JULY MONTH END SUMMARY AND LOOKING AHEAD TO AUGUST
July Performance: +15.65% S&P 500 July Performance: +1.26% YTD Performance: +43.48% S&P 500 YTD Performance: +9.68% Portfolio highlights for July: - AUTH was bought back on July 13th and subsequently added to on July 16th for an average price of 4.75. On July 27th Apple announced they would be purchasing AUTH for a 60% premium over the closing price, resulting in a substantial profit for the largest position in the portfolio before the announcement was made. A vast majority of the profits for the month were a result of this investment that achieved a gain of 120%+ since the research report was released on May 8th, 2012. - SYNC was sold on July 10th in the mid-14 range for a 100% plus profit since initiating the position and releasing the research report on March 29th, 2012. SYNC closed the month at 9.73 after releasing a disappointing earnings report after the close July 25th. - SPRT was sold on July 24th for a 15% profit since reinitiating the trade on June 16th. This was the second double digit percentage profitable round trip in the stock this year. - A majority of the month saw the portfolio move between 50-75 percent invested. The efficiency of the capital invested was significant this month given the outsized gains. The month closed at 70% invested of capital with a 30% cash position. - A new position was taken in restructured, post-bankruptcy shares of Washington Mutual Holdings. This is an extremely unique and potentially lucrative opportunity in the recovery vehicle for previous Washington Mutual shareholders. I have full details of the investment in the research report published on July 25th. WMIH is currently the portfolio's largest position. Portfolio lowlights for July: - GSIG was sold for a loss of 15% on July 24th. While the company presents compelling value at these levels given a combination of positive factors, I am reluctant to chase after it further given the sloppy nature of its trading. It has been in a terrible trading range for the entirety of 2012. There are better opportunities to pursue. - SPNS finished the month down 2% from where it started July. While the near-term performance in the stock price has been disappointing, the long-term fundamentals of the company remain favorable, especially in light of the positive spending cycle taking place in the insurance IT sector. Any pickup in the financial services sector going forward benefits SPNS tremendously. All details are in the research report published June 19th, 2012. - ATNY ended the month down 6% from where it started July. In listening to the conference call, following their earnings announcement earlier in the month, it seems that the...
EXCUSE THE MESS
Zenpenny is being redesigned. You'll notice a few quirks and abnormalities over the next several days while the redesign takes place. The new site should be a lot more easy to navigate and more research focused than the current site. Should be done by the...
I’M ALI MESHKATI AND I TALK ABOUT MY PERFORMANCE NUMBERS
It is fair to say that the financial blogosphere exerts a great deal of influence in today's world. Bloggers move markets. You couldn't say that even 5 or 6 years ago. With that level of influence comes a sense of machismo among these beacons of influence. That sense of chest pounding popularity then begins the fine art of creating moral codes of what is and isn't considered acceptable conduct among financial professionals. These are financial professionals, mind you, that have proven themselves useless over the past 12 years. They are a breed of professional that holds no real purpose. They don't treat illnesses. They don't defend against impropriety. They don't create. They have been trained to speak a certain way, delivered through the polluted womb of an educational system that seeks to deliver pedigree to the institutions that demand it. Thereby furthering the illusion of intelligent research and an attention to due diligence. There is no greater degree of uselessness than that of a Wall Street professional. For proof all one has to do is look at the performance numbers for the average hedge fund. The hedge fund is after all the destination of choice among the elite. That destination used to be Goldman Sachs and we saw what that created. The average hedge fund, filled to the brim with pedigree, distinction and hubris is nothing more than a vehicle meant to enrich those who collect the 1 and on occasion the 20. They have underperformed terribly. The aroma of mediocrity is putrid even if you wear a $300 tie and $800 shoes. A well-trained nose can't be fooled. The average investment adviser is no better. They are simply tools of the industry that rely on pedigreed research to drive an investment thesis that is built on robotic duplication of what has been working recently. There is little originality. They rely upon diversification to the umpteenth degree so that they can cling onto the mediocrity that is not losing too much of your money at once. An Alfani tie and Levi's dockers doesn't seem to do the trick either. Just buy the SPY. It is no wonder then that talking about performance numbers is frowned upon. Never mind that the financial markets are not a venue for story telling or being witty, but rather to perform. That fact seems to get lost. Among all the bloggers and financial media, it seems that Wall Street has turned into a children's fairy tale that involves picking apart news stories and adding ominous quips about the nefarious types that will harm us. Performance shouldn't be discussed. Instead what needs to be take place is a colorful discussion that is completely...
PORTFOLIO UPDATE: AUTHENTEC PURCHASED BY APPLE
During the trading day, I tweeted the following: As most of you know, the largest position in the portfolios AUTH was bought out by AAPL today for a 60% plus premium from Thursday's close and a 73% premium from my reentry price on July 15th. The original research on AUTH from May 8th is here http://www.zenpenny.com/?p=4042 My problem now lies in the uncertainty of what to do with a 50% plus cash position in the face of my trend indicators that are quickly telling me that a 100% long position is warranted. I may have another new candidate that I will be announcing sometime in the coming week. I already profiled one new investment earlier this week. Current holdings: SPNS, ATNY and WMIH. I'll have more data and research this weekend. Have a good...
RESTRUCTURED, POST-BK SHARES OF WASHINGTON MUTUAL PROVIDE A MONSTROUS OPPORTUNITY IN THE MIDST OF UNCERTAINTY
*Position taken on July 25th, 2012 at an average price of .50 cents. In March, shares of a restructured Washington Mutual began trading on the pink sheets. Trading as high as 1.14 on the first day of trading, the shares have now settled into trading around .50 cents per share. The shares trade under the symbol WMIH. What follows are the reasons I have made this the largest position in the portfolios and believe it is a multi-year hold: I'm going to begin with the facts regarding the newly issued WMIH shares. Washington Mutual Holdings has very little tangible information with respect to its current business. This makes a valuation proposition a difficult task given the fact that this is a newly formed entity that hasn't filed a 10-Q, much less a 10-K. The company consists of one active business component -- WMMRC. This stands for Washington Mutual Mortgage Reinsurance Corporation. What little information is available on WMMRC is available through bankruptcy filings: http://www.kccllc.net/documents/0812229/0812229100326000000000009.pdf WM Mortgage Reinsurance Company, Inc. WM Mortgage Reinsurance Company, Inc. (previously defined as “WMMRC”), a Hawaiian corporation and non-debtor,wholly-owned subsidiary of WMI, is a captive reinsurance company, created to reinsure the risk associated with residential mortgages that were originated or acquired by WMB. Mortgage insurance for WMB-originated or acquired loans had historically been provided by seven mortgage insurance companies (collectively, the “Mortgage Insurers”), although currently WMMRC is party to mortgage reinsurance agreements with only six mortgage insurance companies. WMMRC entered into reinsurance agreements (the “Reinsurance Agreements”) with each Mortgage Insurer, pursuant to which it would share in the risk, in the form of claim losses, in exchange for a portion of the premiums generated from the residential mortgage loan portfolio held by the Mortgage Insurer. Pursuant to each Reinsurance Agreement, WMMRC established a trust account with US Bank N.A. (collectively, the “Trusts”), for the benefit of the Mortgage Insurer, to hold premiums collected and to secure WMMRC’s obligations to each Mortgage Insurer with respect to the insured loans. WMMRC was historically party to seven trust agreements – one for each Reinsurance Agreement to which it was a party. As of December 31, 2009, the value of the six remaining Trust assets was estimated to be $460 million. Each Reinsurance Agreement requires that WMMRC maintain a certain minimum amount of capital in the applicable Trust (the “Reinsurance Reserve”), which amount is determined by applicable law, as well as each Mortgage Insurer’s calculation of reserves needed, which is generally inclusive of reserves for known delinquencies within the loan portfolio and a percentage of the remaining aggregate risk exposure contained in each portfolio. Minimum capital requirements fluctuate on a monthly basis and are...
PORTFOLIO UPDATE
During the trading day, I tweeted the following: All info regarding WMIH is available in the research report here...
THE DROP IN AAPL TODAY DID NOTHING TO DIMINISH THE FAVORABLE TECHNICAL PICTURE
click chart to enlarge
HERE ARE THE TWO CHARTS THAT CONCERN ME THE MOST RIGHT NOW
I pointed out the chart of the Dow during the weekend review on Sunday. Today we had two more important technical events that I didn't want to see as a market participant that is 75% long here. click chart to...