Update: August 17, 2015

| August 17, 2015

August 17, 2015

 

Portfolio Update

The past couple weeks have continued to be a display of market choppiness and indecision.  The S&P 500 has generally moved sideways, but volatility has picked up just a bit.  The benchmark US equity index is still up about 3% on the year (after being down about 1.5% since this time last month).

Of all the potential bearish catalysts out there, the slowdown of China’s economy is still the biggest issue remaining.  China has been such a huge part of the demand story in recent years, its slowing economy is really taking a toll on certain US sectors.  It’s also a big negative for anything commodity related.

Interest rates are most likely going to be raised by the Fed in September, although it could take an extra month or two given the situation in China.  Regardless, we’re looking at a 25 basis point increase, which really means nothing to most people.  Anything more than a quarter point could hurt the market in the short-term, but it’s a highly unlikely scenario.

In the meantime, the US economy is beginning to thrive.  The job market is basically at pre-recession levels, and housing has generally been strong.  Last week, we saw a very good retail sales report for the first time in several months.  If consumers are in fact spending money again, that’s a great sign for the economy moving forward.

Now, let’s take a look at some portfolio highlights…

 

Portfolio Highlights

Just a quick note:  We won’t update every open position every update.  I try to focus on the positions that have some significant news or price movement.

  • Avnet (AVT) August 41 Calls – Avnet shares soared on a major share repurchase announcement and dividend increase. The stock hit our first exit level for profit-taking and the calls have earned as much as 201%!

 

  • Franco-Nevada (FNV) September 40 Puts – FNV caught me off guard by declaring a quarterly dividend and meeting profit expectations. With how far gold has fallen, I did not see this coming.  We hit the conservative exit point for risk control.  Aggressive traders can continue to hold, but given the news, it may not be a bad idea to move on from this one.

 

  • Cheniere Energy (LNG) September 70 Calls – We had a strong week from LNG, which is beginning to attract the attention of big investors, such as Carl Icahn (8% stake). The big move last week pushed LNG up past our conservative profit-taking point.  The calls have been as high as 144% winners!  Aggressive traders can keep holding for more upside potential.

 

Category: AOA Updates