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an hour ago
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The Saturday Spread: Leveraging Practical Math to Extract Alpha in Hidden Places
Each of the ideas that I'm going to discuss all feature underlying narratives that help explain where they ended up heading into the weekend. Rehashing those talking points would be rather useless. I'm not being fatalistic but rather realistic. A few years ago, the earliest generative AI engines suffered from consistent hallucinations and other productivity headwinds, effectively serving as the digital gremlin that gave the proletariat an extended lifeline. But with hallucinations rapidly evaporating into the ionosphere, we have to face a new reality — AI can kick our hind ends. More News from Barchart Heavy Trading in Intel Put Options - Is Trouble Ahead for INTC Stock? IBM Upped Its FCF Outlook - Could Be Worth +13% More at $294 Per Share Minimize Your Apple Stock Risk Before Earnings on July 31 with This 1 Options Strategy Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! What would take a CFA a day or two to compile ChatGPT can spit out in mere seconds. Some might be worried about the financial publication industry and the fact of the matter is that we all should be. If the core functionality of the CFA can be replaced, what does that say about everyone else? With that said, generative AI more or less operates in a linear fashion. It lacks the intellectual subversion of humans and that's where we come in. We're not going to play the game we're destined to lose. No, we're going to play the only game where we have a chance to win. You see, the fundamental mistake that the finpub industry is making is chasing value. That's an open-ended question with infinite answers. It's akin to asking investors how much a certain stock should be priced at — this leads to endless debates and unfalsifiable assertions. Instead, we should seek worth, as in, is that particular stock worth your time (money)? That's a yes-or-no question. And the answers are incredibly easy to categorize. Sure, compressing price action into a binary code may seem ridiculous — until you realize that this very code can be integrated into Bernoulli trials. From there, we can understand the probabilistic nature of the securities we're targeting, only acting when the odds favor us and simply avoiding when they don't. Welcome to applied game theory. CommVault Systems (CVLT) A cyber resilience and data protection software company, CommVault Systems (CVLT) suffered a rough week. On Friday, CVLT stock dropped nearly 1%, bringing its trailing-five-day loss to 4%. Even worse, in the trailing month, the security is down more than 5%. While circumstances may be ugly right now, the red ink could open an opportunity for risk-tolerant speculators. In the past two months, CVLT stock has printed a 4-6-D sequence: four up weeks, six down weeks, with a negative trajectory across the 10-week period. Think of this sequence as a voting record. During the past 10 weeks, the market voted to buy CVLT four times and voted to sell six times. We're not interested in how much it likes CommVault or whether it attended the rallies — we're just counting the votes. From observing past analogs, we know that since January 2019, the 4-6-D sequence has materialized 35 times. Enticingly, in 71.43% of cases, the following week's price action results in upside, with a median return of 3.07%. Should the bulls maintain control of the market for a third week, investors may anticipate a median added performance boost of 0.57%. Overall, the bulls may anticipate CVLT stock to rise above $170, so long as the sequence's implied forecast pans out. Using data provided by Barchart Premier, of the available multi-leg options strategies, the 165/170 bull call spread expiring Aug. 15 appears the most sensible. This transaction involves buying the $165 call and simultaneously selling the $170 call, for a net debit paid of $290 (the most that can be lost in the trade). Should CVLT stock rise through the short strike price ($170) at expiration, the maximum reward is $210, a payout of over 72%. Allegro MicroSystems (ALGM) A global semiconductor technology firm, Allegro MicroSystems (ALGM) is a leader in in sensing and power solutions, particularly for the e-mobility, clean energy and automation markets. Thanks to the underlying relevance, ALGM stock gained over 54% since the start of the year. However, in the trailing five sessions, ALGM is down roughly 10%, potentially providing a discount for aggressive speculators. In the past two months, ALGM stock has printed a 6-4-U sequence: six up weeks, four down weeks, positive trajectory. Since January 2019, this sequence has materialized 35 times. In 65.71% of cases, the following week's price action results in upside, with a median return of 4.88%. That will put ALGM on course to reach $35.34 very quickly if the implications pan out. Running a one-tailed binomial test on the 6-4-U sequence reveals a p-value of 6%, colloquially translating to a 94% confidence level that the pattern is 'intentional' rather than random. While not meeting the criteria for statistical significance, the low p-value suggests that the signal is more than just white noise. Plus, the baseline probability, or the chance that a long position in ALGM stock will be profitable on any given week, is only 51.21%. Therefore, the 6-4-U theoretically tilts the odds in our favor, which may warrant speculation. Bold traders may want to look at the 35.00/37.50 bull call spread expiring Sep. 19, 2025. Exact Sciences (EXAS) A molecular diagnostics company, Exact Sciences (EXAS) is a risky but intriguing idea. From the April lows, EXAS stock substantially higher, demonstrating upside mobility for traders. At the same time, the security is also volatile. Over the past five sessions, EXAS lost nearly 4% and in the trailing month, it's down about 7%. From a quantitative perspective, though, Exact Sciences could be intriguing. In the past two months, EXAS stock has printed a 2-8-D sequence: two up weeks, eight down weeks, negative trajectory. Ordinarily, the balance of distributive sessions far outweighing accumulative would scare off investors. However, in eight out of ten cases, the following week's price action results in upside. This far exceeds the baseline bullish probability of 52.48%, thus theoretically incentivizing a debit-based options strategy. Notably, the median return following the flashing of the 2-8-D sequence is 4.91%. Should the bulls maintain control for a second straight week, the median performance boost is an additional 2.43%. Basically, with EXAS stock closing on Friday at $48.49, it could be on pace to reach $52.11. Those interested in taking a shot may consider the 49/52 bull spread expiring Aug. 8. While this is temporally aggressive, the later expiration dates arguably don't provide compelling risk-reward structures. On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 hours ago
- Yahoo
The S&P 500 Is Crushing Apple This Year -- Here's Why
Key Points Apple could suffer due to President Trump's tariff plans. The company is also trailing its peers in the AI race. Apple's strong business, solid moat, and attractive growth avenues could allow it to overcome these issues. 10 stocks we like better than Apple › Equities have been volatile recently. The S&P 500 even flirted with bear market territory earlier this year. While it has recovered and is now in the green for the year, many companies are still down significantly. One of them is Apple (NASDAQ: AAPL), the tech giant that needs no introduction. Though it remains one of the largest companies in the world by market cap, Apple has had a challenging past six months. Let's examine the headwinds the iPhone maker has faced and what they could mean for long-term investors. Tariffs could cut into Apple's profits The most important challenge encountered this year is President Donald Trump's trade agenda. He has been in office for less than a year, but the U.S.'s 47th President has been busy implementing -- or trying to implement -- aggressive tariffs on imports from most countries. Trump's end goal is to force companies to bring manufacturing jobs back to the U.S. Corporations that opt not to do so will see their manufacturing expenses rise, possibly significantly, which will eat into their margins and their bottom lines. Apple finds itself in a tough spot here for at least two reasons. First, the tech leader does a significant amount of manufacturing in China, which the Trump administration has targeted with tariffs more than any other country. Second, making iPhones on U.S. soil might be prohibitively expensive for the company. Investors have sold off Apple's stock in response to these developments, but there is more. Apple continues to struggle with the perception that it trails its similarly sized tech peers in the lucrative and fast-growing artificial intelligence (AI) market. The company has made some moves in the field, but they haven't been enough (at least, that's what some investors believe). Are Apple's shares still attractive despite its challenges? The long-term view It may be challenging for Apple to manufacture iPhones in the U.S., but other products can be made in the country. The company announced that it would spend $500 billion over the next four years to strengthen its local manufacturing capacity. These efforts will include a brand-new facility and the expansion of several existing ones. Apple will manufacture AI servers in some of these facilities, something it normally would do abroad. While this is hardly enough to make up for the heavy tariffs the company will face if Trump's trade agenda survives his administration, it's a start. Furthermore, Apple could move manufacturing outside of China and into other countries that haven't been on Trump's radar nearly as much. So, the company could implement a multi-pronged approach to solving this problem. It's also worth noting that Trump has been going back and forth with his tariff plans, and engaging in a series of negotiations and trade deals with various countries. It's not clear that once the dust settles, things will be as bad for Apple as some think. Meanwhile, the tech company still has a robust underlying business, a strong competitive advantage, and important long-term growth avenues. Apple continues to generate consistent revenue and earnings, despite the challenges it has faced. The iPhone maker brand name -- one of the most valuable in the world -- remains one of its strongest sources of moat. Apple also benefits from switching costs for its devices. Jumping ship from an iPhone to an Android isn't that easy. It requires the sometimes painful task of transferring data between the two. Furthermore, iPhone users who own other Apple devices would lose various nifty features that come with having multiple Apple products. The company's app store also benefits from network effects. Lastly, Apple's services segment looks promising. This segment has been growing faster than the rest of its business for years. Apple has over 2 billion installed devices and over a billion paid subscriptions, and there is plenty of room to grow. The company may not be a leader in AI yet, but Apple has made a living off improving existing technologies. The tech leader isn't always first. It just knows how to add its own spin to products to make them far more appealing. With $98.5 billion in free cash flow generated over the trailing 12-month period, Apple has the cash it needs to invest aggressively in this or other potential opportunities. That's before we even mention the company's consistent record of dividend growth over the past decade. Apple may have lagged the market this year, but the company's long-term prospects remain strong. It's still worth buying the stock today. Should you invest $1,000 in Apple right now? Before you buy stock in Apple, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,942!* Now, it's worth noting Stock Advisor's total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy. The S&P 500 Is Crushing Apple This Year -- Here's Why was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
4 hours ago
- Yahoo
Sands Capital Technology Innovators Fund Decided to Exit Its Stake in Apple (AAPL)
Sands Capital, an investment management company, released its 'Sands Capital Technology Innovators Fund' Q2 2025 investor letter. A copy of the letter can be downloaded here. Technology Innovators focus on pioneering businesses worldwide that serve as key drivers or beneficiaries of significant long-term changes driven by technology. The fund returned 26.0% (net) in the second quarter compared to a 21.9% return for the benchmark, MSCI ACWI Info Tech and Communication Services Index. Easing geopolitical concerns, renewed AI optimism, resilient macroeconomic data, strong corporate earnings, and technical tailwinds boosted the markets for a quick recovery in the quarter. You can check the fund's top 5 holdings to know more about its best picks for 2025. In its second quarter 2025 investor letter, Sands Capital Technology Innovators Fund highlighted stocks such as Apple Inc. (NASDAQ:AAPL). Apple Inc. (NASDAQ:AAPL) is an American multinational company that designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. The one-month return of Apple Inc. (NASDAQ:AAPL) was 6.31%, and its shares lost 1.93% of their value over the last 52 weeks. On July 24, 2025, Apple Inc. (NASDAQ:AAPL) stock closed at $213.76 per share, with a market capitalization of $3.193 trillion. Sands Capital Technology Innovators Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its second quarter 2025 investor letter: "We exited Apple Inc. (NASDAQ:AAPL) based on several factors that we view as threats to its ability to sustain above-average earnings growth. Technology Innovators initiated a position in Apple in June 2024 based on the view that the combination of Apple's integrated hardware, voice-activated assistant, and consumer data positioned the business well to deliver artificial intelligence (AI)-enabled personalized assistant capabilities and to collect tolls on the expansion of AI enabled applications that we expected to scale alongside computing power. Since then, we see limited evidence that Apple has effectively leveraged AI to accelerate device replacement cycles or reignite Services growth by enhancing developer-facing AI functionality. A wide view of an Apple store, showing the range of products the company offers. Apple Inc. (NASDAQ:AAPL) is in 8th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 159 hedge fund portfolios held Apple Inc. (NASDAQ:AAPL) at the end of the first quarter, which was 166 in the previous quarter. While we acknowledge the potential of Apple Inc. (NASDAQ:AAPL) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. In another article, we covered Apple Inc. (NASDAQ:AAPL) and shared the list of AI stocks making waves on Wall Street. Polen Focus Growth Strategy also sold its investment in Apple Inc. (NASDAQ:AAPL) during Q2 2025. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. This article is originally published at Insider Monkey.
