PSB Portfolio Update November 2013

November 21, 2013

Fed Watching

After the volatile month of October (due to the political mess), it’s nice to see November so far has been a relatively calm month.  Earnings season is mostly over and equities have generally done well.

Since our last update a month ago, the S&P 500 has gained roughly 2%.  But, it’s up an impressive 27% for the year.  It’s certainly been a good year to be long US equities.

Meanwhile, the Russell 2000, a good benchmark for small cap stocks, has dropped about a percent over the last month.  However, for the year, the index is up 31%.  In other words, small caps have generally outperformed large caps to date.

From here on out – at least until early 2014 – investors will be closely watching the Fed. Moreover, the markets will scrutinize any economic data possibly impacting the Fed’s decision on when to reduce bond purchases.

So-called tapering has become a huge deal to equities, as the Fed’s monetary stimulus programs have been a huge boon to asset prices.  As soon as the Fed starts tapering, stocks will likely react negatively – at least at the start.

Ultimately, good economic data will be good for the markets.  After all, don’t we want the US economy to get back to its growing ways?  In addition, interest rates are likely to remain at historically low levels for quite a bit longer.

Overall, our portfolio is doing well. Let’s take a closer look at some of the highlights.

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) – Buy up to $5.90

After trading in a range for several months, AWRE finally looks like it has broken out to the upside.  Our position is now an 11% winner.

Here’s the deal…

Aware’s recent quarterly results weren’t the best, but investors appear to be encouraged about the direction of the company.  While revenues and net income declined year over year, it’s almost entirely due to a strategic shift in the company’s business model.

The company is shutting down its DSL service assurance business and focusing on growing its profitable biometrics business.  Given the rapidly increasing popularity of biometrics (e.g. iPhone 5s) and the decline of DSL technology, we think this is a smart decision.

If you haven’t yet done so, now’s a chance to buy shares of AWRE up to $5.90.

. . . . Aceto (NASDAQ: ACET) – Hold

ACET has been one of the top stocks in our portfolio for quite some time.  In fact, the shares recently hit a portfolio-high of $20.43, good for a 161% gain.

The most recent jump in the price was due to the company beating Q3 expectations.  So, not only is the company growing like crazy – it also offers a dividend!

Between business growth and what could possibly be a growing dividend, there’s no reason to take profits on ACET just yet.  Keep holding for bigger gains.

. . . . Carriage Services (NYSE: CSV) – Hold

Speaking of highly successful, long-running portfolio holdings, CSV continues to shine for us.  The death care services company continues to expand operations… and offer a dividend each and every quarter.

In fact, the company just issued another dividend on November 8th.  That brings our cost basis down to $5.17 per share.  At the current price, that means we’ve gained 257% on the position!

Let’s continue holding CSV and keep collecting those dividends every quarter.

Action To Take

• None at this time

 

Category: PSB Portfolio Updates