RISK MANAGEMENT AND WHALE RIDING
During the trading day I tweeted the following:
A difficult choice to liquidate GSIG. It's a company that - barring an economic meltdown over the next 12 months - will be well above current prices. It came down to a question of the maturity of the trade, as well as how much influence the general market would have over the company. By maturity I mean that the company is well past their restructuring stage and has resumed normal operations. They do not have the same concept edge that SYNC and AUTH have. And they are not in the midst of an activist promotion in the same manner as ATNY. I also chose to keep SYNC because it has been my best performer of the 2nd quarter thus far. Holding onto winners is imperative. I'm surprised at how jittery traders get when they catch a fish in these oceans. Being afraid to get bit and releasing the fish back in the water will only get you so far.
GSIG will be at the top of my list for a rebuy should my trend indicators turn back up over the next few weeks or months due to the outstanding fundamentals, cheap valuation and management team involved.
Now it is all about SYNC, ATNY and AUTH.
The worst performer among the bunch is ATNY. Wouldn't you know it, from a purely fundamental standpoint, ATNY is also the most attractively valued. I have no plans on adding to the position. I am perfectly comfortable holding here despite the poor showing thus far. The research on ATNY is here.
AUTH I have been pleasantly surprised with given the weak market conditions. It is only a matter of time before the type of mobile security concept that AUTH produces catches on with consumers and investors. It is the type of stock that can easily create a buzz if the right set of conditions comes into play. A concept company with some very solid fundamentals much like SYNC. The research for AUTH is here.
If my trend indicators were pointing upward I would be looking to add to my AUTH position on further strength. Unfortunately, I'm stalled out from adding any risk for the time being.
SYNC is coming along as expected. I understand that the volatility can be unnerving at times, but it comes with the territory. What is going on with SYNC is not at all a classic pump and dump scheme as some seem to think. The concept of a pump and dump takes place with a company that wouldn't otherwise merit investment if not for the promoters creating a false demand for the stock.
SYNC merits investment due to the fundamentals of the company as explained in my research from March. What the added attention has done is to take a value creation process that normally would take 12 months and condense it into a period of weeks or months. It is similar to what happens in other names that garner publicity through promotions from institutions such as Goldman or Morgan. Only difference here is that there seems to be a large retail investment base due to the characters involved in this evolving drama. That creates excess volatility and short-term stop smashing sessions similar to what we experienced earlier this week.
My guess on the eventual upside in SYNC is as good as yours. It could be 14. It could 21. It could be 44. I am comfortable enough with my strategy to allow my sizable profit cushion to let me ride it out so that I can find out how big this whale I have in my net might be.
Good years all come down to a few good trades. This might be one of them.
On a further positive note, I continue to be in the 13% return range for the year thus far. Despite the violent rage of the markets in May, I seem to have found a safe corner to reside in until the storm passes. The remainder of the month will hopefully find me well hidden so that I could put it in the books.
