PORTFOLIO UPDATE: CHANGES GALORE AND DETAILS GALORE
During the trading day, I tweeted the following:
Dramatic changes to the structure of the portfolio, no doubt. Market neutral exposure, which has been the standard since October 10th, has been replaced with a 75% exposure to equities. 25% remains in cash. Should the market continue its strength, the remaining amount of cash will have a home over the next couple of weeks.
As it stands, the portfolio consists of WMIH, PTGI, SPNS, PXLW, PRXI and UPIP. No, I did not intentionally choose companies that had symbols containing the letter "P", as unbelievable as that may seem to some of you.
Here is some brief detail into the reasoning behind today's additions. Looking at things on a micro level here:
PTGI - Restructured, post-BK company here. Company essentially has very little sell side coverage. Very under the radar. Free cash flow machine. Continues to pay down debt, increase operating efficiency and expand margins. Revenues have been somewhat soft sequentially. It is trading at a ridiculously low 3.5 times EBITDA. Unless there is an utter collapse at the company, there is very little downside in the stock at these prices.
I bought into PTGI in January of this year and sold in April for a near 40% gain. The company has only become leaner since I sold in the $17 range in April. Paying $11 and change for the company down here is a gift.
SPNS - I'm at a complete loss for words as to why the market is overlooking this company. Been adding all week. Their earnings are terrific. The CEO raised guidance when they reported earnings earlier this month. Here are some highlights: - Revenues up 67% YOY - Net income up 86% YOY - Profit margin up 200 basis points YOY - Raised guidance to $113 million in revenue for the year. Cash position has increased over $10 million YOY. All of this and the company is trading almost exactly where it was one year ago.
PRXI - Same reasons as I had in the recent research report. Adding, as well.
As I do at the end of every month, I will be posting my letter to investors on the site that will detail all the positions in the portfolio.
