Performance At A Glance... Return Since Inception = 24.43% Current Value of Fund = $581.5 + $24.42 = $606 Forecasted Annual Return = 40% Current Positions SPRT, TNXP, NURO, RGSE Closed Positions SPRT Return = 16.3% Introduction This is the journey (or humiliation) of a student with a couple bucks in a fund. Enjoy. Limitations Due to the very low capital I will not be able to (1) fully diversify my portfolio and or (2) dollar cost average. BUT... Competitive Advantages I will be able to increase my risk profile tremendously due to my long time horizon and low liquidity. Starting Assumptions In my last couple of years of study on this topic I have found some principles I will stick to: 2) The Efficient Market Hypothesis for the most part is wrong. BUT when it comes to short term news-related events it is usually pretty accurate. 3) Investing should be based on fundamentals rather than speculation or forecasting. 4) Buying a couple stocks that you have great knowledge and research on and believe to be great investments is far superior than having a "diversified" portfolio with a couple good stocks that you haven't dedicated as much time to. I hope I will have a lot more to add to the list from this exercise. Starting Out - Active Value Investing in Micro Cap Stocks Due to the risky illiquid nature of micro cap stocks, and the current market climates (with all time high PE average ratios), it is probably the best place for me to start at. My aim is to make a couple posts a month on this forum but make them great ones. I hope to conduct in-depth to the best of my ability analysis on several stocks per month. I do not possess any macroeconomic godliness so I will try to avoid as much as possible speculating on market trends and just keep it strictly and simply to stock analysis. Milestones: Robinhood Gold Account @ $2000 Thanks for reading . Spreadsheet https://docs.google.com/spreadsheets/d/1KBSxLFsmISAI0m-MkXgEBZWYwdNWYkTt-g9KnzxjvKg/edit?usp=sharing
New Position: SPRT $0.80 ($2.4) == 1:3 Reverse Stock Split == Background Support.com ($SPRT) is a leading provider of cloud-based software and services for technology support. Investment Thesis SPRT is an undervalued stock with pretty poor business management but great underlying value in the stock. The market has overreacted a bit in consideration of the value of the company. P/S 0.69 P/B 0.73 P/C 0.79 Book/sh 1.10 Cash/sh 1.01 Debt/Eq 0.00 The Net Current Asset Value (Current Assets - Total Liabilities) > current share price. Which means that, according to Benjamin Graham (and many other value investors), this is a cheap stock. Business Management The Former Board has pursued its' Nexus/cloud project which was expected to generate higher returns than what it actually generated. This combined with a neglect for shareholder value by the board has led to a negative enterprise value for the company. The share price is now trading on the assumption that the former board will drive the company into bankruptcy. After a decade of decline it is to be expected. Activist Investing Recently however this has changed, but in my opinion, the market hasn't yet adjusted to it. Viex Capital Advisors, specializing in activist investing in mid-micro cap tech stocks, has ousted the old CEO and board. They have aligned interests with shareholders (as they have 14.9% of share interest). They have put forward a plan that will be linked at the bottom of the page. Here is the recent events that have brought forward an activist investment potential: 10/31/2016 Old Board + CEO ousted. 11/03/2016 Q3 was better than forecast. Catalyst (1) Cheap. (2) Potential Activist Investment. I would welcome any feedback into how I could improve my analysis. Thank you. Viex Capital Advisors Presentation: https://www.sec.gov/Archives/edgar/data/1104855/000092189516004870/ex10tdfan14a10114013_060716.pdf Disclaimer: I already hold a position in the stock prior to publishing this.
Looking forward to following this thread. I'm on mobile so will need to look through here again, but did you mention which broker you are using?
Firstly, welcome to the forums @justanotherpointlessname it's good to have you join us here and congratulations on your very first post, and trade journal thread here at Stockaholics. Looks like you got a pretty good handle on things there to start. Nice. Best of luck to you and your trading endeavors man! Looking forward to reading more from you. BTW, just out of curiosity how did you find this board if you wouldn't mind me asking? I'm always interesting to hear how newcomers are finding this place. See you around soon!
I have been reading anonymously on forums like this and blogs for a while now. First time I have decided to become active however. I don't plan on being very active as my positions will be large and for longish periods of time. Its a great community though Cya around as well.
New Positions: Net-Net Working Capital Stocks After re-reading Benjamin Graham's masterpiece; "Security Analysis" I have been convinced to allocate 15+% of the portfolio into Net-net working capital stocks. Net-net working capital = Cash & Equivalents + (Accounts Recievable * 0.75%) + (Inventory * 0.5%) - Total Liabilities. It is considered to be a conservative valuation "yardstick" of liquidation value of a company. Historically Companies that have a market value < NNWC value outperform major market indices. SPRT is a NNWC stock although I originally selected it based on activist catalysts and value (not just a pure value perspective). Here are the NNWC stocks I selected: $RGSE - 5% $TNXP - 5% $NURO - 5% If you are interested in NNWC please be aware: - You will have to be patient for the market to revalue the stock (remember: the market can be wrong for longer than you can remain solvent) - Be wary of accounting gimmickry - Diversifying NNWC stocks can help immensely to remove some of the immense volatility that NNWC stocks have. Also I have a secret stock pick I will be releasing in a couple days along with complete due diligence (it accounts for a large portion of the portfolio that I haven't disclosed yet). Source for NNWC stocks and more information: https://www.oldschoolvalue.com/stock-screener/net-net-working-capital-nnwc-stock-screen.php
New Position: Secret Long: Gilead ($GILD) This is a pure value-orientated investment with little catalyst other than over exaggerated under performance as a result of HEP C treatment cash flows decreasing. Even if the entire cash flow of HEP C cure drug evaporates the company is still worth substantially more than $70 per share as it's current offering price. This is because of the company diversifying to new drugs and it's first-class in the world HIV/AIDS treatment. I must confess however this was not my original thinking but rather that of a Value Investor Club post I read. I regret not disclosing sooner. https://valueinvestorsclub.com/idea/GILEAD_SCIENCES_INC/139224
