Portfolio Update April 2010

Old School Value Stock Portfolio Performance

Portfolio Performance

A volatile month, but as I’ve mentioned in previous monthly reviews, it’s a theme that I’m expecting for 2010. I am surprised that the market in general is up so much. The S&P is up 8% while the Russell 2000 index is up a whopping 18% at the end of April 2010.

The Old School Value portfolio performed satisfactorily. In April my portfolio was up 5.28% compared to 3.19% for the market.

Benchmarking against the Russell 2000, as shown below, I’ve fallen quite behind. However, my absolute gain remains steady and my objective to not lose money remains intact in 2010.

Portfolio Movers

ROIAK [[ROIAK]] moved up steeply this month as did all radio stocks. Overtook VVTV to become my second largest holding behind GGP.

BOLT [[BOLT]] released first quarter earnings and performance wasn’t as strong as anyone would have liked. While the company still managed to profit, revenues declined significantly. If oil prices and demand doesn’t pick up, I’m beginning to think that the intrinsic value could very well drop towards a price just above what it is trading at now. Intrinsic value of $14 opposed to my initial $18 looks very real if the company doesn’t pick it up.

Portfolio Trades

Very busy month with trades this month. It all started at the end of March when I bought more SVT. Forgot to mention the purchase last month.

1. Sold RGCIQ then bought it again.

My initial purchase of RGCIQ was below the 12.8c offered to shareholders so it was simple arbitrage and then I sold for a tiny gain. However, Resilient entered the picture and started to fight the court on the validity of the valuation method used by the debtors. Long story short, the court denied Resilient’s motion and approved the prepackaged bankruptcy plan by the company.

The result is that shareholders will receive 12.8c in cash for each share.

Looking back and after going through what happened, I see that Resilient’s chances of winning the case was thin. But at the time, the risk to reward was stunning. A downside of 15-20% compared to an upside of 300%. Based on the information I had and what I knew, I made the right choice, but in hindsight, I’ve got a lot more to learn about bankruptcy investing.

Distressed investing is all about probabilities and it’s definitely something I will have to learn more about. I’ve picked up several books on bankruptcy and distressed investing so I hope to expand my knowledge in this area.

2. Sold a portion of VVTV at a gain of 934.5%

I’m slowly liquidating my position in VVTV now. With the way the company is operating and the current valuation, there is more downside risk than upside. A 100% return could be achieved within 5 years but the downside looks to be much larger and steeper.

3. Sold EVI for a gain of 15.3%

I needed to free up cash for other purchases this month and EVI was at the top of my sell list if a better idea came up. Nothing wrong with the company. I just had better uses for the money.

4. Sold LTON for a loss of 1.7%

This was the second time I entered LTON after a successful 45% gain last year. LTON is cheap and still trades below net net but it deserves to be. With so much cash and assets, the company is unwilling to acknowledge the existence of shareholders. Instead the CEO buys minority stakes in other companies which he owns. Big alarm.

5. Bought APNC

A reader wrote about Access Plans Inc in the forum, and after going through the numbers and reports, the company is very cheap. It is not a ” true” value investment but more like a cheap growth stock.

6. Bought TRXAQ

Of the bankruptcy stocks, TRXAQ is more the typical type of investment that I will try to get into now. Solid fundamentals, operating well, business improving and financing progressing well.

I also have to mention that people shouldn’t just follow me or anyone into bankrupt stocks. Volatility is HUGE (+/- 30%) and there is a lot of speculation. Traders and penny stock gamblers just bid the shares up even though there is no clear evidence that equity holders will be left with anything.

Although I see more upside with TRXAQ based on the operating reports, the price of TiO2 and assets, the 70+% rise in April certainly has reduced the margin of safety. Again, I can’t stress enough that you find the court dockets and read through it in order to understand where the company stands, who is involved, what the company is doing and what the risks are.

Stock Discussions and Questions for You

1. I’ve suddenly become interested in the paper industry. It is highly leveraged with high capital requirements but I am drawn to it. Problem is that I admit I am no expert and would like to know whether you have an opinion or knowledge that you are willing to share.

2. Books A Million [[BAMM]] is a book store that I’ve been looking into. With specialty retailers such as HAST and CONN doing extremely well, BAMM looks to have potential. You can read and join in the ongoing discussion on BAMM. I would love to hear your opinions.

3. Are you interested in a members section at Old School Value? I envision members having access to more diverse screens, special situation ideas, 100% transparent portfolio holdings, my portfolio live trade alerts, stock analysis and more.


1. Finished reading Active Value Investing: Making Money in Range Bound Markets. Book review to come.

2. Don’t forget to sign up with your email to receive articles and stock analysis tools into your inbox.

3. Working on a free Piostroki spreadsheet.

4. Started reading Distressed Investing by Marty Whitman. One heck of a difficult book to read at my level. Learning though.


I own all stocks mentioned except sold positions.

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15 responses to “Portfolio Update April 2010”

  1. TC says:

    What is the inception date of your model portfolio (see below)?

    I encourage you to include this date when presenting the results of your model portfolio, as well as both total and annualized returns. Thanks, Tom


  2. Ken says:

    I am waiting for the 1 year to pass this month on what remains of my VVTV position since it is in a taxable account. But I totally agree with you.

    With regards to the paper industry, there is a pulp shortage which has driven up prices, part of the reason for the run up in paper stocks. Boise Cascade is a company to check out (BZ). I currently hold some warrants (BZ.WS or BZ-S depending on your broker).
    .-= Ken´s last blog ..Festival of Stocks #178 February 1st 2010 =-.

  3. Jae Jun says:

    @ TC,

    I don’t put up my inception date for personal reasons. While I do offer a high level of transparency, I am not a subscription or newsletter service so I prefer to keep some numbers to myself.

    @ Ken,
    I’ve been looking at Canadian paper companies but in some areas even though there has been pulp shortage, some plants are idle.

    I’ll have to understand more about prices, demand, how business is done and the different types of paper as well.

    @ qqq777,
    Thanks. Checking it out now.

  4. Erich Riesenberg says:

    Perhaps this is another aspect you choose to not disclose, but is there a cash component, and how is that factored into results? Proceeds of sales, cash awaiting reinvestment.

  5. Derek says:

    Jae, I own Breakwater Resources, which just reported Q1 earnings of 0.4 p/s, double the analysts’ estimates.
    That should have been the track upwards but then, almost immediately, came news of a reverse split.
    The company has a solid balance sheet but was heavily diluted.
    I’ve been reading many discussion forums and it seems the majority view this news as negative.
    I’d appreciate your take.

  6. Jae Jun says:

    @ Erich,
    Yes there is a cash component but I haven’t been posting that. I should though. I’ll remember for next time.

    @ Derek,
    When a company approves a reverse split, it is because the company is trying to gain compliance by keeping its stock price above $1. Nothing changes fundamentally, but it does reveal that management may be more interested in their stock price rather than their business.

  7. Hi Jae,

    Do you use some sort of software to track your performance, or just a spreadsheet?

    I am long GGP as well, and it’s a significant portion of my portfolio. What do you think the preferred outcome is for GGP?


  8. Vince P says:

    I own GGP too, maybe not for as long as you, but I’d like to think emergence from bankruptcy as a standalone company (with the attractiveness of dividends to investors) would result in $30-$50 within a reasonable amount of time.

  9. Hi Vince,

    Thanks for the response.

    It doesn’t seem like another bidder is likely to emerge at this point, so unless Simon changes his mind – standalone seems to be what we’re left with.

    Many of the people I’ve spoken with about the deal seem to think that this is the preferable outcome. I hope they’re correct. We’ll see.

  10. Jae Jun says:

    Sorry for the late response.

    As Vince said correctly, the preferred outcome by the large shareholders is a standalone company.

    Right now, GGP is still cheap than before bankruptcy. Less debt, more financing and breathing room to maneuver. GGP has quality in their assets and the big by Simon ($20) is the minimum upside potential.

    The current floor is at $15, but we at least know that GGP has plenty of room to hit SPG’s last bid, regardless of whether they have a bid or not. SPG will know the situation the best and if they were willing to get up to 20, that says good things about the future of GGP.

    Ignore short term volatility. Having a quantitative figure always helps.

  11. Vince P says:

    I snagged a bunch more of GGP under $13, can’t help thinking the overall market is the only reason dragging this down…I usually don’t have the patience for longer-term holding but I believe this is a great opportunity just looking at the dividend numbers in the REIT environment. Even if they declare $1 that’s approximately double the industry average yield based on a $13 share price. GGP will attract an influx of cash from investors and drive the share price noticeably higher, considering the quality of assets they will have when emerging from bankruptcy. Good luck to all who see through this market’s static.

  12. Jim says:


    I think the time to buy GGP was at $1. Buying at $13, in my opinion, is being a bit too late for the ball.

  13. Jae Jun says:

    Long term, GGP will be fine. It’s just short term volatility that is hitting GGP. It’s finally beginning to show that the so called good feelings about the market was just too optimistic, especially in light of what is going on in the US and everywhere else.

  14. Praveen says:

    Regarding the question that you raised about creating a members-only section on the forum Jae, I think it will create a lot of value to the paid members. It is always nice to know that you’re getting more by paying than what everyone else is getting 🙂 It also adds a certain degree of formality to the forum.

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