Macro Tsimmis

intelligently hedged investment

Archive for the ‘B.3 Spec Reports’ Category

Monthly ROI (return-on-investment) updates on the Intelledgement Speculative Opportunity Portfolio (ISOP).

Dec 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Tue, 13 Jan 09

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
VRTX 18-Apr-07 57 31.65 1,812.05 30.38 1,731.66 23.55% 30.78% -4.44% -2.63%
NBIX 22-May-07 158 11.33 1,798.14 3.20 505.60 2.89% -29.52% -71.88% -54.47%
GSS 19-Jul-07 451 4.19 1,897.69 1.00 329.23 36.99% -68.35% -76.23% -62.78%
GSS 24-Aug-07 613 3.08 1,896.04 1.00 447.49 36.99% -68.35% -67.67% -56.53%
BBY 19-Sep-08 -58 41.49 -2,398.42 28.11 -1,638.50 35.73% -46.61% 31.68% 165.39%
MA 19-Sep-08 -11 225.18 -2,468.98 142.93 -1,573.88 -1.70% -33.58% 36.25% 199.51%
WMT 19-Sep-08 -40 59.70 -2,380.00 54.77 -2,200.32 -1.99% 15.23% 7.55% 29.45%
CAB 19-Sep-08 170 14.08 2,401.60 5.83 991.10 -6.72% -61.31% -58.73% -95.67%
APWR 18-Dec-08 422 6.14 2,599.08 4.30 1,814.60 n/a -67.79% -30.18% 100.00%
SOHU 18-Dec-08 58 45.13 2,625.54 47.34 2,745.72 n/a -13.17% 4.58% 251.66%
cash -189.22 19,669.50
ISOP 03-Jan-07 10,000.00 24,923.44 -2.21% 14.09% 149.23% 58.12%
Global HF 03-Jan-07 10,000.00 9,340.35 0.74% -15.95% -6.60% -3.37%
NASDAQ 03-Jan-07 2,415.29 1,577.03 2.70% -40.54 -34.71% -19.25%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2008 inclusively) provides a CAGR of around 13.4%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 9.6%. Note that for the portfolio, dividends are added back into the value of the pertinent security—or subtracted from the value of short positions—and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 1% rate of interest on the listed cash balance.

Transactions: The market calmed down considerably in December, and—following three consecutive months of unmitigated disaster—closed up. With the immediate risk of a financial meltdown reduced and the probability of a post-election “Obtimism” rally increasing, we liquidated our four financials sector shorts as well as our real estate short.

News:

Comments: To quote our IMSIP 4Q08 report, “Let’s hope for the best. The incumbent crew was most definitely leading us deeper into the morass; the new crew recognizes we are in a big hole…perhaps they will be smart and brave enough to stop digging. We subscribe to the injunction to make love, not war, but we still believe in being prepared for both.” Accordingly, while we do not believe it is likely we can avoid a crash, it does appear likely that the herculean efforts of the powers-that-be to paper over the cracks in the system are taking hold (for now) and that, combined with optimism that the new regime might work miracles is likely to buoy markets in the short-to-medium term. This we are still short retailers—because we don’t believe the American consumer has any spare cash or credit to spend—but have covered our financial sector and real estate sector shorts for now. Plus in congruence with our long-term belief in the prospects of China, we have filled a gap in the port with two Chinese-market acquisitions.

At the end of the month, we were -2%, the hedgies were +1%, and the NASDAQ was +3%. For 2008 overall, we were +14% while the hedgies lost 16% but still handily beat the NASDAQ, which was -41% (worst year ever!). Overall after two years since inception, the ISOP is now +149% compared with -7% for the hedgies and -35% for the NASDAQ. Please note we generally consider the purchase of individual stock equities to be speculation, rather than investment, because of the high risk associated with owning a particular stock…and we recommend that the ratio of funds under management be about 10:1 in favor of investment over speculation—which is why this speculative portfolio started with $10,000 while our Intelledgement Macro Strategy Investment Portfolio started with $100,000 back at the beginning of 2007. (Of course, speculative risk can be mitigated by owning large numbers of stocks; this is why we recommend investing in exchange-traded funds, which typically do just that.) While this order of volatility is not unusual for speculative positions, the ROI we have attained here is unrealistically high. Over 40% of our net profits after two years still derive from trading one stock and associated options—DNDN—in the first few months of 2007. So, we’ve been lucky and good so far…but it could just as easily go the other way in 2009-10.

While there was lots of macro news—mostly desperate (and ill-considered) attempts by the government to fend off immediate collapse, it was a quiet month for our stocks. Our gold miner Golden Star (GSS) was up big (+37%) mostly on a rebound in the price of gold and possibly also on an unusual lack of bad company-specific news. Vertex (VRTX) recovered nicely (+24%) from last month’s overblown concerns that the new Obama administration would be anti-biotech. Neurocrine Biosciences (NBIX), our other biotech stock, was up 3%. Of our four retailers, two were flat (Mastercard/MA and Walmart/WMT) while Cabelas (CAB) which we are long was down 7% and Best Buy (BBY) which we are short was up 36%. And despite the fact that the price of oil declined in December by 18%, our double inverse oil ETF (DUG)—instead of being up 36% as we might have expected—was down another 20%. Clearly something is wrong there. Finally, our Chinese newcomers were a mixed bag: Sohu.com (SOHU) was up 5%, but A-Power (APWR) was blown down 30% on revised guidance.

The risk of a serious downturn remains but appears to be less immediate, and consequently we reduced our short positions. Unfortunately, it still appears that the new administration is angling to establish continuity with the old one with respect to the policy of material intervention in the market to prop up insolvent “too-big-to-fail” enterprises. While we feel these policies are long-term disastrous, there is some “upside risk” should the collective wisdom of the market come to think otherwise. Generally, new political leaders get some benefit of the doubt. So we will be prepared for a “melt-up” as well. With systemic risk on the loose, the variation in plausible valuations for almost anything is very wide and consequently the risk of volatility—which reached record levels in 2008—remains high.

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Nov 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Wed, 10 Dec 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
VRTX 18-Apr-07 57 31.65 1,812.05 24.59 1,401.63 -6.18% 5.85% -22.65% -14.70%
NBIX 22-May-07 158 11.33 1,798.14 3.11 491.38 -24.70% -31.50% -72.67% -57.35%
GSS 19-Jul-07 451 4.19 1,897.69 0.73 329.23 -17.05% -76.90% -82.65% -72.33%
GSS 24-Aug-07 613 3.08 1,896.04 0.73 447.49 -17.05% -76.90% -76.40% -68.07%
BZH 24-Mar-08 -214 10.99 -2,343.86 1.81 -387.34 -20.61% -95.61% 83.47% 143.57%
BAC 8-Sep-08 -69 34.73 -2,388.37 16.25 -1,121.25 -32.77% -60.62% 53.05% 581.57%
GS 8-Sep-08 -14 169.73 -2,368.22 78.99 -1,110.76 -14.61% -63.27% 53.10% 582.44%
HBC 8-Sep-08 -30 79.11 -2,365.30 54.37 -1,658.10 -7.85% -35.05% 29.90% 225.29%
DUG 10-Sep-08 56 42.83 2,406.48 30.40 1,814.51 -17.95% -15.51% -24.60% -72.89%
BBY 19-Sep-08 -58 41.49 -2,398.42 20.71 -1,209.30 -22.95% -60.66% 49.58% 717.44%
MA 19-Sep-08 -11 225.18 -2,468.98 145.40 -1,601.05 -1.64% -32.43% 35.15% 381.54%
WMT 19-Sep-08 -40 59.70 -2,380.00 55.88 -2,235.20 0.13% 17.57% 6.08% 36.09%
CAB 19-Sep-08 170 14.08 2,401.60 6.25 1,062.50 -21.38% -58.53% -55.76% -98.58%
WFC 09-Oct-08 -73 33.06 -2,405.38 28.89 -2,133.79 -15.15% -2.89% 11.29% 118.47%
cash 16,906.53 31,396.20
ISOP 03-Jan-07 10,000.00 25,486.15 2.70% 16.67% 154.86% 63.50%
Global HF 03-Jan-07 10,000.00 9,271.73 -1.67% -16.57% -7.28% -3.90%
NASDAQ 03-Jan-07 2,415.29 1,535.57 -10.77% -42.10% -36.42% -21.18%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security—or subtracted from the value of short positions—and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: Another crazy month in which the ISOP was a haven of sanity. Volatility was extremely high—seven trading sessions in which the NASDAQ finished up or down between 5% and 7%—but it was a bit less wild than October (when there were two days the market moved 10% or more and a third day it moved 9%). Meanwhile we stood pat…hmmm…perhaps when everyone around you is frenetically dashing about like a chicken with it’s head cut off, standing pat is no longer a reliable indication of sanity.

  • 5 Nov—paid out WFC dividend of $0.34/shr
  • 19 Nov—paid out HBC dividend of $0.90/shr

News:

Comments: If anyone was still thinking that “change we can believe in” would be any different from frontrunning for the-powers-that-be, it only took Barack Obama 20 days to put that concern to rest. The appointment of Timothy Geithner—one of the architects of the bailout under Bush aegis—is a clear signal. The import is that the new administration will be working just as assiduously as the old one—di rigueur objections from right-wing zealots that the agenda is focused on promoting socialist/statist solutions notwithstanding—to commit taxpayer money in support of the cabal of financial services leaches who crashed the system. Instead of cutting those bad boys loose and blaming the consequent chaos on W—which would have meant taking a lot of immediate pain, but also purged of the poison, a swift and healthy recovery by the economy—the Obama folks have evidently decided to take the path of least resistance and continue the policies of papering over the cracks in the walls. We can look forward to more easy credit, more bailouts of “too-big-to-fail” companies, more Keynesian stimulus, and—if this “works”—a Potemkin-village “recovery” just in time to support Democrats in the 2010 election.

Although the odds are improving, it is still not clear if the man behind the curtain can pull off the illusion that all is well again here or not. Reflecting the consequent uncertainty, the level of volatility this month was again—as in October—extremely high: an average daily change of ±3.8% as compared with the normal index change (up or down) an average of about 0.5% each day.

At the end of the month, we were +3%, the hedgies were -2%, and the NASDAQ was -11%. Another great month for the good guys! Overall after 23 months of operations, the ISOP is now +155% compared with -7% for the hedgies and -36% for the NASDAQ.

It was another heavy news month. Of our four retailers, two were flat and two were down big. Unfortunately, while we are short three of the four, the one we are long, CAB, was one of the ones down big (-21%) after reporting good 3Q08 results but providing very guarded guidance going forward. We still think CAB will shine for us in the long run. BBY was down 23%, MA was down 2%, and WMT was +0.13%, the only stock in the port to be up on the month. All four of our financial services shorts obligingly tanked: BAC -33%, GS and WFC each -15%, and HBC -8%. We did have a pang of regret over WFC’s victory over Citigroup (C) in the bidding to acquire Wachovia (WB) last month; had C won the bid, we most likely would have shorted their stock instead (we had previously been short WB) and they were down 39% this month. Actually, they were down 72% on 21 November before being bailed out by Treasury in yet another egregious misappropriation of taxpayer money. The next day—as referenced above—the Fed committed another $800 billion to bail out Fannie (FNM) and Freddie (FRE).

None of our other long positions had a good month. Golden Star (GSS) reported their worst-ever gold production costs and our patience with management is growing very thin; the stock was down another 17%. Neurocrine Biosciences (NBIX) tried making no news and that worked even less well, with their stock down 24%. We still think we need to give their GnRH antagonist candidate drug for fighting endometriosis, elagolix, more time. Vertex (VRTX) went to the other extreme of issuing good news—fresh positive results for their telaprevir anti-hepatitis C drug candidate—but ultimately, it did not save them from a drubbing late in the month over fears the Obama administration will limit the prices of new drugs. These concerns may be justified in the fullness of time, but are unlikely to be an issue for telaprevir in any case, as curing many otherwise uncurable patients of hepatitis C is extremely cost-effective (in that the cost of treating advanced cases of hepatitis C far exceeds the cost of telaprevir).

Finally, our oil short ETF, DUG, continues to disappoint, down 18% on the month despite a decline in the price of oil.

The risk of a serious downturn continues to be significant here, and consequently we remain net short. However, it does appear that the new administration is angling to establish continuity with the old one with respect to the policy of material intervention in the market to prop up insolvent “too-big-to-fail” enterprises. While we feel these policies are long-term disastrous, there is some “upside risk” should the collective wisdom of the market come to think otherwise. Generally, new political leaders get some benefit of the doubt. So far the the market has not rallied in reaction to the election results (except for the five days leading into the election), but it could still happen.

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Oct 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Wed, 12 Nov 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
VRTX 18-Apr-07 57 31.65 1,812.05 26.21 1,493.97 -21.15% 12.83% -17.55% -11.79%
NBIX 22-May-07 158 11.33 1,798.14 4.13 652.54 -11.94% -9.03% -63.71% -50.40%
GSS 19-Jul-07 451 4.19 1,897.69 0.88 396.88 -42.11% -72.15% -79.09% -70.36%
GSS 24-Aug-07 613 3.08 1,896.04 0.88 539.44 -42.11% -72.15% -71.55% -65.28%
BZH 24-Mar-08 -214 10.99 -2,343.86 2.28 -487.92 -61.87% 69.31% 79.18% 162.20%
BAC 8-Sep-08 -69 34.73 -2,388.37 24.17 -1,667.73 -30.94% -41.42% 30.17% 515.49%
GS 8-Sep-08 -14 169.73 -2,368.22 92.50 -1,299.90 -27.73% -56.99% 45.11% 1201.23%
HBC 8-Sep-08 -30 79.11 -2,365.30 59.00 -1,770.00 -27.01% -29.52% 25.17% 369.76%
DUG 10-Sep-08 56 42.83 2,406.48 37.05 2,186.91 -4.63% 2.97% -9.12% -49.60%
BBY 19-Sep-08 -58 41.49 -2,398.42 26.88 -1,567.16 -28.32% -48.95% 34.66% 1230.08%
MA 19-Sep-08 -11 225.18 -2,468.98 147.82 -1,627.67 -16.64% -31.31% 34.08% 1180.79%
WMT 19-Sep-08 -40 59.70 -2,380.00 55.81 -2,232.40 -6.81% 17.42% 6.20% 68.75%
CAB 19-Sep-08 170 14.08 2,401.60 7.95 1,351.50 -34.19% -47.25% -43.73% -99.33%
WFC 09-Oct-08 -73 33.06 -2,405.38 34.05 -2,485.65 n/a 14.45% -3.34% -43.08%
cash 16,906.53 31,343.96
ISOP 03-Jan-07 10,000.00 24,826.77 7.70% 13.65% 148.27% 64.54%
Global HF 03-Jan-07 10,000.00 9,429.20 -6.01% -15.15% -5.71% -3.17%
NASDAQ 03-Jan-07 2,415.29 1,720.95 -17.73% -35.11% -28.75% -16.94%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: The ISOP was a bedrock of stability this month; with the market going totally insane in terms of volatility, we felt constrained to make only one transaction…and that was essentially a move to bring the port more into congruence with the way it used to be, in that we replaced our Wachovia (WB) short position (covered last month) with a short position in the stock of the company that acquired WB, viz. Wells Fargo (WFC). A big contrast from last month, when we had a portfolio-record 14 transactions in moving to a net short stance. Speaking of our shorts, we did cheerfully pay out several dividends for our financial services and retailing stocks (when you are short a stock that pays a dividend, you have to pony it up).

  • 3 Oct—paid out BBY dividend of $0.14/shr
  • 8 Oct—paid out MA dividend of $0.15/shr
  • 9 Oct—Sold short 73 WFC for $33.06/shr
  • 23 Oct—paid out GS dividend of $0.35/shr

News:

Comments: LOL you might think that the amount of effort that goes into managing portfolios in a month with one transaction would be a lot less than the effort expended in a 14-transaction month…but when the market is going insane and repricing everything from day-to-day, just about the same degree of close attention is required, regardless of whether or not anything is being bought or sold. On average, the NASDAQ goes up about 10% a year…well there were two DAYS in October where the NASDAQ index was up 10%+…and this in a month were overall, the index was down 18%, the two gigantic up days notwithstanding.

The level of volatility this month was positively staggering. Normally, the index changes (up or down) an average of about 0.5% each day. The average daily change in October: ±3.7%…more than seven times normal!

Obviously, when the level of systemic risk is high, the potential variation in the value of any given company is extremely high, depending. For example, if the economy recovers, then Best Buy (BBY)—which we are short—is worth, say, $15+ billion. But if we fall into a depression where no one can afford to buy big flat screen TVs, then maybe they go out of business. Pretty big range in valuation! Add to that the complexities of the economy, and the impossibility of instantly and accurately calculating the impact of the latest government actions, the inevitable result is a wildly gyrating consensus.

Be that as it may, when the dust settled, we were +8%, the hedgies were -6%, and the NASDAQ was, as we said, -18%. A great month for the good guys! Overall after 22 months of operations, the ISOP is now +148% compared with -6% for the hedgies and -29% for the NASDAQ.

It was a bull market for news this month. On 3 October, W signed the bank bailout bill (after rejecting it last month, the House took another vote after some fig leaves were applied and enough Republicans changed their votes to “yes” to pass it). Also on 3 October, Wells Fargo (WFC) outbid Citigroup (C) for our former short, Wachovia (WB). On 6 October with the market tanking, the Fed announced an emergency $900 billion in short-term loans to banks (this is in addition to TARP funds). On 7 October with the market tanking still more, the Fed announced an emergency move to lend $1.3 trillion to non-financial services companies. On 8 October with the market still on the express elevator headed for the sub-basement, the Fed cut interest rates in a move coordinated with other prominent central banks including those of China, the ECB, the UK, and Switzerland. Overall, the S&P 500 dropped 18.2% for the week ending 10 October, its worst week ever. On 14 October, the US Treasury announced distribution of $250 billion of the TARP funds in the form of loans to several large banks, including our shorts Bank of America (BAC), Goldman Sachs (GS), and Wells Fargo (WFC) as well as C and others. On 21 October, the Fed announced another emergency short-term loan program, this time to money market mutual funds, which had stopped lending to banks in the wake of a huge wave of redemptions.

The fix is clearly in, with Democrats in Congress and working hand-in-glove with the Republican Secretary of the Treasury and Republican appointee Fed Chairman Ben Bernanke to “stablize” the current broken-down system. It appears that none of the broken financial services companies—not even AIG, Freddie Mac (FRE), or Fannie Mae (FNM), who are in the worst shape—will be allowed to fail so long as the Fed’s printing presses are still able to pump out funds to loan them to “tide them over.” W has practically turned invisible during the crisis but evidently has no objections (if any opinions whatsoever). Senator Barack Obama, the Democratic party nominee for President, has pretty carefully avoided saying much of anything, but on 1 October he voted for the bailout (as did his running mate, Senator Joe Biden). The GOP standard bearer, Senator John McCain, has been somewhat more vocal and way more incoherent; in the event, he, too, voted for the bailout on 1 October. We believe this approach is both morally wrong—bailing out wealthy bankers with taxpayer money—and shortsighted, in that it will only delay the day of reckoning and ensure both that the eventual nadir will be lower and the recovery therefrom harder and longer.

Speaking of hard, that it was for our portfolio, as ever single equity was down in October. (WFC, which we are short, was up between the day we bought it—9 October at the open—and the end of the month but we obviously sold it short too late because it was down overall for the month.) Fortunately, we are now short eight positions and long only six so on balance, a down market is a good thing for our portfolio. Among the long positions, our two biotech companies (VRTX down 21% and NBIX down 12%), our gold miner (GSS down 42%), and our relatively new retailer (CAB down 34%) were no help whatsover.

We also own DUG, which is an ETF that is supposed to move twice the inverse of the price of oil…well crude was down sharply in October, but on extremely volatile trading, and DUG somehow managed to lose 5%, declining more on the days that the price of oil increased sharply that it gained on the days oil declined. We need to keep this one on a short leash as it is evidently poorly designed and not behaving as we expected it to.

Aside from the aforementioned WFC, we were very happy with the performance of our shorts. Our real estate short (BZH) was down 62%! The other financials shorts were all down sharply (BAC -31%, GS -28%, and HBC -27%). All three retail-related shorts were down big (BBY -28%, MA -17% and WMT -7%).

Clearly, the risk of a serious downturn continues to be significant here, and consequently we remain net short.

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Sep 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Sun, 12 Oct 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
VRTX 18-Apr-07 57 31.65 1,812.05 33.24 1,894.68 23.75% 43.09% 4.56% 3.11%
NBIX 22-May-07 158 11.33 1,798.14 4.69 741.02 -9.28% 3.30% -58.79% -47.87%
GSS 19-Jul-07 451 4.19 1,897.69 1.52 685.52 -0.65% -51.90% -63.88% -57.14%
GSS 24-Aug-07 613 3.08 1,896.04 1.52 1,606.06 -0.65% -51.90% -50.86% -47.48%
BZH 24-Mar-08 -214 10.99 -2,343.86 5.98 -1,279.72 14.08% 19.52% 45.40% 105.36%
BAC 8-Sep-08 -69 34.73 -2,388.37 35.00 -2,415.00 n/a -15.17% -1.11% -16.99%
GS 8-Sep-08 -14 169.73 -2,368.22 128.00 -1,792.00 n/a -40.48 24.33% 3617.53%
HBC 8-Sep-08 -30 79.11 -2,365.30 80.83 -2,424.90 n/a -3.44% -2.52% -34.54%
DUG 10-Sep-08 56 42.83 2,406.48 38.85 2,287.71 n/a 7.98% -4.94% -60.32%
BBY 19-Sep-08 -58 41.49 -2,398.42 37.50 -2,175.00 n/a -28.77% 9.32% 1824.79%
MA 19-Sep-08 -11 225.18 -2,468.98 177.33 -1,950.63 n/a -17.60% 20.99% 55900.91%
WMT 19-Sep-08 -40 59.70 -2,380.00 59.89 -2,395.60 n/a 26.00% -0.66% -19.62%
CAB 19-Sep-08 170 14.08 2,401.60 12.08 2,053.60 n/a -19.84% -14.49% -99.45%
cash 14,501.15 28,890.43
ISOP 03-Jan-07 10,000.00 23,051.87 -6.22% 5.52% 130.52% 61.55%
Global HF 03-Jan-07 10,000.00 10,032.13 -5.76% -9.72% 0.32% 0.18%
NASDAQ 03-Jan-07 2,415.29 2,367.52 -11.64% -21.13% -13.39% -7.92%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: Well, following three months of almost no activity transaction-wise, the market has been crazy, with valuations all over the place—but trending down, big time—and consequently we felt constrained to make major adjustments to the portfolio, mostly moving to the short side. First we shorted a bunch of financial company stocks. Then we sold all our oilers and our one mining stock and bought an ETF that goes up when the price of oil declines. Then we shorted a cohort of retail-related stocks, and—partly as a hedge—bought a fourth retailer. Finally, we covered the WB short. Not surprizingly, the month set a new portfolio record for the most transactions ever: fourteen (the previous record was five)!

News:

Comments: Sheesh…this month required an awful lot of work to produce a 6% loss! The silver lining was that the hedgies also lost 6% and the NASDAQ was down 12%, so it could have been worse. Overall after 21 months of operations, the ISOP is now +131% compared with ±0% for the hedgies and -13% for the NASDAQ.

So we did have a lot of company-specific news this month, but it was pretty much overshadowed by the macro-level proverbial excrement hitting the fan. We had the government takeover of Fannie Mae (FNM) and Freddie Mac (FRE) on 7 Sep. A week later we had the bankruptcy of Lehman Brothers (LEH) and the acquisition of Merrill Lynch (MER) by BAC. Then we had a run on the money market funds ($140 billion withdrawn in one week), and the emergency $85 billion loan by the Fed to AIG to avoid a bankruptcy there. To close out the month, you have the spectacle of Republican Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke begging the GOP-controlled House for a $700 billion emergency bailout fund to be used to purchase so-called “toxic” assets that have plummeted in value and threaten multiple financial institutions who own them with insolvency…and being turned down! (Oh, and we almost forgot, the arrangement for Citibank (C) to buy our own troubled asset, WB.)

Clearly chickens are coming home to roost here. As we keep saying, this economy has serious fundamental flaws—too much debt and entitlement obligations, too much energy devoted to unproductive-to-fraudulent financial transactions, an unsound currency, underfunding of infrastructure investment—and the cultural focus on taking the path of least resistance and maximizing the immediate return on investment is impeding us from addressing these long-term flaws. While it would be painful, a collapse of the current Ponzi-based financial system would clear the decks for the creation of a healthier, sounder approach, and the resultant crisis would be resolved a lot faster than is likely to be the case if we just kick the can down the road again here. So we were cheering when the House voted down the Troubled Assets Relief Program, even though the markets tanked on the news. (Of course, by then we were mostly short. LOL)

Speaking of which, the market was extremely volatile this month—it was ±3% on two days, ±4% on three days, ±5% on three days, and -9% on 29 Sep (the day the House voted down the $700 billion bailout bill). Ofttimes the market does not move as much as 9% in an entire year! In that light, it is not a shocker that we felt constrained to make a few moves…such as closing more than half the positions we started the month with and then opening up even more new ones. Among the few holdovers were our two biotech companies (VRTX up 24% and NBIX down 9%), our gold miner (GSS down 1%), and our housing industry short (BZH -14% by virtue of which we gained). As for the newcomers, two of our three financials short were up (BAC +1% and HBC +3%) but GS was down 24% in only three weeks. Two of our three retail-related shorts were down big (BBY -9% and MA -21%) in only two weeks while the other gained a point (WMT +1%). Our oil short ETF (DUG) was down 5% and the retailer we went long on (CAB) manifestly should have been a short as it was down 14%. You can help both yourself and the ISOP by going to their website and stocking up on ammo and fishhooks as insurance against a potential collapse of the system.

Clearly, the risk of a serious downturn is now greater than a month ago, and we are about as short as we are going to get. Fasten your seat belts; it’s going to be a bumpy night.

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Aug 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Sun, 14 Sep 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
TMY 03-Jan-07 300 3.30 998.00 0.34 102.00 -32.00% -82.74% -89.78% -74.82%
VRTX 18-Apr-07 57 31.65 1,812.05 26.86 1,531.02 -19.15% 15.63% -15.51% -11.60%
NBIX 22-May-07 158 11.33 1,798.14 5.17 816.86 9.58% 13.88% -54.57% -46.19%
BQI 13-Jul-07 565 3.35 1,900.75 4.15 2,344.75 -30.11% 1.72% 23.36% 20.40%
GSS 19-Jul-07 451 4.19 1,897.69 1.53 690.03 -41.60% -51.58% -63.64% -59.66%
GSS 24-Aug-07 613 3.08 1,896.04 2.62 1,606.06 -41.60% -51.58% -50.53% -49.99%
SLT 5-Oct-07 111 19.75 2,200.25 14.22 1,578.42 -8.44% -45.45% -28.26% -30.84%
BZP 19-Nov-07 245 9.77 2,401.65 19.70 4,826.50 -26.63% 76.21% 100.97% 145.38%
BZP 30-Jan-08 186 11.27 2,104.22 19.70 3,664.20 -26.63% 76.21% 74.14% 160.03%
WB 1-Feb-08 -57 39.99 -2,271.43 15.89 -942.21 -50.19% 58.22% 58.52% 122.84%
BZH 24-Mar-08 -214 10.99 -2,343.86 6.96 -1,489.44 -82.20% 6.33% 36.45% 105.14%
cash -2,393.50 10,519.71
ISOP 03-Jan-07 10,000.00 24,579.73 -21.40% 12.52% 145.80% 77.05%
Global HF 03-Jan-07 10,000.00 10,645.30 -1.27% -4.21% 6.45% 4.05%
NASDAQ 03-Jan-07 2,415.29 2,367.52 1.80% -10.74% -1.98% -1.26%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: None.

News:

Comments: GAK! If you thought our up-till-then worst month ever in July, -8%, was bad, check out August: a minor catastrophe at -21%. We were murdered by both the NASDAQ (+2%) and the Global Hedge Fund Index (-1%); overall after 20 months of operations, the ISOP is now +146% compared with +8% for the hedgies and -4% for the NASDAQ.

Given the almost unanimous meltdown on the part of every holding in the portfolio this month, it’s a little tempting to claim that we purposely engineered big losses in order to prove our point that speculation is a high-risk activity. That’s not the case, but if we had tried to do that, we could hardly have done better than these results achieved by accident. While overall, the market was more optimistic in August, commodity prices were generally down. Thus we suffered from a double whammy: our real estate and banking shorts soared in price (which meant we lost money) while our miners and energy plays declined in value. BZH was up 82% and WB up 50%—we are short both of them—to headline our losses. Our energy plays were all hurt bigtime, with TMY -32%, BQI down -30%, and BZP -27%. Our miners were also down; GSS -42% on continued production cost issues and SLT -8%. Our biotechs were mixed, with VRTX -19% and NBIX +10%.

We believe that this month was an anomoly. If our macro analysis is correct—we are due to pay the piper for years of overspending and the central banks’ easy money policies are merely postponing (and making worse) the eventual day of reckoning—then it makes sense for commodity prices to head south here, as demand will rapidly shrink, but it makes no sense for BZH and WB to be increasing in value (and the market to be moving north overall, as it did this month). On the other hand, if we are wrong, and the credit infusions do rescue the economy, then fine: it would make sense for BZH and WB—and the market overall—to prosper, but there is no good reason in that scenario for commodity prices to decline.

So lacking any clarity in where things are headed in the immediate future, we are standing pat here. While we expect the real estate and finance sectors to continue to decline, the best bet continues to be that the Fed holds things together with the markets in general through November’s USA elections. Having said that, however, the Olympics are over now, so the Chinese government is likely to lose some interest in the collective efforts to apply lipstick to the pig (or, in this case, bear). Therefore, the risk of a serious downturn is now greater and we will be watching closely for signs of same.

Even if we do make it to November relatively unscathed, then it will be time to seriously reevaluate the port and consider more of a short bias.

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Jul 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Sun, 10 Aug 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
TMY 03-Jan-07 300 3.30 998.00 0.50 150.00 -20.63% -74.62% -84.97% -70.00%
VRTX 18-Apr-07 57 31.65 1,812.05 33.22 1,893.54 -0.75% 43.00% 4.50% 3.48%
NBIX 22-May-07 158 11.33 1,798.14 4.72 745.44 12.60% 3.92% -58.54% -52.18%
BQI 13-Jul-07 565 3.35 1,900.75 5.94 3,354.97 -8.65% 45.54% 76.51% 71.68%
GSS 19-Jul-07 451 4.19 1,897.69 2.62 1,181.62 -2.60% -17.09% -37.73% -36.73%
GSS 24-Aug-07 613 3.08 1,896.04 2.62 1,606.06 -2.60% -17.09% -15.29% -16.24%
SLT 5-Oct-07 111 19.75 2,200.25 15.53 1,723.83 -2.33% -40.43% -21.65% -25.70%
BZP 19-Nov-07 245 9.77 2,401.65 26.85 6,578.25 -8.67% 140.16% 173.91% 323.45%
BZP 30-Jan-08 186 11.27 2,104.22 26.85 4,994.10 -8.67% 140.16% 137.34% 461.30%
WB 1-Feb-08 -57 39.99 -2,271.43 10.58 -639.54 31.87% 72.18% 71.84% 198.19%
BZH 24-Mar-08 -214 10.99 -2,343.86 3.82 -817.48 31.42% 48.59% 65.12% 313.71%
cash -2,393.50 10,502.20
ISOP 03-Jan-07 10,000.00 31,273.00 -7.71% 43.16% 212.73% 106.32%
Global HF 03-Jan-07 10,000.00 10,782.24 -2.28% -2.97% 7.82% 4.90%
NASDAQ 03-Jan-07 2,415.29 2,325.55 1.42% -12.32% -3.72% -2.38%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: We sold Elán (ELN) when further analysis of the Phase 2 results for bapineuzumab reported last month called into question the entire theory the anti-Alzheimer’s Disease drug is based on.

News:

Comments: POW! Following our best month of the year in June, we had our worst month ever in July, down 8%. We were outperformed by both the NASDAQ (+1%) and the Global Hedge Fund Index (-2%); overall after 19 months of operations, the ISOP is now +213% compared with +8% for the hedgies and -4% for the NASDAQ.

Our energy plays led the decline, with our sick puppy TMY -21%, and both BZP and BQI down -9% and commodity prices faltered. Our miners were also down; GSS down 3% and SLT down 2%. Our remaining biotechs—after our sale of ELN—were mixed, with VRTX -1% and NBIX +13%. Our shorts performed well, with BZH declining 31% (+31% for us) and WB 32%.

If you are following our macro analysis, you know that we have been anticipating a market crash ever since the Fed started lowering rates nearly a year ago. We still expect the central banks to do their utmost to hold things together until (at least) after the Olympics to avoid embarrassing the Chinese and ideally until after the USA elections to avoid the risk that too many hard questions might be asked of the politicians.

But the Olympics end on 24 August, so the crash watch alert level will be going up a notch or two. Stay tuned.

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Jun 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Sat, 12 Jul 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
TMY 03-Jan-07 300 3.30 998.00 0.63 189.00 40.00% -68.02% -81.06% -67.28%
ELN 04-Apr-07 129 13.90 1,801.10 35.55 4,585.95 41.97% 61.74% 154.62% 112.45%
VRTX 18-Apr-07 57 31.65 1,812.05 33.47 1,907.79 16.91% 44.08% 5.28% 4.38%
NBIX 22-May-07 158 11.33 1,798.14 4.19 662.02 -15.01% -7.71% -63.18% -59.39%
BQI 13-Jul-07 565 3.35 1,900.75 6.50 3,672.50 42.23% 59.31% 93.21% 97.68%
GSS 19-Jul-07 451 4.19 1,897.69 2.69 1,213.19 -9.12% -14.87% -36.07% -37.56%
GSS 24-Aug-07 613 3.08 1,896.04 2.69 1,648.97 -9.12% -14.87% -13.03% -15.12%
SLT 5-Oct-07 111 19.75 2,200.25 15.90 1,764.90 -28.18% -39.01% -19.79% -25.87%
BZP 19-Nov-07 245 9.77 2,401.65 29.40 7,203.00 29.29% 162.97% 199.92% 499.51%
BZP 30-Jan-08 186 11.27 2,104.22 29.40 5,468.40 29.29% 162.97% 159.88% 892.37%
WB 1-Feb-08 -57 39.99 -2,271.43 15.53 -921.69 34.75% 59.16% 59.42% 211.32%
BZH 24-Mar-08 -214 10.99 -2,343.86 5.57 -1,191.98 19.86% 25.03% 49.14% 343.65%
cash -4,194.60 7,672.15
ISOP 03-Jan-07 10,000.00 33,886.98 18.75% 55.12% 238.87% 126.92%
Global HF 03-Jan-07 10,000.00 11,033.81 -1.03% -0.71% 10.34% 6.83%
NASDAQ 03-Jan-07 2,415.29 2,292.98 -9.10% -13.55% -5.06% -3.43%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: None.

News:

Comments:

WOW! Our best month of the year: +19%. In fact, aside from our freaky Dendreon bonanza (up 78% in March 2007), this is our best month ever. We again beat both the NASDAQ (-9%) and the Global Hedge Fund Index (-1%); overall after 18 months of operations, the ISOP is now a record high +239% compared with +10% for the hedgies and -5% for the NASDAQ.

Folks, it really isn’t this easy…or more precisely, the vaguaries of speculation being what they are, while it is feasible to be up big in a short period of time, it is just also easy to be down big. Case in point, TMY, which was up 40% this month on the buyout bid from Hong Kong—but overall is still down 68% for us. Or our biotech spec play NBIX, down another 15% this month and -60% overall in the wake of last year’s surprise recjection by the FDA of their insomnia remedy. Or GSS, our gold miner with the lingering production cost issues, down another 9% this month.

Of course, on balance, the good outweighed the bad this month. On the strength of nearly doubled reserve estimates, BQI was up 42% to lead the port, along with ELN which despite mixed results on their Alzheimer’s drug was also up 42%. The big picture for banking and housing continued to decline in June, and our short positions were strong again: WB up 35% and BZH up 20%. BZP was up 29% on the news that they were finally shipping crude and VRTX was up 17% despite somewhat disappointing news on the design of the phase 3 trials for telaprevir. SLT dropped 28% on concern they may end up overpaying for Asarco.

While there is a temptation to sell off everything and just sit on the funds for the next six months—we are up 55% YTD and it’s hard to imagine the hedgies or market catching us by December—we still think the market holds it together through the Olympics at least and the USA election most probably, and so we are holding pat here. Should we get a decline, then we will have to review the energy plays and possibly the mining and biotech plays, and we could be looking for more shorting opportunities.

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May 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Thu, 12 Jun 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
TMY 03-Jan-07 300 3.30 998.00 0.45 135.00 -13.46% -77.16% -86.47% -75.93%
ELN 04-Apr-07 129 13.90 1,801.10 25.04 3,230.16 -4.75% 13.92% 79.34% 65.79%
VRTX 18-Apr-07 57 31.65 1,812.05 28.63 1,631.91 12.19% 23.25% -9.94% -8.95%
NBIX 22-May-07 158 11.33 1,798.14 4.93 778.94 -9.21% 8.59% -56.68% -55.82%
BQI 13-Jul-07 565 3.35 1,900.75 4.57 2,582.05 5.06% 12.01% 35.84% 41.55%
GSS 19-Jul-07 451 4.19 1,897.69 2.96 1,334.96 -10.84% -6.33% -29.65% -33.41%
GSS 24-Aug-07 613 3.08 1,896.04 2.96 1,814.48 -10.84% -6.33% -4.30% -5.57%
SLT 5-Oct-07 111 19.75 2,200.25 22.14 2,457.54 6.49% -15.07% 11.69% 18.50%
BZP 19-Nov-07 245 9.77 2,401.65 22.74 5,571.30 16.74% 103.40% 131.98% 391.59%
BZP 30-Jan-08 186 11.27 2,104.22 22.74 3,623.28 16.74% 103.40% 101.01% 722.76%
WB 1-Feb-08 -57 39.99 -2,271.43 23.80 -1,414.46 18.35% 37.42% 37.42% 167.12%
BZH 24-Mar-08 -214 10.99 -2,343.86 6.95 -1,487.30 37.22% 6.46% 36.54% 446.33%
cash -4,194.60 7,672.15
ISOP 03-Jan-07 10,000.00 28,536.37 7.96% 30.63% 185.36% 110.98%
Global HF 03-Jan-07 10,000.00 11,148.64 1.84% 0.32% 11.49% 8.05%
NASDAQ 03-Jan-07 2,415.29 2,522.66 4.55% -4.89% 4.55% 3.15%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus—or minus for short positions—the value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: In the long run, we like oil, as the continuing buildout in Asia will ensure demand tends to challenge supply, and it also serves as a hedge against the declining dollar. Be that as it may, $125/barrel seems too high, too soon to us, and accordingly we took a position in an inverse ETF that goes up 2x any daily decline in the price of crude (and vice versa). However, the market disagrees, and it only took six days and a high print of $132.78 to decrement our position by 10%. Mindful of John Maynard Keynes’ famous oberservation that “Markets can remain irrational longer than you can remain solvent,” we hit the silk. In March, Goldman Sachs analysts forecast a spike as high as $200/barrel. While we still think that is unlikely anytime soon, we’re no longer willing to bet on a near-term decline.

News:

Comments:

Another excellent month, up 8%. We beat both the NASDAQ (+5%) and the Global Hedge Fund Index (+2%) for the fourth time in five tries this year. The big picture for banking and housing clouded up in May, and our short positions lead the port for the month: BZH up 37% and WB up 18%. On the energy front, BZP was up 17% on continued strength in the price of oil and improved reserves data, BQI was up 5% and the outlier was TMY, which produced nothing but more bad news and sank another 13%. Our biotech plays were mixed: VRTX was up 12% on no particular news, ELN lost 5% and NBIX shed 9%. On the mining front, SLT was up 5% but GSS was decimated (approximately) by 11%.

We still think the market holds it together through the Olympics at least and the USA election most probably. By around then we will have to review the energy plays and possibly the mining and biotech plays, and we could be looking for more shorting opportunities.

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Apr 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Mon, 12 May 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
TMY 03-Jan-07 300 3.30 998.00 0.52 156.00 -41.57% -73.60% -84.37% -75.43%
ELN 04-Apr-07 129 13.90 1,801.10 26.29 3,391.41 26.03% 19.61% 88.30% 80.34%
VRTX 18-Apr-07 57 31.65 1,812.05 25.52 1,454.64 6.82% 9.86% -19.72% -19.13%
NBIX 22-May-07 158 11.33 1,798.14 5.43 857.94 0.56% 19.60% -52.29% -54.42%
BQI 13-Jul-07 565 3.35 1,900.75 4.35 2,457.75 10.41% 6.62% 29.30% 37.91%
GSS 19-Jul-07 451 4.19 1,897.69 3.32 1,497.32 -2.92% 5.06% -21.10% -26.11%
GSS 24-Aug-07 613 3.08 1,896.04 3.32 2,035.16 -2.92% 5.06% 7.34% 10.90%
SLT 5-Oct-07 111 19.75 2,200.25 20.79 2,307.692 16.67% -20.25% 4.88% 8.73%
BZP 19-Nov-07 245 9.77 2,401.65 19.48 4,772.60 -10.35% 74.24% 98.72% 365.92%
BZP 30-Jan-08 186 11.27 2,104.22 19.48 3,623.28 -10.35% 74.24% 72.19% 785.70%
WB 1-Feb-08 -57 39.99 -2,271.43 29.15 -1,698.03 -7.96% 23.35% 25.24% 151.88%
BZH 24-Mar-08 -214 10.99 -2,343.86 11.07 -2,368.98 -17.14 -48.99% -1.07% -10.09%
cash -4,194.60 7,945.90
ISOP 03-Jan-07 10,000.00 26,432.68 -1.06% 21.00% 164.33% 108.56%
Global HF 03-Jan-07 10,000.00 10,947.21 1.59% -1.49% 9.47% 7.08%
NASDAQ 03-Jan-07 2,415.29 2,412.80 5.87% -9.03% -0.10% -0.08%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: None.

News:

Comments:

We were down 1% in April, our fourth losing month out of 16 so far. We also trailed both the NASDAQ and the Global Hedge Fund Index for just the fourth time. A bad month for us, but otherwise a pretty good month: the NASDAQ was up 6% while both our shorts lost money as the big picture for banking and housing appeared brighter to investors. (We don’t see it that way, unfortunately, although we do think the sun is likely to stay out through November.) Our biopharma stocks were strong, especially ELN. BQI up 10%, BZP down 10%…normal random Brownian motion for speculative E&P positions. SLT recovered some losses and is back in the black for us overall. TMY continued their spectacular meltdown.

All in all, a pretty quiet month.

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Mar 08 Intelledgement Speculative Opportunity Portfolio Report

Posted by intelledgement on Tue, 22 Apr 08

Position Purchased Shares Paid Cost Now Value Change YTD ROI CAGR
TMY 03-Jan-07 300 3.30 998.00 0.89 267.00 -28.80% -54.82% -73.25% -65.46%
ELN 04-Apr-07 129 13.90 1,801.10 20.86 2,690.94 -8.39% -5.10% 49.41% 49.94%
VRTX 18-Apr-07 57 31.65 1,812.05 23.89 1,361.73 35.51% 2.84% -24.85% -25.91%
NBIX 22-May-07 158 11.33 1,798.14 5.40 853.20 7.78% 18.94% -52.55% -57.99%
BQI 13-Jul-07 565 3.35 1,900.75 3.94 2,226.10 -1.50% -3.43% 17.12% 24.64%
GSS 19-Jul-07 451 4.19 1,897.69 3.42 1,542.42 -16.99% 8.23% -18.72% -25.60%
GSS 24-Aug-07 613 3.08 1,896.04 3.42 2,458.13 -16.99% 8.23% 10.57% 18.15%
SLT 5-Oct-07 111 19.75 2,200.25 17.82 1,978.02 -14.53% -31.65% -10.10% -19.63%
BZP 19-Nov-07 245 9.77 2,401.65 21.73 5,323.85 37.79% 94.36% 121.67% 790.06%
BZP 30-Jan-08 186 11.27 2,104.22 21.73 2,399.40 37.79% 94.36% 92.08% 4,882.00%
WB 1-Feb-08 -57 39.99 -2,271.43 27.00 -1,575.48   11.82% 29.00% 30.64% 423.09%
BZH 24-Mar-08 -214 10.99 -2,343.86 9.45 -2,022.30 n/a -27.19% 13.72% 81,810.12%
cash       -4,194.60   7,932.68        
ISOP 03-Jan-07     10,000.00   26,716.40 8.37%   22.30% 167.16% 120.86%
Global HF 03-Jan-07     10,000.00   10,811.43 -2.10% -2.73% 8.11% 6.49%
NASDAQ 03-Jan-07     2,415.29   2,279.10 0.34% -14.07% -5.64% -4.57%

Position = symbol of the security for each position
Purchased = date position acquired (for long positions) or sold (for short positions)
Shares = number of shares long or short in the portfolio
Paid = price per share
Cost = what portfolio paid (including commission); note for short sales, the portfolio gains cash
Now = price per share as of the date of the report
Value = what it is worth as of the date of the report (# shrs multiplied by price per share plus value of dividends)
Change = Change since last report (not applicable for positions new since last report)
Year-to-Date = Change since 31 Dec 07
Return on Investment = on a percentage basis, the performance of this security since purchase
Compounded Annual Growth Rate = annualized ROI for this position since purchase (to help compare apples to apples)

Notes: The benchmark for the ISOP is the Greenwich Alternative Investments Global Hedge Fund Index, which historically (1988 to 2007 inclusively) provides a CAGR of around 15.1%. For comparison’s sake, we also show the NASDAQ index, which over the same time frame has yielded a CAGR of around 10.1%. Note that for the portfolio, dividends are added back into the value of the pertinent security and not included in the “cash” total (this gives a more complete picture of the ROI for dividend-paying securities). Also, the “Cost” figures include a standard $8 commission and there is a 2% rate of interest on the listed cash balance.

Transactions: Another quiet month transaction-wise, as all we did was sell short Beazer Homes (again), as it climbed to our longstanding GTC price of $10.99…actually, it got as high as $11.44 on 24 March, but we are just grateful to be short a homebuilder again as a hedge against further market deterioration.

News:

Comments:

Yet another great month: +8% while the NASDAQ was flat and the hedge funds declined (-2%). Don’t take this the wrong way…we are happy the fund is doing so well…but we are constrained to say that being +167% in fifteen months (a new record all-time high, BTW) is not typical…and way beyond our expectations for future performance. However, it is a good example of the kind of results that speculation—as opposed to long-term investing—can generate. We need to keep in mind that this sort of wild fluctuation can work both ways when one is speculating.

The long-term outlook remains gloomy and doomy, as discussed in more detail in our IMSIP 1Q08 report posted Friday. We expect to limp into the elections reasonably whole, but we are currently short one financial services company (WB) and one real estate company (BZH) as a hedge against a sooner-than-expected decline (and also because we believe their stocks are overpriced here, of course). Meanwhile, we continue to monitor our long positions. TMY looks like a writeoff here and at this point, we are holding it primarily as a potential tax loss. Our other energy plays, BQI and BPZ, still have strong fundamental stories (so long as oil remains pricey, at least). Our commodity plays (GSS gold and SLT zinc) are down so far this year, but more related to individual issues than the macros. Our biotechs are a mixed bag: ELN is down, NBIX is up, VRTX has been down and up.

We’ll know more in another month, although the additional information won’t necessarily mean more clarity.

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