Posts from the ‘Portfolio’ Category

Sep 4

Week 9 Portfolio Update: Par!

Well almost.

I am $300 from being back to even. Considering that the portfolio was created at the beginning of July, and that since that time the market has been somewhat horrendous, I do not think this is too bad of a result.

But it would be nice to start making money again.

There was not much action in my portfolio this week. I sold a bit of Arcan, a bit of Coastal, and a bit of Lydian International. In all 3 cases my selling had nothing to do with the company performance and everything to do with Europe. Its unfortunate that I have to make investment decisions based on Europe. I would much rather just pick stocks.

It is an interesting to think of what my portfolio would look like if Europe wasn’t on the verge of implosion. I think it would look quite different. First, I would own much more of Coastal Energy, and some more of Arcan Resources. I would also own a decent position in Second Wave Petroleum. I would likely have held on to Leader Energy Services. And I don’t expect gold would be going through the roof, so while I would probably still own Jaguar, OceanaGold and Lydian, and Argonaut, but I would have smaller positions in all 3. These stocks would not be as enticing if gold was still at $1200/oz, which I expect it would be ex-Europe.

The real upside in the gold stocks is the upward revaluation to reflect something closer to spot, along with the ever present possibility (as long as Europe is still the EU that is) that spot will continue to go higher. If Europe was just being Europe (dull 1% growth), I would likely prefer to own other commodities that were leveraged to emerging world growth. But alas, Europe has taken on the mask Faust, choosing a devil’s bargain over boringly flat GDP, and the outcome looks to be much the same, with the EU being on its way to hell on earth. So gold stocks it is.

Aug 28

Week 8 Portfolio Update

My portfolio is down a little more than 5% since its inception on July 1st. Given the ill-time nature of that inception, that is not too bad. The TSX is down about 9% in the same time frame.

As I have previously discussed, this week I sold all of the Leader Energy Services from the Portfolio. I also sold my stake in Xenith Banchsares and half of my stake in Oneida Financial. I added to my position in Argonaut Gold on Wednesday when it dropped back below $6. I also added to OceanaGold on the same day.

My cash position is still lower than I want it, and it is lower in percentage terms than my cash position in my actual account. There are two reasons for this.

The first reason is that I keep adding to my gold stocks. I’ve built up a large position in Argonaut Gold now, and I have a reasonable position in OceanaGold again. I want to write up on both of these stocks at some point soon. For the moment suffice to say that Argonaut Gold is trading at a valuation below its peers yet has a above average growth profile for the next few years. OceanaGold is trading at a valuation well below its peers and its second quarter results, which crushed the stock, were not as bad as they look at first glance.

The second reason, which I have already alluded to in a previous post, is that in my actual account I like to trim positions over time, selling 10% every day or two, rather than all at once. This doesn’t work great in the practice account, because the amounts are small (its only a $100K account), and the commissions are higher (they are $9.95 versus the $6.95 that I actually pay).

In the first month I was following my account moves exactly and I found that I spent over $200 on commissions in the practice account. That’s over 2% of the portfolio annualized. So that wasn’t going to work.

Therefore, in the practice account I have decided to buy an sell stocks in larger blocks. The downside of this is that I can end up with smaller or larger positions in the practice account than I would like. This is the case at the moment. In my actual account I have smaller position percentage-wise of Equal Energy, Lydian International, and Arcan Resources right now. I have a larger position of Jaguar Mining where I have been buying on dips in small amounts.

Aug 27

…Couldn’t Stay Away

I couldn’t stay out of Gramercy. I bought back in yesterday at the end of the day, at $2.80. I sold more Oneida Financial to keep my overall cash position the same.

I know, my decision making is flailing a little here. I admit, I’m finding it difficult to make decisions here. I see plenty of opportunities out there. Even beyond the stocks I own. There are oil companies, for example, trading at a third of what they were a few months ago.

Take Emerge Oil and Gas (EME.to). Does it deserve to have been cut down by 60% in a few months? Oil prices are still at $80/bbl after all. The company’s production has declined slightly but nothing too severe. Still, a 60% decline in share price?

There are lots of stories like that out there. Lots of stocks that I would jump on in normal times. But as I wrote about last week, I don’t think these are normal times.

The latest evidence I’ve read describing the lack of solidarity in the Eurozone came from this FT article. Don Coxe said on his call this week that the default of any European sovereign would be “a nightmare”, except that the analogy was flawed because you do eventually wake up from a nightmare.

Scary stuff.

So I bought back Gramercy. I saw the volume over the last few days and I have heard the company say themselves that they are getting closer to a settlement of realty, and so I was loathe not to be long the stock coming into a Monday morning where news might be sprung.

But that hasn’t changed my outlook or my strategy.

Aug 25

What I’ve Been Doing

On the weekend I posted the reasons why I am very afraid that the situation in Europe is about to get a whole lot worse. At the end of that post I highlighted a number of things that I planned to do to deal with this risk. Over the last 3 days I have mostly completed these items.

Get out of Gramercy – I sold out of Gramercy today at $2.56. In retrospect I could have waited and sold out 10 cents higher. We can’t know which way the market will go on any given day. I may regret this. Gramercy is likely coming ever closer to the day they settle their Realty division issues with their lending consortium. The stock could make quite the pop on that day once the deal is announced. I will be watching the news very closely for that day and will pounce if it settles positively.
Trim Oils – I did this in my actual account but not in the practice account. In my actual account Arcan, Coastal and Equal Energy were all trimmed by 10%. I am dealing with somewhat larger positions in my actual account, so trimming is a more reasonable proposition. I have found that using my strategy of taking off little bits at a time leads to extraordinarily high commissions with the practice account. If and when I get to the point where I want to trim these positions to 25%, I will do the same in the practice account in one move.
Cut the Banks in half – Oneida Financial was cut in half. I held onto all the Community Bankers Trust that I own. I sold all of Xenith Bancshares. I don’t think I will regret these moves. The US economy, at best, will be sluggish for the next few months. I don’t expect big moves in the banks for a while yet.
Cut Leader Energy Services by as much as I can – In my actual account I cut the position by half. In the practice account I had a stink sell order at 69 cents and low and beyold it got filled today so I am out of Leader entirely there. Some might say this is hypocritical. How can I write up Leader a few short weeks ago and then suddenly turn around and liquidate my position. All I can say is that when the facts change… look I underestimated the crisis that is occuring in the Eurozone. Leader Energy is in a cyclical business and has a lot of debt. This is a good company to be in during a economics expansion and especially during a time when oil prices are highly profitable. This is not a good company to be invested in during a time when debt markets tighten.
Watch Gold Stocks Closely – I haven’t done a lot here, though I did lighten up on Jaguar on Monday and add to Argonaut Gold today. I’m still of the mind that gold stocks are breaking out and have higher (maybe much higher) to go. But I reserve the right to change my mind here. I am wary of how far this gold correction will go. However, the stocks never priced in the move anyways. To take an example, should Newmont be crushed as gold moves from $1900 to $1600 when its price is lower than when gold was $1200? Its ridiculous.

We’ll have to see how the next few days play out and what Bernanke announcement comes out of Jackson Hole. But for the moment I feel a lot more secure after having made these moves.