PSB Portfolio Update August 2015

It’s UGLY Out There!

We’re putting out today’s update a bit later than usual.

I’ve been studying the markets, and it’s time to lighten up… I’ve got a handful of sell recommendations below.

Why?

Just look at this chart…

As you can see, the Russell 2000 has not only fallen below its 200-day moving average, it’s significantly below the average.

To make matters worse, look at the blue line on the chart. That’s the 50-day moving average… It’s now trending lower and at quite a slope.

Might we see a snap back? Maybe.

But I’m in risk off mode right now… especially going into the September and October months (historically the worst time of the year).

In last month’s trade alert, we updated a number of trades and exited a bunch…. we took profits at just the right time, and dumped a few strugglers. Follow the advice below closely, we’re cleaning out a few stragglers and TAKING BIG PROFITS in one trade.

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

Position Update

. . . . OMNOVA Solutions (OMN) – Hold

Well, this trade hasn’t started off very strong. I still believe in the business and the industry. I think we’re going to see big things in the homebuilding industry. Despite being off to a rocky start in this one, we sit tight. However… if the market melts down and we get below $6.00, sell to conserve capital. Move this trade to a Hold.

. . . . Huttig Building Products (HBP) – Buy

Another company we based on the rebound in housing. Our thesis is still in tact with this trade… and despite the choppy market, the stock’s holding stable. Since the stock’s so strong, we’re going to stick with the buy recommendation. Buy up to $3.52.

. . . . JAKKS Pacific (JAKK) – Hold

Just today, Oppenheimer initiated coverage on JAKKS… with an outperform rating. We’re up a solid 37% in this trade. Continue holding for more gains!

. . . . Marin Software (MRIN) – SELL

After the last earnings announcement, the stock fell out of bed losing a whopping $1.57… that’s 28% of the market cap. Despite the sales numbers being up, profitability is still a ways off for the company. Unfortunately, stocks with poor earnings are the first to get tossed off the boat in choppy waters… and that’s what happening now. If you still own this, sell it.

. . . . Broadwind Energy (BWEN) – Hold

This stock keeps trending lower, and the reason is the continued softness in the oil sector. I’m going to go out on a limb here and say hold onto this stock. The oil sector has been through events like this before, and BWEN management managed to turn a profit last quarter. Things are tough, but when the market turns, they could see some upside. Hold tight… for now.

. . . . Marchex (MCHX) – Hold

This company was announcing earnings the day AFTER we published our last update. Unfortunately, the market didn’t like the results… our 12% profit has now melted to a 9% loss. However, the company is focusing its efforts on click to call from mobile ads… and that’s going to be a huge industry. Our original entry was around $4.00. If the stock falls below $3.10, sell… otherwise hold.

. . . . Demand Media (DMD) – SELL

Here’s another company we rode from a gain to a loss. We’re down about 16% from our entry… The company announced a loss in their most recent quarter. Users and revenue numbers are sliding… and with the choppy market, a company like this could sink us. Sell now to conserve capital.

. . . . Glu Mobile (GLUU) – SELL

GLUU announced earnings… Revenue was up 64% over last year… but operating expenses were high. The Cash position remains strong with $189 million. Unfortunately, the press led with the soft guidance management put out and the stock took a hit. I still like the game company, but in this market, I like my money more! Sell now to lock in your 27% gains!

. . . . Gain Capital (GCAP) – Hold

Another company that announced earnings right after our last update. I still like this company… the stock is up off the August lows, and they announced 60% growth in revenues last quarter. Not too shabby… hold tight.

. . . . NetSol Technologies (NTWK) – Hold

Nothing new from this company in the last few days… continue holding tight. I’m expecting strong numbers in September.

. . . . Carriage Services (CSV) – SELL

This company is performing… but the stock isn’t. Despite strong earnings numbers, we’re seeing the stock roll over and I’m worried it will head lower! The 50-day moving average is trending down and so is the stock. We’re up a stunning 367% on this trade right now. Take your gains to the BANK! Sell.

Action to Take

SELL Carriage Services (CSV)
SELL Glu Mobile (GLUU)
SELL Demand Media (DMD)
SELL Marin Software (MRIN)
Move OMNOVA Solutions (OMN) to HOLD

Category: PSB Portfolio Updates