On May 25 we started the $33,000 American Portfolio with the goal of seeking home run potential with acceptable risk. Let's get an update.
The $33,000 American Portfolio
JG Boswell (BWEL.PK)
Investing in America's largest farm just sounds good, and that is what Boswell has been to us. Our play on California water rights has trended steadily higher since we got aboard, and paid a dividend too. If we never "sell the farm" and take profits on this one that is just fine - Boswell carries its land and water rights at decades old valuations and the Boz could rise for a long time and remain undervalued.
6 shares BWEL @ $717.00 = $4,302 (13.04% of the portfolio)
Last close $865, Dividend $24, $5,214 total, +$912 +21.2%
Our plays on housing/energy-efficiency and amino-acid-laden pulses have done quite well, but
Houston Calgary, we have a problem. Canadian equities/currency/economy/housing may be in trouble, so we sold.
We got a nice capital gain on Waterfurnace and a better gain and a dividend on Alliance. We will be keeping our eyes on both of these plays as we still like the companies.
200 shares WFIFF @ 15.28 = $3,056 (9.26% of the portfolio)
Aug 22 close $17.10, $3,420 total, +$364, +11.9%
150 shares AGXXF @ 10.78 = $1,617 (4.90% of the portfolio)
Aug 22 close $16.68, Dividend $22.50, $2,524.50 total, +$907.50, +56.1%
We no longer have Solazyme in our portfolio, but we wanted to revisit the Soul and see how its done since we closed our position on July 23rd:
Alrighty then. We love Solazyme whole-heartedly and would like to re-enter at this low level, but two things keep us from doing so. One is that we sold this company based on technical analysis (see the link above) and by the reasoning of that analysis SZYM is not ready to turn around. Two is that insiders are selling a lot, even down here:
Arch Coal (ACI)
Romney! It has been a rough ride on the Arch Coal train since we got aboard, but that all changed after the first Presidential debate.
We had two open option positions in Arch. The first is the put we sold with an October 20 expiration and $7 strike. That date came and went with Arch safely above $7 so that put expired worthless, meaning the entire price we sold for was a profit. Nice work if you can get it : )
The second position was the out-of-the-money calls we bought with an $8 strike and January 2014 expiration. Those OTM calls are now (Romney!) in-the-money and we sold half. Say it with me: Romney!
When we started the portfolio Arch was at $7.36, we doubled down on the calls when Arch got clobbered. We still have the original investment and got a swing trade out of it too (a nice gain although it was not quite the double we thought it was). The puts were secured with $5,600. We will use the price of $1.43 (our double down price) as the basis for the calls sold (leaving the remaining 8 calls with the original basis of $2.13).
8 contracts ACI Oct 20 2012 $7.00 Put @ $1.40 = +$1,120, +20%
8 contracts ACI Jan 2014 $8.00 Call @ $2.33 = +$720, +62.9%
Our only two bearish bets have yet to play out, but these contracts don't expire until 2014. We expect an all-at-once move in the tradition of Netflix (NFLX) when/if the fall does cometh:
1 contract AMZN Jan 2014 $150.00 Put @ $16.90 = $1,690 (5.12% of the portfolio)
Last Trade: $8.00, $800 total, -$890, -52.7%
1 contract CRM Jan 2014 $100.00 Put @ $14.90 = $1,490 (4.52% of the portfolio)
Last Trade: $8.66, $866 total, -$624, -41.9%
Spectrum Pharmaceuticals (SPPI)
We liked this company right up until they approved an enormous buyback - you know, because the shares are so undervalued - while the CEO fled for safety.
Tens of millions of shareholder dollars are being used to buy shares. Good thing for the sellers that the company is spending all that money, otherwise they might be in a real fix.
Enough said, we got out:
Closing the position turned out to be the right thing to do as Spectrum has continued to fall. We had to buy 2 puts back for $570 each. The graphs at the bottom are the graphs of asking and bidding prices, we were hurt by Spectrum's drop in share price but also by the spread between bids and asks.
The SPPI Nov 17 $17 puts are bid at $2.90, Spectrum currently trades at $15.88. We will sell 2 puts for $580 and secure them with $3,400 cash.
$3400 + ($290 X 2) - ($570 X 2) = $2,840
We had common stock in some smallish biotech plays:
- Antares 400 shares
- Ibio 2,900 shares
- MannKind 900 shares
- Pluristem 700 shares
Then MannKind, which is now our favorite speculation in the market, raised money with a secondary offering and the price took a beating.
So we sold:
- Antares 400 shares ($2,128 basis/ $1572) = -$556, -26.1%
- Ibio 2,900 shares ($2,668 basis/ $3045) = +$377, +14.1%
- Pluristem 700 shares ($2,366 basis/ $2,772) = +$406, +17.2%
And used those $7,389 in proceeds to pick up 3,750 more shares of MNKD at $1.97, making it our largest position.
MannKind 4,650 shares ($9,745 basis/ $8,695) = -$1,050 -10.8%
We will have more to say about MannKind, but we like it quite a bit and think getting in under $2 is going to look very good over the next 18 months.
Arena Pharmaceuticals (ARNA)
Our Arena puts expired October 20th with Arena trading at $9.19:
The $13 Oct 20 Puts are bid at $4.20 for ARNA, which currently trades at $9.52. We will sell 3 puts for $1,260 and secure them with $3,900 cash.
$9.19 X 300 = $2,757
$1,260 +$2,757 -$3,900 = +$117, +3%
Arena drifted a little lower in the time we had it but that was more than offset by the time premium we got for selling the put, leaving us a modest gain.
Tabulations: A Love Story
Let's add up all of our closed trades so far:
- SZYM Put: +$2,200
- ACI First Put: -$741
- ACI Second Put: +$1,120
- ACI Calls: +$720
- WFIFF: +$364
- AGXXF: +$907.50
- ATRS: -$556
- IBIO: +$377
- PSTI: +$406
- SPPI Puts: -$560
- ARNA Puts: +$117
So that's a total gain of $4354.50
Where We Stand
So here is where the portfolio stands:
- $18,447.50 Cash
- $8,695 MNKD 4,650 shares
- $5,190 BWEL 6 shares
- $1,816 ACI 8 Calls
- $866 CRM Put
- $800 AMZN Put
So that's a total of $35,814.50 for a gain of $2,814.50 or 8.5%
Between snow-hurricanes and elections we don't mind being mostly on the sidelines. We'll look for opportunities related to those two events for some good entry points in the coming days and weeks.
Disclosure: I am long MNKD.