Saturday, October 11, 2014

Weekend Update - Worst Week Ever

Worst Week Ever

Hard to even write my update this week.  This was my worst week ever. On a dollar basis and on a percentage basis.  I finished the week down 12%.  I knew it was going to be a bad week on Monday, when home sick (already not feeling well) I see where GTAT declared bankruptcy.  While that was the low light, the rest was the week was a continued downward spiral.  That means I have gone year to date from being up 16% at the end of August to now down 8.5%.  I am reminded of a quote from Winnie the Pooh:

In the chapter, "In Which Tigger is Unbounced", they want to teach Tigger a lesson and get him lost in the woods.  Here is what Rabbit says will happen at the end:

"Well, I've got an idea," said Rabbit, "and here it is.
We take Tigger  for  a long explore, somewhere where he's never
been, and we lose him there,  and  next  morning  we  find  him
again,   and--mark   my  words--he'll  be  a  different  Tigger
altogether."
        "Why?" said Pooh.
        "Because he'll be a Humble Tigger. Because he'll  be  a
Sad  Tigger,  a Melancholy Tigger, a Small and Sorry Tigger, an
Oh-Rabbit-I-am-glad-to-see-you Tigger. That's why."

So after this week (my equivalent of getting lost in the woods and left there), I am a Humble Tigger, I am a sad Tigger, a Melancholy Tigger, a Small and Sorry Tigger.

It Is Ok To Get Angry

I have had other investments go bankrupt. IAR was a big one for me back in 2008-09. Plus a couple reverse Chinese mergers. In all those bankruptcies, I got letters from law firms about joining a class action suit.  I never joined as I felt it was my own fault/stupidity.  With GTAT, I also take the ultimate blame.  I was foolishly blind to continue holding them post the September 9th launch of the iPhone.  I even remember thinking on the first day when they only dropped to $14 or $15 how I was surprised the drop was that small. I was foolish to hold when seeing how much insiders had sold. But I was relying on what management had said (still drinking the kool aid). So while I sold 22% of shares in August, I did hold the rest.  Here is a table showing management sales:



Now I am not an attorney, but I know quite a bit about what officers of a public company are allowed to do.  One key point is that you cannot sell shares in a company if you have knowledge of a material market moving fact regarding the company that is non public. The exception to this is if you set up a 10b-5 plan in advance of that knowledge.  Guiterriez clearly had such a plan as he was selling every month.  So his test would be whether he knew the AAPL partnership wasn't going well when he last amended the plan.  Given the size of his sales, I think he was likely knowledgeable that the deal was likely to fail (Res Ipsa Loquiter - the thing speaks for itself).  The Squiller actions also look very damning.

The other key is that the officers of the company have a duty to fairly comment on likely material events in the future in their 10-Qs.  It will be very interesting to find out if GTAT knew before the release of their 2nd quarter earnings that things with AAPL were likely to fail. That was NOT disclosed and they continued to give bullish earnings guidance.  If they did that in face of knowledge contradicting that guidance, that is a felony offense that would get jail time for the CEO and CFO (Sarbanes-Oxley).

Now had they disclosed these facts when they knew them, it is true I would have still lost my money. I am okay with that. What really bothers me is that the officers lined their pockets when they knew (in my opinion) that the Titantic was sinking. So I will be part of any class action suit. Not in any hopes of getting my $ back, I know at best I would get pennies on the dollar, but because I am mad.

MFI Tranches

Here is how my MFI is doing.  In summary, my August 15th 2012 reboot also had a poor week as tech stocks like KLAC, SYNA and SNDK got their proverbial clocks cleaned:

11/15/13 Stocks Start Current Dividend Pct Gain R3K Gain
AVG $17.22 $16.11 $0.00 -6.4% 6.4%
ATVI $17.71 $18.71 $0.20 6.8% 6.4%
GA $9.04 $11.90 $0.23 34.2% 6.4%
RPXC $17.04 $14.00 $0.00 -17.8% 6.4%
SYNA $48.01 $65.69 $0.00 36.8% 6.4%
Totals 10.7% 6.4%
2/1/14 Stocks Start Current Dividend Pct Gain R3K Gain
ATVI $17.13 $18.71 $0.20 10.4% 6.5%
KLAC $61.47 $68.07 $1.40 13.0% 6.5%
RPXC $16.22 $14.00 $0.00 -13.7% 6.5%
SNDK $69.55 $86.07 $0.53 24.5% 6.5%
WNR $39.11 $40.09 $0.78 4.5% 6.5%
Totals 7.7% 6.5%
5/6/2014 Start Current Dividend Pct Gain R3K Gain
AVG $19.57 #N/A $0.00 -17.7% 1.3%
CA $29.54 #N/A $0.50 -10.6% 1.3%
CSCO $22.79 #N/A $0.38 4.1% 1.3%
NSR $25.82 #N/A $0.00 -4.9% 1.3%
RCII $28.78 #N/A $0.46 8.5% 1.3%
Totals -4.1% 1.3%
8/15/2014 Start Current Dividend Pct Gain R3K Gain
CSCO $24.40 #N/A $0.19 #N/A -3.1%
AGX $36.71 #N/A $0.00 -16.2% -3.1%
ITRN $21.32 #N/A $0.19 0.4% -3.1%
BRCD $9.34 #N/A $0.04 0.5% -3.1%
CBI $58.25 #N/A $0.07 -15.1% -3.1%
Totals #N/A -3.1%
Category/Tranche August November February May Total
Initial Investment      25,000       25,000     25,000      25,000    100,000
Current Tranche -6.8% 10.7% 7.7% -4.1% 1.7%
Previous Tranche 41.4% 43.7% 78.3% 33.0% 49.4%
Tranche -2 14.1%              -              -               -   3.5%
MFI Overall Gain 50.4% 59.1% 92.1% 27.5% 57.3%
Current Balance      37,592       39,784     48,015      31,877    157,268
R3K Current Tranche 19.4% 6.4% 6.5% 1.3% 8.4%
R3K Overall Gain 41.4% 45.5% 29.0% 20.4% 34.1%
R3K Balance      35,347       36,372     32,239      30,099    134,057
Annualized IRR 20.8% 27.6% 47.1% 18.5% 28.5%


Date Differential Value
12/1/2012 -2.20%       99,765
1/1/2013 -1.78%      102,798
2/1/2013 -2.26%      102,594
3/1/2013 -2.23%      102,881
4/1/2013 -0.43%      106,804
5/1/2013 2.00%      110,423
6/1/2013 4.75%      115,831
7/1/2013 4.29%      114,888
8/1/2013 6.91%      124,799
9/1/2013 10.46%      124,536
10/1/2013 19.67%      138,655
11/1/2013 19.75%      143,514
12/1/2013 23.70%      150,105
1/1/2014 26.63%      157,138
2/1/2014 24.70%      150,619
3/1/2014 25.66%      158,116
4/1/2014 30.38%      162,991
5/1/2014 29.65%      162,428
6/1/2014 31.44%      167,001
7/1/2014 39.23%      177,971
8/1/2014 31.13%      167,054
9/1/2014 35.90%      177,792
10/1/2014 29.38%      168,321
Current 23.21%      157,268

You can see I have gone from beating the benchmark by 39% to 23.2% now. And I am down about 7% since start of October.


MFI Big Dividend

This tranche has held up better.

10/1/2014 Stocks Start Current Dividend Pct Gain R3K Gain
BAH $23.52 #N/A $0.00 3.9% -3.6%
BKE $45.55 $46.03 $0.22 1.5% -3.6%
CA $27.87 #N/A $0.00 -7.1% -3.6%
GME $41.70 #N/A $0.00 -8.1% -3.6%
NUS $44.56 $46.92 $0.00 5.3% -3.6%
Totals -0.9% -3.6%

much better than the 7% decline of my standard MFI.

With that I need to go. May write more later.


1 comment:

ChrisO said...

Tigger never got lost or "sad", Rabbit, Pooh and Piglet got lost instead. :-)

I wonder how much the not being able to discuss the Apple contract will shield the officers of GTAT in a court. I also wonder if the SEC will do anything.