Hard Pressed For a Strategy? Try This.

One of the great features of Exodus (coming soon!), the second iteration of The PPT, is the ability to set parameters for a screen and see what sort of returns would’ve been had over a pre-determined time period. Without question, this market spits in the face of high growth money losers in favor for cash flow generating machines.

The following criteria led to a median return of 20.25% and average return of 25% last year, long 82 stocks.

Market cap over $5 billion

Free cash flow over $100 million

Forward PE under 45

Quarterly earnings growth over 15%

Quarterly revenue growth over 15%

Before I reveal the names, I want you to understand why this investment approach did so well, beating the SPY by 4% and 9.25% respectively. First of all, this basket of stocks is less than 1/5th as large as the SPY, which serves as both an advantage and disadvantage, depending on the market conditions. The fact that investments were limited to companies with market caps over $5 billion excluded most of the pump and dump scams, transient flavor of the month’s and such. The free cash flow prerequisite ensures that you’re invested in a real business, excluding many high flying biotechs in the process. Investing in names with forward PE’s less than 45 leaves out many over-priced stocks and possible blow ups, should earnings begin to turn down.

It’s worth noting that I tried every possible combination and this one resulted in the highest returns.

How do we narrow it down and pick some stocks that are actionable now? If building a portfolio, you’d simply choose the best names amongst the 8 principal sectors. Or, in this case, knowing the short term nature of you poker playing degenerates, we can simply cross-reference this screen against some technical factors, such as names in proximity to the 20 day moving average.

Here are names at the 20sma to +5%, easily screenable inside The PPT.

If you’ve become risk averse and have difficulty knowing from which reservoir of stocks to choose from, this is a good option for you. Of the 82 stocks, just 12 were down over the past 12 months, with the largest drawdown being -39%– long QIHU. The other down stocks were in the oil and gas space, which could’ve easily have been mitigated by exercising stop losses.

Listen to me. I’ve consumed more information, whether it be blogs, movies, books, essays, scientific journals, teevee shows, over the past three years than all of you combined. Because of this, I am a supreme authority of all things, especially cinema. The very fact that you have access to my database of knowledge and information is a massive boon for your existence. That being said, since the departure of our dearly beloved tabbed blogger and 12631 trading mate, ChessNWine, iBC has been without a proper movie connoisseur leaving a dreadful vacancy in its wake. I realize that many of you have suffered since this departure in style and culture and I’ve decided to do something about it.

Alas, Le Fly is here to save the day–yet again.

The Talented Mr. Ripley (3.75 bullets out of 5)

This used to be a favorite movie of mine, before I went on a tangent and saw a bunch of films that generally shit on this. But the message is profound and will be relevant for the next thousand years.

NEVER BEFRIEND BEDRAGGLED MICROBES WHO ADMIRE YOU TO THE POINT THAT THEY WILL ONE DAY MURK YOU AND ASSUME YOUR IDENTITY.

The villain in this film, Matt Damon, reminds me of so many people who’ve attempted to destroy me over the years. If you enjoy a modicum of success and have a bunch of inchworms clamoring for your attention, I advise you to watch this movie and take copious notes. It might just save your lives.

Next week we will analyze and discuss my favorite film in French cinema.

Now +8% year to date, generally bowling on your lazy ham and eggers with a vicious audacity.

Come to Yandex and have big party on the computer. Google is American shit, who only wants to build cars for lazy people and glasses for perverts and spies. In Russia, all the people use Yandex because it’s cool and better than Google.

Look at this favorite search in Russia. See how cool that is, yes? Just buy stock and retire off coast of Monaco. You’ll be big man once shares go up, no?

All of the news you hear about Ruble and Russian economy is big black American lie, yes? Here in Moscow, we are very warm and fat. We have meat and bread and lots of women.

Go to Yandex for the news. It’s much better than Brian Williams.

This message was paid for by the KGB

I sold PEIX and replaced it with VALE.

I also added to my YNDX position, making it a top 3 holding.

What a wonderful coincidence to see oil spiraling higher again, just after a peace agreement was reached in the Ukraine. I wonder what they have that we want over there? Maybe Jesus’ bones are buried there, or perhaps some rare earth metal, which can be used for our cellular mobile telephones? Either way, oil is definitely making the seasonal gods look meaningful this morning.

This play is very, very easy. Buy the oil stocks that are down most, who have massive short positions in them, and then crush the skulls of those embedded short inside of them. If you’re bored, you can do this over and over again. It’s a lovely game, indeud.

Here is my execution list.

SFY
CRK
EPE
UPL
PGN
NOG
REXX
WTI
BBG
PACD
EXXI
SLCA
BAS
FMSA

Bear in mind, most of those names are complete shit and will wipe out your family fortune, should you fall into a coma and wake up a year from now. The best name on that list, by far, is SLCA. They are the real deal, vendors of beach sand to rednecks who enjoy contaminating drinking water.

It’s worth noting, I’d be reducing oil positions into this melt up. I’m actually looking at banks and some steel here, namely BBD, VALE and TCK.

My only question to you is, now that every single short thesis has been repudiated and rejected, will you shut up now?

I added to my YNDX position.

I sold ACAT (+11%) and averaged down in BABA.

I also sold DVN to reduce my exposure to crude and bought SBNY, which will be a long term position.

I haven’t really talked about the majority of my positions in a long time. Instead, I’ve focused solely on some of my swing trades, which for the most part, is a smaller portion of my overall assets under management.

I have two major losers on the books: SLCA, YELP. I have a choice to make with them.

1. Raise capital to average down.
2. Ignore them.
3. Cut them loose.

I do not want to sell them, not here. But, I don’t want to add to them either. So, for the time being, I am going to ignore them and make money elsewhere.

My long term account is now at the highs of the year, up 6%. Where am I making my gains?

AAPL +45%
BX +12%
STZ +31%
GILD +12%
FB +120%
HCA +7%
HAIN +32%
HAR +29%
JAZZ +16%
N +17%
PANW +46%
BID +19.5%
TOL +11%
WFM +49%
ACAT +11%

As you can see, I have been picking some good stocks over the past 6 months. But you fuckers were too focused on the likes of GPRO and BALT to notice. I have some future winners in the making too. I think ICPT, OXY, HABT and MUSA work long term. Short term, I think PEIX, PACD and FMSA will give me ideal exits points. Overall, I am long almost 40 names, which is a big change from how I’ve been positioned over the past 7 years. In the past I’d concentrate my positions and rip in and out of them with frequency. What I am trying to do now is be more patient and let winners win. The only way I am able to do that is by having a wide array of holdings, none constituting more than 5% of capital.

As for active swing trades, those are still overweight. I intend to leverage those trades to bolster my returns.