Author: Eric Steiman
Covestor model: Undervalued Opportunities
Disclosure: Long SODA, TSLA
The Undervalued Opportunities model outperformed well during the month of June. The model was very opportunistic after it bought Facebook (FB) at 25.69 and sold half of the shares at 31.71 for a 23% gain in just 12 days. As of July 4th, the model is beating the S&P 500 by nearly 35% over the last 12 months, despite an 18.3% decline in May.
Another notable long position continues to be SodaStream (SODA), which has gained nearly 25% in the past month. (See my April report on SodaStream.) I maintain my bullish stance with Wal Mart (WMT) added at the end of the second quarter and sales are looking strong.
Continuing on the long side, my Tesla (TSLA) stock hit a milestone at the end of June when it shipped the first 10 Model S vehicles to customers. This shipment beat the expected delivery date of July. The company now plans to slowly ramp production of its vehicles into year end.
Tesla estimated that it will build about 5,000 vehicles in 2012, followed by 20,000 vehicles in 2013. Near-term production problems loom, but with more stores coming on during the end of 2012, the reservations may be able to outpace expectations. For more information on Tesla, see my recent report.
Finally, I will explain a short position I entered in the second quarter that has worked out great. Groupon (GRPN) had a nice short squeeze from the low 9s and into the 11s. After waiting patiently for a great entry put, I shorted the stock at 11.
As of July 3rd, my position is up 20% in a little over 15 days. In my opinion, this is a company that faces major headwinds over the next few quarters and I will continue to hold this short position. The good thing about this short is that it can also act as a hedge to some of my long positions when the market decreases.
Overall, I feel great about the model and will continue to look for quick swing trades that will increase the model’s returns for my followers. Good luck and happy investing!
Clearbrook Capital Advisors LLC is a registered investment advisor based in Massachusetts. The firm seeks to employ an investment strategy that balances bottom-up stock selection with an evaluation of general market conditions. Eric Steiman is the founder and the Managing Member of Clearbrook.
Clearbrook believes in balancing the fundamentals of bottom-up investing against the backdrop of stock market cycles. Clearbrook applies methods of technical analysis in its security selection and market analysis. Generally, the firm seeks investment in companies whose securities it believes are undervalued by the market and can be acquired at a discount to its estimate of intrinsic value. Additionally, Clearbrook will engage in short selling opportunities if it feels certain securities or the market as a whole may be set to decline.