July 2020 Performance

Another strong month for the market as the Covid-19 infections accelerate. Hard to get a good read of this market with the short term market volatility, but what really matters is the free cash flow generated by companies over the long term. What I’ve learned over the years of investing is that you really need to have a buy and hold mentality to make any serious money in the market.   

Many of my holdings (Constellation Brands, Visa, Mastercard and Apple) recently reported earnings and all produced decent results. Apple simply blew away the numbers, which is mind boggling in this environment. These are my long term holds and will take a lot to make me sell any of these positions. All of these companies generate strong free cash flow and the value of these companies should continue to appreciate nicely over time.  

I did enter the merger game once again with a Short Put position in Forescout Technologies. There was a little drama with this one as Advent International tried to walk away using the Material Adverse Event as an excuse. Advent did the right move by renegotiating the merger with a small cut in price. Advent would have lost this court battle with Forescout Technologies.

Also, Thermo Fisher Scientific kind of came to their senses and bumped the price to 43 Euro for their acquisition of Qiagen. I still think this is a bit low, but I am leaning towards tendering at this price. Qiagen reports August 4^th so I’ll wait and see how the market reacts to the earnings report before deciding whether to tender.

I’m continuing to sell way out of the money weekly Puts on some big tech names to generate some income. That’s about it for July. 

 

2020 YTD Performance = +13.7% with the running monthly returns as follows:

January +2.7%
February -6.8%
March -9.9%

April +12.3%

May +6.6%

June +3.8%

July +6.1%