The 2025 Portfolio Rebalance 1/3/25
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Thank you very much. Welcome to the Halftime Report. I am Courtney Reagan in for Scott Wapner. Front and center this hour, New Year, big moves. The Investment Committee making a lot of portfolio changes as we kick off 2025. The stocks and the strategies are coming up. Joining me for the hour today, Brent Talkington, Steve Weiss, Jim Laventhal, and Kevin Simpson. Let's check the markets green across the board. S&P 500 and the Nasdaq trying to avoid their sixth straight day of losses. Take a look at that. The Nasdaq higher by almost

Close, 1.5%. What a nice move here on this Friday going into the weekend. S&P 500 again up by a percent. We do want to get to our committee moves because there are so many of them. So, Brim, we're going to start with you. This is a big one. You're trimming Apple. Tell us why and why now.

Yeah, well, I think over the last six or seven years I've been in and out of Apple, I felt like as the iPhone 16 was coming out, I've been really consistent on saying I think the iPhone sales are going to be incremental, not exponential. And I think that we're seeing that. And so I had felt that Apple would be a market performer. And after November and December's really strong performance of Apple, I just feel like the stock plummeted.

on pretty much every metric is really expensive. It's got around a nine price to sales. I think revenues, I think the analysts are looking for 7% earnings growth. I think it probably comes, revenue growth probably comes in around four-ish. And I just feel like there's other spots I'd rather be. And so starting the new year, I sold half the Apple position and we'll look to redeploy it elsewhere, which we'll get into later.

Wow. Okay. How did you make the decision about half of the position? That's a pretty big move. I mean, if you're going to trim the position, it's like trim the position either. I mean, part of me is like either I own it or don't own it. And so I still like the company long-term. I think Tim Cook is great, but I think just doing like very small trims and names are not very useful in a portfolio. And so I didn't want to sell the whole thing yet. So I just took 50% off.

Weiss, you also trimmed. Similar logic or different reasons? Are you worried about China, for instance? Yeah. So when China came out a number of months ago and said, hey, we don't want anybody in the government using Apple phones anymore, that was sort of the first indication. But I was also worried about that before because Apple was moving their supply chain to India. So there's going to be disruption. Now,

Now, I'd come back and so I'd cut my position slightly then, but then I did buy into the major upgrade cycle until I learned that they're just going to roll things out gradually. And that's not going to drive anybody really by the phones. So I had actually trimmed the shares and I trimmed small.

But I don't disagree with Bryn, except it's been a small position for me, regrettably, because it's been such a good performer recently. And I trimmed initially around, I think, about 210, 215. So, look, for me, the other part of it is I've got so much tech exposure that you sort of have to make choices this year, I believe, even though it's still the area I want to be in, in the Mag 7.

I still think that you have to take a little more risk control back to the portfolio because I don't think I don't buy into this narrative earnings are going to be up 13 percent. Stocks are going to do what they did last year and the year before. I just think it's much more nuanced and all depending upon inflation. And frankly, all the projected policies by the Trump administration relating to inflation are inflationary.

are inflationary, not deflationary. So I think the Fed is going to stay on watch, not necessarily cut. Yeah, I agree with you, Steve. And Bryn, I agree with you and I applaud the move, too. I think for most of the last two years, there's been this plethora of strategists out there who come out with these aphorisms that say you have to own the MAG-7. And I hate hearing that. You don't have to own anything. Look, it's been a great thing to own the MAG-7 for the last two years, unquestionably. But

Bryn, what you're saying about Apple is true. I'm underweight Apple. Steve, what you're saying, I've reflected this in Microsoft, which through the fourth quarter I've been trimming. And Bryn, just to kind of take a dialogue that you started there about, you know, how much do you trim? I would not be surprised, and I'm telegraphing this move, that I would exit Microsoft entirely in the next couple of weeks. This is a time to position. Steve, if you want to be in tech, I'm not saying you have to do this. If one wants to be in tech,

There's a lot more attractively priced technology stocks to be in there. You can look at a lot of semiconductor companies. You can look at Cisco, which is also an AI beneficiary. And many people will look at something like Microsoft, I'm not trying to pile on here, and say, well, it should be a beneficiary with Copilot. If that's the case, then why have the earnings estimates been doing nothing but going down for quite some time? Here's the point I'm driving at, just a summary. I disagree with that.

With what part? That earnings estimates have been coming down? It's too early to have a referendum on whether Copilot and AI is going to add to their earnings. Let me finish my thought. I'm not arguing with you. It's factual that the estimates have come down. Maybe they go up on the basis of what you're saying, but right now they're coming down. You can find much more attractively priced technology stocks. You can find much more attractively priced other...

other 493 stocks. So when people say to you, you have to own something, it's just not true. Just don't believe it. You may find a reason to own something, but it's not that you have to own it. And can I just add one thing? What Bryn said that I keyed on is that she's traded stock over the last number of years, as have I. The people that say you can't trade Apple,

It's just because they're not traders. And they don't see it. Of course you can trade it. And it's been a great trading stock. So when it hits these levels that you say, why the hell did it get there, which is why I sold it, trimmed it, that's

That's when you sell it and you buy it when they miss a quarter. They will miss this quarter undoubtedly. The question is, will the market look through it? Let's hear from Kevin. Yeah, Kevin, you sold out of Apple earlier than Bryn. Let's take it back to Apple because that was Bryn's trade. I've sold Apple 10 times over the past 13 years. Most recently, we sold out of the position in December in its entirety. Early December?

December 9th. So it was right around this same level when you factor in the covered calls that we wrote. And for all these reasons, we thought this company is, from a valuation standpoint, a little bit ahead of itself. Now, we love the company. We don't always like the price that it's trading at. Bryn, you mentioned the price to sales at nine, which is important. But putting that into context, for the past 20 years, they've averaged 4.4. So the price to sales is almost doubled.

PE ratios for trailing 12 months is at like 40, which is very, very high against the historical 24. If you don't like the trailing 12 months, you can look at the forward PE. We had that around 33, and typically that's around 21. So you have a stock that definitely is an amazing share buyback. It's an amazing beneficiary of passive index flows.

But for right now, if you're not believing that the 16 is gonna be the super cycle, but you're waiting for the 17 maybe for the AI to really roll out, I think we'll get a chance to buy this cheaper. And I love that 215, 210 where you sold it. - Yeah, and let me ask you both you guys a question. Would NMU be surprised if one day you wake up, given the problems that telcos are having, right? How the stocks are just being shunned. If you woke up one morning and they said, no more subsidies, we're tired of supporting Apple.

You know, we've got our customers. All we're doing is creating churn to go to somewhere else and they come to us. And then the others all follow suit. Will that surprise anybody? I mean, it's reasonable. I just don't know when. And I don't think you know when. You're not saying when. I'm not saying it's going to happen. That is a risk that people don't assign to the stock at all. And you've said it before, and it's a rational thing to say, I wouldn't trade it today, buy or sell on that news, on that potential news. It would surprise me if that happened, but

the rationale is that it should. Yeah. Bryn, jump in. Yeah, I think also from a pricing perspective, as Kevin was talking about, if you look technically at the chart, the first support is at 234. The 50-day is around 209. And so I think as an investor, be patient here. But I think that this is 2025. We will continue to see

a dislocation of prices between this monolith we all call the Mag7. I mean, we saw it with Microsoft this year, which was definitely an underperformer relative to the Qs and the S&P and then relative to the other Mag6 names. I think you're going to continue to see this. I think there's going to be companies within that group that I think will absolutely underperform the market. And so to me, when I look at, of those seven names,

I think the one name where you have the most clarity, the most line of sight still goes back to Nvidia, right? Because we know that Microsoft spent a ton of money. I don't think you're going to see big monetization with any of these companies this year, except continuing to be with Nvidia, which continues to get cheaper as their earnings grow. I want to stay in this area, but sort of turn the conversation wise to Alphabet. You trimmed that name too. I did.

Tell us why. There was a note out yesterday as well. Any of that play into your thinking? When did you trim? Yeah, these were-- while I wasn't specific in terms of the moves I was going to make in January,

This is just one of them. The position, frankly, just got too big. I kept buying it when it got crushed. I remember buying it around 140, then around 165, 170, and it just kept building up. I trimmed it once before for the same reason, but it's just right size in the position. So the other moves I've made are really just, they're still big core positions. I run a very concentrated book, but I just want to take some off the table on this. I'm not that concerned about them a

losing significant share. In search? Yeah, in search specifically. And I do believe that with AI, they are right there with the others. And they just have incredible balance sheet. They've also, if you take a look at Verily and some of the other

I don't want to say vanity projects. They've really cut back on the spending. So they're really focusing, as shareholders want them to do, on what their core businesses are. Kevin, what are your thoughts on this one on Alphabet? So we don't own Google at the moment, but I do think that there's a potential for them to lose this monopoly on search. Really? And we all talk about it all the time, but just think about any one of us here on the desk.

where I would never escape that ecosystem personally, I find myself at least 10 to 20% of the time bypassing Google and going right to ChatGPT. Really? What about you? Jim? Well, look, we had this discussion yesterday, and Josh was talking about things like perplexity as a competitor. And my thought on this is very succinctly that if you want to compete in the AI world, it really is an arms race, and you better have the biggest bank account to do so.

Google has that biggest bank account. This is one of those reasons that like, I think it was a couple of weeks ago, there was a discussion about Reddit, of all things getting into AI. And I didn't chuckle at it, but inside I was like, really, how are you gonna go up against Alphabet? You don't have the money. Yes, there is some competition unquestionably. However, I think this is about the amount of money that you can spend.

But at this valuation, I think more competition is priced into Alphabet's price than is likely to show up. That's an opinion. You don't own it. You own some of it. Josh trimmed it a couple of weeks ago. For me, look, we're all trimming it because it's done fabulously well. We're going to admit that. Portfolio management, it's not fundamental.

I haven't trimmed it, and because of that, it is my biggest position. It's my biggest tech position. At some point, I probably will trim it, but I think there is more catch-up for it to do. Could be wrong. And I've used Perplexity on my phone, as a matter of fact. I've used ChatGPT. I just find, you know, the old friend, which you know, I didn't find I was getting more from the others, frankly. Look, and also, don't forget YouTube. Don't forget Waymo. Don't forget a lot of moonshots that really could pay out there.

- Waymo just doesn't make any money. It's unknown when they will. - Yet, yet. They haven't even figured out advertising yet. - Yeah, but also bear in mind that their competitors are falling by the wayside, right? GM has given up on cruise. Ford gave up on it a long time ago. - It doesn't matter. It's the fundamentals of the business. When you have Uber, you've got drivers. That's why I don't know why Uber's rushing into driverless autonomous taxis because drivers right now pay for the insurance.

They pay for the maintenance. They pay for the repairs. Who's going to pay for that? Waymo? They pay for themselves. That's why they're in profit. Hang on, hang on, hang on on that one. I want to get to Bryn. You bought some more Uber there. So jump in on this conversation, Bryn. Yeah, so, you know, I own Tesla, obviously. I bought Uber. I started buying in the mid-70s. I bought some more down here in the low 60s.

I just think that there's a narrative of this that had been happening at the end of last year of this long Tesla, short Uber because Tesla's going to come out with robo taxis and Waymo's going to take over and we're all going to get in these robot cars. I just think that's years off. Have a Tesla. They are not ready to have these driverless cars around.

around town. And so I think there is a hedge fund positioning, CTA, algorithmic trading doing this long Tesla short Uber. And I think when earnings start to come out in Q1 for both Tesla and Uber, you're going to see that Uber not only is a free cash flow machine, but don't forget in February of 2024, they announced their $7 billion stock buyback, which they really

are just in their early days about actually implementing. And so I just think for this reason, this is just a great name to own in the tech space. And this is what I did with partial part of my Apple shares or the Apple proceeds is buy more Uber.

And Uber is kind of coming off some beaten up times, right? It's worst month since May of 2022. Weiss, jump back in there and continue your thought. I just wanted to make sure we got Brent's move on that. I've actually been looking at Uber because I sold it at 68 when I sold it and it kept going up. It is interesting. But again, nobody's been able to say to me that why going into robo-taxis is a good thing given the cost structure that I mentioned. And that comes, by the way, from people that are or were critical people

at Waymo. So I don't see it, you know, I don't see where the margins will be. It's much better outsourcing all that to your driver.

And even, frankly, if you have to pay W-2 wages and benefits to your driver, it's still cheaper than paying to support the car. I mean, call me old school, but I want a person in the driver's seat. Just me. It's great, though. Have you done Waymo? No. I'm way too afraid to do that. It's fine. No, no, it's absolutely great. Well, Bren, you also have another winner that you've been trimming, Palantir. Yeah.

Yeah, that was a winner for sure. I mean, you know, stocks go lower than they should probably ever go, and they also go higher than they should go. And so I didn't want to take the profits last year, so I just waited till a new year. But when I look at Palantir today, I trimmed half the position. Huge fan of what they're doing. But when I look at the just...

the financials, it's got about $181 billion market cap. And I think they'll do maybe $2.5 billion in revenues. So from a revenue to market cap, it's very expensive. I think it's one of the most expensive names. And so this is one of these names where I think long term, this company continues to get stronger and stronger. But I think there's a heck of a lot priced in right now. So

You know, I always say you can't go broke taking profits. And so definitely wanted to book some gains on this early in the year. I mean, up 400 percent in a year. Holy cow. What a run. And Kevin, because of that, you sort of you got called out of it.

Yeah, you can't lose money taking a profit, but I wish I would have sold it a little bit closer to where Bryn did. Yes, we had covered calls in our growth strategy, Courtney, and it got called away and it just continues to run. Love the company, but amazing how far this thing's gone so quickly. We talked a little bit, we were touching a little bit earlier on AI and you were talking about co-pilots. I want to get back

to that thought and Jim let you sort of pick it up there because we kind of sidelined the conversation. We're talking about AI. Are we set for a breather? I know we brought up NVIDIA. We're talking about having those sight lines but are we running out of steam? I mean, look at some of these names that have run so far. Look, I think we're set for a transition. A,

AI is for real. AI is for real. And sorry to just repeat myself, I think playing it this year in Microsoft is probably not the way to play it. The way to play it is to look for those companies in the non-tech corporate world that are using AI, that are implementing it. Could

Could be insurance companies. I mean, certainly there's a lot of room there for risk management and calculation using AI. Could be any of a number of travel and leisure companies that figure out how to get the right experience to the right consumer. I mean, I can go on and on about this. Could be retail, getting the right product in the right size in front of the right customer. I think that's the way in 2025 that you're going to see monetization come from AI. But just sort of blindly throwing money at

For instance, the hyperscalers, because they're spending hundreds of billions of dollars on Blackwell chips. I don't think that's the way to make it. You know, Michael Semblist, the strategist at JPMorgan, really smart guy. He does very good analysis of the markets. His recent piece, it's called The Alchemists, goes through the fact that for the hyperscaler community, the big tech companies that are buying all these chips and building all these data centers,

For them to achieve the same historical margins on the amount of CapEx that they've done in the last year and going forward, they would have to create 400 to 500 billion of new revenues per year. And this is with their revenues around 100 billion right now. I'm not saying that it can't happen. Courtney, there's a lot of breathless projections out there. You can choose any of a number of

podcasts to listen to that will tell you these are realistic but i will tell you that to quadruple your revenues when you're already at this size is pretty impressive and i'm pretty dubious of it first of all i'd say that that may be the right number in the end on that analysis but that's not the number that's going to drive the stocks what's going to drive the stocks is the continued adoption and continue and the return on those which some companies are seeing now

AI, coincidentally, is, because we're talking about it, is the fastest adopted technology in the history of the world. Faster than the internet, the web, which was free. This people have to pay for. I'd also tell you that it has been around for a long time. For example, there's this one company we're looking at from one of our portfolio companies that has been doing AI transition for a decade and works with...

all the top PE firms in their portfolio companies. So a lot of companies already have this frame of reference, but what it is doing is absolutely mind-blowing and it is adding tremendous efficiency to it. So again, all you have to do is go along the mile markers. You don't have to get to that number. Let me make sure I understand what you're saying. Let me paraphrase this back to you. I'm not calling you out, but you're trimming Google alphabet

or have trimmed. You have trimmed Apple. I've trimmed Microsoft. Bryn's trimmed Apple. I don't hear anyone, please chime in here, correct me if I'm wrong, coming into the desk today and saying, let's go load up on the Mag 7. I don't hear any of us saying that. Hold on. On AI, I did add to...

which we're going to get to. We're going to get there in a second. Which benefits completely. Okay, but I was being specific about the MAG-7. So the MAG-7, because I've been fully invested in the MAG-7 with large core positions for over a year. But my point is you're trimming. You're trimming. Bryn's trimming. I'm trimming because it's done so well as portfolio management. I'm not trimming on fundamentals. That's fine. You're not hearing me. You're arguing with me just to argue with me. I'm saying nobody's coming on the desk today and saying,

I'm adding to the Mag 7. Listen, I don't want to argue with you for the sake of arguing like you're trying to do. What I'm saying is there's a difference between trimming because of portfolio management and because of fundamentals. We're talking different things and you're getting mad. I still believe in the fundamentals. We're talking different things and you're getting mad. I don't want to do that. I'm not getting mad. I try to be very patient with you knowing the opposite. Brent, I heard you try to speak up there. Obviously, we started this conversation with a lot of your moves. So weigh in on the Magnificent 7. Loading up, trimming, where are you going? What should you be doing?

Two things. As I said earlier, I think you're going to see this distinct performance within these, let's say, seven names this year. And I think...

To Jim's point, I think he's spot on. I mean, I own Microsoft, but I think I think about it in the same way that Jim does. I'm staying with it right now because they do have this big business called Azure. And Satya and Amy on last quarter's call said that Azure sales and margins are actually going to go up in the back half of the year. So I'm going to believe what they're saying.

But I think if you're thinking today, hey, where's going to be my best return? And I'm going to buy these seven names in an equal weight basket. I think there's better places to put your money. But I do think, though, that like Kevin has a growth strategy that sells calls against growth names. We own JEPQ, which takes the Qs and sells calls. But of those seven names, I'm still surprised.

Big fan of Tesla and Nvidia because I think for different reasons, these names are going to do well this year. But I agree that especially with the Apple and the Microsoft, they're pretty rich here unless something meaningfully changes and they're able to actually

grow revenues to sustain the multiple that the market's willing to pay today. - So let's talk about then where you're putting some of that money that you're trimming some of these profits of some of these big names and you're putting some to work in Robinhood, which has also been named a topic at JP Morgan, upgraded to outperform at Wolf. What do you like there?

Yeah, well, I mean, I think we've all seen this company, you know, grow up. I think we remember, you know, the GameStop. Steve was quoted in the movie, right? I mean, you know, Robinhood was not a company I would have bought

two years ago, but they've really changed. And so I bought it last year and just for some numbers, they come out with earnings on February 13th and they're looking for revenue and earnings growth of 83 and 205%. And where I think they're at this intersection of the secular growth trend with there's what 75 to $80 trillion that's gonna get transferred from the baby boomers through the economy down to their kids and grandkids.

On top of that, if you look at Robinhood's monthly metrics, which they print, I think they're taking business from Coinbase, from their growing crypto, and they're taking market share from the traditional custodians. And then what I like about it also, if you go to their site, they spend a lot of time talking about opening a retirement account. They'll do a matching program.

And they're doing much more investor education and to me, less of the gamification that they were doing a few years ago. And so I think as a financial, as well as a tech company, as well as a crypto, this to me is at the intersection of all three of those, plus that secular tailwind of this big transfer of 75, 80 trillion down to this next generation of investors.

You know, Kevin, you've got financials, you've got tech. You don't really have fintech. What do you make of this Robinhood idea and the fundamental strategy here that Bryn laid out? It makes a lot of sense to me. It makes sense to me, too. And in our growth strategy, we do have Robinhood. And I love the fact that they print these numbers. And I'll pile on to some of the things that Bryn just talked about.

Their crypto volume in November was up 780% year over year. Now, that's obvious because we've seen what's happened with Bitcoin. But their equity volume was up 147 billion. That's 178% year over year. They made an acquisition of Trade PMR, which is a custodial firm for RIAs.

So if you follow Bryn's thesis and you follow the money, if these are the people that are going to inherit it, at some point they may want financial advice. And to be able to tack on this legitimate financial planning division, I think they're going where the puck is moving. They see the field, and this is a stock that you shouldn't ignore. Well, this was a jam-packed beginning of the show. We've got to take a break, get some air. Coming up, more community moves. Jim Laventhal buying the dip in one of his key holdings. The trade, though, is next. You're going to have to hang on for it. Halftime, back in two minutes.

Weekdays at 5 a.m. be first on World Markets. First to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early. Worldwide Exchange, 5 a.m. Eastern, CNBC.

Welcome back to Halftime. Shares of U.S. steel falling as President Biden blocks the $14 billion sale of the company to Japan's Nippon Steel on national security grounds. In the last hour, the two steel companies have issued a joint statement saying they will take all appropriate legal action to protect

their rights. Jim, you're buying more Cleveland Cliffs on this news this morning. Tell us why. Go through your thought process here. Yeah, it's not just out of spite. I mean, I will point out that Cleveland Cliffs made an offer about a year and a half ago for buying U.S. Steel around $35 a share. They raised that to $54 a share.

And here we are with U.S. Steel now at $30 a share. So certainly U.S. Steel could have done better, but that's beside the point. What has happened in that year and a half is that Cleveland Cliffs has bought a different company, Stelco, and they've bought that company at a meaningful trough in steel pricing. Now, I don't know where steel pricing is going to go over the next months, three months, etc., but I do suspect...

that over the next year, particularly under this administration, which has protectionist policies, that we will see steel prices have bottomed and that as they continue to go up, because they have started to go up, that you'll see a bigger Cleveland Cliffs benefiting from it. And let me just do the math on this very quickly. Two years ago, Cleveland Cliffs did $23 billion in revenues.

With Stelco, I think it's pretty easy that they can get to $25 billion in annual sales. May not be this year, maybe next year. $25 billion times the historical EBITDA multiple, 12%, gives you $3 billion in EBITDA. Their historical enterprise value multiple on that EBITDA is 7. That gives you a $21 billion enterprise value target over the next year or two, subtract

the debt and the market cap on that basis is four times what the share price is today. Now, you can find risks to this. Maybe steel prices don't go up. Maybe we hit a recession. Any of a number of risks. But that's the analysis that I'm using to buy more of the shares today. We're going to move on to a different move. Weiss, you are buying more Goldman Sachs here. So very different sector. But go through your thoughts.

Look, I thought the stock had great momentum and I'm not a momentum player. I'm not ignorant to what's going on with stocks. But then, you know, it just corrected with the rest of the market and stayed down there.

I can assume under the belief, as Powell came out with a more hawkish stance, that, hey, our rate's going to stay high. We're not going to, you know, you're not going to see basically a IPO, secondary cycle, et cetera. And I still think that's wrong. I mean, there's so much pent-up

demand for companies to sell their shares, to exit part of it, to raise growth capital, that's going to happen whether rates are where they are, whether they tick up a few more bips, or whether they come down. I do believe that not an insignificant portion

of the increase of the rise in rates has been from exiting bond funds. You take a look at bond funds and the five-star manager has put up an average of 3% over the last five years. So don't people get tired of saying, okay, I'm tired of the safety when I see equity markets over that same five-year period really creating substantial wealth for me.

So you'll see that selling subside and maybe, you know, there is another option. There is a TINA. But overall, to me, going back to my original premise, you will see the underwriting cycle. Everybody's anxious to get out there. The companies, the bankers and the investors. So that's why I bought. Okay. More ownership in Goldman Sachs and in Cleveland Cliffs. Let's go over and get the headlines from Bertha Coombs. Hi, Bertha.

Hey, Courtney. The FBI released previously undisclosed video of a suspect who planted pipe bombs outside the DNC and RNC in Washington, D.C., the night before the January 6th 2021 riot at the U.S. Capitol. It's part of the agency's renewed effort to identify that suspect. The announcement comes just after congressional Republicans released a report complaining that the FBI had not yet made an I.D.

Supreme Court Justice Clarence Thomas will not be referred to the Attorney General over allegations that the justice may have violated ethics laws. The judiciary's policy-making body told Democratic senators who had called for an investigation into Thomas' acceptance of luxury trips that the justice agreed to follow the updated rules on reporting such trips and gifts. The court has yet to respond for comment.

And in the UK, researchers uncovered hundreds of dinosaur tracks that date back to the Jurassic era in a quarry. Now the tracks, which are about 160 million years old, were made by both herbivores and carnivores. Researchers say that raises some pretty interesting questions about how they interacted.

eat or be eaten? I don't know, Courtney. I love that. I love finding like dinosaur fossils and stuff. Just fascinates the pants off me. Thank you so much, Bertha. Well, next, our calls of the day. We'll debate today's analyst activity on four committee stocks and see Weiss is trimming his position in one of those. Halftime, we'll be right back. Global markets, up to the minute, front page news. Wake up to Frank Holland and Worldwide Exchange. Weekdays, 5 a.m. Eastern, CNBC. Live ambitiously.

Welcome back to Halftime. It's time for our calls of the day. Let's start with Netflix. Benchmark reiterates its sell rating. Weiss, you own it, and you're trimming your position on this one. Yeah, again, this is one of the ones I was waiting for this year to do. And it's purely a portfolio management call. I love the company. I love the fact they still have so much pricing power.

that they're doing more and more in sports, which will bring more subscribers there, and then they will raise prices. The ad model is going well, and they're all in competition. Well, actually, they don't have any real competition. So that's what I like about the position. Stock has done very well, as we all know. Position just got way too big to be responsible. Still one of my largest.

positions, if not my largest. Kevin? Yeah, I mean, the analyst calls nonsensical to go from $555 to $720. It's silly. Third quarter revenues were up 15%. Net income was up 41%. They report January 21st. They're going to crush it again. WWE comes to Netflix Monday night. So get ready, Jim. Oh, I'm so excited.

I'm just kidding. I can't wait to see Jim in one of those little bathing suits. I show up as a masked crusader. I protect my anonymity. You're going to have to need some kind of special name for all of that. I have a feeling people will be able to tell it's you.

I'll give you that one. But sports, though, to be serious. Sports in general. You had the Jake Paul, Mike Tyson experience. Monday night football. Excuse me. Christmas football. They haven't really figured out how to completely monetize advertising. And when they do, this thing's going to be a juggernaut. And to Steve's point, you can charge us anything. We're not going to get rid of Netflix. Yeah, that's probably true. Diamondback Energy upgraded to outperform from peer perform at Wolf. It's also named a 2025 pick. Price target at $190. Brynn, you own this one. Okay.

Yeah, I mean, Diamondback is one of the best of breeds in the energy space. It sold off along with the rest of the energy complex in the fourth quarter of last year. But I think you have great execution from the C-suite. You have capital discipline. They're in the right spots. And so I think in the energy space, this will continue to be somewhat of a darling of the energy companies that asset managers want to own.

Steve, in energy, what are you thinking about for this year? Such a loser previously. What about energy? I thought that, but I didn't say that. Sorry, Steve, that was low-agency crude. It's all right. You would have taken it if the positions were reversed. Here's the thing. Even if he says something funny, his delivery is so bad, you can't tell if he's talking about Cleveland Cliffs again or me. So here's about energy. I've not been an investor in energy, but I do keep coming back and looking at it.

constellation with the nuclear deals. I do think I am a proponent of nuclear. It's much safer than it ever was. So I'm just trying to figure out where to go on it. Net gas looks interesting, but they've already moved. So to me, commodities are just so hard, and they are the ultimate trading stocks. I'd rather not...

you know, continue to trade them. If you look over 10 years, over any 10 year chart, last 10 years, they're basically flat across the board. So you definitely have to trade them. I'm looking at continue to look. I can't guarantee I'm going to do anything. Brent, you have a thought there?

Yeah, I mean, I think we're, Steve's not wrong there. I think there's certain names. We really like the mineral rights spaces in both the public and the private markets. But you definitely have to pick your spots. I mean, I sold Devon last year, and that stock's been negative for two years. And so when you think about allocating capital, I think you really have to get company-specific or stick to the private markets where I think returns are more stable.

Okay. So TJX named an off-price winner at Wells Fargo. It feels like, Kevin, it's almost always one of those names that analysts are calling out in almost any kind of economic environment. Off-price seems to be in vogue. Do you agree with this call? I mean, 100%, I agree with TJ Maxx, both in strong economic times as well as a pullback, $4.4 billion off.

record free cash flow, earnings per share were up 11%, revenues were up 6% in the third quarter, management guide hider for the year. The only thing I would disagree with about this call is they don't think the price is high enough. 115, the stock's 120. So if it's the fourth quarter that they're leaning into, maybe the price target should be a little bit higher. We love the name. Yeah, fair enough. It almost always comes up as a winner. I feel like when the analysts are going through their calls, no matter what the economic environment,

Dell is another one, top pick at Bernstein. Bryn, you're in this name, obviously not one of these big core Magnificent Seven kind of tech names, but still you've got ownership.

Yeah, I think this name like an oracle is what's old is new again. And their infrastructure services group is really the key point, the key section of the company that's driving double-digit returns. So keep an eye on that. I think it'll be another strong year for Dell as the infrastructure continues to get built out in the AI data centers.

It's interesting here that Bernstein sort of notes that they see the stock as attractive in the 110 to 115 range, which describes little to no AI premium. Well, up next, Mike Santoli joins us for his midday word. We are back right after this.

We're back on halftime. Senior markets commentator Mike Santoli joins us for his midday word, as he does every day. At this point, yesterday when I was here on the desk, stocks had taken a downturn. Now we're kind of just melting up higher. What's the action take today? Yeah, trying it again, Court. Actually, around current levels is when yesterday's decline happened. So 59.40-ish, 59.30, it's the 50-day moving average. I think the market's caught up a little bit in the kind of tactical games in the absence of really big economic data.

Probably worth acknowledging we're due for some kind of a bounce. It's very rare to have the market down five days in a row, not to mention around the turn of the year. So all this stuff market acting not the way it's supposed to, so to speak.

So you had the makings of an oversold market underneath the surface because you have had really negative breath. ISM numbers were okay. Yields are tame. So I feel like this is what the market's supposed to be doing right now. The question is, is it just a relief bounce? I think you could look at some of the cyclical sectors in the last few weeks and say the market is at least clenched up.

against the possibility that higher bond yields and and waning economic momentum might be an issue but i wouldn't say it's really sounding a loud alarm yet. A lot of news cycle focus on what's happening in Washington. Is the market paying attention? Absolutely paying attention. I feel like part of the December story was okay the path to whatever policy objectives the Wall Street was hoping for might not be quite as clear or quick

And the idea that you wouldn't have a speaker and the idea that the budget fight was a little tougher than you thought maybe is a slight overhang. So if you do get Speaker Johnson gets clear for the job again, and it's one less thing to worry about. So I don't think it's the main driver, but it's been one of the things that I think is giving pause to a lot of investors who otherwise felt like it was

kind of clear sailing into this year. All right, got it. Well, coming up next, your crypto playbook for 2025. We're hitting everything today for you. Bitcoin prices breaking records last year. The committee's strategy from here that's coming up. We're back. Bitcoin is starting the new year in the green, but still below its all-time high of about $100,000. Kevin, you own MicroStrategy, rallying today at more than 400% in the past year. Sticking with this one.

We are. And it's not for a use case thesis. I hear Steve talk about that quite a bit from the Bitcoin perspective. But this is a leverage play on Bitcoin. And if you believe that there's a limited supply and a strong demand, which we know that there's a strong demand, that this will continue to go higher. I will also say, without going into credible detail, that you can write covered call premium on any of these names.

and bring in massive cash flow. So we've been taking advantage of that, not just as a shareholder of a stock that's on fire, but also as an income generator and a hedge. We have a little Coinbase and a little Robinhood as well. But this is a trade that I think will continue into 2025. Wow. Britton, you're not in MicroStrategy, but you've got a play here.

Yeah, I think, you know, I own iBit. And so options came out on iBit earlier in the year. So earlier this week, when it was pretty much right here, 54, 55, I sold the May 70 calls and collected close to $4 in premium. So definitely not as much as a micro strategy, but a lot less volatility. So close to 7% yield and within six months. So I think it's a good strategy as Bitcoin we know is volatile to take advantage of that premium.

Waisik, I want to give you a quick final thought here on this. Look, volatility as is advertised, I still think the demand's there and that Trump's policies, not the least of which he owns a Bitcoin business or crypto business, you can believe that it's going to go higher if for no other reason. I was wondering when someone was going to say that, that this is a call because of a very pro-crypto administration, at least that's the thought.

thought. Well, coming up, we will take you to trade school with this committee's investing resolutions for the year ahead. Halftime. We'll be right back.

Welcome back. As we kick off another year on the markets, we asked our committee for their investing resolutions. Weiss, we're going to start with you. Yeah. Look, my resolution is to be able to discern trends earlier. So once they get too fleshed out, you know, there's really nothing to do with them. But or it's more expensive. They could still continue than just determine the duration. So that's really it. So I've been so focused on what I own this year and

things that are related to what I own, that I miss some trends. And so that's what I'd like to be able to do. That's resolution. Clearly, I was looking for something to say when Patty asked me to say, but that's it. Okay, Kevin, what's your trading or investing resolution? I want to exercise prudent risk management in 2025.

After two years of 20 plus percent returns, it's very easy to get complacent. I remember in my early career, the first seven years, believe it or not, we had positive years in the market. I thought I was a lot smarter than I turned out to be. But you might make sure that you don't get complacent, you don't get lazy, focus on the data, focus on the numbers and the mathematics, don't get caught up in the emotion. Yeah, last few years have been pretty big winners, even just in index funds. Bren, what's your resolution?

Yeah, we want to continue to help keep clients in their seats long enough to earn the returns of the asset classes they're invested in. And that really comes down to help continue to educate clients to avoid what we call that perishable news, those one to two day headlines that can have that unwitting effect of derailing a long term portfolio.

Jim, you're pretty much happy where you are. No resolutions for you? Yeah, I thought about maybe turning into a crypto trader, buying meme stocks, coming on the show wearing neon green jackets, that sort of thing. Your WWE wrestling outfit? Yeah, exactly. No, listen, I always like to participate in these things, but I thought about it, and the turning of the calendar year doesn't change who I am, doesn't change any of us. Of course I want to get better. That's good. That was funny.

Of course I want to get better and that's what Kevin, Bryn, Steve, you've just said. So of course I'm continually going to improve. I want to echo though what Bryn said because I think it was very insightful is to continue to educate clients because the worst thing that can happen is when you get a market downturn, maybe it's a correction, maybe it's something worse and clients sell at the worst time. If there's one thing I want to continue to do is to continue to educate clients that price does not dictate value.

I'm not allowed to invest. My resolution is to make more meals my kids will eat. Anyway, stick with us. Final trades coming up on halftime. We are back with final trades. Bren, kick us off. Yeah, I'm going to stick with Uber. There's no real resistance until 72. And don't forget that Dara is one of the best CEOs in the business.

And we're sitting right now at a little above 64. Kevin. Robinhood. We love the acquisition of trade PMR. We're going to experience the largest generational wealth transfer ever. And the young people, their demographic will be the beneficiaries. Jim. It's true that energy is cyclical. And through each cycle, ExxonMobil gets better and better. That's going to continue.

And Weiss? Crypto, Bitcoin specifically, and more specifically, iBit. I just think it retakes 100,000, goes to 125,000 next time. All right. We've got just a little bit left here, and I want to show you that the markets are higher here across the board. Consumer discretionary leading the way. Tesla highest in consumer discretionary, reversing yesterday's move higher by more than 4%, but still down about 8% for the week. That does it for halftime. The exchange starts now.

You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.

Thank you.

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