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Portfolio Update November 2010


As catalysts played out with my positions, my portfolio  performed well in November.

Up 11.3% compared to 0.04% for the SPY fund that tracks the S&P500.

I broke back into positive territory in November and hopefully it can stay that way.

2010 performance won’t be anything impressive but I’ve taken away so many key lessons in 2010. Probably the most I ever have in a single year. I’ll post what they are when the year ends.

What Happened in November

No transactions took place in November but lots of things did happen.

General Growth Properties (GGP) and Howard Hughes Corp (HHC)

GGP finally emerged from bankruptcy and then spun off Howard Hughes Corp (HHC) which is being picked up by institutions. The main catalyst was that many funds were unable to hold GGP during bankruptcy stages. Upon emergence, analysts are back to recommending the company and the exposure throughout the bankruptcy process has helped the share price to increase.

Sun Healthcare Group (SUNH) and Sabra Healthcare REIT (SBRA)

Another completed spinoff from November. Funny thing is that the spun off child (SBRA) is much bigger than the parent (SUNH) which brings the potential for both to be good investments.

Now that SUNH is a pure healthcare play, there is the risk of medicare, but the drops in price make it a very interesting and cheap company.

I purchased SUNH before the spin off, but with the 13% drop from the spin off completion, it looks like Greenblatt was right once again about buying companies after it has been spun off. I’ll be looking to add.

Gravity (GRVY)

As expected, GRVY has announced another delay to the release of their game RO2.

From the video conference they held in October, this is what I expect the timeline to be.

  • 1st Round CBT complete
  • 2nd Round CBT estimated start: Dec/Jan 2011
  • 2nd Round CBT estimated end: Jan/Feb 2011
  • Implement and fix things from 2nd CBT
  • OBT estimated start: Feb/Mar 2011
  • OBT estimated end: Mar/April 2011
  • add in X factors
  • My estimated launch date for RO2: Mid way through 2011. About 7-8 months from now.

What I really like is the fact that a delay was announced but the stock price did not move. A sign that all the pessimism has already been built into the stock price.

With all these delays, you would expect the company to be burning cash, but not so. GRVY has been buying the rights to several games and releasing them to the US market. The latest being Dragon Saga and Freestyle.

On a personal note, I used to play Freestyle myself back in 2004-2005.

Extremely addictive with the multi-player aspect. I was disappointed when I couldn’t play it in the US but now that it is here, it looks like it becoming popular rapidly.

Retail Holdings (RHDGF)

Not long after I purchased RHDGF, the company announced that it will be selling a majority stake of its Bangladesh subsidiary which prompted a 30% jump in price.

Still worth about $25 though. Plenty of upside remaining. I’m happy to just wait.

Bolt Technology (BOLT)

Bolt has come a long way since the Gulf oil mess. Up about 53% since then and has recovered much quicker than I thought.

Fundamentals are still great and there hasn’t been any news for the price increases but if the price is right around my intrinsic value of $15ish so I will be looking to sell soon.

Disclosure

Long GGP, HHC, SUNH, SBRA, GRVY, RHDGF, BOLT

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10 responses to “Portfolio Update November 2010”

  1. Dror says:

    Hi Jea
    Do you know why in Google Finance SUNH has no activity after 15th November?
    I cannot find the 13% drop in Price you described and is interesting
    http://www.google.com/finance?q=NASDAQ%3ASUNH

  2. jc says:

    Jan,

    Would like to know whether you have validate the accuracy of the spreadsheets, stock valuation and statements analysis?

    JC

  3. nico says:

    didn’t you have some position in adbe? by any chanche, did you sell it?

    thanks!

  4. Jae Jun says:

    SUNH is currently trading under SUNHD until mid Dec when it will return as SUNH.

  5. Jae Jun says:

    @ jc,
    What do you mean?

    @ nico,
    Yes I still have ADBE. Nothing to write about that’s all.

  6. AV says:

    Hello Jae Jun, thank you for this update.

    I have a question: how could I value a company like SBRA after it has just spun off from SUNH?

    Thanks!

  7. jc says:

    Jae,

    Sorry for my delay response, when I was doing stock valuation for AMED the DCF value calculated by the spreadsheet was $1066.56 which seems high. The Ben Graham Formula was $76.48. So I went to Gurufocus and using their DCF calculator the instrinsic value for AMED was $104. I do not understand why the huge discrepancies between the numbers.

  8. Jae Jun says:

    @ AV,
    Well SBRA is now a REIT so you will have to value it accordingly.
    Here’s a good link to value REIT’s
    http://www.investopedia.com/articles/04/112204.asp

    @ jc,
    Look at the growth rate and the FCF number. Historical growth shows AMED grew at extremely high rates.
    You’ll have to use common sense whether you can assume the same value in the DCF.
    On the spreadsheet, you can change the growth rate and the FCF.

    On Gurufocus, the DCF value looks incorrect as well. Always check your assumptions.

  9. Zehua Zhou says:

    There are not so many good opportunities in the stock market. Why don’t we have a try to invest in junk bonds? Do you know where to find a bond screener?

  10. Jae Jun says:

    I am not an expert in bonds and analyzing bonds so I will have to stay away. I thought of trying to do it last year but never found the time to learn deeply about it.
    I do not know of any bond screeners.

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