Trade Alert: PVG, DESP

By Stephen Leeb • January 26, 2018

Buy Pretium Resources (NYSE: PVG) and Despegar.com (NYSE: DESP) on margin.

Pretium is one of our favorite small gold miners. The stock sold off sharply yesterday due to announcement of fourth-quarter production figures deemed to be disappointing. The company is about six months into production at its Brucejack mine, and the ramp up is slower than analysts had expected.

We think the price decline presents a buying opportunity. Miners very often experience small obstacles in the early life of their mines. Even if the ramp up isn’t going perfectly, the outlook for the mine, or the company, does not change. We expect the share price to rebound.

As for Despegar.com, it is an online travel company dubbed the “Expedia of Latin America.” Expedia, in fact, owns about 14% of the company and could eventually take over Despegar.

After a few lean years, Latin American economies are rebounding, and the outlook for travel in the region is bullish. We like the shares both in the long term and short term.

Note: In regards to the 3-Pot System, PVG is a Pot-2 trade and DESP is a Pot-3 trade.. Ideally, each purchase should be done on margin. However, if you cannot buy PVG or DESP on margin, purchasing them using 100% cash is ok. The point is, we expect both to go up in price.

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Allen Suss

01/26/18 ‐ 10:27am ET January 26, 2018 at 10:27am ET

PVG, DESP
Would you consider to buy the options.
What would be the suggested time frame?

Scott Chan

01/26/18 ‐ 10:47am ET January 26, 2018 at 10:47am ET

Dear Allen,

Our target holding period for both stocks is 3 months. As for the options, we would aim for the June ones. If you feel aggressive, the March options offer more leverage.

Please note there are no options available for DESP and the option market for PVG is pretty thin too.

Paul

01/26/18 ‐ 11:07am ET January 26, 2018 at 11:07am ET

Bought PVG and DESP at market prices.

William Moffatt

01/26/18 ‐ 11:19am ET January 26, 2018 at 11:19am ET

So if PVG is in Pot 2 and DESP is in Pot 3, what is in Pot 1?

01/26/18 ‐ 12:18pm ET January 26, 2018 at 12:18pm ET

Dear William,

Pot 1 is generally reserved for indicator-driven ETF option trades. Right now it is empty.

Stanley

01/26/18 ‐ 11:32am ET January 26, 2018 at 11:32am ET

PVG filled 7.70 @ Fidelity

George McMillion

01/26/18 ‐ 11:37am ET January 26, 2018 at 11:37am ET

Bought both at Market .

Thank you.

Rick

01/26/18 ‐ 2:26pm ET January 26, 2018 at 2:26pm ET

I bought DESP at $30.85 on Fidelity earlier today.

On PVG, I bought the June 2018 Calls at a $7.00 strike – some at $1.34 and the rest at $1.33.

I keep a lot of cash in my account, as I trade OFI and VT. Consequently,, I never have a credit balance in my margin. So, if I am buying stocks and options for AT, I am not using margin. So, I prefer options to get leverage. Thanks for the guidance on going with June 2018. I was planning on using Jan 2019, which of course is more expensive.

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