DraftKings, The Coronavirus Comeback Kid
“They think it’s a small plane.”
That was my wife telling me what the news had just reported when I walked into our family room on 9/11.
I had just made my coffee and was headed downstairs to my office to begin the trading day. I was working for a New York based hedge fund, but trading from my new home in Maryland.
Hmph. By the time the second plane hit I was already in my car headed to the gas station to fill the car up.
No one had said “we’re under attack.” But, having been a consultant to the military, and companies supporting the military, my “something doesn’t smell right here” sense was slightly higher than the average person’s.
I’m sure 99% of our military personnel knew what was going on when they heard about the first plane.
The second thing I did, once I got home from filling up, was to buy the stock of a little known explosives detection company I knew of. They supplied their devices to airports to detect explosives in luggage. Invision Technologies. They were later bought by GE.
I obviously had no idea what was really going on in New York, and hadn’t even heard about the Pentagon attack at that point. But, I had “started” to project possible outcome scenarios.
In the past few weeks I’ve been talking to my paid members, as well as free warrant watchlist subscribers about “looking through” the coronavirus issue.
This doesn’t mean ignoring it, or not doing what you’re supposed to be doing personally, as advised by the CDC and local government. But, it does mean taking a few minutes to form some hypotheses around possible outcomes.
And, since we’re here to make money in warrants and stocks. What will those possible outcomes mean for the next 2, 3, or 6-12 months from now, for our trades and investments.
After going through this kind of market several times now, what are the patterns that stocks will follow?
Find the profitable patterns
One of the patterns that WILL play out, is that some stocks (and businesses) will take much longer to recover than others. Some will need to, in essence, rebuild their businesses. While others will simply “flip a switch” (shout out to Tik Tok), and essentially be back.
I want to have money in those warrants, or stocks first. And, will need to start building, at least a small position, now.
One of these “flip a switch” warrants is DraftKings. Or what is still Diamond Eagle Acquisition (DEAC, DEACW), because the deal hasn’t quite closed yet.
Now, specific sports may come back in a staggered fashion, but it’s likely that if one sport is back, most of the others won’t be far behind.
And when sports are back, so is gambling. Overnight.
There won’t be any “am I SURE, no one on the plane has coronavirus.”
Or, “that’s a pretty big restaurant crowd, I’m not SURE I want to be in that big of a crowd.”
There will be, “hey, the Nats are playing the Phillies, that #@#% Harper!! I’m betting against him” and click, bet placed.
If DraftKings was worth $18 prior to sports closing up shop. It will be worth $18, almost immediately, when sports come back. Maybe more, because there WILL be pent up demand. Gamblers gotta gamble.
These types of companies will heal your portfolio much faster than slow grind back stocks. While most will come back, it will be a very uneven distribution.
Look for more “flip the switch” stocks to get you back on track quickly post coronavirus.
And, for more ideas on getting back to even (wasn’t that a Cramer book?) place your bets on this link: