Much to my surprise I haven’t received any feedback on my piece regarding Bitcoin. I believe that could be do to the fact that most people who receive my newsletter simply file it into their trash folder without ever glancing at what was said. Regardless, I will continue to send out my investment ideas and thoughts because no matter who reads it, it is what I love to do. Since my last newsletter, the Voyager Fund added a few positions which we will get to later.
First, I would like to talk about the losers of the Voyager Fund and why they are losing currently. Out of the 8 positions in the Fund (as of Nov. 12th), five of them are in the red. This isn’t a concern to me. Obviously I would love for each of my picks to be winners right from the entry, but that isn’t always the case, and it is foolish thinking to believe the contrary. Like I have mentioned before, most of my picks will turn out to be small losers. It is with the ones that I hit it big that make up for the small losses I suffer along the way, or what I like to call the ante in to playing the game of financial market speculation.
My losing positions are as follows: Long USOIL, Long USD, Long SRRA, Short EURO, and Short JNK. The long position in US Oil was triggered via a breakout of price resistance on the weekly charts, as Oil broke a key resistance level above $52. If you remember, I went long a basket of oil stocks, and all of those were hit for either small gains, or small losses (virtually a scratch play). I chalk that up to moving stops up too early and missing out on reversals from price declines.
Going forward I will be cognizant of where I keep my stops as to make sure they are at technical levels that prevent a premature exit. I am still bullish on my long-term position in oil. I entered on the weekly chart break, and my stop loss is set so that if I am wrong, I will be out of the trade and would be able to potentially take the short side of the oil price decline. Furthermore, the COT data shows an increase in positions for both the Producers & Users as well as the speculators. This is a good sign for the long thesis.
After cashing in big on my short USD trade a couple months ago, I reversed my position and went long. My thesis behind going long the USD is more of a derivative thought process. What do I mean by that? It is similar to second – level thinking. I am trying to think of how other people are thinking about things. The USD is looked at as the safest currency in the world, and a safe haven in times of crisis. Because of this logical thinking from the masses, it makes sense for me to go long the USD despite its overall lack of value as a currency. I like to leap on the backs of giants, one of which is Jim Rogers. Jim Rogers says (and I’m paraphrasing here), that the dollar will go up and turn into a bubble before it collapses. Whether he’s right or he’s wrong, I believe the probabilities are in his favor.
Moving on to one of my long equity positions, SRRA hasn’t performed like I thought it would after breaking out of an inverse head and shoulders patterns on the weekly charts. SRRA is a healthcare drug company that is trading at a negative Enterprise Value, and trading about half times book value. Although I am down in the position right now, I have no reason to not be bullish on the company. SRRA released its Quarterly Earnings on the 8th. Here are some of the earnings report highlights:
“- Chk1 inhibitor SRA737 Monotherapy trial expanded to eight leading centers across the UK – – On track to provide planned SRA737 Program Update in February 2018 – – $107.8 million cash expected to fund current operating plans through approximately mid-2019.”
When looking at their financial numbers quarter over quarter, the trend is continuing upwards: “For the three months ended September 30, 2017 , Sierra incurred a net loss of $10.0 million compared to a net loss of $15.2 million for the three months ended September 30 , 2016. For the nine months ended September 30, 2017 , Sierra incurred a net loss of $31.4 million compared to a net loss of $38.6 million for the nine months ended September 30 , 2016.” In summary, I like their cash position, I like the trend in their financial statements, and the charts are still not against me.
Going back to my currency positions, I took a short position in the Euro against the dollar as a basket type trade in tangent with my long USD exposure. I entered on a technical breakdown in price on the daily charts, and the charts are still in my favor. My final losing position is my short position on US Junk Bonds. JNK had a tremendous breakdown technically on both their weekly and daily charts. I entered the short position at the end of the week, and right now it is too early to say how the trade will turn out. Right now stops are set at $38, which is well off the current price of $36, and if hit, would indicate that my thesis was incorrect.
KORS Continues to Kill It
KORS is turning into that big trade I keep talking about that makes up for all the small losses. I entered KORS at 36.38 back in late July. Two strong earnings reports since then, KORS is sitting at 54.71. The position has increased 50% since initial entry, and at the designated stop loss, the worst case scenario would be a near 2% total gain on capital. Here is the notes from my original position entry:
“Risked 0.50% capital ($360). I have already expressed my fundamental interest in the company mainly because I deem it undervalued. I originally entered the trade on a false breakout within a channel, got out, entered again on another false breakout and got out before the heavy selling took place. Is three times the charm? Who knows? That is why I love risk management and limiting my losses first and foremost. I don’t care if I’m wrong two times before, because if I’m right this time, it will more than make up for the combined loss of the two previous trades of ~ 1.0% of capital.”
I risked 50bps of capital on this trade and if it hits my stop loss it will be for a 186bps profit. You can’t ask for a better trade. Once again, I always stress I never know how much of my success is luck and how much is skill and analytical abilities. Either way, this is a big win for the Fund regardless of where prices goes from here.
Long Natural Gas In the Commodities market, I took a long position in Natural Gas based on technical breakouts in the daily chart, as well as confirmation of a breakout in the weekly charts from a wedge pattern. COT reports show that both Producers / Users and speculators are approaching a net 50% size position. On the daily chart, price broke above the 200 MA, and on the weekly chart price broke the 50MA and could very well break the 200 MA starting tomorrow.
As always shoot me an email with any further questions you might have, or any comments you would like me to comment on.