MY INTERNAL PROCESS, NAKED.
There is a certain sense of worth that can be derived from discussing openly errors that have been made in one's own analysis. I have purposely made the past few years of blogging and Tweeting about the markets as transparent as possible. I date everything I do in terms of chart work. I provide monthly updates as to my opinions of each investment I have discussed. I provide detailed research of each new investment that is made. With this type of transparency readers get to view what have been mostly good results, with a sprinkle of flea flickers that have been bungled along the way. I have the need to discuss the bungled plays of this past year due to the fact that I am facing a slight bit of mental anguish regarding a decision that was made in Q1 of this year. By pouring out my heart and soul it should act as a type of exorcism that will abolish this anguish for good while creating understanding of why such an error in judgement took place. This year there hasn't been much that has gone wrong. Nearly every name that I have profiled in published research is positive with the exception of JMBA. Leave it to the most simple business concept of all - making juice from stuff that comes out of ground - to ruin what would have been a perfect record in 2013. Of course, the S&P is up near 30% this year. It is difficult to go wrong with that type of backdrop for decision making. There has been individual analysis that has been faulty. AAPL certainly didn't go the way I expected. If it was left to my analysis the unimaginative investors who choose to have AAPL as part of their portfolio would have been looking at a $350 stock price. I can't have ill will towards a company that is so widely held during the holiday season, however. Anything that allows for an increase in quality and quantity of gift giving because of the magic of the wealth effect can only be praised. It is a virtuous cycle of monetary delight...until it isn't. What has been the most costly (back to my ill fated decision in Q1) was the dumping of MITL at near breakeven in the $3 range. I profiled MITL in a research report published January 14th. In the final paragraph of the report I said: A $6 stock price can very simply be attained by remaining consistent in their current efforts. Between $10-$12 will take place over the next 12-24 months on any perceived acceleration of their initiatives, which I believe will...
NOVEMBER PERFORMANCE SUMMARY AND LOOKING AHEAD TO DECEMBER
*This is my monthly letter to investors summarizing the month of November. The full PDF version of the summary, including managed account performance data as well as a few added components is only available via email. Return data will no longer be published as a part of the summary. If you would like to be added to the monthly email list, please contact me at mail@t11capital.com - Largest winning position in November: CIDM +28.49% – Largest losing position in November: EVOL -4.22% – New additions to portfolio: KCG – New liquidations in portfolio: SBCF Portfolio Highlights For November – CIDM was the largest gainer in the portfolios for the second month row, exceeding October's gain of 19.33% to finish November with a gain of 28.49%. The primary driver behind the surge in November was CIDM's earning release on November 13th. The earnings report and the conference call that was to follow didn't contain any information that was different than what was said after October's conference call in which CIDM management discussed the acquisition of Gaiam. It simply seems that the market is much more receptive to CIDM as a company now that they have reiterated the projection of near $100 million in EBITDA for fiscal year 2014. The market is realizing the transformation that has occurred here, showing that recognition the best way its knows how: Through an increase in share price. The CEO of the company mentions Lions Gate Films (LGF) on almost every conference call as a model for what CIDM can become. In the November conference he had this to say regarding their recent acquisition of Gaiam compared to LGF: In a lot of ways, we always like to use Lionsgate, as a parallel. I think I said that on the last couple of calls. The real transforming event for them wasn't when they ultimately did the Hunger Games, and bought Summit. It was back in the mid 2000s when they acquired Artisan and became the 800-pound gorilla among independents and physical distribution, and that's -- we'd like to compare our acquisition of Gaiam to that. Bear in mind that LGF was once a two dollar stock without much recognition in the marketplace. The path to value creation for CIDM can indeed take the same path as LGF over the long-term given the business model that has been created here, capitalizing on (1) an experienced management team (2) partnerships with virtually every major retailer and content provider that exists (3) licensing deals with companies like NFL, WWE and National Geographic that give the company immediate clout (4) a library of 32,000 film and TV episodes. It can't...
3 CHARTS DEMONSTRATING DEFIANCE, LEADERSHIP AND DISCIPLINE FOR THE WEEK AHEAD
click chart to enlarge
THERE IS GOOD REASON TO BE LOOKING AHEAD TO THE FIRST HALF OF 2014 RIGHT NOW
*This is from the "Looking Ahead" section of the monthly summary I am currently working on and will be posting tomorrow. As far as comfortable market environments go, the stock market of 2013 has been a series of mattresses that investors keep rolling over onto as each month passes. The daggers that often times fall from the ceiling when investors are most unsuspecting seem to have been put away as the market has humbled itself before the feet of investors in an expression of sorrow after the torturous decade that was 2000-2010. To over-think a market of this nature is to misunderstand the market at its essence. There are those who will always be involved in the minutia of understanding every component that creates an uptrend, which invariably leads an investor astray. The problem as it will always stand is that Wall Street is filled with the over-thinking type who has been born and bred into an environment of detailed analysis. That detailed analysis doesn't hold up in dynamic environments. This is the exact reason so few have embraced this uptrend and furthermore, so few have been calling for it over the past few years. There was no piece of traditional analysis available that would have pointed to such an outcome. It was an outlier that investors both amateur and professional are unable to recognize. If they are unable to recognize the beginning of such a bullish event, how then can market participants depend on these same individuals to provide guidance going forward? It is like an evolutionist being the keynote speaker at a religious conference on the topic of the location of the Garden of Eden. And that is exactly what market participants face going forward in the various voices that are attempting to guide asset allocation here: A group who didn't recognize anything leading up to this point now embracing the bullish movement. This type of misguided guidance, if you will, creates the various stages of an uptrend. You will notice that during the initial phase of the uptrend meaning the past 12-24 months, there has been very little in the way of downside volatility. There has been very little in the way of a full embrace that could lead to downside volatility. Severe downside volatility occurs only when one of two things occurs: 1. A macroeconomic or geopolitical shock takes place 2. The embrace of an uptrend takes place led by those who were skeptical at the beginning and often times throughout the middle stages of the uptrend. When those types who were utilizing erroneous analysis to judge a market finally decide to toss their ideas to...