My message remains the same.

I plan on ramping up the positions in our actively managed portfolios (Buffett and Growth/Value) over the next expiration cycle. My goal is to have a minimum of 5 positions per portfolio, but I’m not going to race to get there. I’ll continue to pounce when the opportunity presents itself. We’ve taken our time adding positions since initiating our portfolio and, so far, our patience has served us well.

The S&P 500 (SPY) is up 8.3% YTD and 25.1% since its near-term low back on October 27, 2023. It can’t be argued that we are witnessing something well outside of normal distribution.


If we go back to October 27 and take a quick look at the probability of the current move, we can clearly see that the probability at the time for SPY climbing above 510 (SPY currently sits at 511.72) was 0.93%. That’s right – 0.93%! So yes, again, this is definitely a move well outside of the norm.

The market remains in a solid uptrend, though there’s no question some sellers are beginning to step up, with more volatility in the Nasdaq seen in the past month and, outside of chip stocks, some churning in the leading stocks. That’s not bearish, per se, as we’re still riding our winners, but for new buying we’re being more selective and looking for fresher leaders that have recently emerged with some power. In the Model Portfolio, we sold one stock in the past two weeks while starting a half-sized stake in one of those fresher leaders, and tonight, we’re averaging up in that name and starting another new position, too.

Half of all people need cataract surgery. But even though messing with your eyes is a massive decision, the Big 3 MedTech players in this market don’t have the best solution out there.

This is where today’s company comes in. It has developed cutting-edge technology that drives better outcomes for patients needing cataract surgery. The key? Its lens can be customized once in the eye!

All the details are inside the March Issue of Cabot Small-Cap Confidential.

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

In this issue we look into the bear case for the energy sector and discuss why energy stocks might provide some tonic for sober investors in an otherwise tech-intoxicated stock market. We highlight a selection of six energy stocks worthy of at least a sip.

This month’s Buy recommendation, VF Corporation (VFC), is a major apparel and footwear maker whose shares have collapsed 83% and now trade at their 2006 price. The new CEO, an unusual selection from outside the industry, is undertaking a complete overhaul of the company, with some early signs of progress.

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

We discuss the similarities between poker and value investing. This past month we moved two stocks from Buy to Sell – Allison Transmission (ALSN) as it reached our price target, and Sensata Technologies (ST) as its management continues to take a path that is not shareholder friendly.

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.

As we plow into March, the overall story remains mostly the same for the market—the primary evidence remains strong, with the trends of the major indexes up, most leading stocks in good shape and with hundreds of stocks hitting new highs.

As we plow into March, the overall story remains mostly the same for the market—the primary evidence remains strong, with the trends of the major indexes up, most leading stocks in good shape and with hundreds of stocks hitting new highs. That’s the main focus, of course, but not to be ignored is the near-term froth seen in many names and the fact that few leaders are at high-odds entry points, extended above moving averages and having been on the run for months. Thus, our advice is unchanged: We’re riding winners higher, but are picking our spots on the buy side, aiming to find earlier-stage stocks. We’ll again leave our Market Monitor at a level 7.

This week’s list has many stocks that have emerged in recent weeks that seem worth a shot, especially if we see a normal retreat in the market. Our Top Pick has a great story and has transformed into a well-sponsored name (nearly 1,500 funds own shares!) as it’s the clear leader in a unique sector.

The party continues on Wall Street, and we’re not going to forecast when it will end. Instead, we’re going to try and capitalize on the strength, a strategy that has worked very well for the Stock of the Week portfolio over the last four months. Today, we take another big swing in a stock that was a home run for Cabot Explorer Chief Analyst Carl Delfeld several years ago, before the sellers came for it. Now, it’s back. It’s an overseas stock that doesn’t have the China stench on it, something that hurt other perfectly good stocks (see BYD (BYDDY)) in the last year.

The S&P 500 is roughly 24% higher without a 2% decline. So, the air is starting to get thin at these price levels. In addition, the rally, without a 2% pullback, has lasted for 88 days. This puts the current bullish streak in the top 25 all-time and top 3 in terms of returns since 1928. The largest move without a 2% decline came in 1994, when the S&P rallied 26.3%.

It can’t be argued that we are witnessing something well outside of normal distribution.

I plan on locking in returns on several of our current positions and immediately selling more premium. In addition, I plan to add at least one more stock to the portfolio, which will bring our total to seven stocks. I also intend on continuing to ladder our positions in perpetuity, so we are collecting premium on a weekly basis. As it stands, we have positions due to expire over the next four consecutive weeks.

Other than that, there really isn’t much to say at the moment. We continue to be pleased with the overall mechanics of our approach and more importantly the overall return, which currently stands at 145.7%.

Earnings season is mostly behind us, but there are a few stragglers yet to report on the calendar. Target is on the agenda this week. With a decent IV rank (58.9) and the ability to create a fairly large range outside of the established expected range, Target (TGT) looks like a potential trading opportunity.

The company is due to report prior to the opening bell Tuesday, so if we decide to place a trade look for an alert around mid-day today.

The market was impressive last week. The S&P 500 moved 3.5% higher for the week, accounting for nearly half of the better than 7% YTD return. Hopefully the rally has further to go.

Investors love it that the banking issues have had the benefit of tempering the Fed with no apparent offsetting crisis so far. The expected timeline for the Fed to stop raising rates has moved way up, to one more rate hike from what could have been a hiking cycle that lasted the rest of the year.

The big news this week is that OPEC+, including Russia, made the decision on Sunday to cut oil production by 1.16MM barrels per day from May through the end of the year. It appears that OPEC+ wants to keep oil in the $80-$90/barrel range.

Things are looking up in the market. The S&P 500 soared 3.5% last week and is now more than 7% higher YTD.

Investors love that the banking issues have had the benefit of tempering the Fed with no apparent offsetting crisis, so far. The expected timeline for the Fed to stop raising rates has moved way up, to one more rate hike from what could have been a hiking cycle that lasted the rest of the year.

This week, we comment on earnings from Walgreens Boots Alliance (WBA).


We also include the Catalyst Report and a summary of the April edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.

WHAT TO DO NOW: The market remains stuck in the middle—on one hand, growth stocks and big-cap indexes are holding up very well considering the recent banking and economic fears, but on the other, the broad market is still weak, financial stocks are a mess and a couple of our key indicators are negative. All in all, then, we’re following the market’s split personality, holding about half in cash but also holding and nibbling on some resilient growth names. Tonight, we’re going to buy a half-sized stake in Axon Enterprises (AXON), though that will still leave us with 48% on the sideline.

Small-cap stocks have underperformed their larger-cap peers by a wide margin since Jerome Powell’s Congressional Testimony just over three weeks ago.


Part of that is because of the hawkish tone he struck. But mostly it’s because of the fallout of the SVB debacle, concerns over a 2023 financial crisis and what the spillover effects could be on the broader economy.

BYD (BYDDY) reported great earnings, and Novo Nordisk (NVO) got a lift from the World Health organization this past week – but the big news is that Alibaba (BABA) surprised markets by announcing on Tuesday a plan to split the $220 billion goliath into six standalone units.

There’s a new worry in the market – recession. Just when the Fed is finally chilling out, investors are moving on to the next bummer. The market still stinks, just for different reasons.


Until a couple of weeks ago the main concern was a more hawkish Fed. But the banking situation has mellowed the Fed, and the Central Bank just indicated it is nearly done hiking rates. It’s a relief on the Fed front but the economy could be a problem now.

I’ve never liked gambling. I went to Las Vegas once with friends and had a blast. But that was because the weather was beautiful, and we sat by the pool during the days and then had some good nights out. Some of my friends loved to play blackjack. I enjoyed it for entertainment value, but I was only interested in playing at tables with low minimums. Why? Because I know that the house always wins! (Unless you are Edward Thorp, the famous card counter.)

Last Thursday evening, I was a guest at a friend’s regular poker game. It seemed friendly enough – the regulars were average players (like myself), pleasant to spend time with (no jerks), and the evening included a tasty dinner. Also, favorably to me as the newbie, the stakes were modest.

The games were straightforward: 5-card draw, 7-card stud high-low, while a few others included a small field of common cards similar to Texas Hold’em. Betting was reasonable, with limits on both the size and number of raises. So far, so good.

This week, amidst the fireworks in banks, the Fed and more market volatility, there were no earnings reports and we had no changes in ratings on our recommended stocks.


Next Wednesday, we publish the April edition of the Cabot Turnaround Letter. We’ll tip our hand on the first article – which will be on possible bargains in the banking industry.

Yesterday the FOMC decided to move ahead with another 25bps hike, bringing its federal funds target rate to a range of 4.75% to 5%. The statement was missing the phrase, “...ongoing increases in rates would be appropriate,” which was present in the eight previous statements, suggesting the Fed may be done hiking soon.

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.

There is almost no premium left in our PFE December 16, 2022, 45 puts. As a result, I want to buy back the 45 puts and sell more premium in January.

I’m going to lock in some nice profits today and as a result, our win ratio is now 18 out of 19 winning trades since starting the service back in June. I’ll also be adding a few new trades to the mix over the next day or two, so be on the lookout for an opening trade alert.

We’ve only held Treace Medical (TMCI) for about a month, but it’s been a wild ride.

Today SWAV has dipped below support near 235, triggering my mental stop-loss level.

I’m going to lock in some nice profits today and as a result, our win ratio is now 18 out of 19 winning trades since starting the service back in June. I’ll also be adding a few new trades to the mix over the next day or two, so be on the lookout for an opening trade alert.

The market got off to an ugly start to the week yesterday, though really not much has changed—the Tides are positive, but not much else is, while individual growth stocks remain hit or miss.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Momentum 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 Momentum Trader features.