August 2024 Report

During the recent volatility, the best action for me was to do nothing. It’s really hard to pull the trigger as I did not see any real values during the sell off. The only action I took was to sell puts on several tech stocks during the sell off. There was fear out there so the option premiums were quite attractive. The market should be fine. with the anticipated September rate cut. As they say, “Don’t fight the fed”.
 
So, what did well in August? Apple, Visa and Mastercard… Apple continues to rally on the highly anticipated iPhone 16 launch. Do I buy this Apple AI upgrade cycle? Definitely, I actually purchased a new iPad Air to take advantage of the upcoming AI features. This will be nothing like the muted 5G upgrade cycle where the user did not really have any use cases. Visa and Mastercard are rallying based on the anticipated rate cut that will spur the economy. Visa and Mastercard are amazing companies, they do well in all types of economies.
 
I’ll continue to play it safe for the remainder of the year by maintaining a healthy cash position of ~9% and try not to do anything stupid. There will likely be some volatility as we head toward the elections.
 
 
2024 Performance = + 11.55% with the running monthly returns as follows:
 
January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%
July + 2.42%
August + 2.52%

July 2024 Report

Why you really can’t hold a stock forever. A clear example is Intel, which was a dominant player in the late 90s and has now come crashing down. Although Apple continues to be my top holding, I am mindful that technology can change rapidly, and Apple may one day follow the way of Intel. Right now, I continue to be bullish on Apple and have no intention of reducing my holding. In July, Apple generated a gain of ~5.4%, which helped push my portfolio into positive territory. I continue to build cash (~10% position) from the income generated from selling options.

I got a bit more aggressive selling options to generate income, which is a warning sign. When I get complacent and start going big with selling options, you can bet that the market is going to go down big. Fortunately, I was unscathed by the recent volatility, but need to be more cautious and put on hedges with the option plays. One wrong move when selling naked options and it could be over.

I am on the recession camp and the signs are popping up everywhere. The big question is how severe the downturn will be. There are some great companies with big stock declines, but now is not the time to bottom fish. I would rather wait for an uptrend to get started before getting into the stock.

Stay safe out there…

 
2024 Performance = + 8.80% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%
July + 2.42%

June 2024 Report

Once again, Apple pulls through with a very compelling presentation of Apple Intelligence, which in turn generated a nice gain in the stock. I was skeptical of Apple’s AI play and thought they would simply just integrate ChatGPT into their iOS. The presentation provided many uses cases for Apple Intelligence, which I can see myself using. Now, there’s no choice, but to upgrade to a new iPhone if you want to experience these features. Considering what this device can do, the cost of a new phone is really insignificant.
 
Not much with special situations other than a small play on the Talen Energy Dutch offering. Still continuing to sell Puts on tech plays to generate income. I’m selling way out of the money options so I’m pocketing small premiums, but they add up over time.
 
I find that optimizing one’s tax situation is as important as generating gains. I admit that I started late in adjusting my portfolio to minimize taxes. Things such as waiting to sell ESPP shares until they become a qualifying disposition to cash exercising employee stock options for long term capital gains. It’s only been these past two years that I’ve started to take action on these tax saving strategies. I guess these are good problems to have but should have started much earlier. If you have time, YouTube is a great resource and that’s where I learned many of these tax savings strategies. I just can’t bring myself to pay a financial planner charging ~ 1% of assets for this advice.
 
 
2024 Performance = + 6.23% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%
June + 3.52%

Talen Energy Dutch Tender Offer

If you’re not aware, there’s a Dutch tender offer for Talen Energy (Ticker: TLNE) for $116 to $122. The stock is currently trading around $111 to $112, which is a decent discount to the minimal range of $116 for the tender. The discount can be attributed to a possibility that they can withdraw and amend the deal based on the recent 10% decline condition of the Energy Share Basket. I see this as a low probability, but it can happen. The deadline for the early tender is June 12th. If you participate, make sure to purchase no more than 99 shares as there is an odd lot priority and go with “no bid” when tendering.

May 2024 Report

I’m finally in the black, which can primarily be attributed to the gain in Apple. With a ~ 40% holding in Apple, a ~ 12% gain will definitely have an impact on the portfolio. On the other extreme, I have a 0.10% position in Ginkgo Bioworks, which declined ~ 40% in May. The decline in Ginkgo Bioworks had almost a negligible impact. Ginkgo Bioworks is a one of those moon-shot positions and I’ll continue to hang on. The recent layoff announcement at Ginkgo Bioworks is worrisome, but I still like their vision. The lesson is to never average down on a stock that is not making you any money.

Still no merger arb plays as it’s too difficult in this environment. I usually take a stab at some of the rumor plays from the more reputable sources like Bloomberg and WSJ, but these days it seems like so many stories are planted and the deals don’t materialize. I’ve pretty much transitioned from merger arb plays to selling puts to generate additional income.

I still have a ~9% cash holding. I’ll take a safe 5% return any day and if you go with short term T-Bills, you’ll get a bit more than that. Cash is definitely not trash in this environment.  
 

2024 Performance = + 2.62% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%
May + 5.16%

April 2024 Report

Well, I finally went into the negative territory for the year with the April results. The decline can be attributed Constellation Brands and Visa. Constellation Brands delivered a good quarterly result but sold off on the news. I am still very bullish on Constellation Brands and really like their capital return to shareholders via dividend / share buyback. Visa is just an amazing compounding machine that will do just fine in this inflationary environment. Nothing has fundamentally changed with these companies, and I intend to continue to hold them for the long term.

I have not been involved in any recent merger arb plays as I still find it tricky with this administration. The FTC attempt to block Tapestry’s acquisition of Capri is such a joke. I really want to see the FTC lose this case as this is a total waste of tax-payers money to fight this merger. In my wildest dream, I cannot see how the consumer is harmed by this merger. We are talking about “accessible luxury” handbags! Ok, enough of my rant on the FTC.

I still have a healthy cash position at ~ 8% and slowly building on that with the premiums from selling options. I am just waiting patiently for a good opportunity. I have no problem waiting with cash yielding ~ 5%.

 
2024 Performance = - 2.41% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%
April - 3.07%

March 2024 Report

I’m not making much head way this year with a loss of -0.33% in March. It doesn’t help when Apple (my largest position) declines ~ 5%. I’m just glad that Constellation Brands gained ~ 9% and helped to keep the portfolio’s loss contained. Cash remains at ~ 8% and will deploy when opportunities arise.

I’m maintaining a relatively conservative approach with the goal of capital preservation. I don’t think I will ever go All-In in any position like I did in my early years. I guess you get wiser as you age. I experienced the 1997 – 1998 Asian Financial Crisis, 2000 dot.com bubble and the 2008 Financial Crisis. The last thing I want to do is to lose a big chunk of my portfolio on a dumb bet.

Tesla is starting to look interesting with its recent decline. Fundamentally, they are currently in a rough spot with the macro issues, but they are the clear leader in their segment. It is interesting that I am seeing more used Tesla’s for sale at a local used car dealership. It used to be a rare to see a used Tesla for sale, but now it’s very common. The difficult part is how low will the stock go?

 
2024 Performance = + 0.68% with the running monthly returns as follows:

January + 0.02%
February +0.99%
March – 0.33%