PSB Portfolio Update February 2015

What’s Next For Stocks?

It seems we’re at something of an inflection point for stocks. The high volatility period has mostly passed by, although volatility levels are more elevated than in the past few years.

We could be seeing a new volatility regime, where VIX levels settle into a higher low than what we’ve been used to. This is a likely consequence of the global economic environment as well as other geopolitical risk.

Meanwhile in the US, things are still looking up. The S&P 500 is up about 2% on the year and is sitting at new highs. The Russell 2000 (our benchmark for small caps) is also up 2% on the year.

So far, it looks like small caps are in better shape this year than last.

The US economy is showing mixed results in recent weeks. The overall economic picture seems mediocre. However, employment numbers have been very positive. As long as people are getting hired, there’s not too much to worry about.

All eyes will be on the Fed in the coming weeks. When will interest rates go up? Will it be in 2015? The central bank will surely be paying close attention to wage growth and inflation numbers.

For now, I wouldn’t expect a rate hike anytime soon. The biggest factors impacting stocks will still be geopolitical for the time being. Still, it pays to pay attention to economic reports are they are released.

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.

. . . . NetSol Technologies (NASDAQ: NTWK) – Hold

NTWK, a provider of leasing and finance software, has finally had a breakthrough for us. The share price has jumped 25% over the last week. At the time of this writing, our position is up 69%.

The company finally had the killer quarter we’ve been waiting for. In the most recent quarter, revenues grew nearly 50% year over year. The company’s cash position also climbed significantly. And, NTWK signed two new agreements in Europe.

Looks like NTWK is definitely headed in the right direction. Let’s continue holding this one for even bigger gains ahead.

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

One of the reasons I liked GLUU so much was because of potential new game releases. The company was sure to find ways to capitalize off the success of its Kim Kardashian game.

And sure enough, GLUU is making a splash by signing Katy Perry to a game deal. Whatever game Katy and GLUU come up with is sure to be an immediate hit.

The share price is already up 34% this year, and our position is currently a 44% winner. Hang on to the shares as there’s still plenty of upside potential remaining.

. . . . Marchex (NASDAQ: MCHX) – Buy up to $4.50

Our latest trade, MCHX, is off to a good start. The stock has already been a 15% winner, albeit for a brief period.

This is just a reminder that the company has already issued a dividend of $0.02 per share. This dividend should have been issued to you if you became a shareholder by February 6th. The dividend issuance effectively lowers our buy price to $4.06.

I like the direction the stock has taken so far. And, I think we could be in for good things with this position. Go ahead and buy the shares if you haven’t yet done so.

Action To Take

• None at this time.

Category: PSB Portfolio Updates