Hi everyone, welcome back!
Although I’m neutral/slightly bullish in the near term, I’m bearish in the 1-6 month time frame. Most sectors haven’t fully recovered and the recovery is lead primarily by the five largest companies.
The financial and energy sector underperformance is drastic, although we did get some sector rotation on Friday.
SPY daily chart below:
I added about 30% more to my MRO position at $4.07 this week. I also started a small position in OBT at $14 (a pharmaceutical company). I don’t have a hard stop loss so I’m using a much smaller position size. I plan to add more and complete my full position if we retest $12.
I bought more MRO because they reinstated the dividend – this to me signals MRO’s confidence in their future cash flows. I still plan to sell in the 11-12 range, which is what I think MRO is worth currently.
I bought ODT because the CEO and Boxer Capital LLC increased their stakes significantly. I did some research on Boxer Capital LLC and they have a very good track record, and ODT is now one of their largest positions. I also spent about an hour looking at their 10k annual report, but it looks very bad from a cash flow perspective due to its high burn rate from R&D costs. Either way, the CEO and Boxer Capital LLC have more information than me, so I will just follow their lead.
Insider transactions for the last 2 years below. Notice the heavy buying in the $13-$15 range in September.
I don’t usually do these long term holds (last one I did was on Boeing), but for these trades, I don’t have a hard stop loss, although I do have a mental stop loss. The way I manage risk on these trades is by using much smaller position sizes. The sizes are small enough that even if the company went bankrupt, it wouldn’t be a huge hit to my portfolio.
MRO Daily chart below:
ODT daily chart below:
I’m looking forward to next week’s stock market developments! Enjoy your Sunday 🙂