Tuesday, October 15, 2013

Forge Group

The market has responded with a strong resilience to the debt ceiling fears and I managed to hold onto all my investment positions that I initiated on the non-taper announcement. I still recall trading the debt ceiling fears in the past few years, and the volatility seems similar, but the downside price action in this current political standoff seemed relatively insignificant; the market psychology and sentiment is bullish in this year's case. I'm now 100% long without any cash; and after recent changes to Interactive Brokers margin regulations based in Australia, will be unable to leverage my portfolio until these regulations changes.
Interestingly, I had some piotroski entries (MX, WNC, EBIX, TGA, NLY, PKX) and my own selection of longs based on macro themes (MERU, AG, AAPL) and most of the piotroski screened stocks are performing well, but my own selections are duds so far.
I did another screen on the piotroski based on current prices, and have started to notice most stocks are now in the fairly priced, expensive range and multiple expansion is going to take time.
One interesting sector right now is the general contractors on the ASX - I am not quite sure why most of these stocks seem fairly cheap, maybe it's being discounted for leverage. My research into sectors is not too extennsive. I try to find basic but effective strategies, and use derivative tactics on positioning; if someone relevant is talking their book and I agree with their thesis; this is good enough to start a small position. How long you hold the position and how much of my own portfolio I will add is where the real performance in investing will come. Sometimes asking simple questions and adding investments based on a hypothesis is a good way to test your own thesis, and then to make adjustments based on how the market develops is one way the reflexivity of the market can be capitalised upon. This is most effective in leveraged markets where you need to keep monitoring for possible inflexion points.



I added FGE at 4.95. The stock has its margin of safety even in its peer group. After seeing the past 4 years of revenue and earnings growth, the market is pricing a stalling earnings growth or the inability to gain new contracts. It's very difficult to see the market pricing more economic growth in this climate and this may get a rerating if there is a change in market sentiment.