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My Gut Feeling for May 23, 2024: Nvidia – Lather Rinse Repeat

My Gut Feeling for May 23, 2024: Nvidia – Lather Rinse Repeat

May 23, 2024

I apologize for not writing my commentary sooner. However, we have been remarkably busy behind the scenes. To begin with (as if I had spare time) I was busy cramming for my Insurance License Exam (Life, Health, Disability) which resulted in a passing grade two weeks ago. I am now awaiting the formal approval of the license application by the requisite regulatory agency. Pretty soon we will be able to offer, in addition to investment management and alternative investments, insurance and, in partnership with a financial planner, financial planning services. So, think about us if you need those services (and I know many of you have already reached out). I may have turned sixty-three years old since I last published “My Gut Feeling” but I am going as strong as ever. Plus, with Carly on the team, LakeView Asset Management is rising to greater heights. We will have more in the pipeline in the future.

On top of all that, I relocated east for the summer months as we usually do. Carly will remain in Nevada, except for a trip east in June.

So, let me recap a bit of what has transpired in the last few weeks. The quarter got off to a rough start as hopes for rate cuts diminished in April. The Standard & Poor’s 500 (SPX) declined 4.16%. While the usual suspect of the decline was the Federal Reserve, let’s be honest, the market was due for a pullback, and it got one. As we know, April showers bring May flowers and the markets have bounced back to make new highs this month. The only noteworthy laggard is the small caps as evidenced by the Russell 2000 (RUT). I would not give up on the small caps. In fact, my research last year led us to purchase two small cap stocks, Comfort Systems (FIX) and Technoglass (TGLS), both of which have been homeruns for us. Carly had a stealth pick in another small cap stock, SharkNinja (SN), which has performed quite well. Remember, it is a market of stocks not a stock market. This is why we are paid to be stock pickers and do not take the lazy way out and just index client funds.

So, let us turn to the highlight of the day, Nvidia (NVIA). The company blew away analysts estimates when reporting Wednesday night and to paraphrase company CEO, Jensen Huang AI; demand is strong and shows no signs of slowing down. Furthermore, the transition to the company’s newest “Blackwell” system of chips is expected to take place in the second half of 2024, which is not too far away.

When previewing the prior quarter earnings for NVDA , I prognosticated that “I do think that the stock could reach the $1000 price level. It is quite possible that NVDA will announce a major buyback and/or increase its dividend and/or split its stock this week.” Well, I was three months ahead of that forecast, but indeed, the stock has now breached the $1000 price level (to the upside) and announced a 10 for 1 split effective June 7 and an increase of its quarterly dividend from 4 cents to 10 cents.

This is now two consecutive quarters of exemplary financial results and stock appreciation. For the year, as I write NVDA stock has doubled. As I mentioned to my friend Paul, a devotee of the Dow Jones Industrials (INDU) for which I am not a fan of, the stock split in NVDA will give the index managers an opportunity to put NVDA into the grand old index. My best guess as to which company NVDA will supplant in the index is Dow Inc. (DOW), no relation to the Dow in Dow Jones. The Dow is Dow Jones is Charles Dow, co-founder of the Wall Street Journal and Dow Jones & Co. As it turns out, we own DOW in our Dividend Value Portfolio. Removing DOW from the INDU will not have any impact on the stock as the index is not heavily managed, except for the namesake ETF.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC  was long DOW, FIX, NVDA, SN, TGLS, SPY, SSO and SPXL  - although positions can change at any time.

Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, (LVAM) an investment advisor representative, specializing in high-net-worth private wealth management. LVAM is affiliated with Kingswood Wealth Advisors Services, a registered investment advisor.

For more information on investing with LakeView Asset Management, LLC call us at 702-749-9343 or request more information by clicking on the contact button on the top right-hand corner of the website or by emailing Scott at srothbort-lakeview@kingswoodus.com or Carly at crothbort-lakeview@kingswoodus.com. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ

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