NO REST FOR THE WEARY
Now that the market has gone into "play dead so I can slather another coating of horned defecation on the bears" mode, I feel it is a good time to review the status of the portfolio and the contents within.
September has been another kind month to the portfolios. With a near double digit return that now puts the year to date return close to 55%, it would be easy to become complacent, lackadaisical or some other variation of plain lazy. I, however, have eaten arsenic laced concrete far too many times in my career to relax when I am ahead.
It becomes a question of consistency rather than the sheer power of your gains during any time period. For the sake of consistency, it is a best practice to mark to market your gains on a weekly or monthly basis so as to not become complacent when you are sitting on large cushion. A 20% drawdown is a 20% drawdown whether it starts from being flat on the year or up 80%. In either case, it is something that should be controlled or else you can find yourself sitting on a much larger problem in a relatively short period of time. The market is a fickle lover.
Here is a rundown of each individual holding:
SPRT has carried the portfolio in September. It is up more than 40% for the month and looks set to continue the trend higher. As a result of the addition I made to the position earlier this month and the recent decline in PXLW, SPRT is now the largest position in the portfolio.
PXLW is suffering a fairly standard, low-volume pullback that doesn't concern me at all at the moment. Of course, I would have preferred a consolidation at higher levels, but this pullback is nothing out of the ordinary from a price or volume perspective. I'm holding comfortably.
WMIH, as I mentioned in the research report, is a very long-term holding in the portfolios. It is not a question of whether a positive outcome will play out here. For me it is a question of how long it will take to play out. I believe we will see some concrete positive evidence of the direction WMIH will take before year end. At the latest, it will be Q1 of 2013. I continue to see it as the opportunity with the most potential in the portfolios. Price action has been as expected.
SPNS is caught in a lack of liquidity land with a large seller holding down the price. I expect SPNS to have a very rapid appreciation when this seller moves out of the way. The stock is as overlooked as a company can get given the positive developments as of late.
BWC is doing what any respectable mid-cap company does during a market rally: slosh around, until it is able to put together a decent string of up days. It moves a little slower than I would like, but that doesn't take away from the fundamental potential the company possesses. I outlined it in my research report here.
ATNY I'm down about 20% on since initiating the position in mid-April. The defense sector as a whole has been getting pummeled as a result of budgetary cuts and ongoing concerns. There is a ton of value in the sector, however. Just this past week, Barron's did a write up on KTOS, which is a company closely related to ATNY both in terms of the players involved and their general business strategy. The article talked about the fact that the shares, according to a fund manager "are stupidly cheap here", as well as how the entire sector has just been thrown to the dogs. ATNY has suffered the same fate and I would argue that ATNY shares are just as "stupidly cheap" here as KTOS. The weakness that ATNY has suffered may be more a reflection of sector dynamics than company specific issues as I have postulated other times.
CASH be damned. I have none. 100% invested...100% long. Just how the Fed wants it.
