Here are this week’s top trades from The “Halftime Report” Investment Committee
Kevin O’Leary buys Chinese stocks
Shares of Chinese companies listed publicly in the U.S. traded significantly lower Monday amid a new shutdown in Shenzhen and renewed U.S. delisting fears.
Big names including Alibaba, Baidu and JD.com fell as low as 10%. Despite the declines, O’Shares ETFs chairman Kevin O’Leary took advantage of the flash sale and bought shares of Tencent, Alibaba and Meituan.
The sell-off also caught the attention of JPMorgan analyst Alex Yao, who downgraded a handful of Chinese stocks including Alibaba, calling them “uninvestable” right now.
“Anytime you get an analyst calling multibillion dollar market cap stocks growing in an economy that’s larger than ours … ‘uninvestable,’ that’s a buy signal,” O’Leary said Monday on CNBC’s “Fast Money Halftime Report”.
Chinese stocks have been slaughtered relentlessly all year, O’Leary said, adding that the downward moves in some of the Chinese names Monday are overdone, considering their overall declines over the last year or so.
O’Leary noted that he isn’t sure he is buying the bottom, but he’s making a fundamental decision about the headwinds China is up against.
He told CNBC that he feels comfortable buying Alibaba, Tencent and Meituan because all three companies are huge and already have distribution systems in place.
“To get Alibaba down 7% in one hour, that’s hard to do, that’s a very large market cap stock. So thank you analyst guy, I appreciate that, but at the end of the day, they’re still gonna grow and that’s why I bought them.”
By Wednesday, the same group of U.S.-listed Chinese stocks surged as Beijing signaled support for the stocks. Regulators from both countries are progressing toward a cooperation plan on U.S.-listed Chinese stocks, according to Chinese state media.
Although O’Leary saw a 30% gain in just two days, he says he doesn’t plan to sell.
“You have to hold your nose on the volatility but the fundamentals are why you invest and you pick your opportunities.”
Pete Najarian buys Snowflake call options
Snowflake shares are more than 50% off their 52-week high reached in November, but Market Rebellion co-founder Pete Najarian sees near-term upside potential.
He noted he wouldn’t buy the stock, but he did buy short-term call options on Wednesday.
“I’ll trade the calls because that gives me that leverage that I want to have without as much exposure,” Najarian said on CNBC’s “Fast Money Halftime Report.”
He noticed increased buying volume in the March expiration $200 strike calls, adding, “Already today [Wednesday], they went from $1 to $5.”
Najarian’s move echoed Altimeter Capital Chair and CEO Brad Gerstner’s sentiment in Snowflake.
“We think this is a 3X in three years even if software multiples remain at these levels,” Gerstner said on CNBC’s “Closing Bell Overtime.” “This stock will compound as it continues to beat earnings.”
“I think you can trade these names, but again, you don’t want to be in these stocks because they can be a widowmaker in just days or weeks,” Najarian said, referencing stocks with high price-to-earnings multiples.