PSB Portfolio Update September 2014
September 18, 2014
What’s Next For The Market?
US equities have maintained their bullish pace since our last update in August. Yes, there was a bit of selling between then and now. But overall, the S&P 500 is up roughly 2% in a month’s time. And, it’s nearly a 10% gainer for the year.
Small caps haven’t fared as well, which unfortunately is more relevant for our portfolio. The Russell 2000 is basically unchanged since our last update and is also flat on the year.
Still, equities have held up overall. Geopolitical turmoil has settled down somewhat, though there are still several tense situations across the globe.
The next big international event is tomorrow’s results of the Scottish independence vote. The results shouldn’t have too much of a direct impact on US stocks. However, it could roil the currency markets quite a bit, with the potential for a spillover effect.
The US economy continues to chug along at a moderate pace. The economic news has mostly been good. The Fed is winding down its bond buying program and still doesn’t see the need for a rate hike anytime soon.
Finally, the biggest corporate/product news for the month was the unveiling of three new Apple (AAPL) products. The two new iPhones go on sale tomorrow and preorders for the devices have exceeded 4 million. That’s the most so far for a new iPhone.
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.
. . . . NetSol Technologies (NASDAQ: NTWK) – Hold
That’s quite a nice start to our NTWK holdings. The shares have already jumped 11% higher from our entry point earlier this month.
Essentially, NTWK’s recent earnings results were more optimistic than many thought they’d be. For one, the company generated around $19 million in cash from operations for the year. Plus, management reminded us they just signed an impressive $16 million contract.
As I mentioned in the trade issue, the lawsuit is groundless and a waste of time. This company is in great position for a stock price resurgence – especially once it breaks through the 50-day moving average.
With the recent climb, we’re moving NTWK to Hold.
. . . . Profire Energy (NASDAQ: PFIE) – Buy up to $5.00
PFIE continues its rollercoaster-like ride over the last couple months. The stock shot up to a high of $5.40 very briefly (for a high of 20% gains on our position) before pulling back sharply.
The initial gains in the share price were due to strong earnings. In particular, net income climbed from $1.6 million to $2.2 million over a year period. Revenue also posted a strong 83% gain.
On the other hand, the stock’s pullback is due to the declining price of oil (which is hitting several companies in the industry hard). Basically, the share price is down due to macro factors, which are out of the company’s control.
With the company itself doing fine fundamentally, we believe this is a short-term pullback. For those who haven’t purchased the shares, you can still do so up to $5.00.
. . . . Odyssey Marine Exploration (NASDAQ: OMEX) – Hold
Normally, we would have already sold a stock which has dropped as much as OMEX. However, this company is an exception.
You see, OMEX is going to move in gaps. As I mentioned when we first bought this company, because of the nature of the business, it tends to be an all or nothing sort of investment.
It’s going to take another major discovery or shipwreck recovery for the stock to climb. However, that could happen at any time. And when it does, the stock won’t just climb… it will gap higher.
Let’s continue to hold OMEX for the next big catalyst.
Action To Take
- Move NetSol Technologies (NASDAQ: NTWK) from Buy to Hold.
Category: PSB Portfolio Updates
