PSB Portfolio Update December 2013

December 19, 2013

The Taper Has Arrived

The question of the quarter has finally been answered – the Fed will in fact begin tapering back its bond purchases at the start of 2014.

The massive $85 billion in monthly Treasuries and MBS purchases will be scaled back to… $75 billion.  Yep.  That’s the extent of the reduction.  In other words, the reality of the taper means almost nothing to the economy.

The Fed is remaining just as dovish as it has been since the Great Recession began.  The tapering announcement is more likely a way for the Fed to slowly step into reducing bond buying without creating havoc in the markets.

Perhaps more importantly, the central bank has said it won’t raise rates just because the unemployment rate hits 6.5%.  Instead, the Fed will be paying closer attention to inflation, which has been running below the desired level for an extended period.

This is a major policy change and is bullish for stocks. Near-zero interest rates could be the norm for quite some time.

In other news, Congress passed a 2-year budget deal, preventing another government shutdown.  However, the debt ceiling issue will once again be a factor come late January if another agreement isn’t made between the parties.

Finally, the economy continues to pick up steam, with the job market, housing, and retail sales doing better than expected – among other indicators.  Perhaps 2014 will be the year we finally see some decent economic growth.

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 continues its breakthrough to higher ground.  The stock has steadily climbed since breaking through resistance and is now a 14% winner for us.

More importantly, it looks like the shares have the necessary momentum to keep climbing. In fact, the company appears to be gaining traction in its bid to remake itself as a biometric company.

If AWRE’s transition to a pure biometrics and imaging company come to fruition, it could be very undervalued based on the current metrics.

With the recent move higher, we’re moving AWRE to Hold.

. . . . Aceto (NASDAQ: ACET) – Hold

As we’ve highlighted before, ACET is one of the top stocks in our portfolio.  If you bought the shares from the start, you’d be up 190% right now!

Moreover, the company just issued another $0.06 dividend on December 12th.  That brings our entry price down to $7.77, for those of you keeping track.

Continue holding ACET and keep racking up gains and dividends along the way.

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

Our decision to not sell REGI at its highs of the year may just be working out to our advantage.  Although the shares are off the highs, the position is still a 50% winner for us.

And now, there’s reason to believe the share price could be set to reach new highs.  You see, the company just agreed to purchase Syntroleum (SYNM) in an all-stock deal.

SYNM is a prominent renewable diesel and synthetic fuel company with high upside.  The acquisition makes REGI the clear leader in the biodiesel space.

This move could be a huge boost to REGI shares.  Not to mention, this type of news is a reason why we felt the stock was worth holding on to from the start.

Let’s hang on to REGI for bigger profits ahead.

Action To Take

• Move Aware (NASDAQ: AWRE) from Buy to Hold

 

Category: PSB Portfolio Updates