Portfolio Overview

The speculation on 3D Systems Incorporated (DDD) has been paying off in spades since I started it. I forgot to post my more recent article on the stock. It goes a little more in depth into the reasoning behind the conclusion that it is in a reflexive bubble.

But recently, I have noticed the trend in perception has worsened. The DDD articles on Seeking Alpha have gotten more  lukewarm recently (1, 2). Since we have already seen that Seeking Alpha articles have an effect on DDD (the Test phase in early October was sparked by these articles: 1, 2), it is not a stretch to imagine that recent articles may sway the general investor opinion in DDD.

I have not picked up any clear technical signals of a reversal, so this may be tricky. I may have to pay back some of the gains to know whether this is merely a pullback in the uptrend or whether the downtrend has started in earnest. Soros says that in a reflexive bubble there is usually a twilight phase, where people are still playing the game, but no one believes in the long thesis anymore. This may be where we are now…

I slashed my GMCR holdings in half at $41/share. I got a near-100% return so far. It still appears undervalued on a P/E-to-growth basis – the P/E is 17.6 and the growth rate is ~42% year-over-year, giving a .42 PEG. This would suggest another double could be possible if it can keep up a 30%+ growth rate. The public perception of Keurig brewers is still pretty good, and I have seen K-cup levels pretty low in the stores I have visited, though that is a very small sample size. I have seen worrying commercials for plastic generic K-cups that fit the Keurig machines recently, but it is too early to tell whether this will accumulate any substantial momentum with customers.

I also sold off my IMAX calls. I think this momentum will last for a while, but my calls were dated for the end of this month so I had to dump them. This may be a great year for 3D movies because of the many sci-fi genre films scheduled. I got a 73% gain on the position, so, not bad for a few months.

These last few trades have left me with a bit more cash to invest. I am looking at a few ideas:

I am considering a purchase in Intercontinental Exchange (ICE). I believe they got a great price on NYSE (a much-better price than their last minute bid last year), and NYSE throws off so much free cash that ICE will be in a great financial position for share buybacks or future purchases. I will admit I have a bias, I know the business model well, and I like the company. Sprecher seems to have a good eye for getting the right purchases at the right time. Once retail investors start to come back on the market, the core NYSE business will pick up, and once the European crisis is behind us, NYSE’s Liffe business will also pick up, so they got a great asset on the cheap.

I am also considering getting more heavy on my C&J Energy Services (CJES) and Halliburton (HAL) positions. I still believe these companies are best of breed in their sector, and it seems that the perception is starting to get more positive for oil among investors. However, a new movie starring Matt Damon about the environmental dangers of shale exploration has been showing in theaters. It remains to be seen whether this will have a significant impact on the public perception for the sector.

I was too eager in selling off the bulk of my BNCC position. The stock doubled again after I sold off the majority of my stake, and it is still only at 55% of the book value.

I am working on compiling some performance results for last year. It was a good year, but it will be worth it to check exactly how good.

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