Category Archives: $LNKD

2CentView performance in 2016

The 2CentView portfolio was up 12% in 2016, which outperformed the S&P500 by 3% but below the FTSE100 which returned 14%.

The objective of the 2CentView system is to outperform the index in rising markets and be at least in line when the major index is flat or falls up to 20%, and outperform if the market corrects more than 20%. The portfolio is benchmarked vs. the SP500 (50%, up 9.5% ) and FTSE100(50%, up 14%), so the outperformed by 0,75% in 2016.

Overall return since 2013, 86% (21.5% annually).

2016 was a volatile and difficult investing year, starting with a sell off in February, triggered by low oil prices and a distressed energy sector. This was followed by Brexit and the election of Donald Trump – both results proving the polls are meaninigless! Many pundits advocating ‘sell all’ following both of these events, but the key was NOT too panic, and look at these events as potential buying opportunities – quality companies will always do well no matter who is in power!

Where it did badly:
2 Core positions were savaged – $FIT (FitBit), $SPWR (SunPower) – both these core positions were down 30% following results, so they traded way through long term stops – 2Centview eventually did exit – the overall pain was not great as 2CentView always sells higher up to reduce the overall cost basis and protect you from the ‘wide arcs’, as the legendary investor Bill Miller says

“Stocks, markets, and money managers’ performance are subject to enantiodromia, the tendency of things to swing to their opposites. Those swings can have wide arcs, and unsustainable trends can sometimes persist beyond the ability of one to endure. That is why most investors are out of stocks at the bottom–they are tired of losing money–and fully invested at the top–they believe their good performance will persist despite their stocks or the market’s being overpriced.”

Trades in $SPD (Sports Direct), $EZJ(EasyJet) [ post Brexit trades],$SKX (Skechers), $VRX (Valeant) were all stopped out.

Where it did well:

Core positions which did well: $MS up 60%, $Z (Zillow group), $ACA (Acacia Mining – gold trade) up 109% were the best performers with other core positions in Apple, FaceBook, Celgene, DLG up between 5 and 15%.

Trades that did well : $LNKD (linked in) – bought by $MSFT, $BOO – (bought after sell off following Trump victory). $DVN – Devon energy  doubled.

Also taken a position in AK Steel and IAG following Trump Election (up 30% and 5% respectively).

The portfolio benefited a bit from the rally in the US$, but the currency exposure is broadly hedged using the $PUS contract.

Main lesson learnt from 2016 – DO NOT PANIC – exiting the market was the worst possible thing you could have done in 2016 – but STICK to your stops if the market or an individual position continues on a downward spiral (both $SPWR and $FIT $9 exit stops were hit).

2CentView is that 2017 could be a great opportunity to make 15-20% if Trump delivers on his election promise, tax cuts and infra-structure spending could really boost company earnings. More on the next tweet for themes for 2017.

Happy 2017  from the 2CentView team.

Update on recent trade ideas :$FIT and $LNKD

$FIT – after a nice run up to $18 from $13, the stock has pulled back following results.

Bit gut wrenching that it failed to reach the target of $21 after such a nice run up…will now have to wait for the next set of results.

The company is investing in its products, which seems to scare Wall Street, who likes to see EPS growth now – not in a years time!

The danger with this market is that it can be become saturated – barriers to entry not that high….keeping margins up and sales growing will be a challenge, but their products are best of breed and worth waiting for another quarter. Don’t forget, always looking for the companies which yield great returns over the long term.

Fair Value is unchanged at $25 (includes the CASH), even after the results – so Analysts not as pessimistic as the market.

2CentView is still in the trade posted in March.

$LNKD – received a bid from $MSFT at $196 – bid unlikely to be trumped given the clauses in the agreement – given Microsoft’s record of failed acquisitions, would take profit here and look for a another opportunity.

2CentView exited the trade at $191.

$LNKD(LinkedIn) Buy ahead of the results tonite? …

Social Professional networking site was trading over $250 a share back in November of 2015.

This was expensive, with the 2CentView fair value coming at only $145 – implying a 5Y growth at around 30% versus the market price implied growth of 44%.

The stock then tanked early Feb as it was proving difficult to achieve the growth the market was willing to pay, and the stock halved in a day, in one most dramatic falls for a growth tech company – normally you see those kind of drops after a biotech’s drug fails to get approval!.

Now, the 2CentView FV = $115 vs $118 , earnings estimates being revised own and the market not willing to pay a premium to fair value as it did last year. Implied growth around 28% from more modest earnings expectations.

This could be an opportunity, as consensus target price is $157, indicating perhaps the market should pay premium.

LinkedIN is the only player in the Professional networking space so has an asset with no serious competition and revenue coming from several revenue streams.

If you like the company and the management – which only has a market cap of $15bn, buy here at around $120, take profit target = $155, Stop $99.

2CentView is in the above trade.