Curious Investments Update
After a summer unable to touch my investments, I’m finally out from the oppression of a douchey compliance guy and I’m back! Portfolio B is going to return, while I was out of commission, my friend did not touch any of the positions so it’s still holding what it held at the beginning of the summer – J. Crew (JCG) and Southwest (LUV). Portfolio A, as on the My Stock Holdings section of the site, remains long in Piper Jaffray (PJC) and China Mobile (CHL). As I re-enter a more active stance in my investing, I figured I’d share my thoughts.
Portfolio B
Portfolio B did quite well over the summer with Southwest rebounding after some concerns over its growth and J. Crew having a terrific first quarter.
J. Crew performance since position was establishedÂ
The recent market turmoil has eased some of the gains but J. Crew looks as though it remains strong and, while there hasn’t been much news out of them, I am confident of J. Crew’s prospects in the longterm. Its sales numbers have remained strong and I feel optimistic about its next earnings call at the end of August. The company’s shift to higher ticket items, I feel, insulates it well from consumer fallout caused by subprime and the housing market as well as what seems to be the decline of the mall rat (J. Crew’s old consumer base).
Management recently announced its plans to launch an ultra-premium line known as J. Crew Collection this fall with a flagship store in New York City to open early next year. I see this as a positive sign that management does not see an abatement in the company’s already torrid sales growth. Going further, I’m no sartorialist, but the J. Crew Fall Look Book available on its website seems to be once again on the mark. I like the men’s looks and the women’s look, I think, falls right in their wheel house. My girlfriend seemed to like about 50% of the stuff though I think the J. Crew style, particularly for women, tends to be a little bit niche. One way or another, at least one offering from both the men’s and women’s fall previews are already sold out which seems a good sign for both the collection and their direct-to-customer sales.
Clearly, I’m not doing any in depth analysis here, but these are just general trends which I believe are supportive of the themes which have driven J. Crew’s stock appreciation – margin expansion and insulation from declining consumer spending through higher price points and a luxury target, strong organic growth, and quality fashionable design.
Southwest performance since position established
Southwest is a bit more of a question mark. It seems that the company is doing well having overtaken American Airlines to be the largest airline by passenger load in the United States (and this from a domestic carrier!). The stock appreciated as high as $16.35, fell to $15.50 due to insider selling in the $16.30 range, then made another push to $16.70 on rather good volume. At the time, RSI signaled a divergence and I likely should have quietly told my friend to execute a sell to take profits, but I was #1 trying to strictly follow my firm’s rules on trading and #2 believed that the pull back after the inside sell off was merely a blip in the general trend and thus trusted the volume of buying over the RSI. It seems that with further credit worries and skyrocketing costs for oil, Southwest has quickly plunged back below $15.00. As such, I’ll be watching this stock closely and may be removing this one in favor of a better investment not for lack of belief in the company but for a desire for more guaranteed returns (if there is such a thing).
Portfolio A
Piper Jaffray performance since position established
Piper Jaffray has fallen more than 20% in the time that I’ve owned it and I have admitted time and again that this is just a quintessential trade gone wrong. I traded ahead of earnings (unknowingly… yes… I’m an idiot and need to do more research before making my picks) and after the poor results decided to hold on in a direct breach of my own investing disciplines. Before I knew it, a trading lot became an investing lot. The problem, however, is that as I did more research in hopes of understanding the decline in share price, the more I came to like the company and believe that it is currently well underpriced. Do I think it deserves a price near 60 where I bought it? Maybe not. But, I do believe that it does deserve to trade at least in the mid-50s. That being said, this stock has been pretty impressive of late. Magnifying returns during market rallies and more or less trading even with the financial sector on down days (the benefit of buying downtrodden stocks in a declining market). As I feel a little bit of a rally coming on, I plan to hold PJC in hopes of selling into the next rally and finally moving on from this debacle. Hopefully, with a much smaller loss than where I stand now.
China Mobile performance since position established
China Mobile has bouyed Portfolio A throughout the summer appreciating nearly 30% over the course of May, June and July and since falling nearly 10% with the rest of the markets. Not to pat myself on the back, but I feel that I timed the purchase of China Mobile perfectly. Waiting only about a week before it began its beautiful little run. I think this company has tremendous world-beating potential and having earned some money this summer may decide to turn this lot into a truly long-term buy and hold. To satisfy my itch to trade (or what I like to call very actively manage) in Portfolio A, I am planning on increasing its size so as to handle 3 positions.
On a final note, with some newly earned money, I am planning now to open another portfolio within a Roth IRA which I will also share on this site. This account will likely be the same size as Portfolio B and contain two positions as well. It’s strategy will be much more value driven than even that of Portfolio B. I still need to fill out some paper work and get things set up, but keep your eyes peeled.
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I think JCG has proven itself to be an elite among retailers at this point. The company has done very well managing inventory and keeping the new trends in stock. I think the company looks like a winner in the long run in this difficult retail space.