This month we’re jumping into a small software company that provides solutions for a specific small- and mid-sized business (SMB) market.

While the market for SMB software has been tough for the last two years, this company’s revenue growth has accelerated and customers that bailed in 2022 are coming back. In short, best-of-breed software isn’t dead! And this player is about to become profitable too. Enjoy!

After a big run higher for the market to end 2023, 2024 got off to a rough start yesterday, especially for growth stocks. And while yesterday was sloppy, this action isn’t terribly surprising as crosscurrents in the new year are typical.

Happy New Year! Now that the calendar has flipped, early January is upon us, and as we saw today, that’s almost always a tricky time: There are many crosscurrents that pop up, and when you combine that with the market’s straight-up move since the start of November, today’s sour (and rotational) action wasn’t a total surprise and is a reason why we’ve been advising picking your spots of late. If you’re looking for something to worry about, we’d say that growth stocks (which led the way up in November) stalled out three weeks ago, so if the selling continues, that could be a canary in a coal mine of sorts—but at this point, we’re seeing normal (albeit unpleasant) downside action in many stocks. Right now we’re thinking the next couple of weeks will likely prove tricky, yet the path of least resistance remains up. We’ll keep our Market Monitor at a level 8, though we’ll be in touch if that changes.

This week’s list has something for everyone, from newer names trying to emerge to established leaders that have rested for two or three weeks. Our Top Pick has moved out on the upside and has excellent numbers, all while its sector remains in favor.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the January 2024 issue.

We review the stock market’s remarkable performance in 2023 and highlight our recommendations that produced notable gains along with our clunkers. Our view on the 2024 market is that stocks will have an average year, with the Magnificent Seven producing flat/modest returns at best. Readers should keep in mind quotes from Yogi Berra and Warren Buffett when considering market forecasts. Onward to 2024.

Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.

Happy 2024! Here’s hoping the new year can pick up right where the old one left off. There are plenty of reasons to think this year will be good for stocks – the Fed cutting interest rates instead of hiking them, inflation cooling, recession fears fading, etc. But there’s no doubt a few sectors (tech?) are a bit overcooked at the moment, at least in the short term. So we kick off the new year by doing a bit of bargain shopping, starting with the most bargain-basement sector out there: cannabis. We haven’t had much luck trying to buy into strength with cannabis. So today, we instead buy after the sector has been knocked back again, adding the largest holding from Michael Brush’s Cabot Cannabis Investor portfolio.

I hope all of you had a wonderful New Year’s and holiday season! Now it’s time to get back to it!

As I stated last week, my hope is to add one if not two more trades for the January 19, 2024, expiration cycle, although with volatility on the low side, we might have to go out a bit further in duration. The challenge when volatility is low is finding a highly liquid ETF or stock with a decent IV rank, and therefore, at least in most cases, some decent options premium. So again, if premium just isn’t there, we might have to extend the duration on the trade, possibly going out to the February 16, 2024, expiration cycle. Either way, I intend on adding an iron condor and hopefully a bull put spread to the mix. Of course, a slight pullback would make things easier.

Not much to say as we enter another holiday-shortened week, so I’m going to keep the message consistent with last week. I intend on introducing a new position in WFC, or another fairly low-priced big bank stock, by selling puts early this week. My hope is we get a short-term pullback before entering a new position.

I hope everyone had a wonderful New Year!

As we move through another holiday-shortened week, it should be no surprise that there is little in the way of earnings announcements the first week of the year. But the action will pick up in earnest in less than two weeks.

Happy New Year! The market remains in great shape, with the vast majority of evidence positive—and, given that we are coming off of two years in the muck, with big declines in 2022 and (for the most part) lots of bottoming-out action in growth stocks and the broad market in 2023, we see great potential going ahead for a real bull phase. That doesn’t mean we’re complacent or leaving our brain at the door, but we’re leaning bullish and putting money to work. Tonight we’ll add one half-sized position in a leveraged long index fund, leaving us with around 20% in cash.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the January 2024 issue.

In this issue, we discuss our Top Five Stocks for 2024. We also dissect and review what happened in the capital markets in 2023 and offer our outlook for the coming year.

This month’s Buy recommendation, Mohawk Industries (MHK), is a major global flooring manufacturer whose shares are deeply out of favor. We discuss three key questions when considering an investment in a cyclical company and describe how Mohawk passes all three with flying colors.

Our cannabis trades continue to perform very well, beating the market by more than tenfold since the last update, depending on the index position considered.

The AdvisorShares Pure U.S. Cannabis (MSOS), is up 10.5%, and the AdvisorShares MSOS 2X Daily (MSOX) is up 18.7% since I last suggested getting long cannabis on December 13. I suggested both as proxies for the sector, at the time.

Wishing you all the best from the past holiday season and as we embark on the final trading week of the year. May the new year bring renewed energy and success in all your endeavors. Here’s to a bright and prosperous 2024!

Not much has changed since last week. So, as we enter one of the slowest trading weeks of the year, we currently have one open position, a SPY bear call spread due to expire in the January 19, 2024, expiration cycle.

Last week marked the fourth straight week of declines for the S&P 500 and was the worst week so far this year, down nearly 3%.

The problem is inflation, go figure. The Federal Reserve’s preferred measure of inflation, the Personal Expenditures Price Index (PCE), was much higher than expected in January and showed inflation moving higher, not lower, to start the year.

This week, we comment on earnings from Elanco Animal Health (ELAN), Gannett (GCI), Kaman Corporation (KAMN) and Warner Bros Discovery (WBD).

We also include the Catalyst Report and a summary of the March edition of the Cabot Turnaround Letter, which was published on Wednesday.

We’re in the thick of our portfolio’s earnings season so today’s update will be short and sweet. My focus this week is on providing updates on positions as they report and laying out expectations for companies that have not yet reported.

While our reports have been mostly good so far the market is still swinging with the interest rate breezes. I had thought that influence might diminish but with Fed members making hawkish public comments and expectations for more hikes after March both the 10-year and 2-year yield have become troublesome.

We’ll continue our mini-series on the Tech Hype Cycle next week, as we thought some brief comments on the war in Ukraine might be timely roughly one year after Russia’s invasion.

Clearly, the war is an awful situation for all involved, certainly on a humanitarian level but also on an economic level. While the conflict has degenerated into a World War I-style artillery battle between two entrenched forces, we anticipate that spring will bring more mobile hostilities.

Part of our risk management process is to identify risks, then gauge whether those risks are increasing, or decreasing. This simple directional metric avoids the impossible task of predicting the future yet provides an effective way to understand risks.

The impressive early year rally has ended. The S&P ended its third straight down week on Friday and is sharply lower to start this week.


The “soft landing” optimism of January has given way to concern about a hawkish Fed and rising long-term rates. Inflation had been coming down, and the Fed appeared to be chilling out while the economy remained on solid footing. But a continued strong economy, a rise in January inflation, and a more belligerent Fed are spoiling the party.

This week, I want to use my introduction to spend some time diving into Liberated Syndication (LSYN) because I spoke to the CEO, Brad Tirpak, for about an hour last week.


To review, Liberated Syndication stopped trading publicly in late 2021 because it was so behind on its historical financials, that FINRA/SEC revoked its ability to trade. So since late 2021, the stock has been private.

This week, we comment on earnings from Conduent (CNDT), Ironwood Pharmaceuticals (IRWD), Organon (OGN), Toshiba (TOSYY) and TreeHouse Foods (THS).

Cabot Options Institute Quant Trader is focused exclusively on creating consistent returns using high-probability options strategies including bear call spreads, bull put spreads, iron condors and more. Whether you have questions about the strategies, or even about setting up your account, or how to make your own trades, Andy will answer all of your questions

WHAT TO DO NOW: Continue to lean bullish. The market has chopped around for the past couple of weeks, but while we’re always on the lookout for yellow flags, none have appeared yet—all of our key market timing indicators are positive and most stocks are doing pretty well. We’re not close to fully bullish, but we’ll put a bit more money to work tonight by filling out our position in Uber (UBER), which will leave us with around 35% in cash. We’re also going to place Shift4 (FOUR) on Hold after today’s selling. Details below.

The market has continued to hold up surprisingly well in the face of less-than-great inflation reports.

We’re in a period where it appears the pros of slightly stronger economic growth outweigh the cons of a slower-than-desired inflation retreat. Earnings season is helping to return focus to company specifics, for the time being.

Our earnings season really heats up next week as we should have at least six positions report. It’s going to be an intense week, so buckle up!

Retail sales rose 3% in January, the Census Bureau said yesterday, reversing November and December’s declines. Manufacturing output increased by 1%, following a steep 1.8% decline in December. Positive but slow growth right now might be just what we need to avoid more interest rate increases by the Fed.

The Dogs of the Dow is an investment strategy that involves investing in the top ten Dow Jones Industrial Average stocks with the highest dividend yields. The theory behind the investment strategy is that the highest-yielding stocks have most likely lagged the market and as a result, are undervalued and due to outperform in the year ahead.

We currently own the VTI January 19, 2024, 145 call LEAPS contract at $54.50. You must own LEAPS in order to use this strategy.

Moving Kraft Heinz (KHC) to Sell

Our BITO 12 calls for the December 30, 2022, expiration cycle are essentially worthless. As a result, I want to buy back our BITO calls, lock in our premium and immediately sell more premium going out 32 days.

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

We currently own the VTI January 19, 2024, 145 call LEAPS contract at $54.50. You must own LEAPS in order to use this strategy.

We’ve had lots of good fortune over the past six months in the Quant Trader service. Our quant-based approach where probabilities lead the way has led to 18 out 19 winning trades since starting the service back in early June.

I’m rolling my December positions into January. We still have to roll our December SPY calls, but I’m going to hold them for a few more days to allow time decay to work its magic.

Okay, we just sold a bear call in SPY for the January expiration cycle back on 12/1 and got out of the trade on 12/6 for approximately an 11% return. But, we still have 38 days left in the January 20, 2023, expiration cycle and the ability to sell some decent premium with the VIX hovering around 23.50.

We currently own the EEM January 19, 2024, 30 call LEAPS contract at $11.50. You must own LEAPS in order to use this strategy.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.