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Posts from the ‘Pacific Ethanol (PEIX)’ Category

Jun 8

6 Comments

Week 153 Update: Investing by a Thread

This is not a full update of my portfolio so I will not be providing all the details of my current positions and trades over the last few weeks.  I’ll do that again in the next week or two. Below are my current top 10 holdings and their percentage weighting in the portfolio.

06-07-14 topholdings

In this post I want to write about the tenuous nature of most of the stocks I hold.   While I make many purchases based in part on the judgment that an undervaluation exists, I’m not really a value investor in any strict sense of the definition.  I don’t really look for stocks that are simply cheap to their intrinsic/discounted/net asset value and then wait for something to happen to change that.

In addition to cheap I’m always looking for a catalyst.  Something that will change perception of the stock and where the stock has enough leverage to the change to make for meaningful upside.

Because of these two criteria I find that I am drawn into an inordinate number of cyclical, indebted, tenuous or heavily capital dependent businesses.  They are not great businesses over the long-run.  Their true value is usually wildly erratic depending on the assumptions used.  While this characteristic represents the opportunity it also means I have to continually re-evaluate the thesis and sometimes admit that I am wrong and give up. Read more

Apr 23

9 Comments

Week 146: Some thoughts on agility

Portfolio Performance

week-145-yoyperformanceweek-145-Performance

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

Recent Developments

Four weeks ago I wrote:

I think an important pillar of my strategy to take advantage of the concentration that I can have.  I don’t have anyone pressuring me to be diversified or questioning my risk level or anyone to answer to if something goes wrong.  So I don’t hesitate to have a large percentage of my portfolio tied to the names I think will perform the best.

With that said, the names that I am currently of the heaviest weight are, of course, Pacific Ethanol, which remains my largest position by far

Today Pacific Ethanol represents a 2% position for me. Read more

Apr 6

What to do with Pacific Ethanol

Being invested in Pacific Ethanol (PEIX) is like riding a yo-yo.  Up and down, up and down.  It can get a bit nauseating.

As I tweeted earlier this week, I got tired of the motion sickness and reduced my position in Pacific Ethanol considerably.

 

Since that time I’ve sold a bit more and it’s now about 25% of my original position.  It’s still a reasonable size but its not going to hurt me (I will remind you that as of my last portfolio update, when Pacific Ethanol was at about $14, the stock was a 16% position for me.  That number jumped closed to 20% as the stock rose, but now sits at about 4% with my sales last week and the current price).

As the tweet explains, I didn’t like that the stock was going up because of rising ethanol prices while at the same time corn prices were creeping higher.  This wasn’t the dynamic I had invested upon.  I wanted sustainable ethanol prices and low corn prices.  Ethanol can’t trade at nearly a dollar above RBOB gasoline and you saw that on Wednesday when the weekly EIA statistics showed imports of ethanol.  The market was suitably spooked and the price of ethanol has since tanked.  More on the ethanol price dynamic in a minute, but first let’s talk about Pacific Ethanol. Read more

Mar 17

2 Comments

Week 141: Portfolio Allocation

Portfolio Performance

week-141-yoyperformance

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

week-141-Performance

Recent Developments

I’ve been on vacation and so am a couple weeks late getting an update out.

My portfolio had a big move up, thanks mostly to the movement of Pacific Ethanol and MagicJack. Pacific Ethanol had a one day gain of 67% last Thursday, and is nearly a 4-bagger since I bought in. MagicJack is nearly a double.

But what has really helped is that even before the run-up Pacific Ethanol was my largest position. MagicJack was my fourth largest position.

One of the ironies of writing about the stocks I own, is that what I write about most is often not what I have the biggest position in.  The stocks I have the most to say about are the one’s that are on the cusp, where I am constantly debating whether to hold on to them or not.  My biggest positions; Pacific Ethanol, Yellow Media and MagicJack, for example, I have written only a single post about.  That post states the thesis, and as long as that thesis is valid I don’t have much else to say.

Yet the stocks in my portfolio are far from being of equal weighting.   I usually have a lot of stocks. Unless the market is going down, the stocks number at least 30 and has recently approached 40. But most of the positions are quite small, in the 1-2% range.  These as starter positions; enough to keep me interested and following the company, but not enough to hurt me too much. If my thesis for these companies plays out, or if, as I learn more I become more comfortable with the idea, I add.  If not, if the company materially lags or sometimes if time simply passes and I lose interest in the idea, I drop the position and move on. Read more

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