Enjoying a cup of coffee on my balcony this morning while looking over
Jungfraujoch
. That certainly helps me maintain perspective during a difficult month in the markets for me. While a down market is not fun psychologically, it does actually give you a chance to make more money in the long run than a market that stays flat or rises very slowly. The Market going nuts can be your friend.The table below shows how my stocks performed in the past week. There were a few "crash and burns" in the group. AVG was interesting, I will certainly need to consider buying them for August 15th tranche as I felt selling there was over done.
| Index | Stock | Current | Weekly Change | Share | |
| 1 | GTAT | 14.91 | 13.95 | -6.4% | 10.4% |
| 2 | GNW | 16.35 | 13.07 | -20.1% | 6.0% |
| 3 | 13.94 | 13.85 | -0.6% | 5.2% | |
| 4 | AOD | 8.89 | 8.63 | -2.9% | 5.1% |
| 5 | BBEP | 21.79 | 21.01 | -3.6% | 5.0% |
| 6 | 22.99 | 22.44 | -2.4% | 3.7% | |
| 7 | RPXC | 16.03 | 15.50 | -3.3% | 3.6% |
| 8 | NTC | 12.51 | 12.42 | -0.7% | 3.5% |
| 9 | FSC | 9.86 | 9.65 | -2.1% | 3.4% |
| 10 | CSQ | 11.93 | 11.51 | -3.5% | 3.3% |
| 11 | RIOM | 2.40 | 2.30 | -4.2% | 3.3% |
| 12 | 39.92 | 40.03 | 0.3% | 3.3% | |
| 13 | TPVG | 15.58 | 15.41 | -1.1% | 3.3% |
| 14 | TGONF | 9.95 | 10.50 | 5.5% | 3.0% |
| 15 | TC | 2.80 | 2.82 | 0.7% | 2.3% |
| 16 | AVG | 20.00 | 17.05 | -14.8% | 2.3% |
| 17 | SNDK | 93.24 | 92.76 | -0.5% | 2.2% |
| 18 | 10.91 | 10.37 | -4.9% | 2.1% | |
| 19 | AGX | 35.72 | 34.80 | -2.6% | 2.1% |
| 20 | BAC-WTA | 6.85 | 6.38 | -6.9% | 2.1% |
| 21 | NADL | 9.96 | 9.91 | -0.5% | 2.1% |
| 22 | 75.57 | 78.11 | 3.4% | 2.0% | |
| 23 | TIME | 24.00 | 24.03 | 0.1% | 2.0% |
| 24 | 71.60 | 71.63 | 0.0% | 1.9% | |
| 25 | TSL | 11.36 | 10.76 | -5.3% | 1.8% |
| 26 | HIG-WT | 26.70 | 25.46 | -4.6% | 1.7% |
| 27 | WNR | 42.64 | 40.30 | -5.5% | 1.7% |
| 28 | TUBE | 9.61 | 9.00 | -6.3% | 1.5% |
| 29 | 25.97 | 25.00 | -3.7% | 1.4% | |
| 30 | NSR | 29.10 | 27.55 | -5.3% | 1.3% |
| 31 | CF | 252.61 | 252.59 | 0.0% | 1.3% |
| 32 | CA | 29.53 | 28.47 | -3.6% | 1.2% |
| 33 | O | 44.69 | 42.98 | -3.8% | 1.1% |
| 34 | 6.18 | 6.12 | -1.0% | 1.1% | |
| 35 | FLR | 76.02 | 73.25 | -3.6% | 1.0% |
| 36 | 24.13 | 23.86 | -1.1% | 1.0% | |
| 37 | EDV | 108.46 | 106.89 | -1.5% | 0.6% |
| 38 | Overall | -4.0% |
MFI Portfolio
The month of July was brutal on my MFI portfolio. Down a bit more than 6%. I am still up 7.1% on the year. It is important to keep in mind that this is not a sprint, I hold these stocks for a year, one down month is not that big a deal. The bigger question is whether I am "not a believer" in any of my stocks post earnings. I do have to say that RPXC has turned out to be a mistake, and a big one at that. I hold the stock in three different tranches. I thinkI mentioned post their last earnings, that I would have sold had it not been in my MFI tranches. Ditto this quarter. They are really having trouble keeping expenses under control. I felt they had a business that was scalable and as revenues increased 10%, earnings would increase by a greater percentage. Sadly, I was wrong. Looking at the rest of my open positions, RCII is my other mistake. In hindsight, I am not sure they qualified as an MFI stock. And I have been underwhelmed by them.
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| CF | $187.26 | $252.59 | $3.00 | 36.5% | 17.3% |
| $66.06 | $73.25 | $0.53 | 11.7% | 17.3% | |
| AGX | $15.60 | $34.80 | $0.75 | 127.9% | 17.3% |
| $11.29 | $13.85 | $0.00 | 22.7% | 17.3% | |
| RPXC | $15.92 | $15.50 | $0.00 | -2.6% | 17.3% |
| Totals | 39.2% | 17.3% | |||
| 11/15/13 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| AVG | $17.22 | $17.05 | $0.00 | -1.0% | 7.8% |
| $17.71 | $22.44 | $0.20 | 27.8% | 7.8% | |
| GA | $9.04 | $11.90 | $0.23 | 34.2% | 7.8% |
| RPXC | $17.04 | $15.50 | $0.00 | -9.0% | 7.8% |
| $48.01 | $78.11 | $0.00 | 62.7% | 7.8% | |
| Totals | 22.9% | 7.8% | |||
| 2/1/14 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| $17.13 | $22.44 | $0.20 | 32.2% | 7.9% | |
| $61.47 | $71.63 | $0.90 | 18.0% | 7.9% | |
| RPXC | $16.22 | $15.50 | $0.00 | -4.4% | 7.9% |
| $69.55 | $92.76 | $0.23 | 33.7% | 7.9% | |
| WNR | $39.11 | $40.30 | $0.52 | 4.4% | 7.9% |
| Totals | 16.8% | 7.9% | |||
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| AVG | $19.57 | $17.05 | $0.00 | -12.9% | 2.6% |
| CA | $29.54 | $28.47 | $0.25 | -2.8% | 2.6% |
| $22.79 | $25.00 | $0.19 | 10.6% | 2.6% | |
| NSR | $25.82 | $27.55 | $0.00 | 6.7% | 2.6% |
| $28.78 | $23.86 | $0.23 | -16.3% | 2.6% | |
| Totals | -2.9% | 2.6% | |||
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 39.2% | 22.9% | 16.8% | -2.9% | 19.7% |
| Previous Tranche | 14.1% | 43.7% | 78.3% | 33.0% | 40.5% |
| MFI Overall Gain | 58.8% | 76.7% | 108.1% | 29.1% | 68.2% |
| Current Balance | 39,698 | 44,182 | 52,031 | 32,277 | 168,188 |
| R3K Current Tranche | 17.3% | 47.4% | 7.9% | 2.6% | 18.8% |
| R3K Overall Gain | 43.3% | 47.4% | 30.7% | 22.0% | 35.1% |
| R3K Balance | 35,829 | 36,851 | 32,665 | 29,722 | 135,068 |
| Annualized IRR | 26.5% | 39.4% | 63.1% | 22.9% | 39.5% |
FLR and SYNA had very good earnings yesterday, so that helped. And you can see where my August tranche is doing some serious butt kicking (up 39.2% vs 17.3%) with two weeks to go. So that is nice as I turn the corner and head into year three of my MFI reboot.
Discretionary Portfolio
This is the portfolio where I feel the real damage has been done over the past week and month. I do not keep exact statistics on this portfolio as it is ever changing, but for all my stocks ever in the portfolio, I am up an average of 2.6 percentage points over having been in the R3K. Going back a month, that figure was 5.4 percentage points. That is a lot of give back, when you consider a large chunk of it (the closed component) is frozen in time.
Still, I like my holdings here. GTAT, GNW, TLM and KLIC are all stocks I believe in. Then I am upbeat on TC earnings next week. I like RIOM over longer term. TSL was a mistake, I will hold at least through my options period. TUBE was always a speculative play. I just got greedy. I put in an order at start of week to sell at 10.15, when it was $10.10. I should have given up that nickel!
| Stock | Shares | Avg Cost | Current Price | Pct Change | R3K Change | Diff |
| BAC-WTA | 8,000 | 5.73 | 6.38 | 11.3% | 15.6% | -4.3% |
| GNW | 11,880 | 9.48 | 13.07 | 37.8% | 24.6% | 13.2% |
| GTAT | 18,000 | 10.49 | 13.95 | 32.9% | 4.2% | 28.7% |
| HIG-WT | 1,650 | 21.24 | 25.46 | 19.9% | 16.8% | 3.1% |
| 7,000 | 11.48 | 13.85 | 20.7% | 12.3% | 8.4% | |
| RIOM | 25,000 | 2.01 | 2.30 | 14.2% | 2.7% | 11.5% |
| TC | 20,000 | 2.94 | 2.82 | -4.1% | -2.9% | -1.2% |
| 7,500 | 10.78 | 10.37 | -3.8% | -2.1% | -1.7% | |
| TSL | 4,000 | 11.13 | 10.76 | -3.3% | -2.3% | -0.9% |
| TUBE | 4,000 | 9.40 | 9.00 | -4.3% | -2.9% | -1.4% |
| Total Open | 18.0% | 7.4% | 10.6% | |||
| Closed | 2.5% | 1.2% | 1.2% | |||
| Combined | 4.6% | 2.1% | 2.6% | |||
I have to say that the BAC warrants are looking very, very cheap to me at $6.38. I may add to my position next week.
Dividend Portfolio
This was always intended to be the slow and steady component of my portfolio, even in difficult times. At that seems true this time as well. A month ago, my dividend portfolio was up 6.1% and overall (open and closed) had beaten the index by 1.2 points. Now I am up 5.0% (much smaller drop) and leading by 1.3 points. Not huge, but certainly in the right direction.
| Stock | Shares | Avg Cost | Current Price | Dividends Received | Pct Change | R3K Change | Diff |
| AOD | 14,186 | 8.03 | 8.63 | 10,916.30 | 17.0% | 18.4% | -1.4% |
| BBEP | 5,713 | 16.74 | 21.01 | 9,693.96 | 35.7% | 12.2% | 23.5% |
| CSQ | 7,001 | 8.72 | 11.51 | 13,707.39 | 54.5% | 51.6% | 2.9% |
| FSC | 8,395 | 9.57 | 9.65 | 3,068.21 | 4.7% | 2.7% | 2.0% |
| 2,000 | 40.55 | 40.03 | 440.00 | -0.7% | 1.7% | -2.5% | |
| NADL | 6,366 | 9.60 | 9.91 | 1,200.00 | 5.2% | 0.2% | 5.0% |
| NTC | 6,753 | 12.01 | 12.42 | 2,284.84 | 6.2% | 3.5% | 2.7% |
| O | 600 | 21.02 | 42.98 | 9,350.71 | 178.6% | 110.4% | 68.2% |
| 4,136 | 5.00 | 6.12 | 8,195.12 | 62.0% | 120.6% | -58.6% | |
| TGONF | 7,000 | 10.27 | 10.50 | 2,367.50 | 5.5% | 16.7% | -11.2% |
| TIME | 2,000 | 22.89 | 24.03 | - | 5.0% | -2.0% | 7.0% |
| TPVG | 5,128 | 15.54 | 15.41 | 1,958.70 | 1.6% | 1.0% | 0.6% |
| Total Open | 63,183 | 17.5% | 15.1% | 2.5% | |||
| Closed | 12.0% | 10.9% | 1.1% | ||||
| Combined | 12.9% | 11.5% | 1.3% | ||||
| Annualized IRR Since 12/31/10 | 17.3% | ||||||
| 2014 Gain | 5.0% | ||||||
I did add this week to my NADL at $9.55. I think that is a great price for a stock that yields close to 10%.
| Stock | Shares | Ann Dividend / Share | Yield | Projected Dividend | Worth |
| AOD | 14,186 | 0.68 | 7.9% | 9,618 | 122,428 |
| BBEP | 5,713 | 2.01 | 9.6% | 11,484 | 120,035 |
| CSQ | 7,001 | 1.00 | 8.7% | 7,001 | 80,586 |
| FSC | 8,395 | 1.10 | 11.4% | 9,235 | 81,013 |
| GPS | 2,000 | 0.88 | 2.2% | 1,760 | 80,060 |
| NADL | 6,366 | 0.96 | 9.7% | 6,111 | 63,088 |
| NTC | 6,753 | 0.68 | 5.5% | 4,619 | 83,870 |
| O | 600 | 2.17 | 5.0% | 1,303 | 25,807 |
| OIBAX | 4,136 | 0.29 | 4.7% | 1,199 | 25,313 |
| TGONF | 7,000 | 0.60 | 5.7% | 4,200 | 73,500 |
| TIME | 2,000 | 0.80 | 3.3% | 1,600 | 48,060 |
| TPVG | 5,128 | 1.20 | 7.8% | 6,154 | 79,024 |
| Total | 7.3% | 64,285 | 882,785 |
Final Thoughts
I head back home tomorrow morning. While I have enjoyed my week in Switzerland, I am ready to go home back to family & friends. The month of July was difficult, but I have gone through steeper sell offs and I am sure I will again. The real key is to not panic (or as I say, panic before everyone else), keep some cash at all times, when stocks drop that you like - buy more and then chill out.
I am taking a class in Social Psychology and there is so much pressure to conform. If everyone else is selling, it is so, so tempting to think they know or see something that you do not see. Just like when everyone is buying LOCO (well named). As smart investors, we have to ignore the herds, tune out the noise and ask ourselves the key question, "what is the real value of a share of stock in that company?". If you get that right more than you get it wrong, which allows you to buy with an appropriate margin of safety, then things will work out ok in the end. As stocks do, over time, find their share prices approaching their intrinsic value.
So GNW is a great example. Their book value is north of $23 a share (excluding AOCI). You could theoretically buy the entire company tomorrow and liquidate them and realize at LEAST a $10 profit per share. And even better, they are growing book value. So in five years, if the market finally recognizes their intrinsic value, that could be a share price between $35 and $40. That is a margin of safety as you can buy in at $13.07 right now. I mean wow, in five years you will come back and read this blog and think, why didn't I buy more GNW? Are there risks? Of course. Their current business may become unprofitable. Their investments may go down, etc, etc, etc. Just pull up their 10K. But there are risks in every security you buy. I'd suggest at $13.07 all of those risks are priced in.
Take GTAT as another example. This is a company that analysts project will earn 77 cents in 2015 and over a $1.00 a share in 2016. Revenues are expected to grow in 2015 by 78%! For the next 5 years, analysts project 49% annual growth. Let me tell you, if that is anywhere close to true, this is a company that will be trading between 20 and 30x earnings when that growth starts to show up. $30 x $1.00 a share is $30 share price. That is not an unreasonable share price target by mid 2016. Less than two years from now, that is more than a double. Not sure how many stocks you own that you believe have a reasonable chance to double in two years, but my idea list is pretty short. So the fact that they might still be working out a few production glitches that they should iron out in a quarter causing a 30% drop? That is a gift from the stock market gods! Not a disaster. Could things go wrong? Of course. But there is also a lot that could go right.
I am on a roll here. I could certainly go on. KLIC, BAC-WTA, AVG, NADL, TGONF, AOD - these are all securities that I see as having potential for sizable gains in next 18 to 24 months. I can wait. I can add while on sale. I have done my homework. You too should do your homework, we don't want groupthink here (pulling out more of what I am learning in Social Psychology).
I feel better now. I may do a little shopping next week. I certainly have some good ideas for next MFI tranche!
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