OCT09

In October, our portfolio returned -5.71% compared to -1.98% of S&P500. This means our portfolio underperformed S&P500 by 3.73%. Even with around 25% in cash for the most of the month, it managed to go down that much. This is a good reminder to everyone that we are in a risky business.

Since the portfolio was down, let’s start with the biggest loser. CTIC was down 22.76% in October for no particular reason. Nothing has changed since we first bought CTIC, so we were able to average down our purchase price to $1.23. Seems like October was not a good month for healthcare sector overall, probably because of the on going healthcare debate. FRX was down 9.4% and OSIP was down 8.72%. Another biggest decliner was OME, which dropped 14.22%, also for no particular reason. Small cap stocks are really volatile and they don’t always follow the overall market. Nothing to panic here.

Among the significant gainers were LMIA, up 7.37% and ADM which was up 3.08%. During the month of October, oil prices kept going up and so did our holding of BHI and XES. With oil above $80 per barrel, we decided to sell BHI at $47.25 for a gain of 58.8% without counting any dividends. We don’t think oil will go any higher than this any time soon. But just in case it does, we still have about 5% exposure to oil and energy sector with XES.

In other transactions, we have added two more positions to our holdings, AMN and ACET.  If you read the previous post, we had sold AMN at $85, but since then it has been falling down. We picked up quite a bit at $62 and it is now our largest holding at about 11.2% of total. We still have the price target for AMN at around $85. Aceto Corp (ACET) supplies chemicals for pharmaceutical and agricultural industry. We thought it was undervalued at $5.44, our purchase price.  Our price target for ACET is $8.50. ACET makes 5.25% of our portfolio.

We have used up some cash this month on those transactions. We now have 13.15% cash.

NAV of our partnership for the month ending October is $9.43.