Seeking Alpha

Robert Duval's  Instablog

Robert Duval
Send Message
Professional Trader, 16 years. Started as a equity index futures floor trader, now swing / intermediate trade, US stocks, international ETFs and commodities. Believe in correlation of markets, must understand all markets to trade one well. Self taught by studying myself and other investors,... More
View Robert Duval's Instablogs on:
  • SHORT PORTFOLIO TRACKING.

    I've recently placed a short portfolio on while keeping most (although trimming sizes in some cases) of previously documented long term portfolio. Here it is above, with today's closing price inputted. I'll update this as time passes.

    SHORT ENTRIES JUNE 10 -16THOPENEDSHORTS   
            
     SYMBOLENTRYCLOSE% GAIN / LOSS   
      SHORTJuly 2 2015OPEN POSITION   
            
    Netflixnflx6956407.91CLOSEDJUNE 29 2015
            
    PioneerPXD150.51388.31CLOSEDJUNE 29 2015
    Cnd Oil SandsCOS.TO10.510.054.29CLOSEDJUNE 29 2015
    TeslaTSLA250.5261-4.19CLOSEDJUNE 29 2015
    Green Mtngmcr8475.510.12CLOSEDJUNE 29 2015
            
    TwitterTWTR35.535.350.42covered 35.35CLOSE 
    AlibabaBABA8781.56.32CLOSEDJUNE 29 2015
    VipshopVIPS24.221.311.98CLOSEDJUNE 29 2015
    SuncorSU27.7527.50.90CLOSEDJUNE 29 2015
            
    CheniereLNG7068.771.76   
    WhitelingWLL3431.337.85   
    SandiskSNDK6356.3610.54   
    YelpYELP44.7538.1814.68   
    GrubhubGRUB37.530.6918.16   
    Lending ClubLC1713.9517.94   
    GoproGPRO5751.759.21   
    Joy GlobalJOY35.234.671.51NEW  
    continentalCLR42404.76NEW  
    ambarellaAMBA103101.211.74NEW  
    teslaTSLA270280-3.70NEW  
            
     ambalong puts  SOLD 300% GAIN 
     ambalong puts re-estabished.closed flat  
     small biotech shorts CLOSEDSMALL GAIN  

    UPDATED CLOSE JULY 2ND HAPPY 4TH AMERICA

    Please see below the LONG portfolio, which is overall a substantially smaller weighting at this time, again with today's closing prices. Some positions previous mentioned have been sold, mostly with profits, like PBR. Tata (India) has been the big disappointment, I have slashed this position down in size. UPDATE JULY 2 -- losers HBM and TRQ have been cut to small positions as the unrelenting commodity bear continues.

    STOCKSYMBOLENTRYCLOSE% GAIN / LOSS 
      LONGJuly 2 2015OPEN POSITION 
          
    Fairfax IndiaFFXDF10.7811.45.75 
    HDFC BANKHDB57.8561.656.57 
    TATA MOTORSTTM42.334.35-18.79SMALL
    HOLCIMHMCLY15.515-3.23SMALL
    HudBay MineralsHBM.TO11.2210.24-8.73SMALL
    Turquoise HillTRQ4.984.69-5.82SMALL
          
    Fairfax FinancialFFH.TO665.8651.71-2.12Hedge
    GreeceGrek1.751.231.43short puts
    Bank of ABAC Warrants6.26.2 new
          
          
          
     SNC.TO44.244.50.68CLOSED
     BHB33.4635.56.10CLOSED

    UPDATED CLOSE JULY 2ND HAPPY 4TH AMERICA

    As you can see, the long side portfolio is doing little, as the market churns. From previous, PBR, SUNE were sold with nice gains, SDRL CF DE about flat, EPHE IVN with a small loss.

    Although the major indexes have done nothing wrong worth even mentioning -- with the possible exception of the transports -- I continue to find the average stock is not keeping up. Hence as we enter the summer months I have reduced my bond short via TLT puts and have initiated individual shorts. It is a market of stocks and we are measured not from the S&P 500 but from our actual positions -- as a Market Cap weighted index the S&P has limited relevance for my actual results. Update -- July 2nd -- Bonds remain soft. No positions currently.

    UPDATED JULY 1 / 2ND ENERGY AND MOMO continue weak. China / Biotech shorts closed. I am very pleased overall with how these have worked out within the context of S&P 500 range trade with a slightly weak bias.

    Oil has clearly broken down which accelerates our US Shale short book. Momo continues weak with the exception of Tesla, I have a bug for this stock. I expect a significant correction in TSLA but timing is ?? New addition is JOY which should be hurt by the coal implosion occurring right now, and a small short in AMBA, tied to GoPro.

    I remain cautious in the intermediate term as I think chances of at least a high - beta stock correction are quite good.

    I have re-ordered the spreadsheet slightly, placing closed positions above and existing below to make easier to follow. Hope this is helpful to some, to see my trading in "real time" Best wishes all and Happy 4th to my American friends.

    Jun 16 5:42 PM | Link | 23 Comments
  • Debunking The Debunkers: Truth About Market Cap To GDP Valuations -- This Time Is Not Different

    There has been some horribly inaccurate commentary about Mr. Markets valuation bandied about by some of the usual rose colored glasses crowd, attempting to make a case using inaccurate data without links to back it up.

    Let me provide some quotes from the commentary, (in quotation marks) and then debunk this misleading commentary right back to the woodshed, where it belongs.

    Lets Begin -- this is relevant because I believe many investors are fooling themselves with -- "this time is different".

    1. "Now I don't mean to dismiss Mr Buffet and his thoughts on this approach to the equity market." (But you are, obviously) --"But, I believe other factors now make this method of valuation questionable. However, many still staunchly use this tool to state the market is in fact overvalued."

    First-- from source Cumberland Advisors: "The longer-term trend level of S&P 500 value to US GDP is about 95%. The current level of the S&P 500 is about 105% of GDP. So at first view it would appear that the US stock market is richly priced, but not by very much."

    Cumberland provides no link or chart to support their claim of a current 105% market cap to GDP ratio. Really, Cumberland? Where's the proof?

    Here's my link and chart, backed up by other sources, proving a 132% current Ratio, just a hair below the 2000 highs, from SA's respected Doug Short:

    2. -- also from Cumberland: "But something else has happened since the 1982 low. The foreign-sourced profit share of American corporations has risen from 10% to 30%. Thus an additional 20% of profits now being earned by American corporations originates from their activity abroad"

    Really? (no chart again from Cumberland) Lets look at those 2000 highs -- and taking your word for it about today being 30% foreign profit share -- at the 2000 highs it wasn't 10%, but 25%! Heres PROOF: So no big effect there.

    3. "Maybe the current level of stock prices is forecasting that the profit share from foreign sources is going to decline abruptly, while the domestic share is not going to grow."

    "That is possible, but I do not see any forces in place to disrupt earnings to that magnitude to make it happen. Maybe the taxation of American corporations is about to go up significantly so that after-tax profits will decline. That is possible, but is that really likely ? I don't think so."

    Really? I would challenge that assumption. Look what's happening in Europe: "EU Considers Taxing Google, Other U.S. Internet Firms"

    source: WSJ.

    4. Here's the best (most funny one) "Benchmark 10-year Treasury yields are now currently at 2.20%, which is some 65% below normal. When you plug these metrics into the "Fed model," the S&P 500 is 59% undervalued relative to Treasury bonds, using trailing P/E's."

    "Same with inflation. Core PCE is currently running at 1.3% through March 2015, 60% below normal. Using the so-called "Rule of 20" methodology, below-trend core inflation at current levels would translate into a forward P/E of about 18.7 times, which suggests that stocks are about 8 and 12% undervalued, respectively, on estimated 2015 and 2016 EPS."

    Really Really? You are justifying an expensive valuation on one asset class (Stocks) by pricing it off of bubble valuations on another asset class (Bonds) and justifying that with an inflation environment that is changing before our eyes on a monthly basis (Inflation). If one hasn't noticed as well, rates across the curve are moving higher.

    To summarize -- The conclusion being made here is with current earnings, stocks are somewhere between a little to a lot (60%) undervalued, (Per the quote) based on the assumption of a combination of acceleration in earnings, the economy, AND continued rock - bottom bond yields.

    If all of this (nirvana) is the widespread consensus being utilized to form investors pricing models, I'd be very cautious about my assumptions about intermediate term returns. Best Wishes.

    Ps: I hear another amusing group of chatter from the permabull group: "The Bear are wrong (and other assorted ancedotes) because the S&P 500 is up at record highs and I've been bullish. Oh really? So you MR Bull only invested in the S&P 500? No? So you have beaten the S&P 500? Uh.....No?

    Sports Fans; we invest in individual stocks. To conclude this Post I leave you with some of the "most popular SA stocks by commentary" 1 year charts. Lets be fair -- some have done well -- but assuming an equal weight porfolio -- doesn't look so good:

    Disclosure -- I have in the past, and may have, short positions in some of these names.

    OK -- Here we go! (first the stars) Awesome Apple and King Gilead:

    AAPL Chart

    AAPL data by YCharts

    GILD Chart

    GILD data by YCharts

    MU Chart

    MU data by YCharts

    oops.

    LINE Chart

    LINE data by YCharts

    big oops

    RIG Chart

    RIG data by YCharts

    bigger oopsie (short Baba)

    BABA Chart

    BABA data by YCharts

    the next FB?

    DDD Chart

    DDD data by YCharts

    Ouch

    GPRO Chart

    GPRO data by YCharts

    Short GPRO

    TWTR Chart

    TWTR data by YCharts

    Short TWTR

    TSLA Chart

    TSLA data by YCharts

    Still a star. Short small TSLA

    WLL Chart

    WLL data by YCharts

    Ouch. Short WLL. Pain not over here.

    UAL Chart

    UAL data by YCharts

    What happened to the airline trade. No end to the selling.

    Its a market of stocks. Best wishes!

    Jun 15 5:36 PM | Link | 3 Comments
  • Get Out Of China A Shares (And Anything China) A Classic Bubble Market Facing A Inevitable Crash

    China, and in particular the China "A" shares, have been THE bull market story of 2015, in the face of slowing growth and exploding debt levels.

    Now it not just the following parabolic charts I will show you that call for extreme caution, its the character of the rally and who is playing it.

    Rather than make my own case, I'll simply share the charts and information via posted links, and the reader can decide whether this period rhymes with any other, and then briefly conclude with the current US story and possible effects.

    First, (NYSEARCA:ASHS), China A small cap ETF, and Shenzen 100 index --- Wow.

    ASHS Chart

    ASHS data by YCharts

    ^SS399004 Chart

    ^SS399004 data by YCharts

    China New Retail trading accounts Opened:

    And Here:

    China Debt to GDP:

    CNBC video about Chinese Farmer Day - Traders:

    Hanergy Film Crash:

    Alibaba fake transactions and customers: (NYSE:BABA)

    Vipshop accounting and misrepresentation: (NYSE:VIPS)

    Sound like a prudent investment situation or a bubble? You decide.

    Turning to the US, I'm reading that the low numbers of bullish investors on the AAII survey mean individual Investors are not participating in the bull market, the survey is a contrary indicator, and so there is no near term risk of a US stock market correction.

    I call these assumptive, unsubstantiated statements without looking at the data in context. Lets examine not pundit opinions, but hard factual data.

    Its really distortive for SA to allow pundits to publish commentary completely out of context, without documented links.

    First; individual investors exposure to stocks is the highest since just prior to the 2000 major top, and higher than the 2000 highs. This isn't opinion, its Fact:

    (click to enlarge)

    Next, Here's some information about that AAII report, that strongly suggests AAII investors actual lean towards "smart money" -- they are NOT contrary indicators. Remember this is a very small survey --

    "Despite a market that has held up relatively well, only 20% of
    these supposedly mom-and-pop investors are expecting higher
    prices over the next six months. Shockingly, this is the 2nd lowest
    reading since the bull market began.

    But here's the thing - these folks can be anyone. It is an
    anonymous online survey with a tiny sample size compared to
    the population it's attempting to measure. They are also
    dedicated investors, who show some evidence of learning from
    past behavior. In other words, past market peaks have seen
    them becoming less and less bullish as prices rise.
    So...are these actually "smart money" investors?

    From the Data.....The correlation to stock prices is clear. The more bullish mom and pop were, the better stocks performed going forward, and vice-versa." (source -- Sentimenttrader.com)

    So much for hanging one's bullish hat on that theory.

    What about Margin Debt -- which the Perma- bulls continue to tell us is meaningless as it can rise to ever - increasing heights: Maybe.

    Here's a chart the bulls don't want you to focus on -- Market Cap to GDP -- approaching the 2000 highs:

    Now as an aside -- I've noted the Bulls LOVED to quote Doug Short as he tracked the "secular bull' -- Funny he isn't nearly as popular lately with these cautious comments!

    Here's where we really are -- not a place of prudence and fear, but a atmosphere of pure speculation: Source -- Barrons:

    "Meanwhile, according to an article in Investment News, brokerage firms are pushing securities-backed loans through independent investment advisors. For years, the big-name wire houses have marketed these loans to their own customers with the pitch that they're a cheap source of credit to fund big purchases, such as yachts or houses, without disturbing their investment portfolios.

    Of course, the firms get to make money on the loans and keep the assets from leaving the building, not a trivial consideration when asset size instead of transactions increasingly drives brokers' compensation. As for the customers, Josh Brown of Ritholtz Wealth Management was quoted as calling these loans the "rich man's subprime."

    Never mind the real mania these days -- Private Equity Valuations:

    (and more relevant how Post IPO investors are assuming great risk)

    Uber is now valued at 41 Billion, as one example.

    How about Junior Biotech?

    Prudently valued market or atmosphere of Speculation, low interest rates and the greater Fool theory?

    You decide.

    I'm not saying the broader S&P 500 cannot move higher in the long run, or that the US economy has many positives at this time (which I've detailed in prior writings)

    However in an interconnected world, one should be watching areas like China, Interest Rates and Private equities, to fully assess the risks in their investments.

    Best wishes to all investors.

    Short ,

    Tags: ASHS
    Jun 13 1:07 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

  • http://seekingalpha.com/a/1u0yg #FCX #FLR #RSX #PBR #JJC
    Apr 19, 2015
  • Reiterate BUY ahead of Yellen / Quarter End #GILD #LL #FCX #VMC #BANC #HLF
    Mar 26, 2015
  • Buy NOW for Quarter end rally --
    Mar 25, 2015
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.