My value plays from February on are -0.87%, and one is locked into an acquisition that would take me break even. That doesn’t include ATVI, which was just a merger arb play. I’m currently -3.45% on ATVI vs -8.78% for the market since then. Actually leaning towards sizing up the play on ATVI soon.
It’s hard to compare exactly since I entered the group of value stocks over a period of 3-4 trading days and added a couple others later and increased my holdings in some, but the S&P is down about 11% to 12% since then. Lowest would be 10.8%, highest would be 12.8%. So I’m beating it by 10-12%.
I added UMC the other day at $8.02, by the way. Hadn’t posted that one yet.
Oh also I mentioned KT in that old post you quoted and I didn’t include it in my update on my value plays since it predates the most recent batch. I bought KT on 2/11/21 at $11.23.
It’s now at $14.68.
The dividend (annual) was $0.625 after foreign taxes/fees.
So I’m +36.28% including dividends vs the SPY being up about 4.6% including dividends.
Still like it, may exit late this year. They partially own two companies that are IPOing this year and those IPOs could be major catalysts. I’m eyeing $18 to $24.
The annoying thing is that the dividend is annual, so I could end up holding it for like 21 months and only getting one dividend. But obviously happy with the performance thus far.
I also piled into it in my HSA as a dividend capture play - I was willing to hold twice as much for as long as it took for the price to recover because I was extremely confident it was underpriced. I’m basically making what I view as extremely low risk plays in the HSA and they’ve been working very well so far. Got 4.55% on the dividend capture from 12/28 to 3/22 (S&P -5.44%) then piled into IBA as a very safe merger arb play at $43.10 on 3/28. It’s +7.5% so far vs -11.9% for the S&P.
Put the KT dividend payout into ATVI on 5/5 at $78.645. It’s -1.16% vs -2.98%.
Overall the HSA is +12.75% since 12/28 vs -15.5% for the S&P including dividends.
Not bad at all for 4.5 months!
I started a spreadsheet to track my full history of individual trades, separated by: value, arbitrage, and macro.
Took me a while to go back and get everything on the record and get the historical S&P data but this way I can make informed analysis of my results.
Alright, I’m curious what sort of answers I’ll get to this question other than the two that I think are obvious.
What big companies do you think the market broadly considers most unlikely to lose > 20% of their current value? You can also answer what you think, but I’m mainly looking to see what people think the market thinks.
On Sunday/Monday I’m going to start looking for a few stocks to consider buying puts on to secure a long/short position for my portfolio. I want the cheapest possible long-dated puts to protect me from like a 25 to 50% crash from here, and I assume if the whole market crashes that even the best of the blue chips will go with them. So the answers to this question will help me screen for some candidates that I might be able to buy insurance against cheaply.
My current #1 answer is also a company I think is surprisingly overvalued when you look at their balance sheet now versus a few years ago, but I don’t want to spoil anyone’s answers.
Seriously, if you want to do this kind of stuff go to the Crypto Discord thread where you at least playing in markets where you might have a chance.
Not only is the competition much smarter in real finance, you are at a massive information disadvantage. Lol at thinking real money is to be made in gleaning public disclosures.
Like I know you said you didn’t mess with the Musk/Twitter stuff. But just look at how Musk can walk around comfortably while openly and brazenly violating securities laws and think about what others must be doing on the down low.
I appreciate the sentiment, and perhaps I’m just going to be another in a long line of people who can’t beat the market. But so far my history is that I can beat the market and by a somewhat significant margin so far. The sample size isn’t there yet (just under 50 different stocks), but I really want to find out - I enjoy it, I’m wired to find some of this stuff interesting that others find boring, and if I can beat the market it would be really fun for me to manage my portfolio instead of buying index funds.
Options, especially puts, could be a very different story, but I don’t want to be on the sidelines completely, and I want a little insurance if I can find it at a decent price. If I can’t find at least 2-3 companies in different sectors to buy puts on so that it’s at least a little diversified, or if the math isn’t there (ie it’s too much drag on the portfolio), then I won’t do it.
Unfortunately I don’t have much time to spend learning a new thing or trading it daily. Spending 1-2 days every month or two finding value investments, then monitoring the results and earnings reports and exiting at a good time is manageable.
I’m definitely at an information disadvantage overall, but I have a few advantages on my side:
I can buy stocks with very small market caps that aren’t worth anything to the people managing money for a living who have the major information advantage. They aren’t even looking at these, so I’m not competing with them.
I don’t have to worry about attracting money in to manage, or keeping it onboard. As a result, I don’t have to worry about short-term results. If I think taking a guaranteed 14% return over the next year on a trade is going to beat the market even though the market returned 27% next year, I don’t have to explain that to annoyed clients.
There are occasionally some short-term trades available to me for a very low risk 1.5% to 3% return in just a couple hours for amounts of money that matter to me but that aren’t even a rounding error to even a small hedge fund, which I assume is why they’re available to me.
Yeah I’m very aware, I mean even a couple of my “wins” in the current crop of investments involve getting somewhat screwed in the process by larger shareholders taking over at a far-too-low but still way more than I paid for it price. I expect the board to screw the smaller shareholders, but it is what it is. As Omar would say, “It’s all in the game, yo.”
There are obviously investors who can do this and beat the markets. There always have been. Maybe there will come a time when the algorithms are too good, and they’re even going after the smaller stuff, but I don’t think that time has arrived yet. I know the odds are against any individual being one of them, and that applies to me too, but I think I have the skillset to be good at this and I want to find out.
Dude there are hundreds if not thousands of firms staffed with very very very smart people from top schools who work insanely hard and exactly one, maybe two has shown the ability to consistently outperform index funds. It’s insane to me that you can’t see this.
Let me preface this by saying that I agree with you in principle. I’m a basic index fund bro.
However, the advantage that Cuse has is his small bankroll. Beating the market with a massive fund has a much higher degree of difficulty than what Cuse is trying to do. So the comparison you’re making isn’t quite apples to apples.
There are funds of sizes across the spectrum from
one man shops to mega firms doing exactly what he is doing. It’s not true that there is unpicked low hanging fruit out there.
This. I mean, Warren Buffett is on the record within the last few years that he thinks smart value investors on small bankrolls can return about 50% per year until they get up to about the “millions to many millions” range, then it falls off dramatically.
Perhaps he’s blowing smoke, but it doesn’t seem to be his style, nor do I think he has much reason to do so at this point.
Right, my favorite value stock right now has a market cap of $52M.
I get it. I think you’re really unlikely to beat the market on a risk-adjusted basis, but I also understand that analyzing and investing in individual stocks can be very interesting and if you do underperform the market, it’s likely not to be by too much. So godspeed and I hope you keep posting your decisions here because I find it interesting to watch. (And occasionally tease, like when you were convinced that QIWI held a bunch of US dollars.)
My magic beans comment was specifically about options, and what it sounded like you were looking for. Here’s how I interpreted your goal:
Buy puts to serve as portfolio insurance against significant losses.
Instead of buying puts on the market, which would likely be expensive, instead buy puts on individual stocks that are perceived as having a lower probability of significant declines. Those would be less expensive.
The magic beans comment was because these two are more or less conflicting goals. If you end up buying these cheaper puts, you’ll be buying puts on stocks that, in all likelihood, won’t experience major declines even if the market does. So when the market does experience the big crash, your puts won’t fully protect you from the overall market fall. But maybe I’m misunderstanding your goal. Or I’m just aggressively disagreeing with your assumption that out of the money put options for blue chips are incredibly cheap relative to their actual likelihood of paying out.
And of course, I’ll repeat the thing that I often say, which is any strategy that you’re tempted to do with options can almost always be replicated more cheaply with just the stock. (It’s useful to understand the notion of synthetic calls and puts.) And in this case, I’m confident that’s true. If you want to protect your portfolio against the risk of a major drop, just hold a larger cash allocation instead of buying puts.