Wifts Investment Group

After beating the S&P500 for two consecutive years by 26%  and 15%, we saw our portfolio lagging the S&P500 by 9.5% in 2011. 2011 was a tough year for us. Dendreon dropped more than 2/3rd last year which significantly impacted our portfolio.

Towards the end of the year last year, we were more defensive and were raising cash. However, S&P500 has gained quite a bit since the October lows and we have mostly been out of that rally towards the end of the year and the beginning of this year.



Here is an update of our portfolio. Sorry for not keeping up with the monthly updates.

For the month of June, 2011 our portfolio was down 2.26% compared to a loss of 1.68% for S&P500. Our portfolio underperformed the index by 0.58%. For the year so far, we are up 3.3% compared to a gain of 5.94% for the S&P500, which means we are underperforming by 2.64%. This is because we have been taking defensive position this year due to uncertainties in the market.

Good news! Provenge will be covered by Medicare. It’s an expensive treatment, but the panel decided it is worth it. Here is a link to Bloomberg report.

As I had mentioned in my February update, I have high hopes about this treatment (may be I am slightly biased because of my Immunology background). Analysts expect revenue of $2.4 billion at it’s peak and since Dendreon is marketing the drug itself (unlike many other Biotech companies that have to partner with a big pharma) it doesn’t have to share the profit with anyone. Dendreon is still not operating at its full capacity, but it is trying to bring all the facilities online soon.

I think Dendreon also makes a good takeover target now that they’ll generate revenue (Pfizer, GSK??)

LMI Aerospace (LMIA) is up about 18% (at the time of writing) after it released it’s quarterly report. The earnings for the recent quarter was in line with the analysts expectation, which was 26 cents. However, LMIA said it sees a strong year ahead and increased its revenue guidance because it expects increased engineering services due to Boeing’s recent deal to build tanker aircraft. Here is the link to their press release. LMIA is our fourth largest holding at around 9%.

For the month of February, our portfolio returned -1.75% compared to a return of 2.33% for the S&P500. Our portfolio underperformed the S&P500 by 4.80%.

Year to date, we are down 1.35% compared to a gain of 5.88% for the S&P500. That an overall under-performance of  7.23%. We have been taking some defensive position in the last few months with higher than normal cash position (close to 20%)  and a small hedge with S&P500 put options. As the market keeps going up, we have been trailing the market. As I have mentioned before, we remained focused on the long-term and try not to get carried away with short-term performance in either direction.

Portfolio Movers

Since we are under performing, let’s start with the stocks that lost the most. Cisco (CSCO) was down 12.25% for the month after releasing disappointing quarterly numbers. Western Digital (WDC) was down 10.11% and  after reaching a 52-week high in January, Aceto Corp (ACET) was down 7.9% in February.

One of our holdings that did well in February was Archer Daniels Midland (ADM). After going up 8.61% in January, it kept it’s pace with a gain of 13.8%.

Transactions

Sold FRD at $9.5: for a gain of 64% (short term and long term)

Bought more CSCO at $19: We think it’s a good value.  Our average price is $19.48 and it makes up 11.8% of the portfolio (3rd largest holding behind GILD and AMN)

Bought more DNDN at $32.5: Let’s hope Provenge therapy achieves the blockbuster status! Once they open up all the facilities this year, we will get a realistic idea of it’s revenue. Our average for DNDN is $35.02 and it is the 5th largest holding at 7.63%.

We end February with a Cash position of 16.56%.

Our partnership NAV for the month ending February, 2011 is $12.69.