Current Portfolio (8/18)
I think the degree of today’s market decline was overdone. The buyout offers for Potash and McAfee are probably prelude to similar deals; individual stocks are cheap on the basis of value to a private owner. I added a long position in Mass Financial Corporation and a short position in the S&P 500 VIX Short-Term Futures Total Return Index, which is technically like adding a long position. The overall effect was to increase net long exposure to 92.5%. Most of this exposure is represented via short puts on Apple and Citigroup, which I account for at their notional values. So technically I am far from being fully invested.
I’m betting on a short-term bounce in stock prices. With interest rates this low, there’s nowhere else for money to go. As always I will reduce net long exposure as the market rises. What a luxury it is to manage small amounts of capital! I can be nimbler than investors more capable than me.
CASH (~20%)
LONGS (112.5%)
50%
AAPL (short put)
10%
BCO
25%
C (short put)
10%
GGP
7.5%
GLOI
10%
MFCAF
SHORTS (32.5%)
5%
BG
5%
CHCO
5%
DLR
5%
MCO
12.5%
VXX
BCO seems really cheap. What is the bearish argument?
Also, do you have an email address where you can be reached?
BCO is so cheap that I may write a letter to management proposing a share buyback around these levels. Insiders are buying quite a bit… so it wouldn’t be a stretch. If nothing is proposed, I’m going to exit my position.
The bear case is that cash circulation worldwide will decline, which in turn will reduce Brink’s revenue. I think this is a far-off eventuality.
My email address is stableboyselections at gmail dot com. (Spelt out to avoid spam bots.)