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☕ The big split is here, and OTHER stocks that matter 😊

Jun 07, 2024

Good morning! 👋

Jobs data is out and hotter than expected.

Right on cue.

All three indices were in the red earlier because traders fear that it’ll make the Fed less likely to cut rates and the US10YR yield shot higher on the news, exactly as I suggested to you would be the case earlier this week.

What to do now?

There is always a path to profits.

An increasing number of savvy investors see right through the nonsense.

So, they’re buying anyway.

Something I’ve encouraged you to do all along, especially with companies like Nvidia.

The game ain’t over by a long shot.

Here’s my playbook.

1 – The big split is here

We’ve talked about the why (I think you need to own Nvidia) but just in case you’re recently joining us... here’s the short version:

Nvidia will sell every chip it makes for the foreseeable future
Operates at obscenely high margins
Has an 80%+ market share
Is ALREADY rolling out upgraded chips
Reported +260% revenue jump YoY and data center revenue +427%

As for the split...

Every investor who held NVDA as of the end of trading yesterday will receive 9 additional shares of Nvidia stock after today’s closing bell dings and the day winds to a close.

What's more, shareholders at the end of the day Tuesday will receive a dividend of $0.01 per share on June 28th.

Keith’s Investing Tip: There are still quite a few people who missed this one which, as unbelievable as it sounds in hindsight, is perfectly normal. You are NOT out of luck if you’re one of ‘em. In fact, history suggests there may be 5-10 Nvidia’s out there right now – you just have to find ‘em and do something about it next time around. I’ll be here if you’d like some help. If you’ve got this covered, cool beans and thanks for reading the 5 with Fitz!

OBAers: I’ll have more on Nvidia in today’s update, along with 4 smart midyear moves, a new recommendation and the truth about PE ratios. The June issue is only hours away. Keep an eye on your email 😊

2 – Game Stop shares drop after 29% sales decline

Keith Gill – aka “Roaring Kitty” – called an audible, literally his first live-stream in several years.

Shares of his muse, GameStop, jumped 47% yesterday on the news.

This morning, they’re down double digits after the company announced a 29% decline in sales AND that it would sell an additional 75 million shares on top of the 45 million share sale announced last month. (Read)

My hat’s off to you if you’re trading GME! 💯

I’m nowhere near smart enough.

3 - Palantir AIP - WOW!

It's not often that you have customers line up to show the world what they’re doing with your products but that’s exactly what happened at Palantir’s AIPCon this week.

Some of my favourites include United which has used it to save more than 100,000 customers from delays (no word on my lost luggage though), Parexel which has reduced data delivery time by 50% using AIP, and Fujitsu Global which has saved more than 1B Yen a year in operating costs.

Then there’s Tampa General which has used AIP to create an 83% reduction in the time it takes to place patients. And SOMPO Japan which has boosted profits by $60 million this year while also expecting $100 million next year.

Karpus Maximus!

My target remains $50.

Trade Idea: Buying Palantir stock is the simplest, most straightforward way to go. But, if you wanna get fancy and you have the chops, consider buying January LEAPs like the (PLTR260116C00025000) calls then selling additional closer dated calls against ‘em as a way to “pay” for your investment over time, an options strategy known as a Calendar Call Spread.

4 – What am I supposed to do when my bride is shopping??!! 🤦‍♂️

Costco has announced that it’ll stop selling books year-round but continue during holidays (Read)

Doh!

What am I supposed to do while my bride is shopping?

We already have a strict “two hands on the cart at all times policy in place” if I accompany her in the aisles. Otherwise, I am banished happily to the book section, not by way of the tool aisle mind you. They may as well cancel the $1.50 hotdog, too.

Double doh!

Now, joshing aside, this is a far bigger challenge than you’d think.

Publishers relied on Costco to sell in quantity because that’s how they ordered. So this is yet another nail in the coffin for traditional media as the world migrates online.

Investing Implication: There were 8 publishing houses publicly traded last time I looked with a combined market cap of around $20B. My guess is that it’s halved within 5 years with stocks like WLY and SCHL at particular risk.

Putskis, short and/or avoid.

5 – China will white knight Russia’s rubles

Speaking in St. Petersburg at the International Economic Forum, Russian leader Vladimir Putin noted that 40% of Russia’s trade is now in rubles. (Read)

At first glance, you’d think so what.

That’s a mistake.

This could not be a more dangerous development for the USD.

Why?

Because China is just itching for an opportunity to inject the digital Yuan in global markets while bypassing traditional clearing.

Unfortunately, buying Yuan isn’t as easy as it used to be.

You can open an individual account at the Bank of China in NYC but only corporate accounts in the Chicago and LA locations if memory serves.
There used to be ETFs but those have disappeared or shut down which isn’t surprising given geopolitical tensions.
There are also Yuan/renminbi futures on the CME but I’d urge you to steer clear unless you’ve got the moxy to deal with materially higher risk and the understanding to go with it.

A few VERY specific stocks work, too. Both Chinese and US, in case you're wondering.

MyPOV: China’s economic footprint will increase whether we like it or not which is why savvy investors need to be thinking about what happens when the Dragon comes to dinner. You can be at the table or on the menu. Simple as that. Keep your emotions out of the equation.