Executive Summary:

The speaker addresses concerns regarding the performance of Coinbase, DHI, and Lululemon. Despite price drops, they emphasise the importance of assessing the underlying business fundamentals rather than reacting solely to short-term market fluctuations. The overall strategy involves maintaining positions, selectively adding more when the technical analysis indicates a positive bounce, and potentially converting shares to call options to increase upside exposure. A key takeaway is the need for a "mindset check" to distinguish between market-driven price drops and genuine deterioration in a company's fundamentals. The speaker highlights that all three companies have strong fundamentals with improving businesses at lower share prices.

Company-Specific Analysis:

• Coinbase:
  • Issue: The share price has retraced. Some investors may be concerned, especially those holding call options purchased at higher prices.
  • Analysis: The speaker believes the retracement is part of the cryptocurrency market's inherent volatility, which they personally embrace for options trading opportunities. They highlight Coinbase's recent Q4 2024 earnings as "incredible," including record-breaking net revenue, significantly increased net income (2.5 billion vs 95 million previously) and exceeding revenue expectations. The increase in subscription and services revenue is noted as particularly positive due to its recurring nature. The speaker also notes the ROE and ROIC are increasing tremendously: "tremendously 54% 12% right I would love to see them keep up with this".
  • Valuation: The speaker finds Coinbase's price-to-earnings (P/E) ratio of "23 times" to be "insane" and "very, very cheap" relative to its growth rate, especially when compared to traditional brokerage IBKR with a P/E of 30.
  • Strategy: Hold existing positions. Wait for a clear upward trend bounce before adding more or converting shares into call options. Monitor technical analysis for confirmation of a bounce. The speaker states: "So for me right now, Coinbase very nice support. Of course, what I want to see before I uh put in more or even convert some of my shares to call options, right, is for it to bounce up a little bit, right? I want the TA to be clearer like this kind over here. Okay, I want the TA to be to be clearer that the bounce has already taken place."
  • Position Sizing: The speaker mentions that Coinbase already takes up 10-11% of their portfolio.
• DHI (Dr. Horton):
  • Issue: Share price decline, mirroring a broader downturn in the home builders ETF. The speaker also highlights a potentially negative technical indicator: "However, however, okay, do look at the fundamentals again and you know ask yourself the question, hey, you know, is this something that we truly uh should be worried about? Okay, so if I just put on the fundamentals to show you for cash flow, okay, this is DHI's Dr. Horton's cash flow on a trailing 12-mon basis."
  • Analysis: The decline is attributed to a general home builder retreat trend, not specific to DHI. The speaker emphasizes strong fundamentals, including increasing cash flow and net income, reaching $3 billion and $4.6 billion respectively.
  • Cash Flow Conversion: The percentage of operating cash flow to net income is high at 65%, implying strong earnings quality.
  • Opportunity: The speaker mentions being excited for home builders noting one of the best returns for client portfolios in 2022 was Dr. Hortons.
  • Strategy: Hold existing positions. Observe the weekly chart for signs of a bounce, noting improving MACD and Stochastics indicators. Be patient and consider the potential for a significant rebound similar to 2022. For expired call options, the speaker states they will buy the shares.
  • Longer-term View: The speaker finds the current share price drop as "a fantastic opportunity".
• Lululemon:
  • Issue: Recent share price drop.
  • Analysis: The speaker points to the company's updated Q4 earnings guidance, increasing revenue expectations to 3.5-3.58 billion (11-12% growth). The update also included increased EPS guidance. The speaker believes that this transparency shows honesty to shareholders and confidence in upcoming earnings.
  • Fundamentals: Revenue and net income are increasing. P/E ratio is 20+, considered reasonable. Price-to-cash flow is even lower, at 19 times. ROE and ROIC are very strong.
  • Brand Strength: The speaker highlights Lululemon's strong brand loyalty, citing personal experience and anecdotes from female acquaintances.
  • Strategy: Hold existing positions. The company's 200 moving average on both daily and weekly charts is noted as strong.
  • Earnings: Earnings due 1 April.

Overall Portfolio Strategy & Risk Management:

• Mindset Check: The speaker emphasizes the importance of distinguishing between price drops driven by market sentiment and those caused by fundamental deterioration.
• Patience: The speaker highlights the need for patience when investing in volatile markets.
• Position Sizing: Strict adherence to a maximum position size of 15%, becoming cautious at 10%.

Key Quotes:

• "Sometimes great businesses like Coinbase because of their nature right uh dealing with cryptocurrency the volatility is slightly higher right so make sure it's something that you can deal with If you cannot deal with volatility then you know it's something that you should not invest in."
• "Last year really really was a was a fantastic was a fantastic year for them." (Referring to Coinbase)
• "Do I want to take advantage of it?" (Referring to Coinbase discount)
• "The reason that you should be panic upon is the business becoming worse. And guess what? These are improving businesses getting stronger with lower share price. You should be screaming at the top of your head and say hey can I buy more should I look towards buying more"

Conclusion:

The speaker maintains a positive outlook on Coinbase, DHI, and Lululemon, despite recent price declines. Their strategy involves holding existing positions, monitoring technical indicators for potential buying opportunities, and prioritising a deep understanding of each company's underlying fundamentals. Prudent risk management through position sizing is also emphasised. The speaker is looking to buy more shares on price dips.