Sunday, January 01, 2023

2022 Year End Performance

I’m sure everyone is glad that 2022 is over and we can have a fresh start in 2023. My portfolio generated a loss of -14.14%, which I am not happy about. It could have been worse with the S&P 500 declining -19.4% and the NASDAQ -33.1%. In this game, it’s all about minimizing one’s losses and having sufficient capital to participate the next bull market. I just don’t see a bull run until the Fed starts easing rates. I will most likely just play it safe and continue to do what I have done this past year by selling puts / calls and merger arb plays. And with yields this attractive, I’ve actually started buying T-bills for the first time. You just can’t go wrong with T-bills generating ~ 4% return with absolutely no risk.

My portfolio is really boring as it is stagnant with little to no turnover. I am a buy and hold investor in mostly dividend paying stocks, which is how you truly make the big money over the long term. I reinvest the dividends in additional shares and the compounding effect over time is really incredible. For example, I bought Visa at the ipo price of $11 (split adjusted) and with the company now paying $1.80 in annual dividend, this comes out to an annual ~16% yield on the original shares. So be skeptical of anyone who tells you that buy and hold is a bad strategy.

The only position I totally sold out of is Alibaba, which I basically broke even after holding for several years. If you consider the time value of money, I actually lost money over time. I should have sold when the government stepped in and pulled the Ant ipo. I’ve learned my lesson in investing in a country that is ruled by Communist leadership, just don’t do it!

I was very active in selling puts and calls in high volatile tech stocks. The majority of the options trades were in Tesla. If you take a look at the volume of options activity in Tesla, it’s simply amazing. It’s literally a giant casino out there. The gains in my options play covered the losses in Airbnb and Ginkgo Bioworks. I realized a loss of -39.2% in Airbnb and -83% in Ginkgo Bioworks. These were tax loss harvesting sales to lower my capital gains tax. I still have positions in Airbnb and Ginkgo Bioworks so I obviously still like both of these companies. Airbnb is cash flow positive so it will do fine over the long term. Ginkgo Bioworks is my speculative play and I intend to hold on for the long term. Ginkgo Bioworks is the leader in the synthetic biology space and many under appreciate the work that this company is doing. As long as the Ginkgo Bioworks founders are with the company, I’m staying along for the ride.

Here are my current boring holdings:



So wishing everyone a Healthy, Happy and Prosperous New Year!  


2022 Performance = -14.14% 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%
September -9.5%
October +11.55%
November +1.52%
December -8.81%

Annual performance for the past ten 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%
2022 -14.14%

CAGR from 2012 to 2022 = 27.56%

Friday, December 02, 2022

November 2022 Performance

It’s been a wild ride as we head toward the end of the year. The only minor change to my portfolio was executing some tax harvesting trades with Airbnb and Gingko Bioworks. Oher than that, my portfolio remains unchanged (Apple, Airbnb, Constellation Brands, Ginkgo Bioworks, Qiagen, Mastercard and Visa). I am surprised with the strength in Constellation Brands, which is approaching all time highs. I guess it was a good idea to have a position in a boring consumer staple.

 

No merger arb plays at the moment, but Horizon Therapeutics is interesting. I continue to play the Short Put game, but much less aggressively now.

 

That is really all I have to add. A buy and hold strategy is a boring report.

 

 

2022 Performance = -5.84% 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%

September -9.5%

October +11.55%

November +1.52%

Tuesday, November 01, 2022

October 2022 Performance

I guess when everyone is bearish, the market fools everyone and rallies. I certainly did not expect such a strong October rally. I continue to stay fully invested with ~ 5% cash position as I stink at market timing. My portfolio has not changed, and is comprised of the following positions: Apple, Constellation Brands, Visa, Mastercard, Qiagen, Airbnb and Ginkgo Bioworks.

I did go big in Twitter by selling short Puts, but almost bit the dust when there was a rumor that CFIUS was going to investigate the merger with Elon. Twitter plunged overnight and I didn’t even realize until I saw the pre market price in the morning. Fortunately, the Puts that I sold were way out of the money and they managed to expire worthless. The spread in Twitter stock was simply unbelievable even though closing was essentially 100% the next day. I went in really big the day before closing as the risk reward was extremely favorable. It’s not often that you literally see free money.

 

2022 Performance = -7.25% 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%

September -9.5%

October +11.55%

Monday, October 03, 2022

September 2022 Performance

September was another challenging month as the indexes fell to new lows. I continue to maintain a holding pattern. Apple finally got hit after rumors of slower iPhone production. I do see strong pent up demand for these phones as I am eyeing one myself. I am surprised how well Constellation Brands is holding up in this environment. Constellation Brands looks like it wants break out and emerge as one of the market leaders. Constellation Brands reports this week, so we will see how inflation is impacting this company.

I continue to play the short put game, which has worked out fairly well. I have become less aggressive as the market volatility increases. I always worry about a black swan event whenever I put on these short put positions. A big market crash will just wipe you out.

The correction in many of these tech companies are starting to appeal to me now. Maybe time to start nibbling a bit, but we will see…

 

2022 Performance = -16.9% 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%

September -9.5%

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%