Kayaks

Current Trades

This week has been progressing nicely, although I have to laugh at the surge in global equity prices and the sharp drop gold/silver miners following the French election. Populism is still strong and politicians are doing stupid things. Take the US’s institution of a 20% (average) tariff on Canadian lumber this week. Will that make US lumber companies more competitive, perhaps slightly. Will Canada, one of our largest trading partners and a country with which our trade is pretty balanced, retaliate. Yeah, most likely they will. I think US consumers are the ones who will lose on the back of higher costs and likely additional tariffs. I also see the American agricultural industry being a target, because America exports so many food stuffs to our neighbors……or perhaps I should say that we have historically exported lots of agricultural products (grain, meat, etc) to our neighbors. Instead, by pissing off Mexico and pulling out of the TPP we have exacerbated a supply glut in this country. American farmers need to export those products, because we harvest far more than we consume. I think a lot of American farms will go bankrupt over the next couple years because the cost of production has exceeded market prices for many products, like grain specifically, for two years running.  Real farm income has declined four years in a row according to the USDA.  That’s the longest decline since the 1970s.  All the while, debt loads on the farms have risen as farmers try to buy time. I know markets will balance themselves eventually, as large amounts of acreage is pulled out of production, but I don’t like to see it happen on the backs of the American farmer.  The next target appears to be the dairy industry. Stay tuned for the trade war…….

Family Activity

A quick note about family activities this week, and then I’ll get to the stock trades. As you know, we have a lot of flexibility in our schedule…..and we try to use it in the most productive/practical way. That’s what flexible independence is all about, right?! Well, I was surprised to notice a new class offered at the gym last week. It was called Kids Zumba, and I thought the Little Man would love it. (Note: Zumba is a trademarked fitness program that is basically fast paced dance type exercises set to pop or hispanic music.) Anyway, the Little Man loved it…..as we expected…..but I didn’t think Mrs. IS and I would have such a good time. I’m not a big fan of exercise classes, but picture 8 three and four year olds, the two of us, and an instructor. I only wish cameras were allowed in the gym, because it was too cute. The kids danced, hopped, and followed along with the exercises pretty well. Forty five minutes later, they were all smiling…..and so were we. That class a regular part of the Little Man’s weekly routine now, and it really helps him work his wiggles out :)

Trades

Ok, now for the trades. As mentioned Last Weekend, we have been making a few short term swing trades in our portfolio lately. Those trades are almost always the result of us trading around our longer term positions, to take advantage of trading ranges and lower our cost basis. We have a comfort level with the companies, and our factor of safety is that we would be ok buying long term positions at those levels if the share price did not behave as we expect. Generally, these have been very small trades……but in this low interest rate environment, I’ll take a quick 6-8% here and there.
As previously mentioned, the trade we closed last week netted 6% on a two week investment in Iradimed (IRMD). If we had held it a little longer, we would have gotten another 3%…..but I wanted to be sure and exit the swing trade before the company reports earnings this week. Likewise, we just closed another two week trade in Vasco Data Security (VDSI). That trade also netted 6%, and we closed it Monday because we wanted to be out of the swing trade prior to the company reporting earnings this week. Remember, we have about $10k long positions in both of these companies….as we watch and think about the pivot these companies are trying to execute. If we like what we hear in the earnings releases this week, we will continue to accumulate shares for our long term position. If not, we’ll likely keep swing trading while management works at making their revised strategy work. Neither company has a meaningful amount of debt, and both have profitable operations. With those two hallmarks the management of the respective companies have the time and flexibility to enact their visions.
Nearly a month ago we purchased the first dividend growth company we have in a long time. The company was Novo Nordisk (NVO), and the shares have risen nicely over the last few weeks. They are up about 10% since our initial purchase, and we are currently about 7% above our cost basis overall. Click HERE to see the blog post about that purchase. This investment is considered a long term holding, and we aren’t interested in selling it unless something materially changes in the company’s operations. I look forward to seeing what the share are worth in 10 years.

Watch List

There are a few companies which are nearing our buy targets at the moment. As you’d expect, almost all the companies that we are currently following are in beaten down sectors like gold/silver miners…..health care…… or else foreign companies. The gold and silver miners have been nice and volatile over the past year. The two companies I’ll talk about today are Pan American Silver (PAAS) and Franco Nevada Corp (FNV). Each is a profitable company, with plenty of stock liquidity and a healthy balance sheet. We have made a few satisfactory trades in these positions as well.

PAAS-1yr

Pan American Silver (PAAS)– We sold out of our position a couple months ago at about $20.60. I was expecting us to repurchase our shares on the subsequent sell off, but I was too greedy. I was waiting to buy one large slug of stock around $14, instead of buying in a few tranches like we usually do. This time around I’ll be looking to buy the first tranche at $16, and hopefully make another larger purchase around $14. A share price of $21 has consistently provided overhead resistance to the company’s stock, and we would look to exit the position again between $20 and $21.

FNV-1Yr

Franco Nevada Corp (FNV)– We still maintain a position in Franco Nevada, but have traded in and out of the stock several times. Most recently, we sold the vast majority of our position just below the $70 level. The area around $70 per share has routinely been a level of resistance and support, and it looks like the share price topped out there again this time. We’ll start nibbling again in the low $60s.

Well there you have the trades we’ve been making (or looking to make). The nice thing about the current stock market is that gold and silver miners have been moving contrary to the indices.  It is also great that they have been so volatile, which has allowed us to enjoy swings as large as 25 or 30 percent.  I am grateful, because it means that we have more opportunities. At some point this relationship will probably break, but we’re enjoying it for now.

While we traditionally have made very few trades, adding more swing trades to the mix has allowed us to realize quite a bit of profit while also keeping the majority of our cash out of a market that I am increasingly skeptical about. It has worked out well so far, and we will continue to look for opportunities, no matter what Mr. Market sends out way. Happy Value Hunting!

Disclosure:Long IRMD, VDSI, NVO and FNV. This post is for informational purposes only and should not be considered a recommendation for anyone to buy, sell, or hold any equities. I am not a financial professional. The charts provided above are from Yahoo Finance.

21 thoughts on “Current Trades

    1. Income Surfer Post author

      Thanks for the words of support Raptor. Yeah, you are doing outstanding with your options trades. I’m still learning options, but I’m not there quite yet.

      I hope your week is going well
      -Bryan

      Reply
    1. Income Surfer Post author

      Thanks for the encouraging words BHL. I prefer investing to speculating, but at these valuations the risk/reward of short term speculation better for me. I hope you’re having a good week
      -Bryan

      Reply
    1. Income Surfer Post author

      Thanks for taking the time to read and comment DH. Yes, unnaturally so. I prefer long term investing to short term speculation, but I’m not seeing much in teh way of long term investments in the moment. It would be nice if that changed soon.
      I hope you’re having a great week
      -Bryan

      Reply
    1. Income Surfer Post author

      Thanks for taking the time to read and comment Jay. We aren’t good short term speculators, but the risk/reward looks better to me at the moment than the long term investments I see. I hope you’re having a great week.
      -Bryan

      Reply
    1. Income Surfer Post author

      Thanks for taking the time to read and comment Mongrel. Target is getting to an interesting place and sentiment is terrible, but I am a little concerned that management is trying to buy marketshare at the cost of margins. They are in a low margin business anyway, but we (as customers) are bombarded with coupons now. I am a little concerned they are changing their store based concept, but I will be enticed to buy if prices drop much.

      GIS is a well run company, but it is too expensive for me. We quit buying it a few years ago in the upper $40s. Unfortunately, sales have been declining recently and earnings have been squeezed. Low input costs are going for them, but sales trends are a headwind. I guess in summary, I would have a neutral rating on both of these companies. A little volatility may change that though.

      Thanks for the question. I hope you’re having a great week
      -Bryan

      Reply
  1. Amber tree

    Nice trades…
    I like it when others post their trades. I see it as a big crowdsourcing for ideas. I then can do my own research and decide to go or not.
    NVO was an option play of mine…

    Reply
    1. Income Surfer Post author

      I’m glad you enjoyed the post AT. I also like when people write about their actual investment decisions, instead of repeatedly posting about the same handful of companies. When people actually write about their moves, I feel like it shows a higher conviction. I particularly like hearing about companies I am not all that familiar with. Gives me a great opportunity to learn.

      I hope you’re having a great week. Sorry for the delay in responding
      -Bryan

      Reply
  2. DivGuy

    Well, I’m glad to see someone else interested in short dividend trades! 😉 I don’t know much of the companies you mentioned so I can’t really comment on them, but it seems smart to me to benefit from what the market has to offer.

    Canadians don’t see much of Trump decisions as good moves… but not much we can do about it! Our two countries are great partners for many decades and I doubt all that will fly away in 4 years, though there will be some rougher times I think.

    Activities with the kids are great! Essential should I say.

    Cheers,

    Mike

    Reply
    1. Income Surfer Post author

      Good to hear from you Mike. I am definitely concerned that rougher times are ahead, but we’ll do what we need to do in order to get our families through them. I completely agree on the kiddo activities, and I’m glad you guys are having a great trip.
      -Bryan

      Reply
  3. Graham @ Reverse The Crush

    Thanks for the updates, Bryan.
    You’ve made some nice profit off some clever moves. I like your strategy to take profit when you see it rather than waiting for the extra percent. It’s always better to to take a gain than it is to risk it losing it. Also, I’ve added NVO to my watch list. Thanks for sharing that company. Hope you’re having a great week!
    Graham @ Reverse The Crush recently posted…An Investment Strategy to build a Cash Flow MachineMy Profile

    Reply
    1. Income Surfer Post author

      Thanks for taking the time to read and comment Graham. There have been some great short term trades. I hate doing short term trades, but that’s how I put our capital to work while searching for long term opportunities. Glad to see you enjoyed the post on Novo Nordisk a few weeks back. I hope that company tests the lows again, because I would like to have about three times as much capital invested in the company. Oh well, at least the precious metals space is giving us plenty of volitility.

      I hope you’ve had a great week
      -Bryan

      Reply
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