Organic Investing (HAIN,LMNR,GDX,JPM)
The real question is how many people are prepared to put a seed in the ground, water it and watch it grow, helping it along with whatever nourishment it requires – fertilizer, water – until such time as its fruit can be plucked and eaten.
Are you among that bunch?
And why is it so important? Why is it ‘the real question’?
Call us crazoids and renegades, but that’s the way we see it. The time’s a’coming when those who can pull their sustenance from the good earth will be the ones to endure. While those who rob, steal and fake their way through life, posing as specialists and experts of every whatnot and wherefore, will politely be shown the door.
And will more than likely starve.
Because the only real skills one needs in this world are those of the farmer.
You heard it right.
Ask him how he grows his fruit and vegetables, and pay attention. Let him explain the details of animal husbandry, how he procures his meat, milk, fish and eggs, and write it down – every word.
Because there’s little more that will get you safely through the storm than possessing this knowledge – and getting it from someone with experience.
We’re all going to find that out sooner than we think.
Get apprised. Start a garden. Experiment, and learn. Make all the mistakes you can today, while less is at stake. You’ll be happy later that you did, when the walls come tumbling down.
Old Friends, Pointed Advice
I worked with a fellow some 25 years ago – a poet, he was – who told me that if you could play guitar and carry a tune, you’d never starve – you could travel the whole world and always support yourself.
He also suggested a carpenter could do the same. And again, it could be true. Them’s some of the most meaningful occupations going.
But there’s also a limit to the number of buskers who can make a living in a city that’s run out of food, or a journeymen who’s competing with every other woodshaper in town.
We say the food producer is best off. Sure, he’s tied to his land; he can’t move at all – unlike like the musician and carpenter. But he’s got what everyone needs. And that’s why we beseech you all, brothers and sisters, to get some heirloom seeds and drop them in the mud as soon as you can.
Closing Down Two and Opening Up Another
We’re going to shut down two recent initiatives before we present this week’s play, and the first one goes like this –
The trade was launched on the 15th of August in a letter called Salvation Arriveth. With a Lithp. There, we urged you to consider selling two (2) GDX June 15th 19 PUTs for $0.88 each and using the proceeds to purchase a June 15th GDX 26 CALL for $1.55. Total credit on the trade was $0.21.
And today, it stacks up like this…
GDX shot higher beautifully, pricing the PUTs at $0.56 and the CALL at $2.14. Buy back the former and sell the latter and you emerge with $1.23 on nothing spent. Adjusted for minimal commissions puts you on the profit side a full 720%!
In three brief weeks.
That’s 1248% annualized.
The following week (August 22nd), we penned a letter called The Department of Redundancy Dept., in which we recommended you move on the financial sector, which we saw about to make a strong move north.
The trade called for you to buy the JPM December 15th 95 CALL for $1.80 and sell the JPM December 15th 85 PUT for $1.76. Total debit on the bet was $0.04.
The CALL trades for $1.96 and the PUT for $1.50. Sell off the former and buy back the latter and you net $0.42 on $0.04 laid out. That’s a very fine 1050% in a fortnight.
Again, if we were shameless braggarts, we’d indicate that that constitutes a 27,300% annualized return.
Thank gawd we’re not.
Back to Mother Nature
This week’s trade is a play on the above mentioned theme of growing your own.
As many are aware, the organic food industry has taken wing, and investors in the sector were overjoyed two weeks ago to see the publicity surrounding Amazon’s purchase of Whole Foods Market in a $13 billion deal.
Now that news on the transaction has cooled somewhat, the question today is whether there’s still value in the sector, and if so, precisely how we Normans might trade it.
And with that, we move directly to the charts.
To begin, we offer a paste-up of one of the biggest names in the sector, Hain Celestial Group Inc. (NASDAQ:HAIN), marketers of dozens of organic brands worldwide – a company with a $4 billion market cap and an erratic trading history.
Take a look –
As you can see, the last year and a half has produced a return of little more than 10% for stockholders – amid some wild jumping and bumping.
More than that, however, the stock is either in a downtrend or just turning a corner higher, according to the moving average pattern.
Against that, look now at Limoneira Co. (NASDAQ:LMNR), growers of organic lemons, avocadoes and oranges. In particular, note the shares’ smooth ascent over the same time frame.
Limoneira shares have returned investors close to 100% in the last eighteen months and the outlook for the company is as promising today as it was in 2016.
Technically, price jumped above all the stock’s major moving averages a year ago, and a full unfurling of the MAs was completed in April.
In short, we’re in full bull mode.
For that reason, we’re playing the two companies against one another in a straightforward long-short trade that looks like this –- Content protected for Normandy Executive Lounge, Wall Street Elite, Executive Lounge members only]
The trade makes money on any outperformance of LMNR stock – higher faster, or lower slower, and we win.
With kind regards,
Hugh L. O’Haynew