Monday, September 05, 2022

August 2022 Performance

 

The slow steady grind down continues with one step up and two steps down. I have not made any changes to my portfolio and will wait out this storm. There is so much bearishness in this market, almost seems like the market should rally hard. Remember that the market is looking out 6 to 9 months into the future so and will bottom when there is maximum gloom and doom.

 

I’ve significant slowed down the put selling as the premiums has evaporated with the recent rally. Hopefully with the continuation of the decline, the premiums will fatten up a bit. In any case, I am going to take it easy with the put selling and not get too greedy. When you sell puts, you are always worrying about a black swan event.

 

Another quiet and boring month with not much to report.

 

 

 

2022 Performance = -8.13% with the running monthly returns as follows:

January -0.68%

February -6.00%

March +4.89%

April -4.41%

May -2.90%

June -7.28

July +12.5%

August -3.1%

Monday, August 01, 2022

July 2022 Performance

 

Not sure if this is a real or bear rally, but I will take what I can get in July. My position remains status quo with no changes to the portfolio. I do not see any attractive plays to go in really big. I remember the good old days when Visa went public during the financial crisis, and you knew you were getting that IPO at a decent price. I wish we have some IPOs willing to brave this market. Then we will know how healthy this market really is.

 

Still selling the weekly options to generate income. It has been slow and steady, but sometimes it can be stomach churching. For example, I went fairly big in Visa and Mastercard last week as an earnings’ play. Everything was going smoothly as planned until WSJ broke the news that the Senate was looking at reducing the credit card transaction fees. Visa and Mastercard too a quick dive and fortunately bounced back, I came out fine, but if Visa and Mastercard continued its decent, I would have been in some trouble.

 

Stay safe in this market…

 

 

2022 Performance = -5.19% with the running monthly returns as follows:

January -0.68%

February -6.00%

March +4.89%

April -4.41%

May -2.90%

June -7.28

July +12.5%

Sunday, July 03, 2022

June 2022 Performance

I guess it could have been worse as the bear market gains momentum. I did finally exit my position in Alibaba with a small gain, which turned into a multiyear round tripper. I got greedy with Alibaba and watched some big gains evaporate. My big cap dividend payers [Apple, Visa, Mastecard and Constellation Brands] have held up relatively well. While my more speculative plays [Airbnb and Ginkgo Bioworks] have crumbled in this high interest rate environment. I don’t plan to make any major changes to my portfolio.

In terms of merger arb plays, I did enter a position in Turning Point Therapeutics via Short Puts. The position has since been closed out with a nice little gain. In this environment I’m avoiding the PE plays as financing can get dicey. My focus is merger arb plays with strategic acquirers.

I continued to generate income by selling Puts on some high volatility stocks such as Tesla. My sweet spot is ~ 30% out of the money depending on the premium. I’ve gotten margin calls even with ~ 20% out of the money strike prices due to the high implied volatility, but I was able to quickly close those out with minimal negative impact.

Some of the tech stocks have gotten to a point where I may actually start initiating a small position. Believe it or not, I am thinking about Tesla.

 

2022 Performance = -15.72% with the running monthly returns as follows:

January -0.68%

February -6.00%

March +4.89%

April -4.41%

May -2.90%

June -7.28

Monday, June 06, 2022

Turning Point Therapeutics & Anaplan

The arb game is starting to get interesting once again. I really like the risk reward with Turning Point Therapeutics, which is being acquired by Bristol Myers for $76 in cash via a tender offer. Bristol Myers is good with the cash, and I really don’t see any regulatory issues with this deal. Right now this is offering a mid-teens annualized return. Lots of ways to play this via common and / or options.

I was very close to initiating a position in Anaplan last week. I got lucky in holding off as Thoma Bravo just cut its price for Anaplan to $63.75 from $66 per share in cash. I did not expect this at all. They are still targeting a close by June 30th, but this deal is getting a bit hairy. I can see a bunch of unhappy Anaplan shareholders. Will they vote Yes to the revised deal? Probably… 

I have a position in Turning Point Therapeutics and may play small with Anaplan.

Thursday, June 02, 2022

May 2022 Performance

The volatility continues as my portfolio swooned to a small loss for May, which I will take. I’ve been fortunate that my portfolio has not taken a big hit from the recent decline. The volatility of the market is a telling sign that there is a change in leadership from technology to the natural resources. The techs are really tempting down here, but the market is saying that the commodity sector is the place to be. I’m looking into scaling into some oil plays at some point.

I have not participated in any arb plays, but Twitter does look interesting. There’s lots of noise in Twitter, but I can’t see how Elon gets out of the deal. I can probably see a slight price reduction like the Tiffany acquisition by LVMH, so the deal just gets across the finish line.

I continued to sell naked Puts to generate some income. The option premiums have increased due to the market volatility, which is a positive for option sellers. Of course, I’ve become more cautious and not go in big.

So just trying to survive through this storm…

 

2022 Performance = -9.10% with the running monthly returns as follows:

January -0.68%

February -6.00%

March +4.89%

April -4.41%

May -2.90%

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 = -6.39% with the running monthly returns as follows:

January -0.68%

February -6.00%

March +4.89%


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%