My First Seeking Alpha Article!

I recently became a contributor to seekingalpha.com, a user generated content site for the financial markets. There are a few advantages to working with Seeking Alpha. I can reach a MUCH larger crowd with my ideas, and they allow me to link here, to my blog. Ultimately, I expect my work for them to increase traffic here. Another plus is that they pay contributors for the articles that make it through their editorial process. A little extra cash is always nice. I plan on linking to all of my Seeking Alpha articles from here. I will still be updating this site weekly, posting portfolio updates, and probably some exclusive content once in a while.

My first article recently went up on Seeking Alpha: 8point3 Energy Partners: Waiting For Solar Sentiment To Change. The article is about my view on 8point3 Energy Partners (NASDAQ: CAFD), which I have owned for a while, and how I believe that solar sentiment will eventually become positive again, boosting the stock and its growth. Of course the stock tanked the next day because First Solar (NASDAQ: FSLR) announced that they wanted to sell their stake in the company. I’m still positive on CAFD long term.

As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Specific numbers I reference may not be completely accurate; different online financial sources often have somewhat conflicting information. Verify information via multiple sources you trust. Please READ MY DISCLAIMER. Do not take action in the market simply because of what you read here. I write about what I am doing and what I think, I am not advising anyone to do anything. Make your own decisions, do your own research, and never rely on any single source for information. Some of my ‘picks’ and strategies WILL lose money, that’s the way the market works. I am not a financial professional, do not rely on me as such.

Thank you,

Michael Rowland, the Stock Picking Bartender,

Reno, Nevada

Will the Market Catch Me?

I’m fast approaching the 2-year mark on my stock market project, so I thought I’d take some time to reflect on my experience so far. I find it interesting to monitor my level of engagement with the market. Some weeks it’s all I think about and I spend hours and hours in front of the computer going over my positions and potential positions. But sometimes I do the minimum to simply keep up. I’m not berating myself over this. I have a full-time job and other obligations, as well as other interests. I can’t be ‘on’ 24/7, and that’s fine. I’m pretty sure by this point that this will be a lifelong project, with ‘project’ being a rough term for ‘amassing enough wealth to retire very comfortably’. I enjoy the process enough to keep on top of it, and I believe I can outperform the market over time. And yes, I know how that sounds. I read A LOT of investing books, and many people say it can’t be done, or at least that it’s rare. Well, it’s good to have goals, right?

Having said that, it’s time to address the elephant in the room. Take a look at my
PORTFOLIO section and check out the chart. I’m beating the market, but lately my performance isn’t so great, and the market is catching up. I’ve been cautious on the market since the DOW was in the 18,000’s. That caution has cost me money. I sold a lot of my stock in August and November of last year. Some of what I sold has tanked, some has gone up, some hasn’t really done anything. But what I sold isn’t the problem. What I am competing against, THE MARKET, has done nothing but go up, while I sit on 65 to 70% cash. The paragraph that follows is full of whiny excuses, feel free to judge me harshly.

I’ve been kicking the market’s butt for about a year, and that’s while usually maintaining over 50% of my accounts in cold hard cash. That means I’ve been beating the market without even risking half of my money. This means that what I have invested in, I’ve generally been awesome at. So what if I would have been even better had I risked more money on my positions. I’m new, I’m still learning. The caution has thus been warranted. And so now that I’ve grown more cautious, have more of my accounts in cash, the markets have gone up, and that’s just not fair.

Anybody feeling sorry for me? I hope not. You see, these are the thoughts that can easily invade my head, make me feel better about myself, despite my relative underperformance these past few months. Underperformance that is posted here for the world to see. Now hold that thought. I want to tell you about a YouTuber I’ve been watching a little the past couple of months. A friend of mine is big into the ‘financial apocalypse’ narrative that always seems to be around in one form or another. We’re not talking the collapse of a few banks, we’re talking a total collapse of the system. A financial and government services ‘Mad Max’ kind of scenario. I’m not intending to belittle those who are into that, and indeed some parts of the world are like that, but it’s not my thing. I believe the stock market is overvalued and we have some serious problems, but I don’t think I’m going to walk into any empty supermarkets anytime soon.

This friend is horrified that I ‘play the stock market’, and has encouraged me to watch this YouTuber that he follows. So I have been. This guy is a financial apocalypse believer. He posts several videos a week, and often plays with his silver coins on camera. He believes in physical silver over paper money, or stock, or whatever. And much of his content is the same, week after week: playing with silver coins, talking about the coming collapse and how to deal with it. One of his latest videos deals with the recent drop in silver prices. He claims that the silver market is being manipulated, but he doesn’t care where the market is. He has his silver, and nobody is taking it away from him. He even thinks silver will be manipulated down even further. And then it struck me what he was doing. He wants to have his cake and eat it too. Let’s say that 6 months from now silver is significantly lower. What will this guy come on YouTube and say? “See, I told you. They manipulated it lower.” What will he say in 6 months if silver is significantly higher? “See, I told you. My silver is paying off. Paper money is going down, silver is up. I’m so smart.” He’ll be right either way.

And now back to me and my blog. I don’t have that same luxury. While some of the things in my whiny excuse paragraph might be true, so what? At the end of the day only one thing matters: my account value versus what I could have gotten simply by investing in the S&P 500. That’s it. So what if I’m new at this? So what if last year I crushed the market while holding a huge percent in cash. Big deal, what’s the bottom line right now? That’s how I know if I’m doing well or not. If I close out a position and take a loss, I’m wrong. If I close a position and make enough money, I’m right. Simple. I don’t get to be ‘right’ either way.

So that brings me to where I’m at now. It’s actually a pretty good place, I think. Given my experiences in the market, I’m confident I have it in me to make this happen. I still believe the market is overvalued, so I’m not going to rush out and buy buy buy, although I have been a bit more active the past month or two. There is value out there and I’m not afraid to nibble at it. I won’t be surprised at all if the marked passes me over the next several months. I’ll be looking at my monitor with a huge frown on my face, but I’ll be ok. I’ll stay the course and be on the lookout for companies I like that are ‘on sale’. That’s my strategy. It may not be the best strategy in this market, but it’s mine, and I believe it will serve me well over time. And I’m pretty well convinced that if I changed strategies, it would end up being the worst possible time to do so. That seems to be the way the world works.

As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Specific numbers I reference may not be completely accurate; different online financial sources often have somewhat conflicting information. Verify information via multiple sources you trust. Please READ MY DISCLAIMER. Do not take action in the market simply because of what you read here. I write about what I am doing and what I think, I am not advising anyone to do anything. Make your own decisions, do your own research, and never rely on any single source for information. Some of my ‘picks’ and strategies WILL lose money, that’s the way the market works. I am not a financial professional, do not rely on me as such.

Thank you,

Michael Rowland, the Stock Picking Bartender,

Reno, Nevada

2016 in Review

I know we’re well over a week into the new year, so I may be a bit late for the traditional ‘year in review’ post, but as you might expect, the holidays are a hectic time in the casino bar biz. So after getting my butt kicked at work for a couple of weeks, I got a few extra days off. So here we are.

What was 2016 like for me, as an investor? It didn’t start off very well. February was my lowest point in this investing/blog project, down over $700. But overall the year was very good. Since that low, my profits more or less shot straight up for the rest of the year. I beat the market by a wide margin in 2016, which is even more impressive considering that I usually had more than 50% of my portfolio in cash. Toward the end of 2016 I got increasingly nervous about the market, selling many of my positions. I ended the year with about 75% cash, and even bought a few put options which I still own. Below I have a chart of all my current positions, and everything I sold in 2016. The charts are to the current date, so we can see if those sales were timed correctly or not. SPOILER: It’s a bit of a mixed bag, but I’m generally pretty happy. I’ve written a piece on most every company listed below, so I’m just hitting the highlights here.

 

CURRENT POSITIONS

1-chk-1-9-17

Here we have Chesapeake Energy (NYSE: CHK), the first thing I bought, and I’m still holding. I may be down 18%, but that’s nothing. At one point I was down about 83% on this. I can do 18% standing on my head. When CHK hit $1.50, being down 18% would have seemed like a distant fantasy. But as you can see, Chesapeake is clawing its way back. The company is slowly taking care of its debt problems, and I think the future of natural gas is bright. I’m holding this one long term. It may well go back down some before heading higher, but I’m a believer.

 

2-cafd-1-9-17

8point3 Energy Partners (NASDAQ: CAFD) is a company I’m really excited about. I’m excited because it’s kinda boring. It owns solar projects and collects money from long term contracts on those projects. It plans to slowly grow its already nice dividend over time. I like the solar industry, and I plan on holding this a long time as well. In fact, I’ll own a lot more if the price goes significantly below my lowest buy point. If it hit single digits maybe?

 

3-fslr-1-9-17

First Solar (NASDAQ: FSLR) is another solar company I am really excited about. I made money on it in 2015 and got back in when the price plummeted after I sold out. Well, it kept plummeting. I hope it plummets some more! Everyone seems to think 2017 will be a tough year for the solar industry, and that may be true, but FSLR has a great balance sheet and a management team willing to make tough, long-term decisions. I’m down now, but not worried one bit. People say a Trump presidency will be bad for the solar industry. I say bring on the negativity.

 

4-skx-1-9-17

Skechers (NYSE: SKX) shares were hit a few months ago on fears of slowing domestic growth. I love the shoes, and the company seems great as well. So far the timing of my first buy point seems really good, though as with most things I own, I’m willing to buy more if the price goes lower. I believe Skechers will continue to be a force in the shoe industry, and not a fad stock. Time will tell.

In late November I bought my first option for my investing/blog project. I bet against CSX (NASDAQ: CSX), a railroad company. The puts haven’t done much, but they are good until January, 2018.

 

POSITIONS CLOSED IN 2016

5-pypl-1-9-17

PayPal (NASDAQ: PYPL) was a decent holding for me. I could have sold it for a bit more had I waited, but overall it hasn’t really done much since I sold it. I got out because I believed the market was overheated, though of course the market has risen quite a bit since I sold. I like the company, but obviously not at these levels.

 

6-ete-1-9-17

I’ve had several successes in 2016, more so than failures, but Energy Transfer Equity (NSYE: ETE) is what ensured that I beat the pants off the market even while usually maintaining over 50% of my portfolio in cash. When I sold at $18.25 and it went down to around $14 over the next couple of months, I was feeling pretty good. If I had stuck with it I’d have been even better off. I can’t complain.

 

7-amba-1-9-17

Ambarella (NASDAQ: AMBA) is perhaps my ‘best’ trade from a technical standpoint. My entry points were great, my exit was very timely, and the stock has been weak ever since. I certainly believe in the long term viability of this company, and am considering buying in again soon on any further weakness. This is another well managed company with a great balance sheet, and I think it’s worth owning long term.

 

8-bhi-1-9-17

I’m going to give the ‘missed opportunity of the year’ award to Baker Hughes (NYSE: BHI). I never felt I understood this company in quite the way I understood my other investments. I think it’s because they didn’t have webcasted conference calls for awhile because of the proposed buyout from Halliburton (NYSE: HAL). Conference calls are so important to my understanding of a company. I liked the business they were in, I liked the money they were going to get from HAL if they didn’t get bought out, and I liked all of the negativity. I made a profit, but at the end of the day I simply didn’t understand things well enough to stay in, and got out too soon. Oh well, as far as mistakes go, I’ll take it.

 

9-dakt-1-9-17

Speaking of mistakes, here’s one I’d rather have not made, although it wasn’t really that bad. Daktronics (NASDAQ: DAKT) makes large digital signs, stadium scoreboards, that sort of thing. This was an early pick of mine, but it slowly bled away after I bought it. The problem here was that this was such a small company that there really wasn’t much to keep track of. I go to several financial websites to keep track of articles about each of my positions, and all of the companies that I’m following. DAKT was such a small company that aside from a few dry newswire type reports, there was hardly ever anything being discussed or written about the company. I kept watching the price go down, and didn’t have a good understanding of why. So I sold for a loss, while I should have had faith in my original plan and bought more. It would have turned out very well. I want to invest more in small companies, so I have to work on a system to do that. Live and learn.

 

99-mat-1-9-17

Mattel (NASDAQ: MAT) is another position that looks pretty awesome from a technical standpoint. Mattel was struggling from revenue problems, especially in its Barbie line, and negativity had gotten overblown. I believed in the turnaround story and bought in. Pretty soon everyone and their brother seemed to believe in it as well, so I got out. It didn’t really do a lot for awhile after I sold, but it’s been in a slight downtrend for months. If it returns to the lows, I’d buy more. But I believe that at the current price, it’s overvalued. If it got much higher than where I sold it, I’d consider buying puts.

So that covers it for my 2016. The year gives me some confidence that how I do things works, but what about 2017? I’ll be honest, I’m nervous about this year. I don’t think things are as good as the market makes them out to be. People have asked me if the election changes my views on the market, and I’d have to say no, not really. I felt this way before the election, and I don’t think either possible outcome would have made me feel any different. The market seems to like the Trump win, and that’s fine. And while I know that there is a definite possibility that the market goes up from here, perhaps significantly over Dow 20,000 (as of this writing it’s ALMOST made it), I believe there is a significant correction coming sometime soon. When? Well, if I knew that I’d be dating a supermodel, probably several.

So how do I handle 2017? Simply sit on my cash like I seem to be doing now? Buy put options on everything and hope for a crash? That might turn out to be exactly right, who knows? My general plan is to be extremely cautious and only go long on stocks that are DEEP values, and buy a few long-term put options here and there on things I feel would be worst hit in a market downturn. Sounds simple right? I found myself in some pretty sweet deals in 2016, and it would be easy to look back and oversimplify them, or feel that I have the ‘golden touch’. Buy ETE at $6.75 and $4.85, then sell a few months later at $18.25, all while collecting a few dividend payments? Cake.

But I have to remember the hard work I put into understanding what I was getting into, and the sweat dripping off my brow as I bought things that were falling like rocks. I have to keep my perspective. If it were really that simple, then I have a fool’s luck to thank for my success in 2016. Rely on that, and it’s sure to run out.

As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Specific numbers I reference may not be completely accurate; different online financial sources often have somewhat conflicting information. Verify information via multiple sources you trust. Please READ MY DISCLAIMER. Do not take action in the market simply because of what you read here. I write about what I am doing and what I think, I am not advising anyone to do anything. Make your own decisions, do your own research, and never rely on any single source for information. Some of my ‘picks’ and strategies WILL lose money, that’s the way the market works. I am not a financial professional; do not rely on me as such.

Thank you,

Michael, the Stock Picking Bartender,

Reno, Nevada

My First Short?

I have to admit to being a bit lazy when it comes to the market the past three weeks or so. Why? A number of reasons. First, I was using an old computer that would barely browse the internet, and my new, custom computer was delayed a couple of weeks because of some week long holiday in China. I was at the point where my old computer couldn’t handle having a couple of tabs open in Firefox, and keeping track of the market was a huge pain. I kept on top of my positions, but I didn’t do a whole lot more than that.

I’ve had my new computer almost a week now, and I’ll even admit to some binge PC gaming since I got it up and running. I hadn’t been able to game for a couple of years on my old PC, so who can blame me? I mean, the PC provides the ultimate gaming experience, right? But you’re not here for my controversial gaming opinions. In a slightly more market related note: I bought Office 365, and so far I’m very happy with it. My rather complex 2003 Excel file that I use to keep track of all my market related activity converted without a hitch.

So what about the market for the past few weeks? Boring, if you ask me. Some of the stocks I’ve talked about recently have come down to attractive levels, like Cal-Main Foods (NASDAQ: CALM), and The Mosaic Company (NYSE: MOS). I even started a position in Skechers U.S.A., Inc. (NYSE: SKX) last week, but I’m very cautious about the market right now. I’m hesitant to buy anything else until I buy SOMETHING on the ‘short’ side. Still, further significant weakness in any of those three names would be very hard for me to resist. Meanwhile, most of the stocks and ETF’s I’ve been keeping track of for the purposes of buying put options have gone down slightly over the past few weeks, so no excitement there.

While I don’t see anything I want to buy puts in RIGHT NOW, I am taking a very close look at KraneShares CSI China Internet ETF (NASDAQ: KWEB). What if there is a very significant market correction in the near term? China is usually pretty volatile, internet stocks can be as well. Chinese internet stocks? Sign me up on the way down.

So what’s in KWEB? Around 12% of the ETF is Alibaba Group Holding Limited (NYSE: BABA), China’s E-Commerce giant. Tencent Holdings Limited (0700.HK) takes up 10%. Trancent is an investment holding company with subsidiaries in a lot of economic sensitive sectors such as media, advertising, entertainment (including gaming), as well as mobile phone services. I’m sure there in a lot of other things as well, but I’m not getting into too much detail here. 8% of the ETF is JD.Com (NASDAQ: JD), one of Alibaba’s largest competitors in the E-commerce space. Baidu, Inc. (NASDAQ: BIDU) takes up another 8% of the ETF. Baidu is a search and web services company. Another 8% is NetEase, Inc. (NASDAQ: NTES), an internet technology company that is involved in games, advertising, and a few other things.

So those are the top 5 holdings of KWEB. They mostly scream ‘Growth, Growth, Growth!’, and I don’t have anything against these companies, but they seem to me the kind of equities that will get dumped in a market downturn. Those of you who caught my recent post on buying puts, found here, know that I’m not taking the inherent risk of options lightly. Also, I’m only planning to risk a couple of hundred dollars. As I write this, options on KWEB only go out to May of 2017. I’m watching to see when ones further out become available. I’m also watching to see if KWEB shows some strength (it’s been a little weak lately), thereby bringing down the put prices. I’m not necessarily predicting that everything falls apart in the very near term out of nowhere, so I can be somewhat patient.

I also continue to watch Mattel (NASDAQ: MAT) for an opportunity to buy puts. I like the company, and did well with it before, but I’m not sure the current price is justified, despite all of the positives of their turnaround efforts. I’m hoping that their upcoming analyst day bumps up the price even further. Hopes for the upcoming holiday season might do the same thing. Taking the other side of any significant strength might be a good opportunity.

As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Specific numbers I reference may not be completely accurate; different online financial sources often have somewhat conflicting information. Verify information via multiple sources you trust. Please READ MY DISCLAIMER. Make your own decisions, do your own research, and never rely on any single source for information. I am not a financial professional; do not rely on me as such.

Thank you,
Michael, the Stock Picking Bartender,

Reno, Nevada

All Options are on the Table

All options are on the table! WOOOT!!!! But what do I mean by that? As those of you who’ve been following my adventures in the stock market know, I’m currently very cautious when it comes to the market overall. To be clear, I actually think it will make new highs from here, so I’m not calling ‘the top’ or anything. I don’t claim to be that good.

Within the last several weeks I’ve sold most of my stock (for some very good profit), and I’m about 75% in cash. But here’s the thing, there are companies out there that I like, that are close to levels where I’d like to start a position. But what if it turns out that I’m right, and the market has a large correction sometime in the next 12 months? Well then, I’ll just buy MORE as they go down. It’s been working for me so far. But what about an additional strategy?

Via put options on stocks that I believe are overvalued, I can profit from their decline. (Here’s an Investopedia article about the basics of options.)  I can buy significantly out of the money put options that are good for ‘long’ periods, even over 12 months. If I’m right, I can make a significant amount of money by only investing a small amount upfront.

If the market tanks, these options could potentially act as a hedge against going long in the stocks I’m considering buying. If the market moves sideways, it’ll just be good old-fashion stockpicking: what am I ‘long’ versus what am I ‘short’? If the market keeps going up… well, I don’t plan on spending a ton on options, but I’ll likely lose most, if not all, of the option investments.

The GOOD: Options are relatively cheap versus the number of shares they can ‘control’. Some big money is possible using only a small investment. Shorting stocks directly is dangerous and I don’t ever plan to try it, while options only risk the amount of money invested.

The BAD: You have to be right with your timing to make money in options, even long term ones. Options lose money over time, all else being equal. Why invest in something like that? Am I THAT good?

The UGLY: What if I’m just getting cocky because of my market trouncing performance so far? What if I’m getting too fancy, too big for my britches? Options, hedges… etc. I’m just an amateur, what am I doing playing with options? I could lose my shirt. Shouldn’t I simply stick with what I’ve been good at so far? I could blow 10% of my portfolio on options that expire worthless, and still be beating the heck out of the market… but should I take the risk?

I’ll admit that when I use terms like ‘hedging’, I start to think I’ve read too many investment books. (It’s a favorite pastime of mine) So I’m aware of the vast potential for hubris here. I plan on fighting these propensities by remaining small in the options game, and not be in a hurry. I don’t think the market is going to crash tomorrow, so I can take my time. I am fully aware that options are high risk, and most people who buy out of the money options tend to regret it. I could very well end up being one of those people, but I’m planning on giving it a try with a small amount of money.

What companies do I feel have the potential to become overvalued if the market pulls them significantly higher? I’m thinking about some of the companies I’ve made money on in the past.

Energy Transfer Equity (NYSE: ETE) was good to me on the long side, with a 222% gain over 7 months. I sold it last month, and am happy I did. If it shot up to the mid $20’s I might buy some puts. It’s had a GREAT run, but the dividend is far from assured.

Ambarella Inc. (NASDAQ: AMBA) was a good investment as well, up 70% over about the same time period as ETE. I still like the company long term, but if it shot way up from here I’d consider some puts. But then, if it tanked from here I’d be a buyer.

I haven’t talked about Mattel Inc. (NASDAQ: MAT) in awhile. It was good for a 43% gain when I sold it in February after holding it about 6 months. It hasn’t done much since, but the valuation seems high, in my opinion. The dividend is far from assured, and any stumble in the turnaround story could send the stock down. A rally on little news might be a good opportunity to take the other side.

Simply because I’ve sold these companies doesn’t mean that I’ve stopped following them. At some point I hope to buy them again at lower levels, but now I’m considering expanding the tools at my disposal. At this point these are just some ideas I’m kicking around, not hard plans, but you can see my thinking. As I stated above, I believe the market is headed higher in the very near term, despite the negativity of the past several trading days. If I’m right, that might be the perfect time to try my hand at puts.

As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Specific numbers I reference may not be completely accurate; different online financial sources often have somewhat conflicting information. Verify information via multiple sources you trust. Please READ MY DISCLAIMER. Make your own decisions, do your own research, and never rely on any single source for information. I am not a financial professional; do not rely on me as such.

Thank you,
Michael, the Stock Picking Bartender,

Reno, Nevada

August Portfolio Update: Why I’m Selling for Huge Profits

So I’m working on researching and writing my next company profile, Skechers U.S.A., Inc. (NYSE: SKX), and had planned to release it, well, now. But something came up. If you’ve been following me on Twitter or Stocktwits, or checking the Trades section of my blog, then you know I’ve been on a bit of a selling spree lately. In three trading days I sold 3 of my 7 positions. My portfolio has changed a lot in a short amount of time, so I felt a portfolio update was appropriate. But look for that Skechers post soon.

But WHY am I selling? The market is reaching all time highs, and that’s great. Am I now officially a ‘bear’? That’s a question I’m wrestling with. Is the market overvalued? There are a lot of inputs to a question like that, and honestly I’m a little overwhelmed by it. Has the Fed’s dovish monetary policy brought about a ‘bubble’ in stock prices? Do recent company earnings justify all time high equity prices? Is the consumer in such a great position? Is the economy in such good shape to justify all time highs? What about the upcoming presidential election and all the dissatisfaction surrounding what promises to be a real circus of an election cycle? All fine questions, each and every one. But I’m just a guy trying to make some money picking stocks.

My feeling is that in the near term the market will continue higher for awhile. Weeks, months, longer…? More new highs are probably coming. But then what? I can’t help but feel that there is a shoe to drop somewhere down the road. There’s something out there that will scare people out of stocks big time. The market will decline (crash?), and then what? That will be the new ‘time to buy’. When will this happen and what will it look like? Beats me. My plan is to be cautious now, and have a shopping list ready. But how does that caution play out? More on that later, for now, what have I done?

On Friday the 12th I sold Baker Hughes (NYSE: BHI) for a modest but nice 17% gain over about four months.

BHI 8-12-16

 

I bought BHI in April for $41.50, and sold it for $49.70. A few weeks ago when the stock was at $44 I decided I wanted to get out. I thought that the company buybacks might push the price up to around $50, close to recent resistance. As I look at the price as I write this, it’s at $52, so I could have squeezed a bit more out of it. It looks like it may be breaking out, so I might or might not be able to get back in lower.

BHI was a bit of an oddity in my portfolio. I basically bought it because I wanted more exposure to oil, without buying a driller. I bought it just before its merger with Halliburton (NYSE: HAL) was officially scuttled. I liked its chances by itself, and I liked the $3.5 billion breakup fee HAL was going to have to pay. I thought my money was safe, and I was right. Others seem to dislike BHI’s strategy of buying back shares and paying off debt with the money. I think their plans are just fine, but it felt like a boring story that had gone stale, and I’d have a chance to get in lower in the future. Time will tell.

Then the next trading day, Monday the 15th, I decided to sell Ambarella Inc. (NASDAQ: AMBA) for a very very nice 70% gain over 7 months.

AMBA 8-15-16

I bought AMBA twice in January for $42.25 and 35.27, for an average of $38.30. I sold it at $66.20. It’s been a few days since I sold, and it’s gotten as high as $66.90, but it is currently about $64.50, so I’m feeling pretty good about my timing so far.

Why did I sell? I really like this company and its amazing balance sheet, but I felt it had gone up too far, too fast. It reports earnings on September 1st, and I believe that management will have to ‘knock it out of the park’ and provide good guidance in order for the market to feel that the move is justified. If there is any kind of stumble… look out below. But if so, I’ll be there waiting to catch it if it goes low enough. But as it looks now, between where I bought and where I sold, I’m feeling pretty smart. Time will tell if I could have been smarter.

And then the NEXT trading day, Tuesday the 16th, I sold Energy Transfer Equity (NYSE: ETE) for a very very very nice 222% gain over 7 months. 235% if you count dividends, but who’s counting? (Ok, I am)

ETE 8-16-16
These just seem to get better and better, don’t they? I bought in January/February at $6.75/$4.85, for an average of $5.58, and sold at $18.25. But why did I sell? First of all, I would like my readers to take a moment to appreciate the intestinal fortitude it took not to sell at $10, $13, or $16. $16 was a big one… but I felt it was headed higher. It hasn’t done much in the few days since I sold. Of course I hope it tanks now, I’ll look like a genius. So why did I sell?

A couple of reasons. First, ETE has pledged to support Energy Transfer Partners (NYSE: ETP) by forgoing incentive distribution rights for seven quarters. It’s great to help ETP, and helping ETP will eventually help ETE, but in the short term that means less money for ETE. Second, I don’t like the convertible shares that CEO Kelcy Warren and a few select investors had the opportunity to get. These shares somehow protect their owners from a distribution cut. I’d love to explain it to you, but I don’t understand it myself. That makes me wary. And in the August 4th earnings call, an analyst (Ethan Heyward Bellamy – Robert W. Baird & Co.) asked Mr. Warren if he’d consider getting rid of the convertible shares, and “…would you be willing to commit to ETE holders that you’ve taken a economic haircut on the covert if the ETE distribution were ever threatened?”

Mr. Warren’s answer… a simple ‘no’. Now I’ve listened to a lot of conference calls, from quite a few companies, and a simple ‘no’ then on to the next question is pretty rare. It seemed fairly obvious that Mr. Warren didn’t care for the question. So ETE is not accepting money due it, its CEO and a few major investors are somehow partially protected if the distribution is cut, and (this is a big one) the price has SKYROCKETED in the past several months. The price action makes my 70% gain in Ambarella seem rustic and unsophisticated. If investors smell a distribution cut, or if one actually happens, I see pain in this stocks future. My fellow investors on Stocktwits are still screaming that it’ll hit $24 any week now, and $50 in a year. That might happen, but I’m thinking not. Either way, I’ll just have to be happy with my 222%. Of course I hope they cut the distribution in half and I can buy the stock at about $8 sometime in the next couple of months… a girl can dream, right?

How are my current positions doing? Chesapeake Energy (NYSE: CHK) seems to be gaining some traction lately because of a new loan to refinance some near term debt. I’m still down about 27% on it. I’m holding for now, as it’s my bet on natural gas. ETE turned out well, maybe this one will, eventually.

PayPal Holdings, Inc. (NASDAQ: PYPL) hasn’t done much. I’m up about 16% on it, and looking to sell it at about $39.50, as I think I’ll be able to get a better price for it in the future.

8point3 Energy Partners LP (NASDAQ: CAFD) is doing well, up about 22% for me. The price seems to be inching up, and it’s still paying a good dividend. No plans to sell this one.

First Solar (NASDAQ: FSLR) has fallen more than I thought it would. I’m down about 28% on the position. Wall Street has pretty much given up on the solar companies. The narrative seems to be that through 2017 you’d rather be a flip-phone maker than a solar company. I hope it goes lower. If I can get some around $30, I’ll be happy. I don’t mind holding this one for a long time.

So what about that caution I was talking about earlier? My portfolio is over 75% cash. I have a lot of capital (by my standards) to deploy if I find the right investment. I like having cash, cash doesn’t bother me. I feel no pressure to be fully invested, but here’s my dilemma: if I believe the market will come down sometime in the near future, should I invest in beaten down companies that I like right now? If the market tanks, the companies I like will probably tank even more, offering me better entry prices. But if the market roars higher, these beaten down names that I like will probably roar higher as well, with or without me. I don’t really have a good answer other than to be cautious and not let my recent stellar performance go to my head. (Did I mention it was stellar?)

As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Specific numbers I reference may not be completely accurate; different online financial sources often have somewhat conflicting information. Verify information via multiple sources you trust. Please READ MY DISCLAIMER. Make your own decisions, do your own research, and never rely on any single source for information. I am not a financial professional; do not rely on me as such.

Thank you,
Michael, the Stock Picking Bartender,

Reno, Nevada

May Portfolio Update

My last portfolio update was in February, so I figure it’s about time to have another one. I’m certainly happier with my performance now than I was back in February. While at the time I was beating the market by a wide margin, I was still in the red. Now, as of writing this, I’m beating the market, but I’m in the black! I’ve made a profit of $947.32, while if I’d invested in the market, I’d only be up $194.02. Check out my portfolio to see how I calculate Mr. Market. These would be the REAL gains if I sold everything NOW, at market, as I also include the future selling transaction costs of my current positions in my numbers.

But while I’m happy with how things are going, all is not rainbows and butterflies. If I’d written this a week or two ago, it would have been pure euphoria. At one point I was up just shy of $1900, while Mr. Market was up about $350. You, my readers, would have been disgusted with my level of self-satisfaction. Yeah, I was patting myself on the back real good there for awhile. My fortunes have been in a downtrend the last week and a half, but I’m still doing very well.

Chesapeake Energy (NYSE: CHK) has been doing better lately. My cost basis on CHK is $8.38, and it’s now at $4.12, so the loss is about 52%. CHK has given me problems since I started, it being the first thing I bought. But at least it’s not $1.50 like it was in early February. No other stock in my portfolio illustrates the fear/greed cycle of Wall Street quite like CHK. One day people who own it are afraid it’s going to go bankrupt, the next day people who don’t own it think it’s going to make it through this low commodity cycle, so of course they have to buy! Personally, I’m willing to stick it out and just own it. Part of me wants to delete it from my spreadsheet and just forget about it for now, maybe check on it in a year. But that’s just not how we do things around here.

8point3 Energy Partners LP (NASDAQ: CAFD) is still chugging along, bouncing from $14 to $16, tossing me a nice dividend now and then. My cost basis here is $12.80, and CAFD is at $14.45 as I write this, so an 11% gain, about 15.5% with dividends. I don’t plan on getting rid of this one anytime soon either. I think one day people will realize the potential here and it will take off.

PayPal Holdings, Inc. (NASDAQ: PYPL) is doing a good job for me. My basis is $32.35, and it’s at $39.51, so about 20% to the positive. I love the company, and their growth potential. That said, if it has any significant strength in the near future I might sell. I feel as though there will be a better entry point in the future, despite the strength of the company. It’s something I’ve been thinking on…

Ambarella Inc. (NASDAQ: AMBA) isn’t doing so hot at the moment. My basis is $38.30, and the stock is at 36.80, so I’m down about 6%. At one point I was up about 22% on the position, but it has recently tanked. It’s now almost exactly where I got my second of two buy points in. I still believe, and would be willing to buy more somewhere around $27.

Energy Transfer Equity (NYSE: ETE) is where things begin to get really interesting. In January I bought ETE at $6.75, and in February for $4.85, for a cost basis of $5.58. Fast forward a few months, and it’s at $12.91 for a 128% gain. The current yield on ETE is almost 9%, but my yield on cost is slightly over 20%. In fact, I should get a nice payment in my account next week. The merger drama with Williams Companies (NYSE: WMB) has driven much of the movement here. I don’t have the space to get into all the details, but I want to see the deal re-negotiated so that ETE doesn’t have to pay any actual cash to WMB shareholders. I want to have my cake and eat it too. Not interested in selling here, despite the huge gain. Of course I realize I might regret that decision. Give me another $5 on the stock in the next few months, and I might consider it. Yes, I’m being greedy, but I still believe in the long term health and profitability of this company. Not willing to sell here and miss out, even if it means risking some GREAT short term gains. If I sell at $18 and then miss out, I’ll feel bad, but not QUITE as bad.

Baker Hughes (NYSE: BHI) is holding up well. I bought it a week or two before the merger with Halliburton (NYSE: HAL) finally fell through. BHI didn’t tank like some people thought it would. The $3.5 billion HAL had to pay BHI was the reason for that, in my humble opinion. I also like BHI’s plan to buy back stock and pay down some debt with most of the money. I think Baker Hughes has some really smart management, and I’m willing to keep this oil services company right where it is, especially since BHI already had a pretty nice balance sheet to begin with. I’m up 7% on the position.

Earlier this month I got the opportunity to get back into First Solar (NASDAQ: FSLR) at $55.00. I sold it back in December for $63.52 for a 36% gain. I’m back in, and happy about it. I LOVE First Solar. When FSLR recently reported quarterly earnings of $1.66, they beat the street estimate of $0.87 a share by a wide margin. Revenues didn’t quite live up to expectations, but the real shake-up was that CEO Jim Hughes was leaving to be replaced by CFO Mark Widmar. Ok, just give me the stock on the cheap. FSLR is now at $49.67, for a nearly 12% loss. Do I sound worried? In fact, I have an order in to buy more at $48.50. I didn’t get two buy points in before, I hope I do now.

Update: First Solar did hit my buy point at the end of the day, closing at $48.56, with a low of $48.49, just a penny under my order. I’ll get some nice bragging rights if that’s the low.

What am I looking at now? I’ve been following The Mosaic Company (NYSE: MOS) for a few weeks now. They mine and produce potash and phosphates used in fertilizer. Their industry has been hit by low commodity prices, though unlike oil, there hasn’t been much of a rebound yet. I won’t go into it much here because of space, and I plan to do a write-up of the company soon. I certainly will if I buy some. What’s holding me back is that cash now makes up slightly less than half of my account. This is because of buying First Solar and the awesome gain in Energy Transfer Equity. With the overall market as historically high as it is, I’m not overly comfortable initiating a brand new position. If MOS falls significantly though, I just might be tempted. Much the same could be said for Fitbit, Inc (NYSE: FIT), which I have covered in the past. I thought I missed out, but it’s starting to come back down to more attractive levels.

As always, feel free to look at my portfolio and see how I’m doing. Usually I own or plan to own stock in many of the companies I write about. Please READ MY DISCLIAMER. Make your own decisions, do your own research, and never rely on any single source for information. I am not a financial professional; do not rely on me as such.

Thank you,
Michael, the Stock Picking Bartender,

Reno, Nevada