Portfolio Performance Update: January 2011

by: Jae Jun

Old School Value Stock Portfolio Performance

Big events occurred in January which brought the final monthly performance down to 1.85%. Also, as you can see from the images above, I’m changing the way my performance will be presented.

Portfolio Movers

  • Gravity (NASDAQ:GRVY) up 20%
  • Bolt Technology (NASDAQ:BOLT) up 8%
  • Meruelo Maddux Properties Inc. (MMPIQ.PK) up 32% (now up 107% for the year)
  • Howard Hughes (NYSE:HHC) down 8%
  • China MediaExpress Holdings (OTCPK:CCME) was up 44%, then ended Jan at 13% and now at -13%.

January was good to many of my picks but the two big positions that make up my portfolio, YNGFF.PK and CCME, gave up a much of their December gains.

New positions in TREVF.PK and ORVMF.PK are off to a good start.

Transactions in January


YNGFF has taken a tumble recently. As gold prices have gone down I took the opportunity to add a little more. With winter hitting the United States, especially in Jerritt Canyon, production has essentially stopped with machinery freezing up. Non working machinery = no new developments = no news = flat or decline in stock price. Just short term temporary stuff.

The company has just offered warrant holders an 18% discount to the exercise price in order to raise funding for its 2011 capital budget. Here is what YNGFF proposes to do with the raised cash.

The Company requires immediate working capital to fund its business plan. Primary use of proceeds will be towards (but not limited to):

  • Construction of new lined tailings storage facility as well as a secondary water storage facility to be completed before winter 2011/12,
  • Upgrade to Digital Control Facility Monitoring System to improve plant operating efficiencies by replacing the current pneumatic system,
  • Installation of additional quench tank and related items during the 2-week scheduled annual maintenance shutdown in May 2011,
  • Complete winterization of the plant including construction of a containment building and installation of new ore drying equipment that should be protected from climatic extremes,
  • Completion of remaining environmental obligations as outlined in the Consent Decree with the Nevada Division of Environmental Protection to keep our current compliance in good standing,
  • Obtain underground equipment necessary to commence operations at the SSX/Steer underground gold mine and continue development of the Starvation Canyon mine.

With all this expenditure expected to occur in 2011, it may take a while longer before this investment is realized.

Sold Adobe (NASDAQ:ADBE) for a 20.4% gain

A simple opportunity that I managed to pull the trigger on.

I bought ADBE when the price fell 20% after management provided weak guidance. I love it when this happens because although the company and the product is rock solid, the shares collapse due to the focus on EPS and “what ifs” by Wall Street.

I calculated ADBE to be fairly valued at $32 – $33 and it’s nice to see it play out so well.

Bought Trevali Res

After having bought a position in YNGFF last year, I’ve been on the lookout for quality miners as I see commodities going higher.

I was alerted of such a company in the likes of a Canadian zinc junior miner called TREVF.PK. The company has strong short term catalysts, plenty of cash, good mineral grades in the mine and low share dilution.

More details in the forum where the idea was first brought up by a regular poster.

Sold Reading (NASDAQ:RDI)

Sold half the position as I do not see this going anywhere for a long time. Felt I could use the money elsewhere.

Sold General Growth (NYSE:GGP)

With GGP growing well over 30% of my portfolio, it was time to sell. I wanted to keep it for the fat dividend I would be entitled to, but I am not much of a dividend guy, especially with so much cash being allocated to GGP.

GGP is now 10% of the portfolio.

Bought Orvana Minerals

ORVMF is Canadian gold miner with cash flow generation in place. With the properties it owns and expansion taking place with a 3rd mine, ORVMF has great potential based on the future cash flow. The company also held more than $100m in cash at one point but has been steadily using it up for the 3rd mine and machinery.

Gravity (GRVY) News

GRVY has been going strong and is trading at NCAV value now but still very undervalued.

GRVY has just completed its close beta testing for the Ragnarok II game with positive feedback and results. Reading through the forums by gamers, it seems like the game has improved drastically and people are finding it very enjoyable to play. I personally hope that it gets to the addictive level.

Now that the closed beta testing is complete, GRVY should be addressing some more things with the game and will most likely start the Open Beta Testing around March. The Open Beta Testing will be open to everyone and this is where the servers and stability will be tested.

The first Ragnarok II never made it to this stage, so this is a huge step forward. If the schedule goes accordingly, we should see GRVY being launched mid year. To be conservative, I expect GRVY to at least double from here.

Bolt Technology (BOLT) News

Q2 results released by BOLT showed that demand is slowly picking up again but analyzing the raw materials under inventories, demand is fairly similar to 2010.

Regarding fundamentals, I may sound like a robot whenever I talk about BOLT, but the fundamentals are superb. Transparent, clean, strong and healthy financial statement.

The big news with BOLT is that the company finally announced an acquisition that I have been expecting. I am very glad to see that it looks like a very smart choice. No full details are available yet, but the acquired company targets another set niche.

Price tag of $15 reflects the current value of the company properly but with such strong fundamentals and a new acquisition, I am adjusting my valuation back to the $18 – $20 range.

Disclosure: Long all positions except ADBE.

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