Fundamental Positions II

[It's Snake Pliskin]

Happy & Snake

I take profits or exit at my profit target, which is the calculated "intrinsic value of the share.

As a minimum this must indicate at least a 50% return.
I prefer there to be a 100% return.
Every now and then you find an indicated return far greater than 100%

Did tecchies take a profit?
Most likely, they are a pretty clueless bunch after all.

jog on
d998

Duc,

That stock was over 50%! You didn`t sell.

Are you hoping, praying, or prophesising that you`ll get 100%?

What are your exit parameters exactly?

[It's Snake Pliskin]

[ducati916]

The calculated exit prices are as follows;

EGY...............$10.23 - $14.01
UST...............$49.44 - $60.10
KND...............$28.63 - $36.81
FORD.............$27.84 - $35.53
CQB...............$32.31 - $41.43
CTT...............$10.10 - $12.96
SAFM.............$45.36 - $58.25
TOL...............$58.56 - $75.06
HNR...............$21.00 - $21.89
GKIS..............$19.03 - $24.28
CALL..............$6.90 - $7.30
LRT................$8.00 - $9.00

Thanks for your answer. I also notice you closed ISSC at a profit of 8.1%
What was the reasoning there, as I notice it doesn't quite fit in with your minimum requirement?

That was a change of mind.
Purely discretionary.
Naughty, naughty breaking the rules, slapped wrist for me.

For you to determine a definative 30% + return you must then have established your exit figures.How youve been able to establish a timeframe of a year is interesting.
If however your valuation can vary from time to time how then can you determine a positive expectancy of 30% + ?

That's a fair question. I shall attempt to answer it in a follow on post.

And if your wrong?
At what point do you determine your wrong or is that not a possiblilty? (That your valuation and indeed your determination of Goodvalue could be wrong).

If the fundamentals and intrinsic valuation change in a material manner.

Duc,

That stock was over 50%! You didn`t sell.

Are you hoping, praying, or prophesising that you`ll get 100%?

What are your exit parameters exactly?

__________________

See above.

jog on
d998

[ducati916]

Weekly update;

Ticker..Opening Price....Current Price....%Change


EGY.......$4.61............$6.32.........+37%
HNR.......$8.39............$10.66........+27%
CALL......$4.76............$4.28.........(-10%)
SAFM......$26.45...........$21.16........(-20%)
FORD......$10.74...........$8.14.........(-24%)
UST.......$41.25...........$40.64........(-1%)
ISSC......$13.66........closed$14.78......+8.1%
CTT......$4.00.............$3.48.........(-13%)
CQB......$17.47............$17.27........+0.0%
TOL......$29.78............$34.99........+17.5%
GKIS.....$14.05............$12.52.......(-10.8%)
KND......$21.94............$24.60........+12.2%
LRT......$2.56.............$2.19.........(-14%)

Aggregate................................+0.69%

jog on
d998

[ducati916]

Buy SGTL @ $10.30

jog on
d998

[ducati916]

For those that may be curious in regards to a Fundamental analysis;

Debt;
There is no long term debt, and non-significant bank lines due within the 12mths period.

The capitalization is therefore 100%
This provides less risk than a highly leveraged business.

Volatility;
As is the case generally with a bear price action, volatility increases even with reasonably stable business models. There is however great volatility within the earnings (-1.36)
This has in turn increased the volatility from 22% to 84% within the common.

Cash Position;
Strong, with $1.25/share of working capital
A Current ratio of 2.76

GAAP Earnings/Actual Earnings
$1.07/share as opposed to $1.51/share
Where's the cash?

In discretionary earnings.
Less $0.81/share of intangibles,
+$0.13/share within Cost of goods
+$0.82/share within Capital expenditures

These discretionary cash-flows allow the manipulation of GAAP earnings quite legitimately, allowing a safety factor for bad periods of business within the GAAP earnings, just the CapEx alone accounts for the intangibles, and is confirmed via the expansion of CapEx to depreciation.

Intrinsic Value based on GAAP earnings.................$16.63 - $21.45
Intrinsic Value based on Cash-flow earnings...........$24.00 - $30.28

jog on
d998

[nizar]

For those that may be curious in regards to a Fundamental analysis;

Debt;
There is no long term debt, and non-significant bank lines due within the 12mths period.

The capitalization is therefore 100%
This provides less risk than a highly leveraged business.

Volatility;
As is the case generally with a bear price action, volatility increases even with reasonably stable business models. There is however great volatility within the earnings (-1.36)
This has in turn increased the volatility from 22% to 84% within the common.

Cash Position;
Strong, with $1.25/share of working capital
A Current ratio of 2.76

GAAP Earnings/Actual Earnings
$1.07/share as opposed to $1.51/share
Where's the cash?

In discretionary earnings.
Less $0.81/share of intangibles,
+$0.13/share within Cost of goods
+$0.82/share within Capital expenditures

These discretionary cash-flows allow the manipulation of GAAP earnings quite legitimately, allowing a safety factor for bad periods of business within the GAAP earnings, just the CapEx alone accounts for the intangibles, and is confirmed via the expansion of CapEx to depreciation.

Intrinsic Value based on GAAP earnings.................$16.63 - $21.45
Intrinsic Value based on Cash-flow earnings...........$24.00 - $30.28

jog on
d998

which stock are you referring to here ?

[ducati916]

nizar

Sorry, SGTL
The one I bought this morning at $10.30

jog on
d998

[tech/a]

Duc.

Just as a comparison From 12/1 to tonight T/T has returned 15.5% on investment at 12/1.

Still reckon you should be executing a stop.
What would your return be with that stop if executed at 10% plus the opportunity cost lost of finding other out performers.

[happytrader]

Hi Ducati

Just wondering if this portfolio would have covered this months costs of borrowings for those using leverage?

Cheers
Happytrader

[Sir Burr]

Hi Ducati

Just wondering if this portfolio would have covered this months costs of borrowings for those using leverage?

Cheers
Happytrader

Happy,

Capital = $1000000
BT Margin Lending_Online loan = 8.20%
Total interest = $6834
Profit @ 0.69% = $6900

YES!

SB

[ducati916]

tech/a

Just as a comparison From 12/1 to tonight T/T has returned 15.5% on investment at 12/1.

Comparisons are fine, but you must compare apples with apples.
Is your 15.5% a cash return on investment, and thus including any leverage?

If it is a 15.5% return on aggregate share price within that period, then that is impressive.

My return is measured on the %return in the stock price of the portfolio.
This then will not include the effects of any leverage.

Still reckon you should be executing a stop.
What would your return be with that stop if executed at 10% plus the opportunity cost lost of finding other out performers.

Stoplosses are specifically designed to lose you money.
They are a requirement for all technical systems, as you are engaging the market blind, and of course adhere to EMT.

My risk is managed very differently.
EMT is not a factor, as I adhere to IMT.
Business risk, is the risk that I must manage.
If I executed a 10% stoploss, I would have actualised losses.
It is my intention to return 30%+ compounded (unleveraged) with zero loss of cash.

happytrader

I personally would only leverage from a source that would not incur a margin call, so brokers loans would be out, but house equity would be in. This really means that the interest should be payable out of a salary or savings.
I would not want to rely on market returns to cover interest charges.
This is conservative.

However, if dividend returns covered margin lending, then you could *risk* it if you were a little more aggressive. Two stocks I hold generate dividend yields of 5.6% & 10.9% (UST, LRT) all the others however do not.

jog on
d998

[ducati916]

Add to that SAFM that has added a dividend of $0.48 (2.10% yield)
CQB $0.40 (2.3% yield)
jog on
d998

[ducati916]

Weekly Update

EGY.......$4.61........................$6.71...... ..................+45%
HNR.......$8.39........................$10.59..... .................+26%
CALL......$4.76........................$4.04...... .................(-15%)
SAFM......$26.45.....................$22.67....... ...............(-14.3%)
FORD......$10.74.....................$10.00....... ...............(-6%)
UST.......$41.25.....................$40.86....... ...............(-0.5%)
ISSC......$13.66.................closed$14.78..... ...............+8.1%
CTT......$4.00.......................$3.48........ .................(-13%)
CQB......$17.47.....................$17.22........ ...............(-1%)
TOL......$29.78.....................$34.35........ ................+15.3%
GKIS.....$14.05.....................$12.75........ ...............(-9.2%)
KND......$21.94.....................$24.13........ ................+10%
LRT......$2.56.......................$2.43........ .................(-5%)
SGTL....$10.30.....................$10.28......... ...............+0%

Aggregate......................................... ....................+2.88%

jog on
d998

[tech/a]

Duc

Its the resturn on funds during that period.
12/1 till now.

Starting capital at 13/1 $263,000
Finishing Capital last night $304,000

15.5%

If we look at Total initial leveraged funds Of $100K
Then over that period its 41%

If we then look at funds initially put up to trade
on Margin ($30K) then its 136.6%

But thats why I trade like that.

Anyway youve touched on a topic which I feel is the most important topic of all---RISK.
As not to fill up your thread with discussion I have started a new thread on RISK.

[ducati916]

tech/a

I am just leaving for the weekend, so I'll jump in on Sunday evening.


jog on
d998

[ducati916]

Buy EVCI @ $1.44

jog on
d998

[ducati916]

EGY.......$4.61........................$6.66...... ....................+44.4%
HNR.......$8.39........................$9.72...... ....................+15.8%
CALL......$4.76........................$4.46...... ...................(-6%)
SAFM......$26.45.....................$22.40....... .................(-15.3%)
FORD......$10.74.....................$10.70....... .................+0%
UST.......$41.25.....................$41.60....... ..................+0.8%
ISSC......$13.66.................closed$14.78..... ...............+8.1%
CTT......$4.00.......................$3.24........ ..................(-19%)
CQB......$17.47.....................$16.77........ .................(-4%)
TOL......$29.78.....................$34.63........ .................+16.3%
GKIS.....$14.05.....................$12.64........ .................(-10%)
KND......$21.94.....................$25.15........ .................+14.6%
LRT......$2.56.......................$2.32........ ...................(-9.3%)
SGTL....$10.30.....................$8.74.......... .................(-15%)
EVCI....$1.44.......................$1.45......... ...................+0%

Aggregate......................................... ....................+1.42%

jog on
d998

[ducati916]

Open Positions


CALL......$4.76........................$4.20...... ...................(-11.7%)
SAFM......$26.45.....................$20.91....... .................(-20.9%)
FORD......$10.74.....................$9.69....... .................(-9.7%)
UST.......$41.25.....................$42.15....... ..................+2.2%
CTT......$4.00.......................$3.20........ ..................(-20%)
CQB......$17.47.....................$16.06........ .................(-8%)
TOL......$29.78.....................$32.74........ .................+9.9%
GKIS.....$14.05.....................$11.93........ .................(-15%)
KND......$21.94.....................$24.56........ .................+11.9%
LRT......$2.56.......................$2.22........ ...................(-12.8%)
SGTL....$10.30.....................$8.60.......... .................(-16.5%)
EVCI....$1.44.......................$1.10......... ...................(-23.6%)
DRYS....$10.59......................$10.08........ ...................(-4.8%)

Aggregate......................................... ....................(-9.15%)

Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%

Aggregate..............+30.5%


jog on
d998

[tech/a]

Duc.

On the surface appears profitable.But is a nett loss.
Some 3 are now -20%+

Hope your not going to claim a 30% return on those positions closed while allowing losses to sit in the background un realised?