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J Mintzmyer
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J Mintzmyer is a CFA candidate (testing Level 2) and investment enthusiast who utilizes Seeking Alpha to provide a free exchange of trading and investment ideas and to provide online visibility for his developing business. Founder and President of Mintzmyer Investments LLC, a financial services... More
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Mintzmyer Investments LLC
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Mintzmyer Investments
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  • 2015 Trade And Investment Performance (27 April Update)

    Methodology/History

    I update all of my trades/allocations live on Seeking Alpha (Follow) and via Twitter. I aim to be as transparent as possible, and also update trade close-outs and when I am changing my outlook on an investment.

    The following is a report on my performance during the first 4Q of 2015- divided between short-term trades (<2 month shelf life, typically earnings/catalyst trades), long-term trades (2 months - 12 months, aiming to capture what I perceive as market valuation discrepancies), and investments (typically >12 month shelf life based on strong fundamentals or considerable market mispricing).

    I've logged each trade both assuming buying alongside my entry point and holding to expiration (or indefinitely) and also assuming both my entry and exit price.

    Market Comparison

    Trade performance is only useful with some sort of barometer- I've chosen to use the S&P 500 ETF (NYSEARCA:SPY) as I believe it captures the greatest realistic comparison to an 'index' that most investors can personally buy. I've logged the S&P based on a weekly trade occurring each Thursday on the open and closing on the next Friday as well as a "dollar cost average" method that assumes an equal-weighted purchase each Friday morning.

    Why Friday? The first trading day of the year was a Friday. Why morning? Easiest to get a solid 'open' value. What about Good Friday? I 'made' the trade on Thursday morning instead.

    The average weekly 'trade' profit was 0.2% and the average investment return was 2.1% per allocation. What does this show? Essentially a "market performing" trader would be making returns of around 0.2% per week on average. A "market performing" investor would be making a YTD return of around 2.1%.

    My Results

    I've included the 3 separate break-downs below. Light green represents open positions that are profitable and light pink represents open positions that are currently "losing." Green are closed profitable plays and red (hot pink) are closed losing plays. Starting first with "investments."

    Investment Performance

    The average "followed trade" return is 1.88%, while the "follow buy, leave open" option is 2.08%. This compares to market investment results of 2.1%. In other words-during the first 4M of 2014 my investments have been a mediocre "market perform."

    I include both results for 2 reasons: I want to see if my 'sell signal' provides any value in addition to my 'buy signal.' I also want to see if there's any sort of "market effect" around the recommendations themselves. In other words does the 'sell signal' destroy the value of the trade or is the trade a self-fulfilling prophesy. Many newsletter operators tend to create mini-pops in their recommendations, pops that quickly vanish as the writer "exits." This difference is much more critical for shorter-term trades, as we'll see later on.

    Long-Term Trade Performance

    As this chart shows, long-term trades have blown out the market return, with 24.2% per followed trade. However, with only the 'buy signal,' the trades return 11.5% on average. Realistically, there's not enough data to make a conclusion since LaQuinta (NYSE:LQ) was the only applicable trade in this category. Also note the 'hit' or successful trade ratio is very low. I'm batting an average of 36%, great MLB numbers, but clearly riskier on a trader basis. Naturally, every one of these trades has multi-bag potential, so I'm not expecting high success ratios. Note the majority of these trades are still 'open,' so the averages could fluctuate either way in huge amounts.

    Short-Term Trade Performance

    My performance in the short-term trade realm resulted in average returns of 45% per trade and nearly 96% if held to expiration. Still a limited amount of data, but trends suggest the 'sell signal' is much less valuable. This 'sell signal' might be more valuable if you focus on the smaller caps like RSH, SN, FRO, but then again you'll see the big mistake with Sanchez Energy (NYSE:SN).

    Why did I sell Sanchez? I needed money to trade Netflix (NASDAQ:NFLX). I then used NFLX profits to trade Apple (NASDAQ:AAPL), so it's difficult to place these results into a perfect vacuum. I've received a lot of mocking for my bearish take on Netflix, but trade critics often ignore the fact that my Q1 trade was an 8-bagger all-inclusive, 16-bagger on the long side.

    Summary

    Results suggest I'm doing much better as a 'trader' than as an 'investor.' The $ values of my investment accounts also support this approach. It makes me a bit nervous since my fundamental approach is "long-term value." It's important to not let a 'hot streak' distract from long-term fundamentals or for 'ego' to get in the way of intelligent decisions.

    I keep over 80% of my assets, typically around 90%, in long-term strategies, and my Seeking Alpha coverage will continue to focus this way also.

    Apr 27 6:05 PM | Link | 2 Comments
  • Trades & Performance In 2015

    I've been taking a haitus from my 'official' Seeking Alpha work for the past 6 months, but have been actively commenting and posting my trades.

    I was recently ranked in the top 5% of analysts worldwide on TipRanks (2y performance), and my 1y performance currently places me in the top 8% of global analysts.

    As I'm working on returning to the spotlight, I wanted to check the status of my performance so far in 2015- I designed an Excel sheet that highlights my trade performance in the short-term (under 2m), medium (2-12m), and long-term investment ideas (1+ year).

    I have posted the results below. As I expected from my account balance- the results have been phenomenally positive on the short-term side. Average return of 76% with a 67% sucess rate and average duration of a few days.

    Those who have followed my work know that I primarilly focus on the long-term angle, so I'm hoping that these 2015 picks will pan out there as well.

    The first average is if you followed my entry and exit. The second average is if you bought and held forever or to expiration. AKA you liked my recommendation but either didn't agree with sell order or were too busy to notice. In the trades, expiration was almost always better. This mirrors some of my results from last year as well. I left several 5-10x trades on the table.

    I Tweet 100% of my trades live- I often mirror them as a StockTalk on Seeking Alpha also.

    Pictures/Proof Below:

    Investments

    Mar 04 6:13 PM | Link | 5 Comments
  • Thoughts On Oil

    I have been exceptionally busy (in AF pilot training) the past few months, so I have been unable to write many of the articles that have been on my mind.

    I would like to get my thoughts down somewhere on the current oil pricing environment for two reasons:

    1) To inspire a discussion with fellow investors here and perhaps discover some new investing ideas along the way

    2) To have a verifiable way to check back in a few years and be able to judge the clarity of my decision making

    -----

    What I saw in early 2014

    I'll be the first to admit that I didn't see this coming. My #1 investment for 2014? BP. I wrote puts (thankfully spreads) and used most of the proceeds to buy out of the money calls. I looked at $BP in spring 2014 compared to $XOM and $CVX and I saw 50-100% upside potential. Needless to say this back-fired. Thankfully the put spread is for January 2016 and can be rolled to January 2017, but the losses are huge. I never post the $-size of my positions, but suffice it to say the paper losses are >10% of my net worth.

    Anyways- the point is that I was firmly entrenched in the bandwagon of long-term rising oil prices and my investments prove that (unfortunate) fact.

    What I'm thinking now (in response to 'buy big' theory)--

    Rather ironic that CVX and XOM are still relatively flat from their spring 2014 prices, while other US producers are down 50-90%.

    Obviously the long-term money isn't shifting focus while a huge majority of the growth/momentum money has fled the scene.

    If oil prices stay flat for a long time, CVX and XOM will likely gobble up 'cheap' reserves from bankrupt US producers. Although this will help both companies in the long-term, I wouldn't be surprised by a drop to 5-6% yield territory as some of the index money shifts. If 'cheap' (sub-$80) oil is here long-long (5+ years) term, than XOM and CVX may require a dividend cut, or at least a halt to growth-- perhaps 1c a year just to maintain aristocrat status.

    If oil prices recover in the short to medium term (by 2016), many US producers such as WLL, OAS, WPX, GST, etc could be 3-6x return plays.

    All 4 of the above and perhaps another half dozen US plays could be capable of surviving 2-3 years at these price levels. I'm not wasting my time looking at anything with a D/E above 100%, a P/B above 1 (book value is often far-inflated anyways), or D/A above 50%, or a Current Ratio below 1, when much safer plays offer 3-10x potential.

    --------

    Long response, but I suppose all this to say that XOM and CVX are indeed good long-term holdings, but are far inferior to nearly all other (financially conservative to moderate) producers if you believe an oil recovery is just around the corner.

    If you think oil will be cheap for a LONG time, than CVX and XOM are poor investments anyways.

    Allocation Comments (6 January)

    I'm personally long BP, CVX, XOM, GDX, FCX, BTU, ACI, ANR, EOX, DRYS, SALT. (TLM position just got taken out)

    Will soon be adding: OAS, WLL, GST, TPLM, ATXDY, WPX, EOX, RIG, BP, ORIG

    Reflection Time

    Digging deeper-- why didn't we... Heck ANYONE see this coming 6 months ago? Nothing fundamental has changed except for OPEC's stubbornness. China's slowdown has been expected, Europe's troubles have been known, Fed raising rates (ironically Tbills are moving in the opposite direction), massive US supply growth-- all of these factors have been known (expected) by the best and the brightest for at least 2 years.

    Why suddenly is everything so different?

    Perhaps we are just all on a negative group-think panic which is just the mirror image of the insanity of the 2008 oil peak?

    Really makes you wonder huh?

    Was oil exploration in the US just another investment bubble? Or are we in the middle of a groupthink bandwagon short-sighted panic? To be honest, I don't really know.

    All I do know for certain is that:

    1) in the END supply/demand will determine the pricing (even if that supply is artificially manipulated by the likes of OPEC)

    2) the companies I'm investing in can all survive 2-3 years with oil prices as low as $20-$30

    3) exploration will virtually halt in this price environment

    4) IF IF IF oil recovers within 2 years, the juniors can return up to 10x, while XOM and CVX will be lucky to go up 50%.

    Market Choice Observations

    Two observations:

    1) XOM and CVX were insanely cheap last fall and this spring (in regards to the current oil environment). Perhaps one of the cheapest multiples (to projected cash flows at $110 oil last spring) they've been in company history.

    2) Investors are fleeing en masse to:

    a- safety of oil (most people seem to buy into the theory that the big will get bigger and oil prices will rise in a few years while CVX and XOM 2x their reserves on the cheap)

    b- higher yields (notice the 10y Treasuries)-- with CVX yielding a A-grade 4%, this keeps investors there.

    I buy into the 2a theory, but I only see 50% max upside in 2 years on CVX and XOM. BP has 100-150% upside, and many of the better positioned US producers have 5x+ upside.

    Exploration vs. 'Pumping' Costs

    (in response to this: 1.usa.gov/VoGFG8 )

    What I see (assuming this data is relevant):

    'Finding costs' are clearly the major issue here. 'Finding' takes exploratory capex, which usually only floods in when 50-100%+ IRR is promised (due to the rates of failure). With average 'finding' costing 75-100% of the current crude rate, NOBODY will invest in (new) exploration.

    Exploration-->Full Production can take anywhere from 1 year to 10 years depending on the complexity of the projects, so essentially there will be a giant ripple effect globally.

    Production ('lifting') costs on the other hand, are extremely low, so current finds will produce as much as possible to pay the bills. This could keep prices low for years in the worst case scenario. Not sure if yall have noticed, but even with US juniors and middles cutting their capex by up to 75%, most will grow production y/y. Even the worst cuts (EOX for example) still result in flat y/y production for 2015.

    Ultimately the further the price goes down, the higher it could sky-rocket in the future. sub-$30 is feasible, but so is $150-$200+ (for a very short period as the zero-exploration ripple hits).

    Thus, oil will begin to trade more and more like a TRUE commodity (extremely cyclical). OPEC's control of 40-60% of the global supply has artificially kept prices high and slowly rising so far. It also has helped that South America, Africa, and the Mid-East are extremely unstable. With the majority of the supply growth in ultra-stable US, this has changed.

    In Conclusion

    Not really sure what I really think anymore (in regards to what will happen to the oil price in the next few years).

    All I know is the juniors have 10x upside while majors have maybe 50% upside.

    What's the chance of success? Is it 1% that oil will be $100 in a few years, or is it 50%, or 95%?

    Only in a scenario where the odds of oil increasing are 10-20% would investing in the super majors (over juniors) make sense. In that same scenario the super majors would be horrendous investments at these prices- perhaps down up to 75% with $RIG style yields.

    What do you think?

    What I'm Investing In

    Stock Talk feed:

    seekingalpha.com/author/j-mintzmyer/stocktalk

    Twitter:

    twitter.com/MintzmyerInvest

    I post 100% of my trades, typically within seconds but always within hours.

    I look forward to your insights and I hope I don't come back in 5 years to regret this post and my potential investment approaches.

    Jan 08 10:28 PM | Link | 18 Comments
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    4 days ago
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