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Summary The V20 Portfolio rallied by 5%, beating the S&P 500, which ended the week flat. Investor sentiment has shifted for Spirit Airlines. Perion Network made a significant acquisition. Conn’s will report earnings on Monday. The V20 portfolio is an actively managed portfolio that seeks to achieve 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 last week’s update here ! The S&P 500 (NYSEARCA: SPY ) was salvaged on Friday, jumping 2% and ended the week flat. The V20 Portfolio completely smashed the index and started December with a bang, rising 5% for the week. Year to date, the portfolio is now up by 98%. Portfolio Update There were two major contributors to this week’s performance: Spirit Airlines (NASDAQ: SAVE ) and Perion Network (NASDAQ: PERI ), which appreciated 23% and 19%, respectively. There were no material news coming from Spirit Airlines, so it would appear that the market sentiment has shifted. About three weeks ago, hedge fund manager Whitney Tilson pitched the stock , perhaps investors are finally recognizing the company’s value after a figurehead on value investing speaks out. Another possible factor contributing to the recent rally is falling crude prices. Perhaps you’ve heard that oil has recently dipped below $40 and OPEC decided to hold production quota constant. These negative events are great news for the airline industry overall, as airline companies will continue to benefit from cheap fuel in the near term. However, I believe that this was only a minor contributor to Spirit Airlines’ rise. In the graph above we can see that the stock has greatly surpassed the performance of the airline index, whose performance is driven mostly by macro movements such as oil. As for Perion Network, the company recently got an investment from JP Morgan , significantly boosting investor confidence. In addition, the company also acquired an adtech company for $180 million. The management has a history of making acquisitions, so I’m not too surprised. The management also disclosed that undertone was profitable (15-17% EBITDA) and has a good growth trajectory. While I would’ve preferred a large share repurchase program since that way the return would’ve been more certain, this acquisition could work out in the long run. About Conn’s Our largest holding, Conn’s (NASDAQ: CONN ), actually fell this week, declining 5% from $27.02 to $25.64. With earnings on Monday, clearly the market is still uncertain. Couple weeks ago I mentioned that the share repurchase program instituted by the management will buoy the stock in the near term. Thus far, this prediction rings true. We can observe the price movement since the $100 million buyback program was announced in the chart below. Of course, now that the company is reporting earnings, this effect will be nullified on Monday. Outlook Since next week our biggest position will report earnings, expect significantly higher volatility. In the past, Conn’s has achieved 15% swings in a week without batting an eye. Of course, as I’ve outlined in the introduction of the V20 Portfolio, volatility is a necessary part of our concentrated style of investing, and we should accept it as opportunity instead of shying away from it. In any case, we should continue to focus on the fundamentals regardless of where the stock ends up on Monday . Scalper1 News
Scalper1 News