Aug 21st, 2015 & a Thank You; Trades 1-7 are at the Bottom of this Email. 

11

Lower oil prices helped provide our best 1-day return in percentage terms. Lower oil prices are also creating excellent opportunities in midstream oil securities. 

Thank You to David Taylor

I want to say “thank you” to David. He has been on the conference calls for the past 2-weeks. He has been very helpful. He has provided some great ideas. His questions are very helpful. His questions and discussion allow me to focus upon relevant topics. I am able to reflect upon the market and provide ideas.
ty
A key benefit is if we continue to do the calls on Thursday, we can make changes on Friday. This ensures we put on hedges, as needed, and buy/sell any opportunities that stand out prior to the weekend.

I Want to Begin a Top 10 List of stocks.

These will be stocks that have dropped by a large percentage; or are trading above cash levels; or are the best ‘special situations’ I can find. I believe a basket of 10 stocks, offering a high gain if the stock does moves up, will allow us to put speculative names. These names should be a success if 1-2 names takes off. They won’t be trading stocks.
Up or Down
The basket will include names with a special situation. We will wait for the special situation to play out. These will be everyone’s ideas. I only ask that you have a catalyst for the name to move up or down. If you have an idea – please also mention what target price you have in mind.
These stocks can be bullish or bearish. If we are short a stock, I personally will buy a call so I know exactly the worst case scenario.
We will discuss these stocks on the conference calls. 

Tom’s Closed End Funds

Last night we were able to look at Kayne Anderson MLP Investment Company (KYN).  Scott asked about midstream-MLP’s. Scott, last night, asked specifically what midstream MLP’s were my favorites.
I want to weekly look at Tom’s CEF’s. If any appear to be the best, we can discuss why or why not. I’ll keep a separate list of these names.
Todd

Fortunate

I don’t like to see any stock go dow. Fortunately our hedges paid off this time.

We were lucky, but having the short positions on oil and short positions on China worked out. I think today was our best due to the terrible days that oil and China experienced and have been experiencing.

What to Expect on Monday: Core Portfolio

1. I plan to close biotech names that have lost money.
2. I plan to add 1-2 biotech names that are doing great – but have dropped with the declining market.
3. I plan to ensure our core positions have protective puts. 
4. I want to add a couple of micro cap dividend names.

What to Expect on Monday: 5-10 Favorite Dividend Growth Names

 –
A. What to Expect on Monday: Beginning to Add Preferred Stock Names. I will at least mention what names I prefer. Tom provides Closed End Fund names that – in my view – are a better investment than preferred stock. I believe the best choice is to own: owning preferred stock; and owning closed end funds; and owning dividend growth stocks; and owning growth names that possess a reasonable beta and possess an understandable business model.
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B. What to Expect on Monday: I want to remove 2-names that I believe are no longer appealing. The interest rate environment has caused certain stocks to become a significant risk for certain stocks.
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C. What to Expect on Monday: Quant Screen analysis. I want to find out if we need to add a hedge for the quant screens.
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D. What to Expect on Monday: Add Any Midstream MLP’s that have Dropped Far Beyond Realistic Levels.

Although oil was down only 2.5% today, it appeared many of the securities were down more than 2.5%. I think we’ll use ProShares UltraShort Bloomberg Crude Oil (SCO) going forward. The $SCO moves fairly close to the actual movement of oil. This may, however, work in a short time frame.

Our best hedges today were

1. Bearish positions on oil.

1) On Aug 17th, we bought (20) $IWM puts, SeptWeek1 for a total of $1,600-Debit.

Let’s sell the 20-puts for today’s current price of $245-each. This is a net cost of $4,900-Credit.

2. $IWM: Buying New Strike Puts for Portfolio Protection

Let’s buy 30-puts for today’s price of $91-each. This is a net cost of $2,730-Debit.

Strike $111; Expiration: Sept, Week 1

3. Portfolio Hedge Link

Let’s buy (10) $SPY Puts, Strike $195, Expiration SeptWeek1; for $2.35-each or a net $2,350-Debit.

4. Selling 300-Shares of $ERY

We bought 300-shares of $ERY on the 18th. Let’s close this position at $32.25 each. This is a net credit of $9,675-Credit.

Trade was part of #8 on Aug 19th.

5. Close $YANG Position

These are trades 10 & 11 from Aug 19th. . It has worked out good.

Sell 25-shares of $YANG at $118 = $2,950

Close the calendar call spread at $95.

Close the $100-Strike, Jan ’16-expiry, $YANG: $3,200-Credit

Net $3,200-Credit.

6. ProShares UltraShort Bloomberg Crude Oil (SCO)

This doubled today. Selling the (3) short calls for $2100 each or $6,300-Credit.

7. $SPY: Closing 3-Puts, Strike $206; Sept Expiration

$2,940-Credit

 

 disclaimer

 

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