Sunday, July 01, 2018

June 2018 Performance

I was able to easily generate a net loss of 1.51% for the June. The bulk of the loss can be attributed to my trading debacle in NXP Semiconductors (Ticker: NXPI) and the earnings short fall in Constellation Brands (Ticker: STZ). I initially bought NXP Semiconductors with the expectation of a fairly quick approval by the China, but the news reports of an imminent approval did not pan out. I exited the NXP Semiconductors with a nice loss. Constellation Brands just reported earnings with the bottom line missing estimates. I am not too concerned with Constellation Brands as the top line generated healthy growth. Increased marketing and transportation cost negatively impacted the bottom line for Constellation Brands. Overall, I was really disappointed on how I handled the NXP Semiconductors trade as I had no edge at all.

So what’s new? I picked up a few of the long dated short Puts on Rent-A-Center (Ticker: RCII), which is being acquired by Vintage Capital for $15 per share in cash. Vintage Capital has been in pursuit of Rent-A-Center for over a year. The acquisition of Rent-A-Cent would complement their other rent to own company, Buddy’s Home Furnishings. It is a private equity deal and they do have a tendency to bolt when things start going south. I don’t see it in Rent-A-Center as they’re in the early innings of a turn around with their free cash flow showing a nice increase. This is almost like a strategic deal by Vintage Capital. Vintage Capital expects this deal to close by the end of the year.

And that's it for June...

2018 Performance = +12.90% with the running monthly returns as follows:

January +2.80%
February +2.82%
March -0.03%
April +2.10%
May +6.25%
June -1.51%