PSB Portfolio Update January 2015

Volatility, Crude Oil, and Europe

Just looking at the numbers today, it may seem like not a lot has happened in the stock market this year.  After all, the S&P 500 is basically flat on the year.  However, looking at the action so far in January paints a different picture.

In fact, stocks have been whipsawed around all month.  The S&P 500 chart looks more like a rollercoaster track than a benchmark index.

It’s also the first time in a while we’ve had a sustained level of volatility.  Granted, market volatility isn’t off the charts.  But, it’s certainly higher than we’re used to (in recent years).

The biggest catalyst for volatile markets has been the plunge of crude oil prices.  The price of crude has settled in between the $40-$50 range, but remains volatile.  And, the price is a full 50% lower than it was a year ago.

Supply and demand fundamentals suggest oil could be cheap for months… although who knows where it will actually bottom out.

Meanwhile, the Eurozone continues to fight depression-like conditions.  Concern over Greece has surfaced again.  And, Switzerland shocked the world by removing its Euro currency peg.

For the most part, the US is remaining resilient.  Economic data has softened somewhat from last month, but is looking robust overall.  For the moment, there’s not a lot to worry about in regard to the US economy.  And once again, cheap gasoline is generally a very good thing for the average consumer.

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.

. . . . SkullCandy (NASDAQ: SKUL) – Sell

We’ve had SKUL in our portfolio for about a year and half, and it’s been a great investment.  At the time of this writing, our position is up 84%.

While I still like SKUL, I’m a little concerned about the competition in the space.  There is especially reason to worry with Apple (AAPL) aggressively entering the industry.

Let’s go ahead and cash out now and collect our excellent returns.  Sell your SKUL shares here.

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

As I mentioned last update, MFI is getting acquired so the share price is pretty much locked in.  We were simply waiting for the final dividend in order to sell out our position.

Well, the dividend hit this week (for $0.08) and lowered our entry point to $7.73.  That means we’ll make 31% on this trade.  That’s not too shabby for an 8-month return.

With MFI getting purchased and the final dividend being paid, there’s no longer a reason to hold the shares.  Let’s sell now and collect the profits.

. . . . Art’s-Way Manufacturing (NASDAQ: ARTW) – Sell

We’ve given ARTW a year to perform and it’s mostly been a disappointment.  The stock has basically been stagnant except for a few blips here or there.

With commodity prices on the low side (and no commodity boom on the horizon), I don’t see ARTW getting a significant bump in revenue anytime soon.

Let’s sell our ARTW shares here and conserve our capital.  We’ll find a more exciting opportunity to invest in.

Action To Take

• Sell SkullCandy (NASDAQ: SKUL)
• Sell MicroFinancial (NASDAQ: MFI)
• Sell Art’s-Way Manufacturing (NASDAQ: ARTW)

Category: PSB Portfolio Updates