PSB Portfolio Update April 2013

April 18, 2013

Is It Time To Worry?

There’s been a lot going on this week in the financial markets.  Between earnings season and everything going on in the global economics arena, there’s just been a ton of financial news to follow.

So far, the news has been mostly negative.  However, there’s certainly no reason to run for the hills.

So far, earnings season hasn’t been stellar – with several key companies disappointing.  But don’t forget, we have a long way to go, with many important companies not yet reporting.

Economically speaking, domestic news has been slightly negative while international news continues to be grim.  Both China and Europe have seen better days.

The general negative sentiment has taken somewhat of a toll on penny stocks.  Although, our portfolio continues holding ground overall.  Still, it’s a good thing we’ve been taking profits on some of our big winners lately.  It’s never a bad idea to take profits – and this recent market downturn shows us why.

Here’s the thing…

One place investors aren’t going for safety is gold.  In fact, gold and other precious metals have gotten absolutely crushed in recent days.  As such, I don’t expect investors to abandon small caps and penny stocks just yet for higher ground.

In other words, it’s not time to panic.  Instead, this could be a great chance to load up on small, undervalued companies while other investors are spooked.

Now, let’s take a look at some of our positions…

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.

. . . . Renewable Energy Group (NASDAQ: REGI) – Hold

It’s been a nice month for REGI, with the stock recently hitting a high of $9.48.  That’s good for a 29% gain.

The climb has been driven in part by the company’s most recent, unexpected profitable quarter.  REGI received a sizeable tax credit from the government for its production of biofuels in 2012 which helped the bottom line quite a bit.

Moreover, the economics of the biofuels industry is improving.  Tax credits have weathered the budget cutting storm. And, margins are improving across the industry.

REGI could be headed for a very solid 2013.

With the shares trading over our buy up to price, we’re moving REGI to hold.  Hang on for bigger gains ahead.

. . . . Crimson Exploration (NASDAQ: CXPO) – Buy up to $3.60

Natural gas has been a tear – one of the few commodities performing well lately.  And, it’s giving a boost to CXPO.

The shares are trading right around our initial buy price, but have climbed substantially from the lows.  What’s more, the stock briefly jumped above $3.50 before a market selloff put pressure on the shares.

However, the most important factor to consider here is the price of natural gas.  It looks as if the nat gas bear market may finally be over.  In fact, gas has more than doubled from its lows in 2012.

We think CXPO could be headed for a very strong quarter.  If you haven’t yet done so, buy your shares up to $3.60.

. . . . Triangle Petroleum (AMEX: TPLM) – SELL

TPLM is one of the older stocks in our portfolio.  It was purchased during a period of higher oil prices.  As such, the share price has fallen with the price of crude oil over the months.

With the recent bloodbath in commodities, we feel it’s time to cut some of our commodity exposure in the portfolio.  In particular, we don’t see oil reaching the levels where we bought TPLM anytime soon.

Let’s sell our shares here and conserve the capital we have.  We’ll find other ways to gain oil exposure down the line… and for a much better price.

Action To Take

• Sell Triangle Petroleum (AMEX: TPLM)
• Move Renewable Energy Group (NASDAQ: REGI) from Buy to Hold

 

Category: PSB Portfolio Updates