Tag Archives: stocks

The V20 Portfolio: Week #29

The V20 portfolio is an actively managed portfolio that seeks to achieve an annualized return of 20% over the long term. If you are a long-term investor, then this portfolio may be for you. You can read more about how the portfolio works and the associated risks here . Always do your own research before making an investment. Read the last update here . Note: Current allocation and planned transactions are only available to premium subscribers . Over the past week, the V20 Portfolio climbed by 7.9% while the SPDR S&P 500 ETF (NYSEARCA: SPY ) rose slightly by 0.5%. Portfolio Update This week we saw significant volatility in our smallest holding, Dex Media (OTCMKT: OTCPK:DXMM ). Last week speculators drove up the price by more than 100% to a high of $0.28. After Wall Street Journal reported rumor of a planned bankruptcy, shares fell to where they traded prior to the run-up. Of course, the reason the V20 Portfolio holds the stock is not to trade these unpredictable swings. Ultimately the value of the equity will be dependent on the outcome of the negotiation. Prior to the management electing to miss an interest payment, the company still had enough liquidity to keep operations going. Intelsat (NYSE: I ) rallied as the high yield market recovered. Over the past month, shares climbed by almost 50%. As is the case with Dex Media, the company will be facing liquidity issues if it cannot refinance, which is why it is so dependent on the high yield market. The difference is that the company still has a good business that is growing. I believe that the discount arising from this issue will eventually disappear as the company deleverages. We also saw revised Q1 guidance from Spirit Airlines (NASDAQ: SAVE ) this week. Operating margin was increased from 19-20.5% to 21.5%. While it is still lower than what was achieved in Q1 2015, it is still a good sign given the intense competition in the market. Because Spirit Airlines mainly competes on price, I believe that exchanging a temporary dip in profitability for market share is a sound strategy. Our recent stake in an insurance company has not moved much since our purchase, though the company has most certainly continued to collect sizable premiums in the first quarter. I believe that one of the main reasons is the expectation that 2016’s hurricane season will be one of the worst in recent years . As the hurricane season approaches, the market may become increasingly nervous about Florida P&C insurers in general. It is important to remember that we were not betting on the occurrence (or rather absence) of a catastrophic hurricane when we purchased a stake in the company, we were buying its long-term profits. Our biggest position, Conn’s (NASDAQ: CONN ), continued to climb this week, rising 24%. While there were no company specific news, I believe that the stock may have benefited from the recent rally in the energy sector. Due to the company’s concentration in Texas, it is possible that the market perceives the commodity rally as a sign that the job market will improve, leading to more sales and lower delinquencies at Conn’s. Performance Since Inception Click to enlarge Disclosure: I am/we are long DXMM, CONN, I, SAVE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Market Lab Report – Weekly Review of PP and BGU Reports for the Week of April 18-22, 2016

This week there were only two PP and BGU reports sent out as the market begins to slow down a bit. Below are notes from the Trading Diaries of Dr. K and Gil on these stocks: New Oriental Education & Technology (EDU) GM – EDU has been a good performer since we first put it on as a pocket pivot within the base on 4/13. The buyable gap-up this past Tuesday came after the company announced a strong earnings report, and it has continued higher since. Only a pullback down close to the intraday low of Tuesday’s BGU day at 37.26 would offer your lowest-risk entry. Notice also that this 37.26 BGU intraday low coincides with the 10-day moving average at 37.25, so both can serve as guides for support on any pullback from current levels. Dr. K – The email on EDU was sent when, after having gapped higher, it was trading roughly mid-bar then continued to rally for the remainder of the day to close near the top of its trading range. Sometimes, one must act fast and buy upon receipt of the email as the risk given EDU’s intraday lows at that point in time was still relatively small.    John Bean Technology (JBT) GM – JBT is expected to announce earnings on Tuesday, so I would not be interested in trying to play “earnings roulette” with this. The stock has had a decent price run over the past 5-6 months and this is its third base breakout over that time period. Interestingly, JBT has bucked much of the market weakness seen in late summer 2015 and in January of this year as it has steadily built base after base on the way up. For my money, however, this stock is far too thin for me to play, as I prefer bigger stocks trading more average daily volume. In general, larger average daily volume = greater institutional participation, although this does not apply 100% of the time. Smaller names with outstanding potential can often be accumulated by small-cap funds, albeit in smaller size given their low liquidity. Dr. K – JBT gapped higher then undercut the low of the gap up day the next day by more than 1-2% so should have been sold. Typically, a 1-2% undercut of the low of the gap up day is permissible. The market has favored larger cap stocks thus given the challenging nature of this environment which has been with us for quite some time, it is best to have any many variables stacked in your favor. That said, if you wish to try your hand at any smaller cap names, a smaller position size or a tighter stop loss is recommended.