PSB Portfolio Update February 2014

February 20, 2014

Has The Market Stabilized?

Stocks gave us quite the scare in early February, with a 5% “correction”.  Since then, the major indices have regained most of their ground and volatility has come off substantially.

The problems started with poor economic performance in emerging markets.  And, they were helped by awful weather in the US (which is doing its part to dampen economic activity).

Fortunately, the government actually helped out the markets for a change by agreeing to extend the debt ceiling until March of 2015.  That certainly had a large impact on easing investor fears.

What’s more, investors have apparently decided most of the negative domestic economic news is based on the arctic weather… and doesn’t reflect an actual economic setback. We won’t know for sure until warmer weather arrives, but it does make sense given the numbers we’ve seen.

Stocks aren’t out of the woods just yet.  Emerging markets are still a question mark.  And, the various hotspots of geopolitical turmoil are not helping any.

Basically, while the markets have stabilized, we could still see short-term bouts of volatility here and there based on global headlines.  Overall, US companies are still performing well – but it’s never a good idea to ignore the macro factors.

Let’s take a look at the portfolio.

Position Updates

Please Note:  We don’t necessarily update every open position each month.  We focus on the positions experiencing significant news, notable price movement, or a change in recommendation.  Please refer to the Performance page on our website for our current buy, sell, or hold recommendation for any positions not mentioned in the Update.

. . . . Aware (NASDAQ: AWRE) – Hold

Aware has been on a very nice multi-month climb.  Our position is up 20% so far, but with significantly higher upside potential.

The company’s recent earnings were mostly positive.

Basically, AWRE has completed its shutdown of its DSL business and is now fully focused on biometrics software and services.  Fourth quarter revenues from this business increased 16% from a year ago to $5.6 million.  Meanwhile, annual revenues from continuing operations improved 12% from the prior year.

Overall, the company’s biometrics business is making progress.  With DSL services a thing of the past, AWRE management can now make growing revenues and income their top priority.

. . . . RadioShack (NYSE: RSH) – Buy up to $3.00

RSH is certainly an interesting story.

The company made headlines with their successful Super Bowl commercial – and gained some positive vibes.  Those positive feelings were quickly washed away in the next couple days as management announced the shuttering of 500 stores.

I actually think it’s a good thing.

It will be much easier for RSH to thrive if it focuses on upgrading its performing stores.  Let the poor performers close and cut those costs – especially with the success so far of the new store format.

I think RSH has strong upside potential.  As such, I’m lowering the buy up to price to $3.00.  If you haven’t purchased RSH shares yet, now’s your chance.

. . . . Great Panther Silver (AMEX: GPL) – Sell

We’ve been holding onto our precious metal stocks for quite some time – waiting for the inevitable rebound.  It took awhile, but GPL finally has spiked higher.

While this position is still a loser, it’s at a spot where I feel we can sell it and conserve our remaining capital.  Moreover, I’m not as bullish on silver as I am on gold.

Let’s go ahead and sell GPL.  We’ll reapply the remaining capital to a more exciting opportunity.

Action To Take

• Sell Great Panther Silver (AMEX: GPL)
• Move RadioShack (NYSE: RSH) buy up to price to $3.00

 

Category: PSB Portfolio Updates