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) :
 
* 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) 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 .


Putting a 'Top Rope Elbow Drop' on Wells Fargo

Speaking of WWF, I am now putting on 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) 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.

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