PSB Portfolio Update December 2014

| December 18, 2014

December 18, 2014

The Crash Of Crude Oil

Unless you’ve been living under a rock for the last several weeks, you probably realize the big news in the world of finance and investing is the plunging price of crude oil.  The price of crude has gone from roughly $105 a barrel in June to about $55 a barrel in December.

For those of you keeping score, that’s a 48% drop, otherwise known as a crash.

Oil has a lot going against it.  Most importantly, there’s a significant supply glut, brought about mostly by fracking and other alternative drilling methods.  In addition, global demand for oil is waning due to poor economic conditions outside the US.

In itself, cheap oil is basically good for the economy.  It means more money can be spent by consumers elsewhere.  However, oil producing countries (like Russia) are getting hit hard, and of course, energy companies are taking it on the chin.

The pain in the energy sector has spread to some extent to the rest of the market, which has seen a moderate increase in volatility.

But keep in mind, cheap is oil is a good thing ultimately.  This volatility shouldn’t last.  And, consumers should have a reasonable amount of discretionary income to spend on other things (like holiday shopping).

Let’s see how the coming dynamics impact small cap stocks.  There should be some good buying opportunities ahead.

Now, here’s a closer 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.

. . . . Glu Mobile (NASDAQ: GLUU) – Hold

What a stellar first couple weeks for our GLUU position!

GLUU, which we bought on December 4th, is already up 16% in just under two weeks.  And looking at the chart, it could easily make a short-term run at the 200-day moving average (just over $4.50).

As expected, there’s been a lot of optimism about GLUU’s current quarter.  Even insiders are getting in on the action, with a couple directors buying up shares.

Moreover, the company launched a Lindsay Lohan video game, which is basically a clone for the ultra-successful Kim Kardashian game.  It could be a quick source of cash for the company, even if it doesn’t mirror what the Kardashian game provided.

I really like the direction GLUU is headed.  And, with the recent surge in share price, we’re moving the position to hold.

. . . . Brightcove (NASDAQ: BCOV) – Hold

It’s been a very good week for BCOV, which is moving sharply higher.  Over the last week or so, the share price has gone from the low $6 region to over $7.25 a share.

With the upward move, our position is now a 20% winner.  That’s quite the turnaround from what was a $5 stock just a couple months ago.

There isn’t any specific news driving the rally.  Some of it could be due to insider buying by the CFO. I believe there’s also a fair amount of technical buying going on.

Whatever the case, it’s good for us.  With the latest surge, we’re moving BCOV to hold.

. . . . MicroFinancial (NASDAQ: MFI) – Hold

Well, it’s not the best case scenario for us. But, it’s pretty darn close.

MFI is getting purchased by Fortress Investment Group (FIG) for $10.20 a share.  At the time of the announcement, the stock was sitting at around $8.50, so the shares clearly got a big boost from the news.

Now, I’d like us to make bigger profits on our positions, but it’s hard to complain about a guaranteed 30% winner.  What’s more, the company will offer one last dividend of $0.08 per share sometime before January 12th.

Be sure to hold onto your shares until the dividend gets paid.  After the payout, we’ll sell out our holdings and collect the profits.

Action To Take

  • Move Glu Mobile (NASDAQ: GLUU) from Buy to Hold
  • Move Brightcove (NASDAQ: BCOV) from Buy to Hold

Category: PSB Portfolio Updates

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