PSB Portfolio Update October 2015

| October 15, 2015

portfolio update

Watching This Market Closely!

If you watch the talking heads on TV, you’d get the impression the economy is doing ok and the markets are rebounding off the lows.

While I’m all for positive thinking, right now we have to be super careful.

Look at the Russell 2000.

We’ve talked about this chart hundreds of times… it’s a great proxy for the small cap / penny stock universe.

Russell 2000

What you’ll notice is the market has been making lower lows… first in late August and then in late September.  Now when I look at this chart, my question is, will the market make another lower low?

I’m not 100% convinced we’ve put in the lows… YET.

I’m watching this chart like a hawk and we’ll see what happens next.

Let’s take a look at our positions…


Position Update

. . . . Sandridge Energy (SD) – BUY

. . . . Magnum Hunter (MHR) – BUY

. . . . Halcon Resources (HK) – HOLD

. . . . Energy XXI (EXXI) – HOLD

. . . . Linn Energy (LINE) – BUY

This is our newest trade from just a few weeks ago.  We’re taking a big position in the energy field, and to be honest, I think we might have timed it right.  If the market holds tight… and oil prices keep from falling further, we could be positioned for some monster gains!

Both HK and EXXI have crossed above our buy-up-to price, so let’s move them to a hold.  We’re up 54% and 76% on these trades respectively!  Nice work everyone.

Remember, with stable oil, these companies have a fighting chance of making huge returns!  

. . . . VAALCO Energy (EGY) – Hold

This stock is going to get interesting.  An activist shareholder in “Group 42” announced they acquired 11.1% of the shares and sent a letter to management all but demanding changes.   

Will the shake-up work?  

It seems like they’re pulling a page from the playbook of great corporate shake-up artists like Carl Icahn.  I think if nothing else, the shake-up will encourage management to cut costs and more tightly manage the business.

We’re moving this to a hold, and I’m excited to see what happens next.

. . . . Huttig Building Products (HBP) – BUY

No new news… but the housing market is still strong.  You still have a chance to get into Huttig… buy up to $3.52.

. . . . JAKKS Pacific (JAKK) – Hold

Continue holding tight to this winner!

. . . . Marchex (MCHX) – Hold

No recent news on Marchex, keep holding tight.

. . . . Gain Capital (GCAP) – Hold

GAIN updated their monthly trade volumes and September numbers are lower than August… not a good trend.  But numbers were not bad enough to warrant exiting the trade.  Hold tight for now. 

. . . . NetSol Technologies (NTWK) – Hold

Nothing new in the news cycle on this stock… Keep your eye on the markets!


Action to Take

  • Move Halcon Resources (HK) from Buy to Hold
  • Move Energy XXI (EXXI) from Buy to Hold
  • Move VAALCO Energy (EGY) from Buy to Hold

Category: PSB Portfolio Updates

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