PSB Portfolio Update April 2015

What’s Next? 

US equities have continued their mostly sideways pattern this past month.  The S&P 500 is up about 1.5% since our last update, and has gained about 3% for the year.  Meanwhile, the Russell 2000 has done twice as well.

In fact, small caps (as represented by the Russell 2000) are up 3% over the last month and 6% for the year.  It could be investors are looking for value.  Or maybe, they’re just taking more risks with volatility at relatively low levels.

At the moment, it doesn’t seem like we have a whole lot of macro risk to worry about.  The geopolitical scene has quieted down considerably.  And, it looks like Europe is finally seeing some green shoots in regard to their economic performance.

Of course, interest rates are still the biggest catalyst for stock moves.

The big question for investors is when the Fed will finally go through with its first rate hike since the financial crisis.  The money is on September right now.  Although, that could always change as economic news is released.

Overall, the US economy is looking good, especially regarding the job market.  Now, we just need to see some wage growth and increases in consumer spending.

Finally, we’re off and running with earnings season.  That means we could see some big moves in our positions as the companies report their quarterly results.

In the meantime, let’s review a few of our positions.  

Position Update

. . . . USA Technologies (NASDAQ: USAT) – Hold

USAT has quietly become an excellent trade for us.  The first few months after we bought the stock, it didn’t do all that much.  But, it’s been an entirely different story since February.

The share price has climbed from around $1 in mid-January to a high of $3.  At the current price of $2.80, we’re looking at 70% gains.  Not too shabby!

The company also recently announced a deal to provide payment processing for Breakroom Provisions Partners.  The partnership should provide a nice boost to revenues moving forward.

. . . . GAIN Capital (NYSE: GCAP) – Hold

We’ve covered how GCAP has been a great trade for us so far.  It’s hovering around 60% gains over the last month or so.  Certainly nothing to sneeze at.

However, the stock could be in for even bigger gains ahead.

Volatility has returned to the currency market, which is great for currency trading.  It means more action, and more action means more trades.  And of course, more trades mean more money for GCAP.

Despite the strong year, the stock is still very cheap in terms of valuation.  As such, I expect this position has a bright future.

. . . . Odyssey Marin Exploration (NASDAQ: OMEX) – Sell

We’ve had OMEX for over a year, and I must say I’m disappointed.  It’s one of my favorite companies I’ve ever written up.  What they do is so unique and interesting, it made it really fun to research.

But alas, performance is lacking in a big way.

The company was supposed to make big discoveries more often than it has.  And, the share price has slowly but surely whittled away.  As such, I think it’s time to move on and find another more lucrative opportunity. 

Action to Take 

• Sell Odyssey Marin Exploration (NASDAQ: OMEX)

Category: PSB Portfolio Updates