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OSV Portfolio 2009

October 2009: S&P -1.98%

October 2009: OSV 10.18%

October was certainly an eventful month, but overall, I am happy that I did not lose money.

Rule #1: Never lose money

Rule #2: Never forget rule #1

With the crazy run up in the market, it’s easy to believe making money in the stock market is painless, but at least the end of the month reminded us to keep emotions in check and to be brutally cold and emotionless when dealing with Mr. Market.

Portfolio Performance

I was up over 30% for the month as the DOW flirted around with 10,000 but ended October at 10.18%, with the S&P500 finishing October at -1.98%.

But honestly, enough of the 10,000 mark nonsense. It’s all I hear on the radio and the news.

Portfolio Movers

Strong performers included all 4 of my radio stocks but the value of these companies has been getting closer and closer to intrinsic value.

I missed out on my opportunity to sell Salem Communications (SALM) in the $4’s as I had no internet access for over a week and just couldn’t keep up.

Insmed (NASDAQ:INSM) is now down about 19% from my average buy price which means that it is even cheaper compared to its net net value.

When I made my purchase, it was at a 13% discount to net net working capital. So with the price in the low 70c range, INSM is becoming a truly cheap stock when comparing it to the value of the balance sheet.

Nevertheless, the risk is that I still do not fully understand everything about the drug and business, and as much as I am tempted to add a little more, I’ll stick it out for a little longer until I get some new info on the balance sheet and cash flow statement and what the company plans to do with the cash when the quarterly results come out on Nov 6.

Mastech Holdings (NYSEMKT:MHH) released earnings Oct 28 followed by a 20% drop during the day. You can find out more about the value stock proposition of MHH and the updated 2009 Q3 discussion.

Portfolio Trades

1. Bought Insmed at $0.86

I wrote about it previously because INSM is a cheap value stock and also a pure Benjamin Graham net net stock after running it through the spreadsheet.

2. Sold iGo Inc (OTCPK:IGOI) at $1.25 for a 127.27% gain.

I mentioned in the forum that I was planning to sell.

If I feel the company is improving its business, I usually hold but in this volatile and range-bound market, I believe selling the stock at intrinsic value is the correct choice.

3. Bought DryClean USA (DCU) at $1.00

After reading up on DCU I came to the conclusion that DCU is another boring business selling commercial drycleaning machines.

I’ll write up an analysis in the near future after I complete building up my position.

Check out a quick discussion on DCU.

4. Bought Emmis Communications (NASDAQ:EMMS) at $0.90.

Missed out on buying EMMS in the $0.60 range buy a few cents. The following day it shot up 50%.

EMMS is now the 4th radio stock but recent news has come out that they are close to losing their radio licenses in Hungary.

With the Hungary station making about 6-10% of revenues, this does affect the business and I will now have to make a decision as to whether I will sell or hold.

On October 28, 2009, the Hungarian National Radio and Television Board (the “ORTT”) announced that it was awarding to another bidder the national radio license currently held by our majority-owned subsidiary, Slager Radio Co. PLtd. (”Slager”). We believe the award of the license to the other bidder violates, among other things, the ORTT’s own national radio license tender rules, the Hungarian Media Law and European Commission Treaty to which Hungary became a party in 2004, and are vigorously exploring avenues for having the award set aside, including but not limited to litigation in Hungary and in the European Union. If the award remains in effect, Slager would be required to cease to broadcast effective November 19, 2009.

5. Sold Atwood Oceanics (NYSE:ATW) at $39.10 for a 2.15% gain

Sold ATW according to my intrinsic value. I’ve held ATW for over 2 years and it recovered extremely well throughout the past 6-7 months.

I was up 50% when oil was in the $100 range but that was during my early days of investing and I just didn’t have the discipline to sell.

6. Bought MHH at $4.60

Doubled my MHH position after earnings during the drop. Now my 2nd biggest holding.

7. Cash is at about 23% so I have money available to buy more of my best ideas or new ideas.

Disclosure: I hold all stocks mentioned except sold positions.