J.D. DURKIN: Good morning, subscribers. Chris Versace and I are now back to tackle some of your latest questions. Chris, good morning. Thank you for being here. Of course, it's been a while. So let's kick things off with a fan favorite, ChargePoint. If you guessed we were going to kick off the conversation with ChargePoint, congratulations. You win. Chris, should members be worried that the CEO has sold shares as recently as the end of July? What are your thoughts?
CHRIS VERSACE: So this is an interesting question, right? We always like to see what management is doing or the larger group of insiders. Are they buying stock, selling stock? But we have to remember that just because a transaction is reported, there can be more details that we need to understand.
And that's exactly the case in ChargePoint. When we review the filings which are public records with the SEC, we'll see that the CEO has not really been selling shares that he owns, but rather simply exercising options. And a lot of these options have been priced at $0.27. And when you look at the distance to the share price, he's obviously trying to lock in some gains for himself, totally understand.
But to me what's more important is the current amount of actual ChargePoint shares that he owns is very little changed over the last year. So if he was selling those shares, then would be far more concerned about what was happening. But again, that's not the case, just simply exercising shares. And he has over 600,000 options to go. So the extent that we see additional activity, we'll want to make sure it's just more options that are being exercised, not shares.
J.D. DURKIN: Chris, one of the bigger stories earning its fair share of headlines in recent days, economic weakness in China. And I'm sure we have members wondering, should ChargePoint's supply chain be impacted, do you think, by that story?
CHRIS VERSACE: That's an interesting question, right? So if you remember last year, when China was under lockdown, there were a lot of supply chain concerns. We saw them across a number of different industries. And we saw several companies in the portfolio, Deere, for example, as well as ChargePoint being impacted.
But I think it's a very different situation now. If anything, the data that we're seeing about China's economy tells us that there's a lot more slack. Meaning that supply chain issues shouldn't be much of a worry at all. And candidly, we really haven't heard anything about supply chains becoming a renewed issue so far this earnings season. If anything, we continue to hear further progress on their improvements. So is it something that we'll pay attention to? Absolutely. But it seems to be-- it appears to have become a very minimal risk, that's what I would say.
J.D. DURKIN: Chris, how vulnerable do you think ChargePoint is to long-term disruption, especially as we see new EV technologies seemingly emerge day by day?
CHRIS VERSACE: Yeah, I mean, look, there's going to be a lot of development on the EV charging front. Just one thought, J.D. , is if you're a person that has to EVs in your garage, well how are you going to charge those? You're going to have two wall units? Might be there some other technology that allows you to charge the units wirelessly, like we've seen Apple done with the iPhone. And those cars would simply sit on the beds?
These are things that we have to continue to monitor. But what I like about ChargePoint is that they seem to be rather flexible. Remember, when the industry kind of migrated towards the Tesla standard, not only did it agree to do so, but it quickly retrofitted its existing ChargePoint. So I think they're going to continue to monitor the technology developments and update their offering as time goes by.
If we saw something else, like they were fighting the move towards the Tesla charging station, again, I would be far more concerned. But again, most companies are going to continue to develop their offering as newer technologies become available. Perhaps those same technologies can either expand their offering into other markets. It could also potentially drop the cost at which they have to bring these solutions to market, maybe helping margins. So we'll continue to monitor it. But not so concerned.
J.D. DURKIN: All right, fair enough. Let's move on now to one of our newer positions. How did Qualcomm's mixed results in the past few quarters, Chris, play into your decision to upgrade that particular name in the portfolio?
CHRIS VERSACE: So if we trace Qualcomm back, we were on the sidelines for a really long time with that name over the past year plus. And it was really due to concerns that we saw unfolding in the smartphone market with excess inventories, particularly in the Android channel. Look, we waited and we waited. And then we finally called them up very recently. Why did we do that?
Well, it's signs that we are seeing the seasonal pattern start to emerge for the smartphone market. Second half tends to be far stronger. And we've also seen commentary that we're kind of in the last throes of that excess Android smartphone inventory. So did we watch what was going on and wait to strike with Qualcomm? Yes, we did.
J.D. DURKIN: All right, finally here, let's conclude with a question from a newer member. Shout out to our newer members getting involved early. I love to see it. Chris, do you have any stock recommendations for members who are just beginning their journeys with us?
CHRIS VERSACE: So when you start investing, there's always a lot of questions. And I think when you look at the portfolio, we've got something like 30 positions. So I think the question is rather natural. But this is why we design the rating systems the way we did, so for newer members, just kind of off the boat, the 1s are the ones that you can, as we like to say, buy now.
The two rating stocks are ones that we tend to buy on a pullback, buy on a dip, something along those lines. And you'll see that we've done some of that this past week. So what I would say is start slowly building out your position. Start with the 1s. But when we take actions with the 2 rated stocks, like we did earlier this week, with Qualcomm, with McDonald's, and even 3 rated PepsiCo, that's when you should be putting your capital to work. Roughly around the same sizing that we're doing. I hope that helps.
J.D. DURKIN: It certainly does. All right, thank you as always for the insight, Chris. Nice to have you.
CHRIS VERSACE: Thank you, J.D. .
J.D. DURKIN: Members, to those of you watching at home, that man, Mr. Versace, will be back tomorrow for his thoughts ahead of earnings from Applied Materials as well as Deere. Have a great day. And we'll see you then.