Monthly Archives: December 2015

Peak Sport Products Position Size Decrease 12 24 2015

Peak Sport Products Position Size Decrease 12 24 2015

 

We are decreasing our position size in Peak Sport Products to 5.0% cost base.  We increased our position from roughly 9.0% initial position size to a 15.0% cost base when the company’s share price got down around HKD1.60 well below its NCAV.  The share price has since rallied by 40% returning to roughly our initial entry point, but the company also issued shares in the interim. Management may have had good reasons for the share issuance but with the amount of cash on the balance sheet the credibility of management, the company’s management, and the capital allocation abilities are severely in doubt. It is now considered nothing more than a deep value holding.  Logic states given the added issues with management the new position size should be lower than the original positions size.

 

Deep value holdings will now be between 2.5% to 5.0% cost base positions. Higher quality stocks will remain between 5.0% and 15.0% cost base position.  The lower position size for deep value reflects the fact that deep value stocks cannot be held for the long term and offers only a one time gain.  Deep value stocks often come with issues that create a bit more nervousness around the stock and lead to more comfort with a lower position size.

Miko International Position Size 12 21 2015

Miko International Position Size 12 21 2015

We have completed building our position in Miko International.   During this last round of buying, we purchased 9,335,333 shares or USD730,514. Our cost base is now just over 5.8% and the current position size is 4.35%.  Despite the valuation below net cash, the company is too illiquid to build the position size any further as it took 90 days to build our current position.

New 11/19/2015 Position Completed

New 11/19/2015 Position Completed (12/15/2015)

On November 19, 2015, we started building a 5% position on a newly initiated Brazilian company with multiple competitive advantages.   The position is now 5% after purchasing 1.453167 million shares at an average price of BRL17.338 and average exchange rate of USDBRL 3.7916 leading to a current position size of USD6.644854 million making our cost base 5.26% of the current portfolio. After market fluctiations, the position size has fallen to 5.04%.  If the share price falls due to short term operational or Brazilian macro economic concerns we will further build our position size.