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Portfolio updates

June 6, 2014 Leave a comment

I’ve been doing quite a bit of trading in the last month or so. Although the trading has been around repositioning how the portfolio is setup, not about finding new buys. Currently my portfolio has been largely setup towards these long term plays, where the catalyst might take years to work out. My two biggest positions are BAC Warrants and XPEL. Both of these are long term plays that will take years to work out. Although I’ve been finding situations that can have good returns in short-term, 1 year or less. Over the past few months I’ve been wanting to switch the portfolio position to become a 50-50 split between long term plays and short-term situations. This is similar to how Buffett ran his partnership.

So in the last month, I’ve been moving capital out from longer term plays to buy these short-term plays. Currently the portfolio is at a 70-30 split, leaning towards the longer term plays. Getting to the 50-50 split will take time, as I will wait for these positions to work out, before I move capital around. Although I did trim my position in BAC and XPEL to put more capital to work at shorter term situations.

Recently, I’ve bought a new position in Derma Science (DSCI). I’ve been watching this company for a while but couldn’t buy because the share prices were high. Although after Q1 numbers came out, the stock dropped from $14 to $8ish. I built up a small position and I’m looking to buy more. The shares have started to move up, now over $10. So I will be patient until it gets into low-$9s. The company has a CEO who has been turning around the operations. There is a growing business which is getting masked by another mature business. Also, the company has a drug going through Phase III testing. If the drug works out then the upside is huge. But even w/ a failure on the drug the company is worth lot more than current market price.

I’ve also started buying 1347 Insurance (PIH). This is a spin off from KFS. The company is focused on writing home insurance policy in specific states where the CEO and management has strong experience. The company is currently doing a run-rate of $16M premiums annually. Although, the company will be at $40M+ run-rate by year end and should be doing $100M-500M in 4-5 yrs. If the company can write profitable business, this is going to be worth a lot more than the current $30M market cap. The company is doing a capital raise to get cash to expand in Florida. The capital raise is expected to be priced on Monday and I expect it to be priced less than current market price of the shares. So I expect the shares to drop and it will provide an opportunity to build up a full position.

Categories: Updates