feb10update

For the month of February, our portfolio returned -1.20% Vs a gain of 2.85% of S&P500. Our portfolio underperformed the S&P500 by 4.05%.

Bank of America was the biggest gainer with 9.75% followed by a gain of 8.18% for OSI Pharmaceuticals (OSIP). OSIP released their annual earning report which showed the revenue from Terceva, their drug for lung and pancreatic cancer, increased 21%. The revenue from DP-IV inhibitors for treatment of type II diabetes is also increasing. After a careful analysis of the report, we decided to keep holding OSIP.

Cell Therapeutics was the major drag on the portfolio. It went down 39% this month after FDA pointed out some issues of their Phase III trial of their lymphoma drug pixantrone. The independent advisory panel was supposed to meet and review the data early in the month, but due to the severe weather in Washington, it got postponed till March 22. CTIC is the most risky position we have because it is not based on the fundamentals but based on a hope that the FDA approves their drug. After the FDA issued those concerns, the stock took a big hit and at $0.60 or so, there was no point in selling. There is still a chance that it gets approved. Just because FDA pointed out issues doesn’t mean it’ll get rejected; it’s FDA’s job to point out the concerns, the cancer experts that make up the advisory panel will decide whether the drug works and whether it’s safe. We were actually considering buying more, but decided it was best not to spend more on this speculation.

Transactions

Bought VII at $5.20: Vicon Industries is a small company with a market cap of only 23 million and makes video surveillance systems. The latest quarterly report was not that good, but they had a strong balance sheet and cash flow for previous quarters and years. Since it looked cheap based on those numbers, we started buying it. 2009 was a tough year for any business so we decided to ignore one bad quarter. We will monitor their earnings in the coming quarters and adjust our expectations accordingly. VII makes up 7.4% of our portfolio.

Bought TRID at $1.50: Trident Microsystems makes integrated circuits for digital media application. Again, 2009 was a tough year for TRID. There was a huge decline in revenue and they incurred a big loss. However, it was trading below it’s net current asset value. So unless they burn through the cash within the next few quarters, it’ll be relatively safe investment. We’ll keep paying a close attention on the progress TRID makes this year. TRID makes up 5.3% of our portfolio.

Due to more contributions, our cash position stays at 17%.

Partnership NAV for the month ending February was $10.01