Closing Bell - Closing Bell Overtime: Time to get defensive? 4/1/22

Episode Date: April 1, 2022

Stocks rallied into the close, led by real estate, utilities, and consumer staples. Is it time to get defensive? Jim Cramer outlines his investment strategy and outlook for the second quarter. Plus, star value investor Scott Black from Delphi Management makes the case for Jabil Inc.. And, Robby Greengold from Morningstar explains why he downgraded the ARK Invest ARKK ETF to a “Negative” rating.

Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started right here. In just a few minutes, we'll get a brand new stock pick from star value investor Scott Black. He's a member of the Barron's Roundtable and a new and scathing report about Cathie Wood and ARK Innovation. I've got it right here. The strategist who wrote it will join us live. If you invest in those stocks, you need to see this interview. Let's begin, though, with our talk of the tape. This directionless day, the first of the new quarter for your money. What does that say about what lies ahead? Let's ask Mad Money's Jim Cramer, who joins us once again on this Friday. Jim, it's good to have you.

Defensive, directionless. That's how this really feels. Real estate, staples, utilities, health care. What's the message? I always like to come on your show and bring something. I don't like to come empty-handed because that's what jokers do. I've been working the phones this afternoon about what's going on with the transports. And rather astounding. But in the last four weeks, spot trucking rates have fallen as much as 35 percent. There was another big decline just this week. The drivers are back. There's too many drivers.

There's more drivers now than there were before the pandemic. No one's talking about this. Some of the stocks are starting to react. But it's for real, Scott. It's gigantic. And the people involved in freight are stunned at the decline in trucking rates that we've had just in the last four weeks. How much of this also has to do with the inversion of the yield curve, Jim? The fact that we are now, if you want to say, on the clock with a recession. I'm looking at FedEx today down 4.3 percent. I pull up UPS right now. It has a decline of nearly 4 percent. Joe Terranova on halftime said he had sold Old Dominion. You could go all the way down the spectrum, Jim, the truckers, the rails, et cetera, et cetera, selling off big time today.

I'm not buying it. I'm not buying it. It's a supply issue, meaning that the truckers are back. It finally happened. It tipped. We got equilibrium and more. And what I'm saying is there are so many companies that just matter of fact, they say, but freight, but freight, but freight. Now we separate the men and women from the boys and girls because we know that some people are going to be able to take advantage of this. And others, once again, not know how to take advantage. This is why some of the consumer packaged goods companies are rallying. Well, this is why is why Walmart's rallying. You are getting an incredible decline that nobody is talking about in spot rates that is going to make it so there's tremendous margin expansion.

So, yes, we can talk about the twos and the tens. I don't even do that. I even succumb to that tonight on mad money as much as I don't want to. But this is big news. And the spot rates fell this week. I mean, this week. This afternoon. You are. I mean, Jim, you are starting to hear some commentary about, is this as good as it gets?

I'm talking PCs. I'm talking housing. I'm talking autos. What's your take? Okay, I think that the housing stocks have signaled that it was as good as it gets a long time ago. And after we get to six percent mortgage rates, those stocks are going to go so low that everybody's finally going to downgrade them. And then you got to buy them. I think that the semiconductors are reflecting the fact that people aren't going to buy cell phones, but they are.

They're just going to buy 5G. Now, the real issue is it's the second home in the hybrid environment. That home, Scott, has everything it's ever needed. It does not need unless you're going to have two washers and dryers, which I find to be unusual. Unless you're going to have two printers and four computers and want to do a TV show from your house because you don't want to come to the office. I think you probably have everything you need. What do I do then with the Home Depots? What do I do with the Microns? What do I do with the Fords? Micron is down.

Just start buying Micron. I mean, did anyone even listen to my interview with Sanjay? Sanjay was saying 5G is great. Sanjay is saying they've got a lot of different things going in the high-performance computing. But Sanjay is saying that this, well, you know what? There are lollies. You can buy them at Ollie's. And I would toss this one if it didn't cost me a G.

Now, what I really feel is happening, Scott, is that there's some areas where there's, well, I'm going to use a really fancy word, surfact. And there's other areas that are okay. But I do think that the whole second home hybrid, you know, they got everything they want. Omicron, not so bad. Maybe you want to come back to the office. Just as when everyone's giving up on the office and has the second office, you're going to start getting some bosses who are like me, who demand six days and a tie.

What does any of this, Jim, tell us about the market going into a new quarter? We had the first positive month of the year, and we just finished the worst quarter in two years. Let's be a little more positive. If Ukraine can win, which is really up to the United States and Germany, because obviously if Russia's taking 20% casualties they'll have nobody left by year end. That's just algorithmic. If Ukraine wins, and we get gasoline down, if we do get freight rates down, we can stop having all that maybe problems at the ports.

If China somehow realizes that they should use Pfizer and Moderna and now whatever the heck kind of vaccine they're doing, maybe it's hydroxychloroquine for all I know. And we finally would be in a situation where these costs would go down. Why am I going to complain? Because Chairman Jay is going to be done. Jay will be done by August. So I'm not succumbing to the negativity of the twos and ten guy. No, I'm not. So you, but what is that? Do you think that what we witnessed to, you know, this comeback was a bear market rally or no? No, it's good. There's a lot of...

Look, I came in here. I bore... I was not a Trojan horse with this thing. I'm saying that if freight rates come down, which is what no one's talking about other than your show today, that is the most significant thing that's occurred. And forget that it might be a recession or not. And accept the fact that I got it from trucking companies because the drivers came back. Out of nowhere, drivers making $110, that's better than $66. But that, again, that's just arithmetic. I am telling you that if we look at the transports, they were a tax on the system. Trucking was a tax on the

system. The rates were a tax. If they come down, you're not going to hear Coca-Cola, well, they got their own trucking thing. How about all the other consumers? Procter. Procter today was downgraded, right? They caught a downgrade. How'd it do? That get hit? These stocks can do well, and it's not just because of the tens and twos. You know, when I used to have tens and twos, you know what that was? That was a hand that you had to hit on because the dealer had a nine. Yeah, right.

So when someone like Dan Niles comes on the network, Jim, and says, quote, you should be completely out of the pool. If you're a retail investor, you can't trade the market every single day. Sit on cash. That's the best thing. That's what he suggests to people, many of whom are watching. With all due respect, which of course means I'm going to slam the heck out of him, I liked Dan for many, many years. And I think Dan is right about a lot of stocks. But Dan's more of a tech guy. So if you're coming in here and you're saying it is time to stop trading

every tick of Procter & Gamble, I would say absolutely just go own Procter & Gamble. But there's a lot of stocks that are not in like the NASDAQ 100 that really are intriguing to me. And then there are other companies that have come down so much that they're intriguing to me. So you take, let's take an advanced micro. Could advanced micro go down more? Absolutely. Was it a 170 at one point? Definitely. Do I want to own the stock? Well, when the smoke clears, yes, because I don't want people to trade it. For the club, it's not like I've banned trading.

I don't like trading. But when the market gets real overbought, you can let some stuff go. But for the investing club, I kind of like pick some good companies, and I want to own them for a very long time. You know, I've been taking a lot of heat on Twitter about my love for NVIDIA. Well, you know, when you take heat for love for a stock that you bought at first at $25 and it goes to $270, I say, you know what? Bring on the butane. In the few minutes that we have left with you, Jim, I want to bring in

Halftime's Bryn Talkington. What happened? Yes, you're the one who has to come. What do we have? Oh, I have to do my show. Oh, yeah. That little thing called the show. The darn show. No, no, no. You stay with me. Adam Parker's with me, too, of Trivariate. He's with me here at Post 9. It's great to have you, Brent. It's nice to see you. Adam, man, I haven't seen you in ages.

How you doing, partner? Good to see you, Jim. So what's your take on what Jim had to say? Well, with Jim, I just was curious. Do you think the semiconductors are over-earning right now? I mean, and how anticipatory do you think the stocks are going to be? Because I know a lot of my clients are trying to figure out when production will exceed consumption. Well, look, I think that's the question. I think that the over-earnings, I was going to pull forward.

I like your over-earning. Sanjay Mehrotra came on Squawk in the Street this week and told a not-so-great story that he thought was a pretty good story. And then Mike Kron loses 10 points quickly. I know that Qualcomm just lost 40 points. Qualcomm, it sells at a very low multiple. It's got a dividend, it's monster buyback, and it's got a lot of things in the works to make it so it's not just sell. I think what you have to have is a transformation inside the company,

not just be a hostage. So you take Qualcomm, they're converting, they'll be around 25 auto. I like that. When you take a look at Micron, they have to talk more high-performance computing and 5G. He did not do that, Sanjay Mehrotra. Advanced Micro bought the Xilinx. We want to see what Xilinx looks like. But Micron at 70 is different from Micron at 86, Adam.

It really is. And Qualcomm at 135 is different from 185. So I'm sensitive to price, Adam, as I know you always have been. And I like that about you. He likes Dell, says my notes, Jim. Do you? Okay. So, wow.

Okay. If you had a long short portfolio, Dell is obviously the best one to be in. I think Dell has been hit and hit and hit. Probably four down, ten up. I would do Dell versus HB. Dell long, HB short. Yeah. Yeah?

Okay. You're with me? Let's bring Bryn in as well. I'm wondering, Bryn, what you make of sort of this defensive feel and somewhat directionless, right? We had a nice little move towards the end of the session here to finish higher by, you know, 139 on the Dow. But for the most part, this day was directionless, and it certainly had a defensive tone. Right. I mean, for the quarter, from a sector perspective, unless you owned energy and utilities, you made no money. I mean, energy was up 40 percent, and maybe energy is a little overbought,

but it's still very under-owned. And so I do think the market's directionless. And I do have a question for Jim, because where one part I would slightly disagree is that Jay Powell being done in August, to me, I can get through raising rates 10 times off a base of zero, but draining liquidity at a $9 trillion top, and then draining that liquidity is incredibly hard for markets to meaningfully make new highs when the Fed is constantly taking that liquidity out of the market. So for that reason, I mean, I think if we ended the year flat on the S&P and flat on the Nasdaq, I think there's so many ifs in this market. I think that would be a wonderful return this year because we've really over-earned the last one year, three year, five year, and 10 years. And I just think that draining of liquidity is such a negative and such a headwind to markets. And I

would love to get, you know, Jim's thoughts on that. Well, look, I think training of liquidity is one thing that the professionals know about. I think J-PAL actually does know about it, too, and will do what he can to make it so it's not on autopilot. Even if people think it's on autopilot, he won't do that. He learned his lesson. But to individuals who I think are coming back to the market, I know some people feel they've left, but I see them coming back pretty viciously. They're buying franchises. And you buy the franchise of Microsoft, and you buy the franchise of Apple, and you buy the franchise of Procter, or the franchise of PepsiCo or American Express. I don't think draining of equity and owning those stocks are

necessarily, let's just say, unjustified. You can make a case that those are not mutually exclusive, and that's what I'm doing. You take a stock right underneath us right now, Meta Platforms. I think that Meta is going to have a really good second half. And I don't want to say, but you know what, I'm very worried about M2, or I'm very worried about what the Fed owns. And the reason I want to do that is because we have such great companies in this country, they can blow through

what you think they can do. Advanced Micro, I know it's had a very hard time. If that stock got to 90, it's going to be selling at 17 times earnings. And Lucy Hsu's buying a whole lot back. I do not want the Fed to keep me from taking advantage of a great American franchise. So I think we're not at cross purposes. I do worry about the overall market. By the way, I do like energy.

I think it's still not enough of the part of the S&P. But I'm just against like a franchise like an Eli Lilly, which I think has an unbelievable opportunity, both in diabetes and with Alzheimer's. I cannot allow anyone in our investing club to sell Eli Lilly because of the tens and the twos. Yeah. Hey, Jim, you're the best. Thank you for hanging out with us. Yeah, that's it.

You got to do what you got to do. But you didn't ask me about GameStop and all my friends in GameStop, the Philadelphia Zoo, the whole thing's there. I followed you on Twitter all day. I've seen your thoughts there. Well, I like to beat the whole thing's there. I've followed you on Twitter all day. I've seen your thoughts there. Well, I like to beat the heck out of the bad people. You know that. You and I know what it's like to be on a winning team and have to deal with these losers.

We will catch you tonight on Mad Money. You got the CEOs of Broadridge and Blue Owl. 6 p.m. Eastern. Don't miss that. Don't forget, you can have Kramer delivered right to your inbox with the CNBC Investing Club. You can sign up now at CNBC.com slash join the club or use the QR code on your screen. Let's pick up AP on something Jim said, energy. There are some suggestions from some people that energy has run its course,

that now is the time to transition from value, like energy, back to growth. What do you think? Well, as you know, for the last year, I've loved energy. It's been my favorite sector. I still think it's going to go way higher. I'm buying every dip. Now, if we get some ceasefire, obviously, we're going to get oil down $10 in a reaction. The stock's down $15.

But we're structurally short. Demand growth is going to exceed supply growth. The stocks are cheap versus their own history. They have upward revisions. They have positive price momentum and sentiments negative. It's a golden triangle or quadrangle of awesomeness. So I'm bullish on energy for two, three years, and I'm a dip buyer every time. Really? So even though you're positive on energy itself, you can be positive on energy equities for two to three years further? I think that's right. I think that's right. I mean you remember last last summer we were talking and some people on the program said

i don't know it's run its course terminal value zero i mean we're short oil demand strong so i i think uh energy and metals like aluminum and copper are in a bull market that will last several years wow i mean i think i know where brin stands and it's almost like sacrilege is down in houston uh to say she's negative energy and i know that energy has been a big part of your portfolio. But what about this sort of it's RBC's Lori Calvacina, right? It's her view today. She was on the closing bell before us. And it's this idea that time to move from value to growth. Again, what do you think? No, I think that the easy money and energy has been made. And I'll say easy only because in retrospect, it looked easy, but it was hard a year, year and a half ago when I was talking about buying energy.

I think that you can dip your toes. Like I own the Q's. I own a ton of growth. So I don't think it's an either or. But I do think, though, that energy has a secular tailwind, and to all of Adam's points. So I would be really, really skeptical of selling energy whose technicals and fundamentals look great versus buying growth whose fundamentals look great, but the technicals don't look good. You like housing exposure? Well, look, I haven't seen what's happened to those. Yeah, I haven't,

you know, I don't I haven't been recommending any of the home builders. I wouldn't buy them here. It was really an idiosyncratic thought about Zillow, just one of those that's getting a lot of traffic, stocks down a ton. They exited something. So I thought Zillow was kind of interesting. But look, going back to your growth value question, when you look at growth stock sell-offs and the kind of things that work afterward, they're different than what worked prior.

It's not the profitless software basket that led in 2020 into February 21. I think it's got to have margin expansion, positive free cash flow, and it's got to have pricing power. Kramer alluded to it. There are a lot of businesses that have pricing power that I think can make numbers. So to me, the big investment debate now, what I talk about with clients all day, is which companies can have gross margin expansion over the next six months that can handle the inflation that we're talking about. I think they're the winners, And some of them are growth. I appreciate you coming to Post 9. Great to see you. That's Adam Parker here with us. And of

course, Bryn Talkington joining us as well. I'll see you both again soon. Good weekend to you both. Let's get to our Twitter question of the day. We're asking which Dow stock will have the best returns in Q2? Is it Chevron? Is it Apple? Disney? Maybe Home Depot. Head to CNBC Overtime and cast your vote. We're going to bring you the results at the end of the show. Up next, value investor Scott Black. He'll join us with his top idea for your portfolio right now. Why he is making a big bet on one global manufacturer. And later, as I mentioned at the top of the show, Morningstar's big takedown of Star Fund manager Kathy Wood. They've downgraded the ARK ETF.

It's a scathing report you have to hear about. We'll talk to the analysts behind it when Overtime returns. We're back in the OT. He's long been considered one of America's best value investors. And today he's come to Overtime with a new stock pick. Scott Black is the founder and president of Delphi Management, also a member of the Barron's Roundtable. Welcome to our new program. It's nice to see you. Well, it's nice of you to invite me. Thank you. Yeah, I want to do what you do best, and that's pick stocks. And you have a new one

for us, as I've been teasing, and it's Jabil. J-B-L. Can you tell me why? Sure. It's probably the largest of the contract manufacturers in the United States. And it's one of the biggest worldwide. In other words, they build things for semiconductor capital companies, for Apple, etc. The stock went out today at $61.80. They'll earn $7.25 for the August year, but if you put it on a calendar basis, it's around $7.40, which is an 8.4 multiple, which is ridiculous when you consider the market multiple's 20.1.

The return on equity on prospective earnings is 45 percent. The return on total capital is 26 percent. And the company has already made promises about this year that they'll do about $32.6 billion in revenue, $7.25 in non-GAAP, 4.6 percent non-GAAP operating ratio, make margins, and $700 million in free cash flow. And the company really is very, very good. If you compare it to a Sandminer or the old Flextronics, they're a stronger franchise. They book more revenues.

They have diversified manufacturing. They're all over. They're in China, Malaysia, Singapore, Hungary, United States of America, Mexico. They have roughly 225,000 employees, and they've managed very well around supply chain shortages. So this is a very decent company. They've had seven straight up quarters, both in earnings and in revenue. We have the revenues this year up about 12 percent, and the earnings will be roughly on the August fiscal 725 against 561, which is up 29 percent. And we see a follow on in the coming year, probably five to seven percent more. And it's an investment grade credit. They have a nice balance sheet. It's triple B minus. And they generate a lot of free cash. Last year, they

generated $640 million. And this year, as I said, it'll be over $700 million. So it's a pretty cheap stock for a good company and an 8-4 multiple. Let me ask you about a stock that's certainly gotten cheaper recently. And I'm curious as to whether you still own it or not. And that's MU Micron. That's still in your portfolio. Yes, we do own it. They actually had a very good quarter. The stock popped right after the announcement that it pulled down. But, you know, they're on leading edge of DRAM. Pricing is good. And then also on flash memory, you know, all the areas that you want to be in, like storage, cyber, cloud, you know, they fit the bill. They're a U.S. manufacturer.

They're efficient. I heard that, you know, they lost some business with Apple. But the company is statistically cheap, even in the low 80s. And they're supposed to earn over $10. I'd have to revise the number to see what the percentage of Apple's loss means to their earnings per share. But they've done a very good job. And they know there is a leading-edge DRAM player. So it's a good quality company. And the other thing is, as we go away from globalization, it's important that we know how to make transistors in the United States again. And so they and Intel really, you know, they dominate flash memory. And they're really the number one producer of DRAM in the United States.

And you need that for national security. You picked Mosaic back in January for the roundtable. Ag stocks have obviously gone crazy and for obvious reasons, given what's happening in Ukraine. You stay with that name? Is this still part of your portfolio? Absolutely. Yes, because when I forecasted originally and I did my own numbers, we had 14.9 billion in revenue and 690 in earnings per share. And now the estimates are north of 18 billion in revenue and $11 a share. So it's 6587 based on $11. You got a 6 PE. The company generates nothing but cash. Again so it's 65 87 based on 11 you got a 6pe the company generates nothing but cash again it's an investment grade credit and if i looked at the prices that i assumed for phosphates

and potash and for brazil at the beginning of the year all the prices were up over 200 a ton in their latest flash report they give you you January, February numbers. For example, Frostbite, they're now getting $874 a ton. Potash, $576. And the Brazil is $778. So, yeah, it's not based on volume. It's based definitely on price. Now, the other thing that's important is that Belarus was the number three producer in the world of potash and that represented about 17 percent of the worldwide production here before even before the war they have to ship by rail to lithuania to get it to a port well lithuania is part of nato and belarus is aligned with mr putin's ergo with the exception of what they're selling now to russia which is a small amount, this has been drawn off

the market. And so obviously, demand and a decreasing supply equals increased price. Then the other thing you have to look at is India. For a long time, India was dependent on China to get some of its fertilizer, but they just passed a bill to spend $40 billion on fertilizer in India. And if you look at the long-term growth in China, which I did from 2022 to 2027, the growth in consumption of fertilizer in China is going to grow at about 5.5% compounded over the next five years. So you have the wind to your back. And Mosaic is the largest producer of fertilizer in the United States. Solid balance sheet, investment grade credit, 6 PE. I don't think it's over yet for fertilizer.

And we all know the farmers are actually doing very well in the United States. They had a second record year last year, and it looks like a good continuation. So although Mosaic's had a big move, I still think it's a solid company. Okay. Yeah, it's up 60-something percent in the last three months. It's great to see you. Scott, you take care of yourself. We'll see you back soon.

That's Scott Black of Delphi Management joining us here in overtime. Up next, Seabreeze Partners. Doug Cass says shorting stocks could be the best strategy for your money right now. He'll tell us the key names on his radar, why he thinks that. Plus, that scathing new report on Star Fund manager Kathy Wood. Morning Star taking aim in a big way. We've got the man behind that report when Overtime returns. Welcome back to Overtime. It's time for a CNBC News update with Shepard Smith.

Hey, Shep. Hey, Scott. From the news on CNBC, here's what's happening. A top Ukrainian security official is now denying that Ukraine is responsible for this explosion at a fuel depot on the Russian side of the border this morning. Russia's defense ministry claimed that two Ukrainian helicopters fired missiles at the fuel storage facility. If true, it would mark the first successful Ukrainian airstrike on Russian soil since the invasion began.

COVID is far more likely to lead to heart problems in teenage boys and young men than the vaccine is. That today from the CDC after the first study that directly compared the odds of developing myocarditis following an infection and following a vaccination. And the U.S. men's national soccer team headed to the World Cup for the first time in eight years. The team qualified last night and will be competing in Group B against England, Iran, and then one of three, potentially Ukraine, if they qualify. The world's biggest tournament

set to kick off in Qatar in November. Tonight, the mystery of Chernobyl and why Russian forces fought to control that radioactive site, then abandoned it on the news right after Jim Cramer, 7 Eastern CNBC. Scott, back to you. All right, good stuff. Thanks, Shep. We'll see you later tonight. Well, the new quarter could be a turbulent one, according to our next guest,

Doug Cass, the founder and president of Seabreeze Partners. It's good to see you. Welcome to Overtime. Great to be back with you, Judge. Love is in the air. You have a doozy of a headline, why shorting stocks or upping your cash position may be the best market strategy right now. Why so negative, Doug? Well, in my investment career, which has spanned a couple of decades, Judge, I've never seen a wider range of possible market and economic outcomes than exist today. And many of those outcomes are market unfriendly. Yet most investors still seem to view the market as they have in the past, as a series of probability

with the greatest probability surrounding a mean or baseline expectation. The tails are not seen as having very high probabilities of occurrence. And I strongly disagree. I see the tails having a much higher probability than any time in my years of investing in trading. And I think we should learn from Ukraine. We should learn from COVID. Well, how much how much of all of that is motivated by the Fed and this road of interest rate hikes, which is going to be rocky? It's really not motivated by the Fed to a major degree. I think most importantly, the world has grown flat, interconnected, networked. And in a game of dominoes, a lot of bad stuff can and will happen the world has grown far more unsafe as we've recently learned uh citizens and investors are

a lot less safe than they and the markets presume we have hotbeds of fomenting of conflicts and multiple continents there's less cooperation between countries. There's very little cooperation in our country between two partisan parties. It's hard for me to see the U.S. as an oasis of prosperity when the other large superpowers like China are foundering. We have a mountain of debt. I'm sorry. But don't you, you know, the great thing about our system is that our companies have an incredibly unique ability to manage themselves through many different periods of pain and crises and all of these potential negatives. And I would say normally they do that. And why can't they do that again? I would say normally I agree with you, but we have a bunch of pivots that we haven't had in the past, Judge. We have a mountain of debt, both in the private and public

sectors at a time when the Fed is aggressively pivoting towards tightening. That hasn't happened in a long period of time. People argue about whether you talked about the Fed, whether the Fed would make a mistake by tightening too hard. They already made a mistake of not tightening enough. The Fed and Powell are literally clueless, in my view. And based upon my experience. Does that tell you you think you think we're going to go back and retest or go through the lows? Is that where this all leads? Yeah, I think that, you know, I think March was a very, very interesting month. It was like a Charles Dickens tale of two cities, profound weakness in the first half, euphoria in the second half.

It's like the old quiz show to tell the truth. Would the real market, a bull market or a bear market rally please stand up? And my view is that we're in a bear market. We had a bear market rally and that the early January top was a broad, distributive and very important top. As I said, there's all these pivots going on that we're not paying attention to. Another pivot is globalization, the practice and the ideology. It's dead. And with that death and other factors, U.S. corporate profit margins have likely peaked. And finally, there's a non-trivial risk of another

pivot and that's been brewing for more than a decade and you and i have discussed it offline online offline it's the change in market structure in which algos and machines who generally worship at the altar of price momentum have replaced active investing and it's leading to heightened volatility this new regime of heightened volatility and market uncertainties in which fundamentals become irrelevant that's that that's your old pal lee cooperman rubbing off on you i i know those i gave that line from where they come i gave that line to lee and he'll tell you yeah so i i don't do this i'm sorry again no i i'm gonna you, I want to look at some

of the stocks that you're specifically negative on. And there's some of the kinds of stocks that we talk about all the time within the art complex and these high growth, high valuation stocks like a Roku or a Robin Hood. Why have you zeroed in on those? Roku, as evidenced by the recent report, Roku is uh decelerating growth the guidance was for plus 25 sales growth compared to stark 60 percent growth the streaming hours in the u.s were flat in the last quarter as investors are beginning to realize that the company's addressable market and share opportunities are more limited than expected. Equally surprising to many and to many longs, that is, is that expenses and costs to drive the current decelerating growth and defend

market share are way higher than previously thought. Management guided to very disappointing revenue growth. It's my continued view that Roku, which, as you know, aggregates and creates a gateway for streaming platforms, will go the way of a dinosaur, the Tyrannosaurus Rex, becoming a very extinct species subject to a shifting competitive landscape that could result ultimately not being in the mix. Because you have to start smart TV competitors like Amazon, Alphabet, Vizio, Samsung, et cetera, are invading Roku's market by delivering their own operating systems. So so look, and a lot of people have had issues with Robinhood and the stock is down in quite a bit. So I don't think we need to pile on Robinhood anymore. But but let me ask you this, even though you have a broadly negative view, which you've articulated well, what do you like in the market?

Surely there's got to be something, a part of this market that you like, that you're long, something new that you have. What is it? Sure. Something new that I'm buying, which you're going to be shocked about because home builders have been among the worst performing stocks extant. I'm buying Green Brick Partners, which is controlled by David Einhorn's Greenlight Management Fund. I think it's precisely the time to buy a whole builder when things look bad,

when interest rates are going up. It has a marvelous franchise. I've been lugging cannabis stocks for several months. This is more of a three or four or five year play. The stocks are ridiculously inexpensive relative to the longer term prospects. Today, the Moore Act, which decriminalizes cannabis, excuse me, was passed by the House. It's going to the Senate shortly. And I think we're going to get safe banking sometime in 2022, 2023. The stocks are trading at ludicrously low multiples to EBITDA. That that was that, by the way, was probably Cooperman telling you that that was actually

his line. So that's why he was calling you on the phone there. Hey, Doug, I appreciate it so much. You take care and we'll see you again on overtime sometime soon. Thanks for having me. All right. That's Doug Cass of Seabreeze Partners joining us. Up next, the big takedown of Star Fund manager Kathy Wood from Morningstar of all firms. The analyst behind this new report joins us next. We're back now in the OT. Morningstar out with a scathing takedown today of Star Fund manager Kathy Wood, the firm downgrading the ARK ETF to a negative rating, taking issue with ARK's risk management, portfolio concentration, succession plan and even Kathy Wood herself. Robbie Greengold is the man behind the call. He joins us now live.

Robbie, welcome. It's good to have you on. Thanks so much. Why this now? Last year was our inaugural report on ARK Innovation, the flagship strategy at ARK. And in that inaugural report, we flagged some of these substandard risk management practices at the firm. And so we had a dim view of the process about 12 months ago. And so we've talked a little bit about that over the past year. We've had a few reports out and it's become clear

at this point that the firm really has little inclination to improve those risk management practices. That the portfolio has become even more risky as Cathie Wood has slashed the number of names from around 60 to around 35 more recently. And just as a steward, ARK Investment Management, really, it's bearing its investors with unnecessary risks in terms of the key person risk in Cathie Wood herself. She is the loan portfolio manager at the firm, and there's a poor succession plan in place in the event that she was no longer available. So let me ask you this. Plenty of managers run concentrated portfolios. So why is it such a negative that she's taken down the number of

stocks in her portfolio? I would almost think that you could make a counter argument and saying that less is more. Why isn't it? Well, in this case, if we look at the past couple of years, ARK has I think the ARK has quadrupled its aggregate assets under management at the firm. And all of these strategies, the actively managed exchange traded funds that the firm runs, they are making shared bets on the same stocks. So ARK Innovation, if you look at the portfolio today with fewer names in the portfolio, the exposure has become greater to the stocks in which ARK Investment Management is a big shareholder. If you look at names like Teladoc or Beam Therapeutics, IntelliTherapeutics, these are names in which ARK owns, I think, more than 10% of the outstanding shares.

And this exposure has grown as Cathie Wood has cut the name count. So the exposures here are really unlike what you'll find in many other portfolios. And the concentration does stand out against peers. There's one line here that truly stands out to me, and maybe more than anything else, you write, quote, Woods' reliance on her instincts to construct the portfolio is a liability. What great investor doesn't rely somewhat on their instincts in the way that they run their fund? And don't you want that in an investor? I think there's absolutely something to be said about a portfolio manager's experience really kind of lending itself to instinctive reactions, buying or selling on a day-to-day

basis or over the course of years. I think there's absolutely something to be said about that. But in this case, the difference with this portfolio is that it is intentionally benchmark agnostic. Kathy Wood is proud of the degree to which she wants to be active in this portfolio and get as far away from the benchmarks as she can. That's a key selling point for her. The portfolio managers that do pay attention to benchmarks, they can then pay less attention to the risk management. With ARK, it's admirable for them to be taking a truly active approach, but they're not also complementing that with some balance in terms of a risk management program in place or risk management

personnel. ARC has invested heavily in its marketing capabilities, but nothing, as far as I can tell, in its risk management. Let me ask you this finally. You say that ARC has in place a poor succession plan for the 66-year-old Wood. It's interesting to me that you mention her age and why you think at this particular time it's important for her to have a succession plan in place. When you just look at other investors who are out there and still incredibly active, and I frankly don't know what Paul Singer's succession plan is, and he's 77. And Carl Icahn has spent the better parts of the last handful of years trying to figure it out in his own right, and he's 77. And Carl Icahn has spent the better parts of the last handful of years trying to figure it out in his own right. And he's 86. And Warren Buffett's 91.

And even Jamie Dimon, who runs J.P. Morgan, is 66. Why was it necessary to mention her age now at 66 and assume that she had to have a succession plan in place now. And the fact that she didn't was a liability. We see portfolio managers at stellar firms often retiring in their early 60s. Cathie Wood may have another good 30 years left, and that would be really great for fund holders if that's what they're really looking for in the portfolio manager. A lot of investors invest with ARK because of Cathie Wood. That's what they find appealing about the firm, about the strategies. She is what's appealing to them. And it's crucial that any manager who's going to invest in a fund for the long run to keep in mind whether or not there's going to be longevity in that portfolio manager or

the team backing the portfolio manager. It's crucial for any investor in any portfolio to just be mindful of whether there's going to be continuity in that process going, you know, over the course of a decade or more. Robbie, I appreciate your time very much. That's Robbie Greengold joining us today from Morningstar. Up next, Santoli's last word, why he's focused on what's not working in this market,

what it could say about the future. Overtime's back after this. We're back in overtime. Wall Street kicking off the new quarter with modest gains. The Dow, S&P and Nasdaq all finishing the day in the green. Late day finish at that, too. For the week, the S&P and Nasdaq managing to post with gains. The Dow finishing the week in the red. Among today's biggest winners, Newmont, Dexcom and Illumina, while names like J.B. Hunt, Norfolk Southern and C.H. Robinson were among the biggest losers on the day. Up next, it is Santoli's last word. All right, let's get now to Mike Santoli for his last word on this Friday, and it is Michael.

We're just sort of asking, you know, what's the condition of the typical cyclical bellwethers in this market right now? Pretty conspicuous weakness in things like, obviously, homebuilders. But then semis had a down leg today. The transports as well. Banks have not really been able to lead down the road? It's a little bit like a football team where the defense has to score points in order for them to win. You do have energy and commodity-related stocks. Healthcare has been doing well.

Utilities making new highs. A lot of that stuff has to go right for the overall market to stay together. The other possibility, and I'm very much open to this, is this idea that the defensive groups are kind of allowing the offense to rest and reset. And then you might actually be able to have another counter rotation. And who knows if that involves tech. But this is what we're kind of dealing with as we get into the second quarter and the market itself is at a decent spot, but it feels a little bit delicate. Yeah, that's an interesting perspective. Appreciate it. Have a good weekend. We'll see you next week. Yep.

That's Mike Santoli joining us. Up next, three big bets against the consumer. Need to hear those names next. To the results of today's Twitter poll, the majority of you saying Apple will be the best performing Dow stock in Q2. Chevron was number two. It was number one in Q1 out of the Dow. So it's an interesting bet on energy there. Technology to Disney and HD in third and fourth. All right. Let's round out the hour with some top plays for your portfolio with us now. Barbara Ann Bernard, the CEO of Windcrest Capital. You really are betting against the consumer with number one beyond meat. Why? Well, we just think 2021 was peak retail sales in the U.S. Sales were up 17.2 percent in the U.S. That's the best year ever. And of course,

a lot of that was due to stimulus checks, which are not recurring. In addition, this year we have very high inflation. So the same basket is costing the average U.S. household $5,200 more this year. And add to that rising rates, and we just see discretionary consumer consumption being squeezed. So you look at something like Beyond Meat, and it's a really unappetizing combination of slowing growth and high valuations. You know, at the beginning of the pandemic, everyone was eating at home, and that stock did very well. When you go out, it's not doing as well in restaurants as it was. Right now, there's a pilot in 600 McDonald's for their McPlant sandwich,

and this is in the San Francisco Bay Area and in Texas. In San Francisco, they're selling about 20 a day. In Texas, it's more like three to five. That does not bode well for a national rollout. Okay. CarMax and Weber are the others. Forgive me for cutting you off, but we've got to go. Have a good weekend, Barbara. We'll see you soon.

That does it for us.