Unless you have been sleeping under a rock for the last few years or do not follow sports, you most likely have heard of Barstool Sports. Founded in 2003 by Dave Portnoy, Barstool is notorious for their sometimes crude humor and vast amount of content (podcasts, videos, blogs, and so on) centered around sports and pop culture.
As sports gambling has become more legal throughout the country, Barstool has gained a lot of popularity for producing original content, including the show “Barstool Sports Advisors”, where Dave, Dan “Big Cat” Katz, and Stuart “Stu” Feiner give weekly picks for NFL games.
This phenomenon of unique, unrivaled sports content came to a screeching halt as sports worldwide suspended seasons and postponed events due to the Coronavirus (COVID-19). For Dave, this meant he had to find a new way to get a gambling fix. As a crafty entrepreneur, he not only found a home in the stock market, he turned his daily journeys into must-see TV (though in reality streaming).
Dave, who now goes by “Davey Day Trader” on his daily (Monday-Friday) Twitter livestreams, decided to put a cool $3 million dollars into an E-Trade account and test his skills as a day trader, buying and selling stocks for short-term gains (or losses). On the premiere episode of his podcast “Stock Central” (changed from “Pick Central” after sports stopped), Dave was joined by Michael “Large” McCarthy who used to work on the floor at the NYSE. Dave described his investing philosophy with the term “ebbs and flows”, touting his ability to time the market and that he can “feel it in my bones.” His investment thesis has been relatively simple – find specific stocks that he can buy and in a couple of hours sell a few dollars higher.
On “Stock Central”, Dave and Large will take calls from Stoolies (Barstool Sports fanatics) who give Dave stock advice. On March 16th, a caller said he had bought Zoom because of the fact that people would be video conferencing from home and recommended it to Dave. However, the caller stated he bought $ZOOM, not $ZM, which is the ticker for Zoom Video Communications. Unbeknownst to him, $ZOOM is actually Zoom Technologies, a company that has commonly been confused with Zoom Video. As of March 26th (10 days after this call), the SEC suspended trading in the stock due to the confusion.
Trading around the earnings of Nike ($NKE) and Lululemon ($LULU), Dave has seen some moderate gains, but the entertainment value has been the true spectacle of his trading from home under “lockdown” in NYC. Dave quickly learned his first lesson in the stock market when he bought $LULU before earnings, only to see them beat but trade lower the next morning.
His livestream, which consistently gets over 1-2K viewers concurrently, saw a high-point on March 24th when former hedge fund manager and legendary CNBC personality Jim Cramer joined from the set of his Mad Money show.
Dave asked Cramer for some low-priced stocks that he could get in on, objecting to buying shares of Shopify ($SHOP) as it was over $400. Cramer then recommended Nordic American Tanker ($NAT), which owns numerous vessels that store millions of barrels of oil. With the price of oil so cheap, people/companies buy barrels and then store them with Nordic until they are needed. Thus, the lower oil goes, the higher $NAT conceivably will go. Here comes the fun part.
Nordic’s stock was trading right around $3 at the time of the recommendation, so Dave placed a limit order for 100,000 shares at $2.99, heeding the advice of Cramer to “not pay above 3.”. However, with thousands of people watching Dave talk stocks with a market whiz like Cramer, viewers jumped at the recommendation and piled into the stock, driving the price well over $3. Within seconds, the stock climbed to above $3.13 as Dave was “front-run.” For those who do not know what front-running (famously discussed in Michael Lewis’s Flash Boys), Nasdaq defines it as, “entering into an equity trade, options or futures contracts with advance knowledge of a block transaction that will influence the price of the underlying security to capitalize on the trade.” Since Cramer’s recommendation, $NAT has not traded below $3 and traded as high as $5 on March 30th.
Another hiccup that Dave has experienced in his trials and tribulations as a day trader includes shorting stocks that he meant to buy (or go long). Complaining of slow and inefficient software from E-Trade, on multiple occasions, Dave has shorted stocks such as Spirit Airlines ($SAVE), Lululemon ($LULU), and Abbott Labs ($ABT). He was then forced to quickly buy back the shares he shorted in order to limit any losses he may incur (he lost $40,000 on shorting $ABT).
On March 20th we highlighted some of the best and worst trades from the Reddit community WallStreetBets. This past weekend, Dave tweeted he was looking to learn to trade options in order to leverage his gains (or blow up his account), to which WSB’s founder Jaime Rogozinski responded “I have some excellent recommendations.” From there, Jaime joined Dave on the Monday March 30th show to discuss the kinds of trades users on WSB make and how options trading works. Bullish has a simple guide to options if you are interested.
All in all, it has been quite a few weeks without sports for Dave Portnoy, throwing around literally millions of dollars trying to become the next Wolf of Wall Street. This truly is a trader’s market right now, so best of luck to Davey Day Trader as he learns about the stock market. I will leave you with this brilliant (and quite accurate) quote from The Oracle of Barstool: