that I occasionally hear on CNBC. When I remember her name I will add it here.  With the #2 spot, thanks Elon, the SEC, and the pioneers who plop down a deposit on one of the models. 

Let's Have a Toast to the...

Hope you enjoy My Beautiful Dark Twisted Investing Mind!

 

Symantec / NortonLifeLock - It Goes Down In The DM

It's December and I wanted to recap my best performers this year. I hope these notes serve as a way to help develop a strategy and display that it's not hard to invest in things you know.  Ironically, I trade enough that I don't know exactly who were top dawgs until I began doing a little bit of data analytics over the year. So I'll let you know who surprised me and why they made the list from my notes.

Symantec Corp. (SYMC) now known as NortonLifeLock NASDAQ : NLOK

In 2019, Symantec Corp. stumbled onto my radar. Quick background, they are one of the old guards in the IT and cybersecurity space.  They are huge and in almost every large companies data center and for consumers like you and me...many of us use their Norton Anti-Virus system on our home computers. I started hearing rumblings that the financials have not been good and the CEO was stepping down, which led the stock to fall, over 10% I believe (May 2019).  So hear is a name I know is in every large company across the globe and in many households.  So I put my alert to buy Symantec and being a little greedy I waited to pounce at an even lower price. This example shows investing is about both timing and price. 

How my trade unfolded:

Early July 2019 - News hit that Broadcom Inc. had DM'd (my version of trying to hookup) with Symantec Corp. for somewhere around $28 a share. I was right YES! But only on the time of the stock, being greedy on the price, I did NOT own any shares and the stock had probably moved up from around $22 to $26. It wasn't official because Symantec Corp. said if you like it put a bigger ring on it...$28 ain't good enough. For me, watching this was tough because it made sense, but you win some and will lose many. But never forget about the ones that got away.


July 15 2019 - News broke that Broadcom Inc. was officially no longer in Symantec Corp.'s DM. They wanted no part of a golddigger, reaching for more money. Symantec Corp. was officially left at the alter and the stock dropped big time over 15% and was back where I first found it. A song popped into my head: "You don't know what you've got until it's Gone" and I decided to finally
buy Symantec Corp. Why, it was like Broadcom Inc. had done all of the hard work of getting the phone number and then giving it to me to make the call. So I went in big because I knew Symantec Corp. should be trading around the $28 dollar range. Now that's what I call a wingman.

August 8 2019 - Yup you guessed it Broadcom Inc. had the same song in their head too and wanted Symantec Corp. back. But they were more cautious and only wanted to buy Symantec Corp.'s enterprise business which supports those big companies that I talked about...NOT the anti-virus business they sell to consumers like us. How much: $10.7 billion deal, the stock move up to the 24-25 range.

November 5 2019 - Symantec Corp. (SYMC) is no longer in the enterprise space so they are "Feeling Good As Hell" with their new focus on consumer security products and identify protection and change their name to NortonLifeLock NASDAQ : NLOK   (Note: they bought LifeLock a few years ago)

December 10 2019 - Saw news today that McAfee (owned by Intel now) and a few Private Equity Firms are DMing NortonLifeLock. So the stock has jump above $26 dollars on the news

I wanted to thank Symantec / NortonLifeLock, Broadcom, Intel McAfee, and the Private Equity Firms for giving me my best position of the year and all the drama that unfolded better than a scripted drama show or TMZ news feed because I can make $$ of this drama.  Thank you Yo Gotti and Lizzo for songs that popped into my head as I wrote this. Reminder, if I can do it you can too.  I'm tagging Symantec / NortonLifeLock because I think other suitors may be lining up. #investandchill   #investingintheDM #hookupalert

Hey HENRY - High Earner Not Yet Rich

Oh no, I’ve got to keep on moving.  So I was in my SUV listening to the Sirius XM service and this song came on by Puff and Mase.  A mood comes over you when you hear certain songs and this song made me feel some type of way. 

First, it served as a reminder that we collectively are not getting any younger so don’t be held down by things in life.  Need proof, this great song was being played on a new station they were debuting: Hip-Hop from the 90s-2000s.  Ha! My favorite songs are now playing on an oldies channel.

Second, it’s a reminder to get your mind, health, wealth, and spiritual core in balance.  I stepped away from blogging for a while because life threw me an upper-cut harder than the ones thrown by Mike Tyson or Floyd Mayweather.  The loss of my father this year knocked me down but his well-lived life and legacy serves as a reminder for me and also hopefully for you to NOT BE HELD DOWN.

Third, live your life to the fullest and build a legacy you can be proud of.  Towards the end of college, I remember setting a goal with a few friends that we wanted to retire by the age of 35. I joke that I am Middle-America retired, I’ll explain shortly.  I recently learned that Wall Street likes to describe many of us as a “HENRY” – High Earning Not Rich Yet individuals. So being a HENRY and coming from a humble background has allowed me to evolve and change my target goal over time. While, I still worked towards the goal of retiring by 35, I realized that I didn’t live for myself anymore. I live to build, provide, and teach my family and friends about the importance of economic security and social awareness so that for generations to come we can overcome the obstacles that life will indefinitely throw at us.  Did I reach my goal?    I can definitively say that I have and now it’s time to lean in and assist you on your journey:

Goal 1: Be Middle America Retired – Remember, your family’s humble beginnings. Start modestly and set a reachable goal: For example, having enough income to buy a home in your parent’s neighborhood with the income from your investments but still having enough saving to never work again.

Goal 2: Debt Free – Eliminate debt from you and your family’s life. Just like Kanye, I’m tryna stay recession free…and the biggest pitfall people have during recessions is usually with debt. My buddy Warren Buffet is a fan of this rule too and DOES NOT like to buy stocks on margin (i.e., with debt).

Goal 3: Savings (6 - 12 months of Salary) – You need savings for life emergencies and they will come. Anticipate car break downs, hospital bills, house repairs, and a cushion against job loss.

Goal 4: Multiple Streams of Income – This is one of the most critical areas if you are a HENRY.  Be ready for what made you a HENRY. Capitalism!! Corporations unfortunately have one master…and that’s the stock market. So if they have to deliver a good quarter or more money back to shareholders…they will cut jobs and close plants and yes that includes the HENRY’s.  Don’t get it twisted, they call it “synergies”. When I buy my competitor’s company…I make money by eliminating all of the duplicate jobs. (What do you think will happen now that Charles Schwab just bought TD Ameritrade?  I heard estimates that up to 30% of the workforce could be cut.

Goal 5: A Balanced Core Gives You Freedom – Focus on family, go on trips, change jobs, start a business wisely, and get off of social media and actually build meaningful relationships. Why because you have planned, sacrificed and have flexibility to do it.

How do you get there, build up your pillars:

· Mental Pillar – Target mental growth through degrees, certifications, and self-learning. Find problems to solve, there is always a need for these items.
· Spiritual – Be grounded in something, when life rocks you…you need beliefs and a community to turn to; Volunteer and give back…trust this will make you feel good
· Financial – Economic security creates the ability to provide for you and your family. Find work that is fulfilling but more importantly solves a problem for others. If you had to advertise your personal skills would I hire you over the next person? Buy assets that appreciate, can be passed along, and that do NOT create additional debt. Diversify your income – do you have a retirement account, investment account, rental income, and a side hustle. If yes, Can’t Nobody Hold you down
· Health – Don’t let bad habits keep you down. A strong core should allow you to hopefully enjoy your hard work for years to come. But remember life is precious, so you must work hard to prolong it

Sprint + T-Mobile (Hookup Alert)

Right now, my stock portfolio has more hook ups going on than the teenagers in HBO's new hit series Euphoria!  Well, you can see why I am a investor and not a comedian.  But back to the lecture at hand...a few months ago, I alerted you that things may be bubbling with Sprint and that a takeover could be in its future.  👰

How might an investor come to this conclusion? Just listen to Sprint executives themselves.  Sprint for awhile now has been publicly telling the investment community that its business pretty much sucks.  From what I can understand, the money-maker is its pre-paid wireless customers...then the HUSTLE is to convert those customers into post-paying customers like me where they can be up-charged and over-charged for services like unlimited talk, text, and data (post-paying customers). Interestingly, Sprint has publicly acknowledged they are giving out so many incentives that the business model is a money looser.

Now here comes the million dollar question, why do I care about Sprint AND why would I invest in a poor performer.  Well, I often take a contrarian view to life and believe that most things are...well "complicated".  Most people want to call Sprint a dog with fleas and they would just rather stay away.  But most things in life have layers and it's in your best interest to peel back those layers. Like in relationships, you just don't look at what's on the surface you have to look at the whole package.  Sprint's whole package is that it is one of the four leading wireless carriers in the US. I learned in elementary or middle school (can't remember) that this is essentially a cartel (monopoly, duopoly, triopoly...cartel??) haha  I prefer oligarchy but let's not get technical. The point is there is still tremendous value here. As my astute friend pointed out, how can Sprint get taken over and leave only 3 wireless carriers...that means prices go up | less choice | and maybe service declines.

The contrarian in me points out two simple facts: 1) Capitalism - the deal gets done b/c a lot of people stand to make a ton of money (it is convenient Sprint's commercials say they are doing well, but the Execs say the business is declining).  I do not usually have time to listen to quarterly conference calls but I found it MORE interesting that Sprint executives have been putting their houses on the market since the end of last year. How about the fact that the Corporate Office has already been sold. 👀 Strange this has all happened and the deal is NOT even complete as of this post.  2) Less Choice - Prices have been declining ever since T-Mobile took the American wireless industry by storm with good ole "competition". So you go with the contrarian view that Verizon, AT&T, and the market has had enough of its decline in revenue due to T-Mobile's entrance and the smart investment is for them to buy Sprint. The only thing is how do you sell it to the public. 😇 Well, the Department of Justice (DOJ) has supposedly negotiated a deal for T-Mobile to sell excess spectrum to another party to create a new 4th major wireless carrier. Wait for it...who can't wait to buy cell phone service from Dish Network 💪💪

Urb Lesson of the Day: Everything and everyone has layers. Take time to peel those layers and get to the obvious truths in life. I traded Sprint multiple times in the last 7+ months and tomorrow's announcement will eventually lead to the closure of my outstanding trades.  Disclosure: I own Sprint (S) and by trading from the bottom up...I followed everyday clues hidden in plain site to reduce my risk on what some called the "unlikeliest" deal to get done.

Executives Sell Mansions Before the Sprint Deal is Done: Follow the Mansion Money


And My Comments from May 2019:  And Sprint (S), Sprint keeps getting offers to play overseas for T-Mobile but the FTC (like the stock version of the NBA Commissioner) is telling me that the deal is unfair. Funny he doesn't say that to Verizon or AT&T the biggest cell phone carriers. Let a player get his money Commish?!?!  Approve the deal and let me bask in the glory of my draft pick prowess.

Linky: May 2019 Post on Sprint

#investandchill #Sprint #T-Mobile

Invest and Chill – How to Be a Portfolio Player

To be a player you have to learn from a player.  And I’ve read my fair share of books about players or as I call them, Original Investors’ in the stock game.  Please don’t get confused, they are not OGs or Original Gangsters, they are more of what I would call old heads or OIs  à Original Investors.  Ron Baron, Peter Lynch, Warren Buffett, and Mario Gabelli are just a few that come to mind.  In addition, I appreciate successful business people and investors who look like me. Some of those great businesspersons include: LeBron James, Jay-Z, Sean Combs, Dr. Dre, Oprah Winfrey (Sports & Entertainment) and Robert Smith, and John Rogers Jr (Financials and Investments). I remind people some of the same skills come in handy when running a business and investing in businesses. One might say: Game Recognizes Game

But back to the lecture at hand, I want to focus on an Original Investor name Mario Gabelli. He often jokingly calls himself “Dr. Love”.  Our generation might ask is Dr. Love the king of “Netflix & chill” or “swiping right”…no not exactly, he’s a player alright just of the stock market.  So what kind of player is this?? Well he often targets companies that will be acquired by another company.  Acquired/Merged/Bought Out…are just the stock market’s way of saying these two companies plan to hook up.  Companies that hook up in the stock market are usually a good thing because the company being pursued usually requires a lot of cash or stock for this to happen. 

So one of the things I challenge myself to ask while researching stocks is whether my stocks are “dateable”.  While it is not my main strategy, it helps to have this as an additional catalyst for a stock to do well.  I try to identify trends in companies being acquired and often ask: “Why is this stock so attractive to other companies?”, “Is this an industry trend that will continue?”, and quite frankly “who might be next”.  While it sounds a really bad dating show, it is important to understand if the company is a diamond in the rough, considered young and attractive, or could the company make company’s pursuing it BETTER.  Here is my Invest and Chill Portfolio:

Possible Themes Uncovered: Healthcare (rationale: all the talk of drug costs coming done??); Media (rationale: Content is king as everyone moves to streaming and online gambling); Technology & Telecom (rationale: young and attractive companies being bought, 5G coming soon??); Value (rationale: strong market means underperformers get bought out??)

Urb Update: Full Disclosure: I’ve owned all of these stocks as noted before; many are currently in the process of being acquired. Feel free to search the site for previous posts and commentary

#investandchill

Did You Say Narcos...Or Anadarko

Interesting?!? When they interview sports stars, is it odd they often say: "If I could do anything else I would be a rapper.   Then the big NBA game comes on and I see E-40 cheering on Golden State, Drake court side in Toronto, and YG and 2 Chains on the court at the end of Los Angeles games.  Well to take a page from their playbook, investors wanna be both!  My investing game in basketball terms feels like I'm in a zone.  Or maybe more like I'm playing zone...like the defense.  The zone defense is known to be safe or even cautious as it does not require the players to exert a lot of energy when defending but requires you be consistent, diligent, and opportunistic.  I am cautious on the markets as they continue to grind higher.  I still think the business climate (due to the tax cuts) and job hiring is trending up. Further, I think the market will melt up even more IF a deal with China (any deal) gets done.  But I think signs in housing and other areas tells me, the dynasty is almost over.  So what does my zone defense look like?  Well here is a run-down of my zone defense portfolio in Game 5 of a 7 game series:

Coaching (Doc Rivers, Phil Jackson, Lenny Wilkens) - Like the great coaches listed here, I try to remain level headed, even zen like, on where the market currently is. I feel like we are in Game 5 or 6 of a 7 game series. So I'm coaching my team (oops my portfolio) to be ready for the downturn...we don't like being blown out.

Guards (Chris Paul, Damian Lillard) - Like CP3 and Dame, my PG is small but packs a punch! So my point guard is Collectors Universe (CLCT), this is a small cap company that I have been overweight for a VERY long time. And they don't seem to disappoint. They had a bad quarter and Wall Street punished them awhile back dropping them from $30 to eventually below $15. If you've been following us here you'll remember when we picked then up during the recession of 2008 at the $4 dollar level. And for us they mint coins...almost literally and grade "mint-condition" baseball cards and collectibles. So that means steady cash streams coming in, a nice dividend and an appreciating stock.  If you read the previous conference calls, part of the bad quarter was slow China demand and a big time investment in a new corporate HQ. Well guess what, those costs related to the HQ are behind them and the last two quarters have been positive. I picked up more shares after the HQ build-out because for a small cap company I felt it made a difference in their earnings. I like my PG so much that I bought more Collectors and put it in my 401K plan for the long-haul. Cheers to CP3, Lillard and CLCT!!

At the other guard position, I rotate the Young Guns. This group is spring loaded and receiving trade offers as other teams want my players. If this were International football (or what Americans call soccer) these players are hitting the the transfer window, or season where other teams pay top dollar for my players:

Anadarko Petroleum (APK) - I picked on Andarko as Chevron was showing interest and now there is a bidding war that has ensued. And look who jumped into the fray... my mentor Warren Buffet is lending money to Occidental Petroleum to outbid Chevron. If was just announced because some investment firm tracks jets and saw that the Occidental jet flew to Omaha...really who has that much free time!!! The Narcos are circling Anadarko. Looks like my draft pick may get bought out soon.  My guess is Occidental wins out with a sweeter bid and the Buffet brand name (we'll see).

Arconic (ARNC) - An earlier trade fell thru but this player has been working on his skills. Dropping down to about $18, and putting up big numbers by bouncing back to the $22 range. I may be getting suitors coming to the table soon and now they pay more than the $23 range to buy this stud out.

Tesla (TSLA)- Like the Nets Guard De'Angelo Russell, everyone has an opinion. So after the terrible earnings call, I took a chance here. Some may second guess my value call, but along with Ron Baron, and others, I just personally think Tesla is a transformation company that will explode. Mr. Russell who was left for dead...is now a NBA All-Star this year due to his hard work and transformation. For example, I drive a Plug-In Hybrid BMW X5 e40 (fully loaded 😎and 600 mpgs) and trust me the experience is nice, I'm sure the Tesla models are even nicer because they dominate the electric vehicle space.

Qualcomm (QCOM) - When I want to play a savvy veteran, I turn to QCOM. Again some questioned the value here when they were battling Apple the goliath of the tech industry. I wish I would have gave QCOM a bigger contract because they went to Game 7 with Apple and won a $4.5B settlement!! A stock in the mid-50s exploded up into the $80s leaving me happy for the player and bummed I didn't invest even more. What a shocker.

JD.com (JD) - This stock is like a chance on the player suspended for taking performance enhancing drugs, TWICE. First, the tariff issues with China took all the steam out of this stock. Then the 2nd item was the CEO was accused of assault and battery. The stock was hovering around $30 and then tanked into the low 20s. It appears the Minnesota prosecutors did not choose to prosecute after new videos surfaced recently appearing to help the CEOs case.  Now basically breakeven, this player may spring back into Player of the Year discussions if the China negotiations with Trump are finalized.

On the bench: I have one player preparing to pack his bags: Celgene (CELG) - they were acquired and soon we'll part ways with a nice contributor.

And Sprint (S), Sprint keeps getting offers to play overseas for T-Mobile but the FTC (like the stock version of the NBA Commissioner) is telling me that the deal is unfair. Funny he doesn't say that to Verizon or AT&T the biggest cell phone carriers. Let a player get his money Commish?!?!  Approve the deal and let me bask in the glory of my draft pick prowess.

Next time, I will go into my Development League team: Newell Brands (NWL), Stitch Fix (SFIX), and Colony Capital (CLNY)