SPC Weekender: Spinoffs, SoFi, and More
Avoiding mistakes and keeping investing simple ...
In this weekend edition of Stock Picker’s Corner (SPC):
How to avoid cow patties and investing mistakes.
SoFi Technologies Inc. SOFI 0.00%↑ earns another earnings victory lap.
And keeping it simple when investing in Bitcoin (BTC) and gold.
👀“Good Investors Always Look Down Before They Look Up”
Special-Situation Investing is one of our key storylines, which is why I wanted to highlight an informative and enjoyable read about Seaport Entertainment Group Inc. SEG 0.00%↑ from Tim McElvaine of A Value Fund.
Seaport offers a “twofer” special-situation opportunity as a spin-off and “turnaround” play.
Howard Hughes Holdings Inc. HHH 0.00%↑ spun it off this year to focus on real estate development, while Seaport focuses on its entertainment and hospitality assets.
Seaport’s holdings in New York’s Seaport area include the concert venue The Rooftop at Pier 17, the culinary marketplace the Tin Building, and the mixed-used development site 250 Water Street.
Losses from the restaurant business and occupancy rates have been an issue, but you’ll see in McElvaine’s report a reason why a new management team could be the jolt needed to turn things around.
In addition, Seaport has a few other intriguing assets: the Las Vegas Aviators (Triple-A baseball team ), the Las Vegas Ball Park (10,000-person stadium) and 80% of the air rights above the Fashion Show Mall in Las Vegas (25th largest mall in the country). Those air rights could be used to build a new casino and hotel, according to the company’s August presentation.
There’s plenty of potential here …
But with any investment, it’s just as important to talk yourself out of owning something as it is to think about the reasons why you like it. That way, when you know the weaknesses and risks — but still believe in the long-term opportunity — you won’t succumb to emotion and “panic sell” at the first whiff of unpleasant news.
“I’m a firm believer in the notion that good investors always look down before they look up,” McElvaine says in his report.
In addition to evaluating Seaport Entertainment, you’ll see why looking down before looking up is a good piece of advice for most things in life.
✅The Triple Beat
SoFi is living up to CEO Anthony Noto’s proclamation that 2024 would be a “transformative year” for the bank-less fintech company after just reporting it’s fourth-straight profitable quarter.
What Happened:
Reported earnings of five cents against expectations of four cents.
Reported revenue of $697.1 million against expectations of $623 million.
And boosted guidance to a range between $2.53 billion and $2.55 billion from a previous range of $2.42 billion and $2.46 billion.
To get a little deeper into the nitty gritty and for a look at what’s ahead, Noto appeared on CNBC, which is well worth the five-minute watch time:
We’ve been following SoFi closely ever since Danny Brody of The Net Worth Club predicted the stock price would climb past $10 when it was trading for $6.52 in July during our “Desert Island Stock Challenge.”
Anybody who followed along won’t be upset that Danny’s prediction came true early, as shares are now up 71%.
Of course, the most important question is, “What comes next?”
When the $10-threshold was crossed a few weeks ago, Danny told anyone who followed along that he would consider selling 30% to 50% of the position; it’s just a prudent financial consideration to take some gains off the table when shares have risen so high in such a short period of time.
But he said he would consider buying more when prices pull back, especially as he sees shares climbing to $16 by the end of June 2025.
You can find out more in Danny’s latest update about SoFi here.
🟡Bitcoin, Gold, or Both?
Gold and Bitcoin — two different alternative asset classes that have performed strongly this year and are now experiencing a boost in interest (and outright demand) from retail investors.
And when you have that strong performance with increased interest, it was only a matter of time before a “new strategy” is introduced on how to invest in both.
That time is now: Enter the STKD Bitcoin & Gold ETF BTGD 0.00%↑.
Instead of owning gold or Bitcoin, the ETF invests in both Bitcoin and gold futures contracts, as well as exchange-traded products, and uses leverage to essentially turn every $100 invested into $100 of gold exposure and $100 of Bitcoin exposure.
Cryptocurrency expert David Zeiler sees this as an “oddball idea from Wall Street that nobody asked for.”
“It strikes me as a complicated and an unnecessary way to invest in Bitcoin and gold, if that’s the goal of the investor,” Dave told me, suggesting something much simpler: “Just buy GLD and one of the Bitcoin ETFs.”
GLD refers to the SPDR Gold Shares GLD 0.00%↑, which is a way to invest in gold without having to physically own it.
For Bitcoin ETFs, Dave has a list of 10 to consider — as well as his Bitcoin price prediction for 2025 and beyond - in the report below:
That’s all for this week.
Take care,
William: many thanks for the plug and nice comments. Time will tell on whether my advice was helpful or a “cow patty” itself! Just subscribed and look forward to following you. tim