Tag Archives: portfolio

The V20 Portfolio Week #16: A Slight Rebound

The V20 portfolio is an actively managed portfolio that seeks to achieve an annualized return of 20% over the long term. If you are a long-term investor, then this portfolio may be for you. You can read more about how the portfolio works and the associated risks here . Always do your own research before making an investment. Read last week’s update here ! Current Allocation *Only available to Premium Subscribers Planned Transactions *Only available to Premium Subscribers ————- The market jumped towards the end of the week. After suffering steep losses, the S&P 500 climbed back to end the week with a gain of 1.4%. The V20 Portfolio also appreciated, rising by 4.4%. Portfolio Update As volatility picks up, I made some sizable changes to the V20 Portfolio over the past couple of weeks. Since the beginning of 2016, more than a third of the capital has been shifted. However, the V20 Portfolio did not exit existing holdings or initiate any new positions this week. Today I’ll talk about one of the less discussed stocks in the V20 Portfolio. Intelsat (NYSE: I ) I’ve been doing an injustice to Intelsat by suggesting that Conn’s was the cheapest stock in the V20 Portfolio. Intelsat is currently trading at a P/E of less 2x and has a massive backlog (~$10 billion) that quadruples the annual revenue. Furthermore, EBITDA margin has been running at an absurd rate of 77%. Not only is it cheap from a quantitative perspective, its business is also highly durable. There are a limited amount of satellite slots available in the world and Intelsat holds some very valuable space real estate. A high margin business with a sustainable competitive advantage. What can go wrong? The problem is leverage. The company had $15 billion of debt at the end of the third quarter. There are two problems with leverage. For one, it magnifies losses when things cool down. This won’t be a problem for Intelsat due to its backlog. The second problem is more applicable: liquidity. When you hold bonds, you usually rely on the capital market to refinance when they mature. Given what has transpired in the junk bond market, there is significant uncertainty regarding the demand for the bonds when they mature. Of course, if bonds can’t be repaid, the company may have to issue additional equity, diluting shareholder value; or worse, as the equity may get wiped out in a restructuring. To summarize, the problem with Intelsat is not that its business is in any danger, but the concern regarding liquidity. Assuming that the credit market is rational, I believe that this junk bond “crisis” (largely caused by the collapse of the energy industry, i.e. nothing to do with Intelsat) should blow over. Looking Forward The recent rally does suggest that investors have become more bullish. Although how the market moves has nothing to do with the value of the V20 Portfolio’s holdings, a more bullish sentiment will nevertheless be beneficial for all investors who are long, including us. In any case, market volatility has returned, and I expect the V20 Portfolio to be more volatile in the coming months as bulls and bears battle it out in a war that does not particularly interest us. Performance Since Inception Click to enlarge

Time To Review Your Portfolio? Here’s A Forecast Of Longer-Term Returns (Video)

With the increased market volatility right now it’s easy to lose focus of the bigger picture. But with a new year, it’s a good time to take stock of your entire portfolio and put new investment goals in place. To help with this MaryAnn looks at what Canadian investors can expect in the longer term with Derek Burleton, Deputy Chief Economist, TD Bank Group.

The V20 Portfolio Week #15

The V20 portfolio is an actively managed portfolio that seeks to achieve an annualized return of 20% over the long term. If you are a long-term investor, then this portfolio may be for you. You can read more about how the portfolio works and the associated risks here . Always do your own research before making an investment. Read last week’s update here ! Current Allocation *Only available to Premium Subscribers Planned Transactions *Only available to Premium Subscribers ————- The market has continued to decline over the past week as stocks both good and bad sold off. Most of our holdings lost value, mirroring the broad market decline. During the week, the V20 Portfolio declined by 4%, underperforming the S&P 500, which dropped by 2%. Portfolio Update Conn’s (NASDAQ: CONN ) Conn’s has continued on its downward trajectory, surpassing its low in 2015. This is quite strange as the company has hit on almost every single catalyst since the V20 Portfolio took a position in early 2015. The securitization transaction has been completed, more stores have been added, and shares have been repurchased. Of course, we can’t count on the market waking up any time soon, but what we can do is continue to take advantage of this opportunity. MagicJack (NASDAQ: CALL ) Conn’s wasn’t the only casualty – m agicJack was another loser. If valuing Conn’s is like riding a unicycle, then valuing magicJack is like riding a tricycle with two extra sets of training wheels. At the end of the third quarter, the company had $80 million in cash (65% of market cap) and no debt. Furthermore, the company is generating around $5 million of cash per quarter and it has entered into multiple partnerships to expand, which will generate incremental cash flow to shareholders at minimal cost. Of course, there is no guarantee that the company’s partnerships will bear fruit, but the core of the business remains a stable cash generator. Spirit Airlines (NASDAQ: SAVE ) Spirit Airlines held up relatively well, vastly outperforming the broad airline index. Below is a chart of the stock’s performance since the V20 Portfolio took a position. Click to enlarge It’s certainly a crazy world right now. One would expect that lower oil prices (leading to lower fuel prices) will encourage travel and benefit airlines, but clearly something else is on everyone’s mind right now. Thankfully, the market seems to be recognizing the company’s “cheapness” relative to its peers. Growth remains in place and the company is still one of the most affordable airlines around. Looking Forward After exiting one of the positions, the V20 Portfolio ended the week with over 20% in cash. This provided us with plenty of dry powder . Unfortunately (or fortunately), Conn’s remains to be one of our biggest positions. Considering retail’s cyclical nature, there’s certainly room for the stock to fall further purely based on investor sentiment. Furthermore, the company’s complicated business model may continue to obscure its value to investors. However, none of the above impacts its intrinsic value in any way . The V20 Portfolio will continue to monitor the situation and pick up shares at opportune times. Performance Since Inception Click to enlarge