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Portfolio Update March 2010 Q1


Old School Value Stock Portfolio Performance

Portfolio Performance

Slow month in March despite the market run up. Seems like the market is running up on anything these days.

My portfolio was up 1.51% compared to 5.88% for the market. The Russell 2000 index rose 7.97% in March.

Q1 performance shows that I am just slightly ahead at this point but on an absolute basis, I am beating the market by 46% since inception.

Throughout March, I spent most of the time upgrading spreadsheets and working on Old School Value. This site is going through some growing pains at the moment and the lack of time committed to research is beginning to show. I missed out on several opportunities and for a couple, I didn’t have the conviction to invest resulting in big misses.

Portfolio Movers

GGP [[GGP]] is the biggest position of my portfolio. It has grown to about 30% now. With the downside clearly limited at $15 with all the buyout offers and news, GGP has plenty upside as its reorganization plans become clearer. It will also help other competitors to assess the attractiveness of GGP’s properties.

My second biggest holding VVTV [[VVTV]], didn’t fare so well. Down about 20% for the month and about -35% for the year. Q4 results were released and the numbers weren’t impressive. Given that Q4 is supposed to be the most profitable quarter of the year, VVTV still ended up with a loss. Had hopes going into earnings based on how brilliant HSN has been performing but it hasn’t translated to the financial statements yet.

I was deciding whether to sell at a very respectable profit of over 900% but I’ll be giving VVTV another year or so. Also check out the following story on the current VVTV strategy and team.

INSM [[INSM]] is up slightly this month but is up 40% or so YTD. I’ve written plenty about INSM and you can read my latest on INSM Q4 results.

GRVY [[GRVY]] is flat in March but up 20% YTD. Great potential with this one. The market has severely mispriced GRVY. One of the best stocks under $2.

SVT [[SVT]] is down 20% YTD after a sell off following Q4 results. The sell off occurred on low volume so I suspect impatient investors sold out. None of the institutions know about SVT so I’m not worried at all. The annual report showed that SVT is operating well, despite some rising costs, but demand for the product is still there and their government contract looks healthy.

Portfolio Trades

This month, I would have ended with zero trades had it not been for some new areas that I’m really getting into now.

Special situations with bankruptcies. Don’t let “special situations” and “bankruptcy” scare you off. I’ll get to that in a sec.

1. Bought more INSM

My original allocation was 3% when I first started buying, but as I learnt more about the business and the role of IPLEX and the potential, my position increased slowly to my 7% allocation. Won’t be adding for a while.

2. Bought CTDBQ and Sold CTDBQ at a 10% loss

Remember how I was real big on media stocks and especially radio stocks? Well, since last year, I’ve had a list of radio stocks and Citadel Broadcasting was on the list. In March they entered Ch11 but like most radio companies, they are making money and generating cash. They just had a hard time getting credit to extend existing loans.

Well, I bought a very small amount and sold after I read in the reorganization plan that common shareholders will be wiped out. So in the heat of the moment, I frantically sold off and locked in a 10% loss.

The mistake isn’t that I sold at a loss. My mistake is that I didn’t dig deeper and look at who the stakeholders are. A couple of days after I sold, it seems like big institutions saw what I did but had the guys to start loading up. Up 100% since my buy price within a week.

3. Bought RGCIQ

Bought RGCIQ on the same day as CTDBQ. This one is a little different where the downside is clearly written down on paper.

All common shares will receive 12.8c in cash. My initial purchase was made at just under 12c which guaranteed a profit even at the worst scenario.

It then traded down to 10c. You could have made an easy 20% on this spread.

I purposely mentioned all this only in the forum under the RGCIQ bankruptcy discussion as I didn’t want prices to be pushed up. You can read all the details and how great the opportunity was, maybe still is, from the forum. I’ll write a formal post on this next week or so.

Email Updates

For many of you, receiving updates via email is more convenient so I’ve created a form for a mailing list. It’s on the side, down below and occasionally it will popup.

To reward you with trusting me to deliver news to your inbox, I will also often send people on this list, information much sooner than when I post it on the blog.

A good example would be an alert of the RGCIQ opportunity 2 weeks ago when I first started looking at it.

You’ll never receive spam or me flooding your inbox with one liners, so rest assured that quality and value is what you will receive.

Others

Didn’t get to finish reading Active Value Investing: Making Money in Range-Bound Markets but I should get through it this month and then move onto my bankruptcy books.

As I mentioned earlier, I spent a considerable amount of time upgrading the stock valuation tools and for all premium buyers, when you receive the upgrade in your inbox, I think you will agree that I’ve just increased the quality and value bar up another notch.

Disclosure

I own all stocks mentioned except sold positions.

What is Old School Value?

Old School Value is a suite of value investing tools designed to fatten your portfolio by identifying what stocks to buy and sell.

It is a stock grader, value screener, and valuation tools for the busy investor designed to help you pick stocks 4x faster.

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11 responses to “Portfolio Update March 2010 Q1”

  1. slinj says:

    CTDBQ would be a bit speculative, I guess, but you are right should have digged deeper.
    I am not fully convinced about GRVY though…Gaming company has a bit of bipolar nature, just like biotechs, there can be big hits, but can also have so so products which just goes unnoticed. So it would be hard to predict. Love to hear otherwise.

  2. Parker Bohn says:

    You are braver than I am. I tend to carry positions at 5% of my portfolio, and rarely above 10%.

    The only positions I’ve bought this year so far are SPCO and SAB, which look not unlike your investing style. Both are up slightly since I bought them, but they may be worth a look to you. I’d certainly be interested to know any reason you saw for NOT investing in these.

    I trust my own homework, but I’m always looking for disconfirming thoughts.

    I enjoy your blog, especially the emphasis on method.

  3. Ryan B says:

    Do you still hold a position in LTON?

  4. Jae Jun says:

    @ slinj,
    Don’t disagree with you on that. Just depends on the company situation though. Current valuation of GRVY has completely discounted every game in their portfolio, whether it be a good one or mediocre. But gaming companies have big margins which allows even the so so games to add to the bottom line.

    @ Parker Bohn,
    I do tend to concentrate my holdings a lot. I don’t like dealing with 30 companies in my portfolio. Way too much work than I can handle.
    My positioning also depends on what I view as the downside relative to the upside. If a stock has 50% downside but 100% upside, it won’t be a big position. It will be a very risky position for me. However, if I see a stock with about 10% downside but 100%, then it’s time for me to piling up.

    @ Ryan B,
    Yes I still hold LTON but I have a sell order in place. I am very dissatisfied and disappointed in the way the company is being run.
    This company clearly doesn’t care about shareholders. Extremely mispriced but I’m not liking this stock at all lately.

    What do you think? Am I being irrational? When it comes down to price vs value, there is more value there but no way of it being unlocked.

  5. john says:

    hi Jae – I don’t remember seeing anything on RGCIQ a couple of weeks back although I’m a sub; is there another list I should be on to get the early info 🙂 ?

    thanks much,

    John

  6. Jae Jun says:

    Hey John,

    I didn’t notify anyone on RGCIQ.
    I also have to transition all the existing email subscribers to the new mailing list. Getting hard to manage separate lists.

    Once I get that done, I’ll start notifying people of breaking situations first.

  7. phishticker says:

    wow!!! CTDBQ!!! I picked some up and flipped them in a week at nearly 100% gain…..now i see if i would have held on another few days that would be a 200% gain.
    Why is this going crazy this past week????

  8. john says:

    OK Jae – thanks so much. I think the trading in RGCIQ indicates the market is pretty skeptical – we will see, I suppose.

  9. Jae Jun says:

    @ phishticker,
    I have to admit that I would have been speculating if I didn’t sell when I did, but I wish I had waited a few extra days.

    @ john,
    That’s the sentiment that I am getting as well.

  10. phishticker says:

    the run by CTDBQ has been nothing short of spectacular. It seems like a large fund has been bidding it up.
    “Q” companies have been doing well in general as they emerge with good deals. Any others you like??? I was long on wamuq but think that is not going anywhere anytime soon.
    Even though CTDBQ is up 500% from my purchase price 2 weeks ago as long as the fund keeps buying I am sticking around.

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