Sunday, May 01, 2022

April 2022 Performance

Talk about a rough start to the year… I’m just glad that I am surviving this turmoil without any significant blowups. I do have a blowup in Gingko Bioworks with another -29% decline in April, but I knew what I was getting myself into and this is a relatively small position. Ginkgo Bioworks is executing well so declines of this magnitude has no impact on my longer term view of this company. I’m very impressed to see how far this company has progressed from their initial pitch at Y Combinator. I’ll be very patient with Gingko Bioworks. This market correction has a little feel of the 2000 decline, but just a tiny version of that. Corrections are healthy for the market so this will eventually pass.

I’m currently not involved in any merger arb plays. I’m still selling out of the money Puts on some volatile tech stocks such as Tesla. The premium is nice, but it can get hairy very quickly. I’m playing much more conservatively by not leveraging up too much.

So just waiting for the market to stabilize before even considering buying anything. No need trying to catch a falling hatchet…


2022 Performance = -6.90% with the running monthly returns as follows:

January -0.68%

February -6.00%

March +4.89%

April -4.41%

Monday, April 04, 2022

March 2022 Performance

March turned out decent for a change. I can once again thank Apple for pulling the portfolio through. Never in my wildest dreams that Apple could approach a market cap of ~ $3 trillion, but here we are. There were so many times I thought about selling but decided to just hang on tight. Apple has morphed into my largest position.


I continued to sell put options to generate some income. I’ve become much less aggressive as the market continues higher. The premiums are really nice during a correction so that’s a good time to put on aggressive positions. With the market back in rally mode, it’s better to play it safe.


Constellation Brands reports this week, so I’ll be looking for any hints about a merger with Monster Beverage. In terms of earnings, I think I’ll be so so… with cautionary chatter about inflationary pressures with raw materials, labor, transportation, etc.…


This market is really holding up well in face of high oil prices, war, inflation, higher interest rates, etc.… Just have to think of how much worst can it get? After all the market is a discounting machine so maybe a rally is in order?

 

2022 Performance = -2.07% with the running monthly returns as follows:

January -0.68%

February -6.00%

March +4.89%

Sunday, March 06, 2022

February 2022 Performance

Who would have thought that there would be a major geopolitical event that takes over the market? I really thought that one side was going to fold without a war breaking out. I managed to survive February with a 6% decline, which is not bad considering the carnage in the tech sector. My big loss has been Ginkgo Bioworks, which will be under pressure for a while. Ginkgo Bioworks is one of my moon shot investments so it will take a few years to see if it does go to the moon or gets vaporized. With the stuff going on out there, portfolio performance is secondary…

Hoping for a peaceful resolution…  

 

2022 Performance = -6.64% with the running monthly returns as follows:

January -0.68%

February -6.00%

Friday, February 04, 2022

January 2022 Performance

The New Year has certainly started off with a bust. I thought I would be down much more, but I will take a -0.68% loss for the month. I guess I’m lucky to have a large percentage of the portfolio in Apple, Visa and Constellation Brands. All of these companies reported good numbers resulting in a nice bounce in the stock price. My biggest disappointment is in Ginkgo Bioworks, which experienced a 31% decline for the month and over a 60% decline from its all-time highs. Ginkgo Bioworks will take a few years to evolve so I’m patient with this one.

I did play the Activision Blizzard / Microsoft deal by selling some Short Puts. I made a tiny bit playing the weekly options, but I didn’t have the conviction to go big. It’s a very hairy deal so I’ll wait for a more opportune time to play this one. I continued to sell naked Puts on Tesla and got margined called a few times due to the increased volatility. The broker dictates everything when you are on margin. I still managed to make some $, but your eye needs to be glued to the screen to minimize a potential blow up.

I’m pretty much on a holding pattern for now and seeing how aggressive the Fed is in raising rates. As the saying goes: Don’t fight the Fed.

 

2022 Performance = -0.68% with the running monthly returns as follows:

January -0.68%

Sunday, January 02, 2022

2021 Year End Review

2021 was the year of the index as the S&P 500 returned ~ 26.9%, which beat just about everything out there. I was able to squeak out a gain of ~ 13.58% for the year. I’m actually quite pleased with this return event though it considerably underperformed the overall market. My trading style continues to evolve as I shifted more from the M&A / special situations plays to pocketing option premiums in high volatility stocks. As an investor / trader, you need to adapt to various market conditions. I still maintain an overall buy and hold strategy.

I’ll first start off with my current long holdings. I did sell off my Sanofi position and initiated a position in Gingko Bioworks. Sanofi just blew it with their Covid vaccine development. Ginkgo Bioworks will be years away from profitability, but I am willing to be patient with this one. Ginkgo Bioworks could possibly disrupt the biotech business model in this new synthetic bio space. The volume of genetic code that this company compiles is enormous, and this data will become more valuable over time. This is underappreciated by the market. Ginkgo Bioworks is definitely speculative as I rarely go into early stage companies, but I really like the founder’s vision.

Apple surprisingly was a standout performer while everything else was lagging. Apple pretty much saved my portfolio. I was really expecting Visa and Mastercard to perform at least in line with the market, but they just sputtered. I know I have said that Visa and Mastercard were never sell positions for me. I am not blind and do see what is happening in the Fintech space. I can see Stripe and Plaid encroaching into the credit card payment space. I will likely initiate positions in Stripe and Plaid if / when they go public as I see these as major disruptors to Visa and Mastercard.

I can’t forget about Alibaba… Geez where do I begin. The Chinese government just destroyed the company. I am still profitable on the position (for now), but I am looking to dump this position. When you have a government that is anti- shareholder that is a problem. China is an enormous and is a rapidly growing market, but how can you invest with the current Chinese administration in power. Just not shareholder / market friendly.

I also ventured into the private equity space. This is definitely speculative as some of these companies may never IPO or have a liquidity event so you will be stuck with an illiquid security. Of course, I expect some of these companies will go public and hopefully the public market values it well above the private markets. I can’t really say too much about these until a liquidity event occurs.


Holding

% Portfolio

AAPL

38.44%

ABNB

4.25%

BABA

1.97%

DNA

1.68%

MA

6.37%

QGEN

1.84%

STZ

18.45%

V

18.89%

Private Equity / Pre-IPO

6.63%

Cash

1.46%

 

Now to selling options. I’ve been aggressively selling naked Puts on high volatility stocks such as Tesla. I mainly focused on the weekly options as I want to close out the position by the end of the week. I first started out by selling way way out of the money Puts and generating a small income with low risk (probability of expiring worthless at ~ 98%+). I gradually started focusing on options with a probability of expiring worthless at ~ 90%+). I kind of settled into this options delta as I can somewhat sleep at night without worrying too much, but of course a black swan event can still occur and inflict some serious damage. I’m going to start buying some protection (buying Puts) in these options positions. As I reflect back, I was really lucky that none of these positions blew up on me. In all these option plays contributed a positive ~ 1.8% to my portfolio return.

That was my report card for 2021… I give it a C-.

 

Hopefully everyone out there will have a Happy, Healthy and Prosperous New Year.

 

2021 Performance = +13.58% with the running monthly returns as follows:

January -2.1%
February +0.6%
March +0.99%
April +5.77%
May -3.56%
June +4.0%
July +2.23%
August -2.8%
September -2.1%
October +2.8%
November +1.65%
December +5.89%

Annual performance for the past nine years is as follows:

2012 +61%
2013 +44.61%
2014 +29.47%
2015 +33.48%
2016 +14.61%
2017 +42.12%
2018 -4.11%
2019 +40.17%
2020 +32.81%

2021 +13.58%




CAGR from 2012 to 2021 = 29.52%


Friday, December 10, 2021

November 2021 Performance

November was a so so month and managed to generate a small gain. I think it’s safe to say that I will significantly underperform the market this year. If I can manage a ~ 10% gain this year, I’ll be pleased. Not much happening with my portfolio other than watching Alibaba go down and down and down.

I haven’t been involved any recent merger arb plays, but have continued selling Puts on high volatility stocks such as Tesla. It’s actually quite amazing to see how well Tesla has held up with Elon’s selling. I may just take a break from the Put selling as I don’t want to push my luck.

I continued to transition into pre IPO companies. These are fairly high risk due to their illiquidity and the only way to make money is to wait for a liquidity event (IPO or acquisition). I’m hoping for at least one to pursue an IPO next year. And there’s no guarantee that I will make any money as you are often paying a hefty premium to the last funding round. You’re betting on a block buster IPO out of the gate.

That's all I have... One more month and it’s a wrap for the year.

 

2021 Performance = +7.26% with the running monthly returns as follows:

January -2.1%

February +0.6%

March +0.99%

April +5.77%

May -3.56%

June +4.0%

July +2.23%

August -2.8%

September -2.1%

October +2.8%

November +1.65%

Wednesday, November 03, 2021

October 2021 Performance

October turned out ok even though the market sold off Apple, Mastercard and Visa. Fortunately, the following holdings picked up the slack: Airbnb, Alibaba, Ginkgo Bioworks, Qiagen and Constellation Brands. I also went a bit overboard in selling naked Puts on Tesla as the premiums were too hard to ignore. I’ve significantly scaled back on the put selling in Tesla as I didn’t want to get too greedy and pay the price.

One of my more speculative position is Ginkgo Bioworks. There has been quite a bit of controversy as there was a recent short selling piece on this company. The company did the right thing in not responding to the report. The report was just a bunch of fluff. The things that this company is doing is quite remarkable especially the amount of data they are compiling. There’s really no other company doing it in the scale of Ginkgo Bioworks. This one will be a very long term hold.

The alternative stuff making of ~5% of the portfolio finally closed. I’ll review if a liquidity event ever occurs. If not, the value is essentially zero as it is very difficult to sell these things. I’m willing to take on this risk.

As I reflect on these monthly reports, I’m just wondering what’s the value. As an induvial investor, I really don’t care about month to month or even quarter to quarter scoreboard. Something to ponder…

 

2021 Performance = +5.2% with the running monthly returns as follows:

January -2.1%

February +0.6%

March +0.99%

April +5.77%

May -3.56%

June +4.0%

July +2.23%

August -2.8%

September -2.1%

October +2.8%