Stock Market Analysis Today – Eight ‘stocks’ we’d sell short
For the last few years, the sports lexicon has become increasingly fueled by Wall Street lingo. We casually talk about buying or selling stock in players and teams, mostly as an avatar for whether we think they have a bright future or not.
But this week’s actual stock market frenzy surrounding GameStop and others brings to mind an interesting question: Which entities in sports would we sell short? In other words, which “commodities” would we anticipate declining in value this year with huge risk exposure if we were wrong and the stock price kept going up? Here are eight to consider:
The Brooklyn Nets
The trade for James Harden has created a Big Three with Kevin Durant and Kyrie Irving that nobody in the N(BA) can match — at least on the offensive end. But we’ll take the position that this isn’t a Finals team as currently constructed. The Nets are 25th in defensive rating, 24th in defensive rebound percentage, 30th in second-chance points allowed and 28th in points allowed in the paint. It’s a fun product to watch, but the fundamentals of this business seem shaky. That’s not an accident. It’s a manifestation of their personnel choices, including trading Jarrett Allen as part of the package to acquire Harden. You don’t have to have an elite center to win a title, but trying to get through a whole playoff run with DeAndre Jordan and Jeff Green manning the post is a position we will gladly short.
For the casual observer, Williams is still the biggest draw in women’s tennis. But her ranking has slipped to 11th, she can no longer overpower top players and she hasn’t won a Grand Slam since becoming a mother in 2017. Contrary to public sentiment, the smart money would be invested more in her declining this year rather than winning a 24th Grand Slam title at age 39. At the same time, the risk is considerable as she made two Slam finals in 2019 and had a lead in the U.S. Open semis last fall before losing to Vika Azarenka. With just a little draw luck, Serena could put together a good two-week run, probably at Wimbledon, and make short sellers look foolish.
This is like the trendy IPO that hits the market and explodes out of the gates, but when we eventually look back on his tenure as Jacksonville Jaguars’ head coach we are likely to see this period as the high-water mark. Right now, the Jags seem set up for future success with the No. 1 pick in the draft (almost certainly Clemson quarterback Trevor Lawrence), seven picks in the first four rounds and lots of roster flexibility. Meyer is a hot stock that people are buying on speculation, not results. After a couple years of losing, there should be a huge market correction. On the other hand, if Lawrence really does hit as a star, the shorts here could be squeezed.
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Will winning the press conference and trading for Francisco Lindor (who can walk after 2021) be the high-water mark for the Mets’ alleged white knight new owner? As the GameStop flap shows, any savior emerging from the world of hedge funds will always carry some baggage. And with several key players headed to free agency and a thinned farm system, World Series-or-bust may not be a sustainable goal.
The New Orleans Saints
Sean Payton is the CEO of a company that churns out solid quarter after solid quarter, but when you start to look out into the future, there’s potentially some trouble ahead. After four straight NFC South titles, the Saints will have to do some serious salary cap gymnastics with a bunch of free agents on defense and potentially replace quarterback Drew Brees, who is 42 and looked pretty much done in the Saints’ playoff loss to Tampa Bay. There’s also been a bit of a coaching staff exodus along with assistant general manager Terry Fontenot taking over in Atlanta. The Saints still have high-end talent, so shorting them could blow up in everyone’s face if they land a good quarterback. But there’s a tenuous feel to the whole operation right now.
The world’s eighth-ranked golfer seemingly hacked the sport in 2020 by bulking up and increasing his distance to the point where he could overpower a lot of courses, culminating with a breakthrough U.S. Open win. But DeChambeau is, by nature, a tinkerer. He’s always going to look for the next thing to try and he seems obsessed with gaining even more yards off the tee than last year. What could go wrong? Plenty. In recent interviews, DeChambeau talked about pushing himself in the offseason to the point of nearly blacking out and that he knows he’s risking injury by trying this stuff. At some point, DeChambeau’s chase for distance is going to backfire. It’s also possible he could completely take over the sport.
The Tigers have been to six straight College Football Playoffs under Dabo Swinney with two national titles. Though Alabama nudged to the front of the line by winning the championship this year, Clemson is still considered 1A in the hierarchy of programs. But the Tigers could be ready for a regression. Though Clemson had a remarkable collection of skill players the last couple years, they were kind of exposed in the trenches in playoff losses to LSU and Ohio State. Now as Trevor Lawrence departs to the NFL, along with running back Travis Etienne and top receivers Amari Rodgers and Cornell Powell, it will be a bit of a rebuilding job on offense. This could be the year some cracks start to show.
Kentucky and Duke basketball
These are your old big box stores that were indispensable back in the day but have seen their market share decline as consumers’ habits have changed. Both John Calipari and Mike Krzyzewski went all-in on one-and-done players a few years ago, but the reality of college basketball these days is that older teams have a big advantage and building a team around 18-year old players who are preparing for the N(BA) Draft isn’t a recipe for a national championship run. As we’ve seen this season with Kentucky likely to miss the NCAA tournament and Duke muddling along with a 6-5 record, these stocks have already taken a pretty big hit. Maybe this is the time to buy low on reliable brands. But at this stage of their careers, it’ll be hard for Coach K and Coach Cal to change course and build the kind of roster you need in this era of college hoops.
Contributing: Gabe Lacques
Tag: Stock Market
Stock Market Analysis Today – Eight ‘stocks’ we’d sell short