Portfolio Updates – 11/09/2016

This post is somewhat significant… as it’s the 1st post in SG ThumbTack Investor that is done from overseas. I’m currently in Austria, Salzburg as I type this. Just earlier today, I was in Germany, Frankfurt.

That’s the view of Frankfurt just before landing.

Anyway, due to the 13hour flight time, plus the long drive from Frankfurt to Salzburg (plus some stop overs), I was basically “off the grid” for 2-3 days. Having finally gotten connected, I set about to work and get updated on what exactly happened last Friday, and was pleasantly greeted with a surprise:

A sea of red.

So here are some updates:

1     Chesapeake Energy

Dropped 2.20% on Friday. Although my portfolio page says I own CHK, I am actually hoping it will drop. This is because I have sold a bunch of call options on my holdings of CHK, and since then, CHK has been going on a crazy tear upwards. The magnitude of the rise has been so damn crazy, that my call options at $7 got exercised.

I don’t really want them to get exercised. I’d like to hold on to my CHK shares please, let the options expire, and just pocket premiums happily. But they did get exercised.

So yes, I ended up selling a bunch of my shares at $7, while the share price, even after the drop, is now at $7.57.

No kidding about the share price going ballistic.

$4 to $7.52 in <3 mths is a how many % gain?!

I’m lazy to link up my previous posts on CHK, so any reader interested, please just go search for it in portfolio updates in the archives. It’s for the large part, quite well categorized I think.

Now, I am not overly worried about CHK though, as IMO, the share price will drop again and I have now swung to selling put options. (It’d be great if I could capitalize on the huge premiums when it tanked last Friday, but I was somewhere between Earth and Space at that time)

When markets open on Monday, I really hope CHK drops drops drops, so that I can sell put options again, and hopefully they get exercised <$7, netting me a nice differential in the price, + premiums when my put options were sold earlier, + premiums when my call options ARE sold on Monday.

Please stop rising. Just stop it please. The rise has been ridiculous. I think it’s been overdone, but then, the markets have surprised me yet again. I suspect some of it at least, comes from a short squeeze as the number of shares sold short is really high for CHK.

For now, it’d be really really nice if CHK drops to say… $6 or so. Then of course, please start rising after that to infinity.

2     Valeant Pharmaceuticals

Again, yet another company that has been on a tear. If I update my portfolio performance page right now, the ROI this year would probably be much higher than what’s stated simply because of CHK and VRX this past 2 months.

It tanked on Friday (like the general market), to sit at $28.05.

This again put a nice smile on my face. No, I did not sell any call options, but I did sell a bunch of put options on VRX at $28, and it ended just above. Literally just 5 cents above.

I’ll be happy, and have the firepower to do so, to sell more put options come Monday.

Love the feeling when luck’s on your side huh.

Notice that I sold call options on CHK, but put options on VRX? Despite my large concentrated position in VRX, I still have room to accumulate more.

Oh and anyway, I do sell call options on VRX too and have been collecting premiums.

Q3 results will be very pivotal as it will finally shed light on whether they’ll be meeting full year guidance. I think even without asset sales, they’d be able to meet the guidance.

Meeting guidance alone will be a huge thing for VRX. At PE <5 (non GAAP earnings), I feel safe enough to allocate a huge portion of my portfolio here.

3     SPY put options

Now. This is the greatest shock for me.

Check out my earlier posts on SPY put options:

Portfolio Updates – 23/08/2016

Track Record Of Dividends From 2012

In earlier posts, I have stated that I have started short positions on SPY by buying put options. SPY is basically an ETF that replicates S&P 500. In other words, I started a short position against the US markets.

The options last till end Jan 2018, and the position was initiated at SPY 217.

Since I have completed my bet about 2 months ago though, the index just kept going higher and higher and higher. But in the past week, and esp so with Friday’s events, my short options are FINALLY green for me. And oh my, they are so green.

Check out what SPY did:

Look at the steep decline on Friday. Gosh.

I had to counter check that a few times to make sure it’s not this Austrian network playing a prank on me.

Notice that before the plunge on Friday, it’s spent almost every single day since 2mths ago above 217, making my short options very much in the red.

You can’t blame me for grinning from ear to ear with last Friday’s carnage.

I still won’t be covering my shorts though. I’m going to let them run.

Monday can prove to be cruel to me with a sharp recovery, or there could be more panic and the index continues it’s sharp fall. Then my grin may permanently be etched on my face.

In any case, my view is that the Fed will have to raise rates at least once this year, and judging from the market’s performance, everyone seems to think that’s going to be a non event.

My opinion is that even a 1/4 basis point increase will be enough to wreck havoc on an unsuspecting market.

It’s always nice to be disconnected for sometime, only to find out the markets have been agreeing with you during the time of your absence.

4     SG Portfolio

Not too much has changed since the previous update, despite an enormous amount of time and effort spent here.

I have started divesting something, but will not update that on this site until I am done with my divestment. That may take some time.

As mentioned earlier, a substantial part of my time has been spent finding a new opportunity to allocate capital. I think I have found something I like, but it’s going to take quite some time to accumulate a large enough position.

Again, these positions will be updated once I am done with them.

I’ll end this post with a nice pic.

(I really wanted to go off the grid for the next 2 weeks, but last Friday’s happenings were just too much of a catalyst for me to write some updates)

Germany, Wurzburg

(If you’d like to see nice pics like these, STE has several in his recent blog posts. Links in the blog roll)

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