May 2023 Performance

Midway through the year and the market is holding up well considering the rise in interest rates and the geo-political issues. There were no changes made to the portfolio with the top three holdings making up ~ 80% of the portfolio (Apple = 42%, Visa = 21% and Constellation Brands = 20%). I’m still comfortable with this concentration but may gradually transition to an S&P 500 index approach.

I’m still selling out of the money options to generate some income. I’ve taken a more conservative approach by going further out of the money than I usually do. With interest rates this attractive, there no need to take additional risk.

I’ve stayed away from merger arb plays this year as the regulatory risk is way too high. This used to be my primary source of generating income, but just have to adapt to changing conditions.

 
2023 Performance = +17.60% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%
May +1.02%

April 2023 Performance

April was very quiet for me as I slowed down my options activity. With rates this high, it just didn’t make sense to push it by selling short puts / calls. I’m willing to do nothing and just let the cash sit and earn 4%+. I just want to be caught up in a black swan event, which can destroy a short put / call position. My big positions are as follows: Apple ~41%, Visa ~23% and Constellation Brands ~19%.

I can’t believe that I owned a position in First Republic Bank at one point. It was many years ago and subsequently sold it for whatever reason. The only financials I will own are Visa and Mastercard as they have proven that they can survive a financial crisis. I would never have thought in a million years that First Republic Bank would get into this kind of mess.

I also have not dabbled into any risk arb plays. I was very tempted to get into Activision Blizzard based on the rumor of an imminent UK approval. The UK decision to block the deal was a big big surprise. I’m glad I didn’t play it as I would have likely gone in big and would be in a little trouble right now.

Looking to add to some dividend paying stocks…
 

2023 Performance = +15.72% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%
April +2.39%

March 2023 Performance

It certainly did not feel like a big positive month, but a gain is a gain. I have to give credit to Apple for the majority of the gains in March. Still not much going on, but it is nice to have cash generating some decent yield these days. I’m sitting at ~ 5% cash right now and may stay at that level for a while with these rates.

So I’m just hanging tight right now and looking for a nice fat pitch…
 

2023 Performance = +13.02% with the running monthly returns as follows:

January +8.04%
February -1.60%
March +6.31%

February 2023 Performance

February was uneventful as the portfolio declined after a nice run in January. The portfolio has not changed with holdings in Apple, Airbnb, Ginkgo Bioworks, Mastercard, Qiagen, Constellation Brands and Visa. The big loser so far has been Ginkgo Bioworks, but I entered this position knowing that this is going to be a long term play. I will be patient with Ginkgo Bioworks to see how their cell  programs evolve. Ginkgo Bioworks is a small position and currently makes up 0.33% of my portfolio.

I’m still selling short, dated options for tiny gains. I did finally get clobbered on a short put play. I was in Pioneer Natural Resources, and everything was going as expected until news hit that the company was looking to acquire Range Resources. The stock instantly sold off on the news and my out of the money short put was now in the money. A took a nice loss on that one. What stunk was that this news was subsequently denied by Pioneer Natural Resources and the stock recovered. This was a good lesson for me!

Still hunting for good risk reward merger arb plays…
 
2023 Performance = +6.31% with the running monthly returns as follows:

January +8.04%
February -1.60%

January 2023 Performance

It’s a New Year and a fresh start. Reflecting back to 2022, I’m glad that my portfolio did not implode and realized that the importance of minimizing losses is the key. 2023 started out well with a small gain. Nothing has changed in my portfolio with holdings in Apple, Airbnb, Ginkgo Bioworks, Mastercard, Qiagen, Constellation Brands and Visa. I did shift cash into T-Bills, which is currently yielding ~ 4.5% with a 4 week maturity. This is really the first time that I’ve invested in fixed income. I still can't believe that my broker is still offering a yield of just 0.35% with their cash account! This is literally robbery in this rate environment.   

In terms of options, I'm still doing the same thing by selling Puts and Calls on volatile tech stocks such as Tesla. I usually go out 20%+ out of the money, but you still have to be careful as the implied volatility can screw you over quickly. 

That’s all I have…

2023 Performance = +8.04% with the running monthly returns as follows:

January +8.04%

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%

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%