Thoughts on Some Recent Winners and Losers

Friday File thoughts on some of our recent "Idea of the Month" picks -- what to buy now?

By Travis Johnson, Stock Gumshoe, July 12, 2013

It’s been an interesting year so far — this week has helped to heal some wounds but my personal portfolio has lagged the market for much of the year, thanks largely to some substantial positions in stocks that were sensitive either to interest rate rises (like Retail Opportunity Investments Corp, ROIC, a favorite REIT) or heavily reliant on commodities that have crashed in price (Altius Minerals, Sandstorm Gold, the list goes on). But some of our ideas have worked quite well, particularly recently — Ligand Pharmaceuticals (LGND), our “different kind of royalties” stock, has been off to the races since we suggested it last month, and, likewise, our “optimism for 2018” picks in the form of TARP Warrants have not been making us wait for those five years to pass before they bring smiles to our faces. Apple (AAPL) has continued to languish, Berkshire Hathaway (BRK-B) has continued to set new highs … so as with most markets, I’ve been feeling the ups and downs — I suspect you have as well — and I’m just trying to keep the horizon in view, stay diversified, and keep putting money into appealing investments when they’re on offer at appealing prices.

First, I thought I should comment briefly on what has moved a few of the stocks in the “Gumshoe Universe” of late — including some of those above.

The TARP Warrants for Boston Private Financial Holdings (BPFH for the stock, BPFHW for the warrants) and for PNC Financial (PNC for the stock, PNC-WT or PNCWS are common tickers for the warrants) have simply been reacting to the steady rise of those stocks — that’s the beauty of leverage when things are going well, the stocks are up 10% and the warrants are up 30%. At current prices, we’re still looking at warrants that will continue to be good bets as long as the stocks rise by at least 10% over the next five years. Not 10% a year, 10% period. The stocks are not quite as inexpensive as they were a few months ago when I wrote about them, but they’re certainly reasonably valued — the risk for PNC is that they languish or that there’s another financial crisis that hits the banks, and they’ve been very solidly run so I’m still comfortable with them. The risk for Boston Private is substantially higher because they’re in a small ...

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