Weekly Performance Review June 1st – 5th, 2021

Trading was muted for the holiday shortened week.  Were it not for the concentrated buying and selling by retail investors of meme stocks, volumes would have been unusually low.  Shares of AMC experienced particularly heavy trading and volatility.

With markets processing most economic readings through the filter of inflation implications, equities saw a small boost following the May employment report that was released Friday.  The report showed that job growth is improving, but not as quickly as anticipated.  

A total of 559,000 new jobs were added in May.  While this is shy of the consensus expectations of 670,000, it’s also double the payroll gains of April, signaling that hiring momentum is building as the reopening progresses.  Considering we are still 7.64 million jobs below pre-pandemic employment, it seems like there is plenty of room for improvement.   

The three major indices managed to eek out small gains.  For the week the Dow rose 0.7, the S&P 500 added 0.6% and the Nasdaq gained 0.5%.

Continue reading for more market insight from our team and to find out how our trades did for the week.

06-01-2021 _SH down 0.06%

When approached correctly, inverse ETFs can be excellent day-trading candidates and highly effective short-term hedging tools.  There are several inverse ETFs that can be used to profit from declines in broad market indexes, such as the Russell 2000 or the Nasdaq 100.  Also, there are inverse ETFs that focus on specific sectors, such as financials, energy, or consumer staples.

With nearly $4 billion in assets, the ProShares Short S&P 500 (SH) is the largest inverse fund by value.  Commonly used by investors as a hedging vehicle, the fund strives to deliver the inverse performance of the S&P 500 (SPX).  If you’re concerned about the stock market falling, then this fund that moves the opposite direction of the largest 500 U.S. corporations is the simplest way to protect yourself.  It’s an important tool to have in your tool kit for the next time you think things could get ugly. 

06-02-2021_ORI down 0.68%

Old Republic International Corp. (ORI) is a holding company engaged in insurance underwriting and related services. The stock has an impressive record of positive earnings surprises, as it hasn’t missed an earnings consensus estimate in any of the last four quarters.  Most recently, Old Republic reported EPS of $0.69 versus consensus estimate of $0.45.  ORI stock currently trades at just 4.75 times earnings and sports a 3.32% dividend yield.

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06-03-2021_STAG up 0.19%

STAG Industrial, Inc. (STAG) is a real estate investment trust focused on acquisition and operation of single-tenant, industrial properties throughout  the U.S.. Thanks to it’s acquisition strategy, the company’s payout has been slowly but steadily increasing. Given the REIT’s aim to invest billions in expanding its portfolio over the next five years, that trend should continue.   The stock sports a hefty, 4% yield, which is paid out monthly, making it even more attractive to income-seeking investors.  

06-04-2021_AFRM down 6.61%

Affirm Holdings (AFRM) is an emerging fintech company that is best known for their buy now, pay later (BNPL) solution for retailers and shoppers.  The stock went into free fall after peaking in February at $139, partly due to investor sentiment.

The company has exclusive partnerships with Shopify (SHOP) and 6,500 stores including Walmart (WMT), Target (TGT), Peloton (PTON) and several other high ticket retail merchants.  Plus, AFRM is the only BNPL player that charges customers zero fee. 

 If you believe that BNPL will become a regular fixture in fintech like Max Levchin, PayPal co-founder and creator of Affirm, then you may be considering a position in AFRM, which is possibly the best pure play on BNPL available.  

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