Just an FYI for folks who follow my personal “real money” portfolio — today, following Kerrisdale Capital’s short attack on Northern Dynasty (NAK), I sold an additional part of my warrant position when it hit my mental stop loss level of about C$2.50 (the stock was nearing C$3). That books a total profit of roughly 400% on that position in six months or so, so I’m not complaining, but it is never pleasant to sell on a down day (or to book taxable gains if you hadn’t otherwise intended to).
Now that I’ve taken a solid profit on the speculation I made in Northern Dynasty, I’ll let the remainder of my position in those warrants ride for a while to see how things do during this new regulatory regime.
The Kerrisdale short thesis, which you can see here, is probably overstated (as all arguments are when you’re trying to get someone to buy or sell a stock on your say-so), but is not really a new or surprising one, and I don’t think of Kerrisdale as a particularly irresponsible or crazy short-selling firm (though you do have to be a little crazy to publicize short equity positions). I’ve seen Sahm Adrangi speak a couple times, and his reasoning generally makes sense — though that doesn’t mean he’s always right, his best idea in the Spring of 2014 was shorting BOFI, and that stock rose more than 50% in the 18 months following his call. On the long side, the best argument I’ve seen of theirs in recent years was their pitch for Webster Financial (WBS) — which, coincidentally enough, came up in my research for this morning’s article about HealthEquity because Kerrisdale’s argument for Webster relied partly on their large HSA business (WBS is up nicely as of now, though it was flat for over a year after that pitch — a lot of the gain came just since the election because of the huge move in bank stocks, not really because of Kerrisdale’s pitch about the “hidden asset” of their HSA business).
The basic argument is that Northern Dynasty stock is overhyped, and that the deposit will never be mined because it is uneconomical and unpopular and possibly dangerous environmentally.
The overhyping is quite clear and obvious — the enthusiasm for the stock pre-election was a little wild, but after the election it ...