My IWM Short Mistake, Rising Rates And Real Estate

Nevertheless, I made a mistake by including IWM to start my short campaign on Thursday. Even though what I’ve called Reopen Value stocks, which are all the rage right now and make up a big proportion of the Russell 2000, are ridiculously overvalued, they are not showing any signs of technical breakdown like Tech. Therefore, the time to short them has not yet arrived. I will cover this position on Monday.

Lyft (LYFT, Market Cap $22 Billion) is a perfect example of a raging hot Reopen Value stock. The stock has tripled in the last 4 1/2 months with the announcement of the Pfizer vaccine on Monday, November 9 and the subsequent rotation into reopen names.

This move has nothing to do with LYFT’s improving fundamentals and everything to do with investor expectations that the reopening will be great for its business. LYFT reported a 45.2% decrease in Active Riders for 4Q20 and lost $185 million in the quarter on an adjusted basis.

But the CFO said: “While the first quarter of 2021 continues to be uncertain primarily due to COVID-19 headwinds, based on current recovery expectations, we should experience a growth inflection beginning in the second quarter that strengthens in the second half of the year.” Based off of that mere assertion the stock jumped the following day (February 10, 2021).

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Kurt Benson 2 months ago Member's comment

IMO, covering your small cap short is compounding your mistake. Let it pull back.