See the end of the post for a full portfolio breakdown.
Since my last update I exited Radian Group, Arkansas Best and MBIA. The sales reflect a desire to redeploy cash in other opportunities as well as some lingering concerns about each company.
With Arkansas Best, its my uncertainty about the outcome of union negotiations. The negotiations were extended this week for a second time. An escalation to a strike does not seem out of the question. If a strike occurs the stock price may or may not get hit; while a positive resolution could be quite good for the stock in the long-run (see my original post about how Arkansas Best would benefit from a contract structured in a similar manner to the one that YRC Worldwide operates with) the uncertainty may drive panic selling. I’ve decided to wait this one out for a few weeks and see how it plays out. Read more
I finished a post over the weekend giving some thoughts about the macro-environment and how it pertains to my portfolio. As a consequence of the conclusions drawn, my portfolio has been growing and my cash level decreasing, to the point where I have now been on margin for the last month and a half. Right now I have about 11% margin. While I am typically wary of using margin, when I look at what I own there are no stocks that I feel compelled to reduce. We’ll see if this turns out to be folly. This is, however, about as much risk as I’m comfortable with, so any stocks added hereon will have to be balanced by equivalent removals. And as per the strategy I profess, I will sell without remorse if the market turns abruptly.
On to some of the moves I made over the past 3 weeks. Read more
(Note that I am now posting my portfolio composition and list of trades at the end of the post)
I didn’t get around to writing an update last week because I was busy with other research that could not wait. So its been 3 weeks since I updated my portfolio and transactions and quite a bit has happened over that time.
Over time my portfolio has slowly morphed into a vehicle for playing the housing recovery. I had large moves to the upside in a number of my housing related positions, with the most pronounced being of course Impac Mortgage (IMH), but also from Radian Group (RDN), MGIC (MTG) and a number of my regional banks with strong mortgage banking operations. Its been a good 3 weeks.
In this post I want to talk about some of the changes I’ve made over the last 3 weeks. To summarize:
- I sold out of all my gold stocks other then Atna Resources (ATN)
- I made a brief foray into, and then out of, US E&P’s
- I am out of JC Penney (JCP)… for now
- I am into Avenex Energy (AVF) and a homebuilder (HOV)
I will address each of these in order, followed by a brief discussion of what to expect from Nam Tai, which reports earning on Monday and of which I want to be clear of my expectations and actions. But first I want to talk generally for a moment.
I’m finding that I am using twitter quite a bit to post what I am doing on a more regular basis. Whenever I find a relevant article, or if I start to buy a new stock, I try to put a post up on twitter. I have also found a number of folks on there that have been useful to follow. Its a useful tool, and has the advantage over the traditional message board format in that you follow a person rather than a subject. So you aren’t wading through garbage to find nuggets. You can follow me @LSigurd. Read more
Sometimes it is easier to develop an idea in your head than it is to write about it. That is because while you can make a decision to buy a stock on an idea that makes sense, you really can’t write well about it without understanding the story.
My Nam Tai story goes back to a fellow who follows the blog and posts by the moniker DTEJD1997 on the Yahoo! Finance boards and on SeekingAlpha. While I know his real name, he asked that I only refer to him as DTEJD1997 here, so that’s what I will do. Anyways, DTEJD1997 has a nose for finding overlooked value. He was the fellow who also got me onto the idea of Rurban Financial. Obviously that idea worked out extremely well.
DTEJD1997 recommended Nam Tai to me months ago when the stock was $5 but I didn’t get in at the time and it moved from to $10. I didn’t get in because I didn’t really look closely at the story and so I didn’t understand the impact of what he told me.
I didn’t look closely because Nam Tai is a contract manufacturer in China. I worked for a contract manufacturer for a while and so I know its an ugly, low margin business. I was less than enthused to jump into that industry. It’s the old Donald Coxe adage that those who know it best love it least. Read more