Trades and ideas

PE, more LEAPS, cash shells, drugs, some quality and some dirt

I was working on a post on one of our largest names, but given all the action from Tariff Man I decided this could wait a week or so as it would be more interesting to discuss some of our recent portfolio moves.

This is something I intend to do more often in the future and will reflect some of the actions we’ve taken in our holdings.

Now unfortunately we are not allowed to discuss our exact moves. We can’t tell you exactly when we buy or sell something, and how big a position we take. Our compliance would otherwise shut us down immediately. We might buy today and change our mind tomorrow. Please keep this in mind (and read our fun disclaimer).

On positioning

A quick word on positioning.

We run a few bottom-up, relatively concentrated mandates. As a reminder, these positions can roughly be split in three categories:

• Event-driven, shorter-term trades (think our TMM).

• More ‘hairy’ situations, where most of the total return is generated from a normalizing situation which the markets values higher at some point.

• Good, quality names trading on decent multiples. These are generally easy to follow and make for great trading vehicles. Every now and then they have a bad quarter (like every company) and you can almost blindly buy.

You have to view the stocks we discuss across these buckets.

Lastly, you won’t find much discussion here on timing. We adhere to the classic saying that far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves (the great Peter Lynch).

As a consequence, we tend to be early. That’s ok, as our strengths tend to be a strong stomach, the ability to hold (i.c. no clients telling us we need to sell something) and flexibility to move.

That said, let’s take a look at some interesting stuff.