Posts from the ‘Argonaut Gold (AR)’ Category

Nov 30

Week 177: Perspective

Five weeks ago I wrote that I was walking away for a while. And so I did that. It didn’t last as long as I had anticipated.

At the time I had taken my portfolio to about 60% cash and I had a number of shorts that helped hedge out the exposure from my remaining longs. In early October I had basically stepped away because I had made some mistakes and lost confidence in my decisions. It had started with the mistake of not looking closely at the oil supply/demand dynamic, which was compounded by the mistake of selling the wrong stuff when the bet began to go wrong. As I lost money on a few oil and gas holdings, rather than reducing those positions I reduced other positions, presumably with the intent of reducing my overall risk. Unfortunately this isn’t really what I was doing. What I was actually doing was selling what was working while holding onto what wasn’t. A cardinal mistake.

The consequence was that I saw my portfolio dip 12% from its peak by the second week in October. More frustrating was that as stocks recovered in late October, I watched as some of the names I had sold near their bottom, in particular Air Canada, Aercap, and Overstock, recover their losses and were on their way back up.

I wrote my last post on a Friday afternoon after the market had closed. Over that weekend I was virtually unencumbered by the markets. My portfolio was cash, my blog was on hiatus, I had nothing to prevent me from thinking clearly. I don’t remember exactly when the moment came, but at some point that weekend I had a realization.

For those who have followed this blog over the past few years, you will remember that in December of last year I made a very large bet on New Residential. The stock had gotten hit down to below $6 at the time. I thought this was rather ridiculous and so I bought the stock. I bought a lot of the stock. I made it a 25% position in my portfolio.

In a narrow sense, the trade worked out. By the end of December the stock had jumped close to $7 and I sold the position for a tidy profit. But in the broader sense, it was an abject failure. Read more

Sep 20

19 Comments

Week 168: Cutting my gains

Portfolio Performance

See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

I don’t know if the chart of performance really does justice to the volatility my portfolio has had over the last couple of weeks. It feels like much more of a roller coaster than that little blip in the trend that you see on the screen.

I sold out of the rest of Pacific Ethanol and Rex American Resources in the first half of this week. I hemmed and hawed through the weekend, even briefly added to my position to Pacific Ethanol on Monday (at the same time I was reducing my position in Rex American), but the volatility of the stocks, the declining price of ethanol, and specific to Pacific Ethanol, my uncertainty with respect to their corn basis (I concluded tentatively it is actually quite a bit higher than Q2) led me to capitulate on many of my shares on Tuesday. I followed that up by selling the rest on Wednesday in the minutes that followed a very bearish EIA inventory report (+800,000bbl!). I tweeted on my sales at the time.

My caution turned out to be fortuitous as the stocks continued to fall the rest of the week. I was even able to catch a few dollars of profit on the way down; always remembering the old classic to which this blog takes its namesake, I took the lesson that if a stock is to be sold it is likely just as well sold short, and so I took a small short position in Rex American and a few $18 puts on Pacific Ethanol. The puts were sold Friday and my short position has been cut more than in half, so these were merely short term trades taking advantage of a clearly bearish dynamic. Read more

Jul 21

2 Comments

Week 159: Blog Days of Summer

Portfolio Performance

See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

I haven’t done a lot of writing since my last portfolio update four weeks ago. I have made only a couple changes to my portfolio, and added only one new position, Midway Gold, which I wrote about last week.

I remain reluctant to add positions. As I stated previously (here and here) I remain wary of the market reaction to the post-QE era. So far nobody seems to care, tapering has had no negative impact on stock prices, and we continue to march to higher highs. Nevertheless I’m not convinced. I don’t have a lot of insights into the specific mechanism by which quantitative easing leads to higher stock prices or how the end of it will cause them to go lower but I know from experience that you can’t overstate the importance of liquidity, particularly where small and micro caps are concerned. Now we’re in the process of draining a bunch of it and I just don’t think that is a great time to be too far out on the ledge. Why take the chance when you don’t have to?

I’m also not having an easy time finding stocks that I want to buy. I’ve spent the last four weeks rather diligently investigating new ideas. I’ve probably gone through 100 names. Nothing I have looked at has stood out as something I have to own.

In fact, I’ve come back to old names. In particular, I’m currently betting the farm on Pacific Ethanol. Below is a list of my top ten positions. Pacific Ethanol was a 20% position that has grown to 24% because of price appreciation.

Jun 23

1 Comment

Week 155: Still Cautious

Portfolio Performance

See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

In my last update I stated that I had about a 20% cash position and wanted to increase that position heading into the summer. We are now one month further along and my cash position stands at something less than 5%.

Nevertheless I do remain somewhat uneasy about what happens to the market post QE. As I wrote about in my last update:

Twice the quantitative easing policies of the Federal Reserve have ended and twice the market has gone into a tailspin.

I came across what I thought was a very good interview of Richard Duncan on the website Valuewalk. I read his first book, The Dollar Crisis, a number of years ago and I still pull the book out every year or so to go through the concepts another time. I have followed Duncan ever since. The video rather long, but in my opinion Duncan describes what current drives the market right now and summarizes why I am uneasy.

I view a number of the stocks I own right now as shorter term trades with (hopefully) immediate catalysts. I have been reducing positions that I would consider likely to have a lower bottom in an event of a correction. And I have been buying gold stocks. So even though I have added a few positions and reduced my overall cash position, I feel like I am continuing to reduce risk. I tweeted the following about my purchases of gold shares: Read more