Current Positions and Investment Performance – 2018

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Outlined below are my current positions in addition to those that have already closed. Note that these positions are sorted by largest to smallest and some smaller positions have been excluded from the summary until they become potentially more significant in size.

Current Positions

Walt Disney Co. (DIS) – Unrealized Gain – 11.50%

Position – Long at $97.84 and Long 2 June 2018 call options at $17.65

What I like

  • Disney has the franchising rights to some of the most popular pop culture entertainment vehicles in history. Franchises like Star Wars and Marvel will add to the top and bottom line for years to come.
  • Low debt to equity and strong cash position makes this additionally attractive.
  • Dividend yield of 1.61%
  • Forward PE of 14

What I don’t like

  • As we all know, the “cord cutting” at ESPN has pulled down the stock for previous quarters
  • Earnings might slow of some of the franchises do not continue to perform as they have.
  • Considering the stock is not moving above $110 we may be range bound for some time to come.

The Plan – I’ve held this position for some time. I was long the 100 shares last year when the stock hit $95 initially. I thought I was good once it broke $110, but continued back to $95. I was long the 2 call options the same time which I eventually took a loss on.

Anyone who’s held Disney over the last few years can attest to the sideways nature of the stock. There has been no shortage of good news and added value creation over the last few years, however the weakness of ESPN has kept the stock from breaking out of it’s $95 to $110 range. I’m not one to hold a position past a reasonable exit and I’m definitely not prone to falling in love with a particular stock. I’ll exercise proper discipline and take an ultimate loss if the stock breaks down below $95 again. That being said I’m hoping we’ve created a base at the current level and if the Fox deal can move forward we can see DIS breaking through resistance at $110 and making a move to $125 in the next year or so

Updates

Update 07/01/2018
In addition to my DIS common stock position I’ve initiated a long call position with the 100 January 2019 calls. I’ll need to watch all DIS positions carefully as my portfolio is highly concentrated in this position. I don’t necessarily mind being over concentrated in particular position as I believe there is both positives and negatives to diversification. That being said, I’ll need to properly manage the downside on the total position to ensure I cut any potential losses are small as possible.

Editas Medicine Inc (EDIT) – Unrealized Loss of 15.86%

Position – Long at $34.06

I built this position along with CRSP in an attempt to round out my gene editing exposure. You often can’t tell which players will win out in a new industry and it’s always a good idea to diversify out between a few of the big players in a particular space.

What I Like

  • One of the top 5 largest CRISPR company’s in the world
  • Has had a nice run lately which allows me to hold through some downward pain

What I Don’t Like

  • Like CRSP the company’s technology is not yet proven out and a lot of the current stock price rise is due to long-term speculation
  • We will likely see a lot more volatility in the stock in the months to come (not always a bad thing)

The Plan – As with CRSP, holding this long term as long as it stays above my breakeven. See discussion re: CRSP above.

 

General Electric Company (GE) – Unrealized Loss of 21%

Position – Long $17.40

What I like

  • Recent stock trading has resulted in a base forming around current price levels. This could signal a bottom
  • Current dividend is close to 4%
  • Earnings multiple on future earnings seem relatively cheap

What I don’t like

  • I purchased my first shares around $25 before the second drop. Definitely tried to catch a falling knife on this one. Should have been more patient
  • GE’s current dividend could be in further trouble
  • If current management cannot fix and replace certain business divisions the stock could be at these levels for years to come

The Plan – I’m down quite a bit on the position and looking for a bounce. I would likely exit the position if the stock began trading above $20. Not something I would have interested in holding long term. If the stock starts drifting down towards $10 I’ll be liquidating some of the position

 

Neltflix Inc (NFLX) – Unrealized Gain of 11.50% (short)

Position – Short NFLX at $410

I opened a short position in Netflix around the $410 level just after the first drop from $420. I held the position through earnings thinking the risk was much more on the downside than the upside.

What I Like (short)

  • As with many tech companies the last few years the valuation is very high and would need to maintain lots of growth to continue justifying the high valuation
  • I’m in the money currently which will allow me to hold through some volatility
  • We may be in the beginning phases of slowing subscriber growth

What I Don’t Like

  • The stock has been terribly strong the last few years and could continue climbing
  • I do think NFLX could be a good longer term hold once some of the air is let out of the stock

The Plan – I have some orders to cover my position just above $300. It could take some time to reach this level, however it’s definitely possible considering the recent test and failure at the $380 level.

Updates – Coming soon

Ethereum (ETH) – No position at the moment

What I Like

  • Ethereum having first mover advantage as a plaform crypto play has the potential to be a staple crypto security for the long term
  • Ether has come well off it’s 2017 highs of $1,400
  • If and when the crypto market recovers from recent lows Ether should be propelled higher by the market in general

What I Don’t Like

  • It’s possible that the crypto market does not recover and never pushes back towards all time highs
  • It may take many years for the crypto market to bounce back if ever
  • I am currently not long and may have missed the bottom. In this case I may have a tough time getting back in considering my previous loss from $800 to $400

The Plan – I was a relatively latecomer to the crypto space. Getting involved in summer of 2017 I has some success in trading and holding into December, but have had some losses in 2018. Notably buying Ether around $800 early in 2018 and selling recently around $400. Looks like I may have gotten out at the low, however I’m going to maintain some patience as weakness still continues on every bounce. I currently have orders in long around $300.

China Green Agriculture, Inc (CGA) – Unrealized Loss of 10%

What I Like

  • High dividend yield, low debt position and low relative PE
  • If the numbers are as good as reported this position could be significantly under value

What I Don’t Like

  • Chinese companies have the potential to be overvalued based on reported figures considering the real possibility that reported figures are not accurate
  • The dividend is no existant
  • No current dividend

The Plan – CGA, everyone’s favourite value trap. I’ve built most of my position around $1.20. Chinese stocks can be notoriously difficult to value as the financials are not always easy to trust. I would argue that this position has a limited downside and a fair upside. Definitely not something I would hold well below my entry, but if the financials are half as strong as reported I think this stock could easily get back to $2.00

Herbalife Nutrition Ltd. (HLF) – Unrealized Loss of 5.25% (Short)

Position: Short at $55.63

What I Like (for short position)

  • The long term success of the company could be in serious jeopardy if the company continues to promote like a pyramid scheme.
  • Lots of shorts have already been squeezed out on the first attempt at shorting the company. This could provide some significant opportunities for those not hurt by the initial run up

What I Don’t Like (for short position)

  • Over 30% short interest currently which could keep the a fair amount of support for the stock in the short term
  • The company’s financials are relatively strong given the current business model
  • The company could continue to develop and evolve their business away from a MLM model to something more sustainable

The Plan – I was fortunate not to be one of the many short sellers that got killed along with Bill Akman when Herbalife destroyed all the shorts, helped in part by Carl Icahn’s long investment in the stock. I still believe like most bears do that Herbalife’s business model resembles more of a pyramid scheme than a nutritional supplement company. That being said with over 30% of the outstanding shares short I’m hesitant to jump on the bear bandwagon just yet. I’ll be waiting patiently for more shorts to potentially get squeezed out. If this happens I’ll start building my short position.

Closed Positions (see other closed positions here)

Apple Inc. (AAPL) – Realized Gain of 17.01%

Position – Closed

What I Like

  • Arguably still in a strong iPhone cycle and increasing service revenues
  • I believe Apple still has many years of product innovation in them and I’m confident that we’ll see some game changing products in the future
  • Relatively valued at 15 times forward earnings
  • Low debt positions and strong cash stores

What I Don’t Like

  • Any significant change in iPhone sales or new iPhone models could negatively affect the stock
  • Potential for market saturation and lack of new customer growth is a risk
  • At almost a trillion dollar market cap, the stock is more like a mature large cap than a growth stock (which I would favour)

The Plan – Over the last few years AAPL has been one of my favourite stocks to own and to trade. I’ve had some great success buying the stock under $100 and trading it on it’s run up to $180. Currently long with a relatively small position around $180 looking to see a test of $200. I definitely have a tight stop in this one as I understand how quickly Apple can get out of style with investors and the street.

CRISPR Therapeutics AG (CRSP) – Realized Gain of 88.44%

Position – Closed

I was fortunate to open a position in CRSP around the $20 level before it broke out to the $60 range. I’ve been buying more on recent pull backs to the mid fifties. This industry and stocks like EDIT and NTLA have the potential to be the tech bulls of the next 20 years. The recent spike in price will allow me to hold through some volatility in hopes we can break out above recent highs. I’ll be watching theses positions closely over the next few months.

What I Like

  • Stocks like CRSP and EDIT have the potential to become the next wave of “technology” stocks of the future. Biotech breakthroughs in gene therapy have the potential to change how treatment and disease prevention are handled.
  • I was fortunate enough to get long before the big run up, given myself lots of room to manage the position

What I Don’t Like

  • The stock is up over 100% in a relatively short period of time
  • As with most spec biotech stocks CRSP does not yet have net earnings and many of their technologies are not yet proven in the marketplace

The Plan – As much as it’s tempting to cover some of of the position considering the run from $20 to $60 I’ll be attempting to hold this position for the long term. I’ve added to the position on pullbacks and may continue to do so depending on the price action of the stock. I have a tendency to not let my winners run, so I’ll be using this opportunity to test my holding power.

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