Portfolio Review and my Favorite Stock of the Year


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The past two months makes me want to believe that the economic recovery is looking good. Markets have consistently been rising, and so has my portfolio so I am not complaining.

I’ve put a lot of cash to work over the past 2 months. Cash made up about 35% at one point of the year, but that has been drastically reduced down to 8% by the end of October.

My Portfolio YTD and Monthly Performance Stats

The portfolio certainly has come a long way from the bottom of -20% mid way through the year.

I’m aiming to break even. It doesn’t matter whether or not I beat the market every year, as long as I don’t lose money because I know that in the long run, I will beat the market.

Transactions in Sept & Oct

Bought ADBE

Couldn’t resist buying ADBE when it dropped 20% following earnings. ADBE stock valuation and reasoning here.

Bought YNGFF

I first came across this valuable idea from Pakiya Funds. Sat on my bum taking my time while the stock was at $0.37. Now it is over $0.80 already.

I’m not an expert on precious metal producers but after reading as much as I can on the company, YNGFF is clearly cheap on a cash flow basis. Next year should be exceptional with the anticipation of production hitting estimated targets.

To learn about YNGFF begin by reading the following links.

Above Average Odds has come great material as well.

There is also more learning material in the forum on precious metal miners.

Sold BOLT

Reduced the position slightly to free up some cash. No other reason.

Bought MMPIQ

I thought I was finished with bankrupt stocks but MMPIQ looks to be a very good prospect. A very small portion of the portfolio with a floor around 25c and upside much higher.

A quick read up can be found on the MMPIQ stock analysis by AQ Value. More info on MMPIQ can be found at AQ Value.

Bought SUNH

SUNH will soon be completing its spinoff. Spinoffs are always good opportunities but I am especially eager about the spun off child Sabra. Sabra will become a standalone healthcare REIT.

Read these links (Thanks to Stock Spinoff Blog)

Bought RDI

An investment with a catalyst.

Reading International operates movie theaters as well as own land. The company has a presence in Australia, New Zealand and USA.

Having lived in Australia for most of my life, and having been to many of Reading Cinema’s and knowing the land location of a few of its properties, RDI looks to have a big margin of safety.

Fund manager Andrew Shapiro has been following RDI for years and has plenty to say about the company on his Seeking Alpha page.

This is an opportunity based on discount to assets. People against the idea have been arguing that cinemas will die but that point is completely off track from the investment thesis.

Sold INSM

Simply needed to free up cash. INSM was one of my biggest positions but I cut it down as better ideas came along.

Bought RHDGF

Most definitely my favorite investment of the year.

Cheap on a sum of the parts valuation. Huge margin of safety. Clearly plenty of upside potential with low risk.

Read about it before Wall Street catches on.

Looks like somebody else has written about RHDGF. Good article but very similar to the linked pdf.

Sold APNC

My growth expectations were incorrect. Made a mistake and selling at a loss of about -23%.

What I’m Reading

Made to Stick: Why Some Ideas Survive and Others Die

Fantastic book on how to package your ideas in order to make it stick in the minds of people. Useful in everyday life as well as investing.

Go read it.

The link is an Amazon affiliate link. I’ll receive 50c or so for referring you. If you can’t stand the idea of me receiving 50c, still make sure you purchase it by searching the title yourself.

Disclosure

Long all positions except APNC.

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21 responses to “Portfolio Review and my Favorite Stock of the Year”

  1. Robert King says:

    Hi Jae,

    Thanks for the link on RHDGF. I actually read the other report from SZ and ignored it until $11.50.

    Please note that I’ve sold out of RHDGF since the sale of the Bangladesh subsidiary shows that, if Retail Holdings continues selling things piecemeal rather than IPO-ing the Singer Asia subsidiary, the NAV falls to roughly $25 per share or so. Still some value left, but I wanted some liquidity for other buys.

    Cheers,
    Rob

    Sidenote: I did the exact same thing that you did with YNGFF, lol. If only I had picked it up at $0.25 when I first heard about it.

  2. tim says:

    Hey Jae,

    Thanks for sharing your positions. I noticed that you purchased SUNH. I also have a strong interest in Sabra but was planning to wait until after the spinoff and hope for a dump to purchase. I guess the flipside is that by buying now you lock in the undervalued price for Sabra. What are your thoughts on timing as far as purchasing spinoffs?

    Thanks,
    Tim

  3. junto says:

    Tim, I agree with you. My thoughts are that given the size of Sabra, we could see some indiscriminate selling from institutions. Should be an interesting one to follow.

  4. Jae Jun says:

    @ Robert,
    Thanks for the visit. I did notice your latest post on selling RHDGF.
    I’m curious as to what other opportunity you found that warranted a sale of RHDGF rather than seeing to get up closer to intrinsic value?

    @ tim,
    I originally planned to wait but there were instances where the price never really dropped.
    By purchasing now, I’m at least guaranteeing a starting position. If drops the next day it is spun off, I can buy more but in case it doesn’t I’m still good.

  5. Appreciate your interest in Reading International (RDI). You can follow substantial blog conversation on RDI on Seeking Alpha and my other articles at http://seekingalpha.com/author/andrew-shapiro

  6. Zehua Zhou says:

    Did your stock screener find YNGFF in early this year?
    I told you APNC doesn’t have growth a long time ago.

  7. Jae Jun says:

    Thanks Andrew.

    @ Zehua,
    No I didn’t find it from a screener. Found it off other value blogs.

  8. JC says:

    Hi Jun,
    Any thought on CSCO now that it’s dropped 16% after earnings announcement?

  9. Adam says:

    I have to disagree on APNC.

    My latest earnings blog: http://bit.ly/cVKUTY

    I’m estimating that the company will have 2010 full year EPS between .18 and .20, even if the company just matches 2009 numbers, making for a P/E ratio of 4.6.

    EV/EBITDA of 1.89.

    FCF is the highest in company history.

    Insiders are buying and the company is reducing shares outstanding.

    Margins are low, especially in the insurance marketing segment, but the company is transitioning that segment towards the much higher alternative insurance offerings.

    Stock seems extremely cheap to me and the company just announced the exploration of strategic alternatives to increase shareholder value, including a possible going private transaction.

    http://bit.ly/9ueVMK

    Just my 0.2 cents

  10. Ludovici says:

    Hello again, Jae Jun. I haven’t visited your site in a while, but I remain happy to have come across it, thanks to VVTV and IGOI, the latter of which I still am holding but getting nervous about. Just want to ask you if, with RHDGF now close to 20 a share, you would still be a buyer. I see that it has had a beautiful run over the last half year. I very much appreciate your hard work and clear-headed analyses.

  11. uri says:

    Regarding SUNH
    i thought the methogology (greenbalt) say to by the spinoff after the spinoff and after the price drop?
    the hope is that funds will drop the spined off company as it is too small or not in their interest?
    the idea is to use the structural flaws of funds and in the year after the capitalistic freedom of the spined of management to succeed.
    arnt you going against the methodology?

  12. Jae Jun says:

    @ JC,
    No opinion on CSCO. Do you have a specific question on it?

    @ Adam,
    Todays news of a strategic plan certainly did help. I was also concerned about management and the direction they would take. Whether they would just sit and wait for someone to catch on or do something to return shareholder value. The news is a start.

    @ Ludovici,
    Wow great job on IGOI. It has done superbly this year. VVTV has come a long way off its lows this year.
    RHDGF wasn’t my analysis but it certainly is a good one and an easy one which makes it that much more attractive. At $20, I would not buy. Not enough MOS.

    @ uri,
    Yes I am going against what Greenblatt said. But it hasn’t always worked out that way. Maybe it will again this time, but at the current price, it is still cheap. If Sabra is spun off and the price plummets, I can easily buy more. If it stays the same or goes up, I’ve at least gotten a small starting position. If I think about the spin off in terms of days, then yes I’m making a mistake but over the course of months or maybe years, it wouldn’t make a difference.

  13. Ludovici says:

    Hate to show my dumbness (i admit i’m over my head here), but if the RHDGF analysis wasn’t yours, how can the stock be your “favorite investment of the year”?

  14. Jae Jun says:

    Due to the research performed by somebody else, I was able to come across the idea, learn about it, confirm the numbers and come to the conclusion that this was a great opportunity. It is easy to understand, I feel comfortable holding it and there is plenty of upside. That’s why it is my favorite investment this year.

  15. Zehua Zhou says:

    YNGFF’s latest 6-K shows its 6 months ended June 2010 has negative cash flow. I am confused.
    Also, I am not familiar with materials company, so is it like oil/gas companies that publish a proved reserve number? What is the unit production cost for YNGFF now?

  16. DROR says:

    Sabra Healthcare REIT, Inc:
    THE market cap of the spun company is bigger than the spinning company. no reason for institutions to drop the stock. So there is no special catalyst for undervaluation. the spin company did very well but it seems that Sabra Healthcare REIT, Inc is a wast of time

  17. Jae Jun says:

    @ Zehua,
    Sorry for the really late response.

    I’m still no expert on miners but remember that you also have to look at the future potential of the mine and capacity it can produce. Right now, there is a lot of good news coming out of YNGFF. Check out the filings.

    @ DROR,

    Why do you say SBRA is a waste of time?

  18. Dror says:

    Hi jae
    Yes – i believe Sabra has no real catalyst based in Greenblatt spinoff rule.
    Greenblatt Idea was that Investors or specially insttutional investors will many time dump Spun company as it is to small Cap and many time in an industry not related to the core businessor the institution fund and therefore will lead to undervaluation. the rule is that Many times these new small spun companies will do well once they have freedom from the spining company (Capitalism rule+ Undervaluaion from dunping the stock).
    In the case above SABRA is much larger than the spinning company and the business is related. Therefore whoever analysed SUNH will continue do so with Sabra and probably continue holding. On the other side Maybe there is a value in SUNH from the same reason.
    I don’t say SABRA will not do well, but not from the reasons Greenblatt looking for spin offs

  19. Jae Jun says:

    @ Dror,
    According to Greenblatt’s rule, SBRA may not have a catalyst, but as in investment it is interesting.
    There are hardly any pure play healthcare REIT’s remaining because they have all been either bought out. Only a few remain (need to look at my notes) but the multiples applied to SBRA are much lower than the competition.

  20. Zehua Zhou says:

    One thing I don’t like this gold stock is that the current gold price is so high, and it is only able to achieve a price/FCF of 3. That is no good. Gold price might crash at any time, and this company will be in danger again. If at present, gold price is $400, and this company has price/FCF of 3, that would be a ten beggar.

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