Shorting Facebook; Top Rope Elbow Drop on Wells Fargo: Doug Kass' Views
Here are Doug Kass' top thoughts on some of the biggest stories of the week.
Shorting Facebook
I have taken a small trading short in Facebook (FB) - Get Report :
* I believe it is highly likely that the company's advertising problems (stemming from the revelation that Russia has posted fake advertisements/information) are being understated by Facebook.
* The Mueller investigation may uncover more issues with regard to advertising on Facebook.
* FB has previously said that they have deleted millions of fake accounts around the world. FB has even mentioned that some days they delete as many as 1 million fake accounts. Therefore, it stands to reason that FB may have uncovered only a small amount of false advertisements made by Russians and others.
* Though the amount of money being spent for advertising on Facebook is robust, at the very least an additional layer of expenses will be created.
If I am correct about these possible influences and despite the lax regulatory environment that exists today -- much like the FCC maintaining control of television and other media advertising -- Facebook and Alphabet's (GOOGL) - Get Report Google will likely face much more scrutiny in the months and years ahead. (More fake advertisements could be forthcoming).
This may represent a short term blow to (T)FAANG as well as the Nasdaq.
I expect the Nasdaq to underperform the other senior indices now.
Position: Long SQQQ large QID Short FB small QQQ .
Originally published Sept. 18 at 3:33 p.m. EDT.
More of What's Trending on TheStreet:
- Blue Apron Is a Bloodbath and Is Still Bottoming
- Nvidia's Parabolic Bubble Has Burst, and This Is What You Are Left With
- Stocks Higher Even as Trump Tweets U.S. 'Locked and Loaded' on North Korea
- J.C. Penney Shares Are Getting Run Over
Speaking of WWF, I am now putting on a 'top rope elbow drop' on Wells Fargo.
Putting a 'Top Rope Elbow Drop' on Wells Fargo
This is my new term to connote a very large position. (I have decided to further add to Wells Fargo
(WFC) - Get Report Tuesday --
abandoning my $52 buy limit).
In the late '80s and early '90s, the most spectacular finishing maneuver was not Hulk Hogan's 'Atomic Leg Drop,' Ric Flair's 'Figure-Four Leglock' or Jake "The Snake" Roberts' 'DDT.'
It was "Macho Man" Randy Savage's 'Top Rope Elbow Drop.'
Here is a compilation of The Macho Man's 'Top Rope Elbow Drop.'
WFC is on my
Best Ideas List and my 12-month price target is about $62.50. Using a three-year time frame -- I can get as high as $85/share.
On a risk-adjusted basis, I believe WFC is one of the most attractive long positions in my portfolios.
Position: Long WFC (very) large.
Originally published Sept. 19 at 1:14 p.m. EDT.
Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings. This week he blogged on:
- How quite a few retail investors have more risk in their portfolios than they think.
- How to take a basic look at investor bases.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
More of What's Trending on TheStreet:
- PayPal's Stock Has Blown Away Facebook and Google This Year for One Big Reason
- Microsoft's New Xbox One X Shows It's Done Trying to Please Everyone
- How to Invest Like Billionaire Warren Buffett
- A 401(k) Loan Is a Terrible Idea Until It Isn't
Action Alerts PLUS, which Cramer manages as a charitable trust, is long FB and GOOGL.
