Back from vacation; sale of HIG warrants

I’ve been away for the past couple of months, but even if I hadn’t been there wasn’t much to write about; the equity markets have continued their slow climb despite lackluster US economic growth.

Unfortunately, my portfolio has not kept pace with the markets. A quick look tells why. Though AIG (about 1/3 of the portfolio) continues to outperform the S&P 500 index, most of the rest of my holdings have lagged significantly. First and foremost, Fortress Paper has continued is yearlong slide as a result of by continued pricing pressure on dissolving pulp and the delay in bringing the Thurso cogeneration plant on line. Then there is Novagold (gold and gold miners have fallen significantly this year), EBIX (under pressure by short sellers), Resolute Forest Products (waiting for a turn in paper and pulp pricing) and MFC Industrial (still trying to make the Compton Petroleum acquisition add to the bottom line). I haven’t lost the faith on any of these, but so far the various investment theses haven’t panned out. Finally, of course, my December S&P 500 market puts have taken quite a beating; I will be rolling them over into June 2014 market puts in the next week.

The only change to my portfolio recently has been the sale of my Hartford Insurance warrants two days ago at $23.37 for a better than 100% gain. My thesis about the common moving back toward book value proved out; the common shares have moved up from 40% to close to 80% of tangible book and I decided it was not worth the extra 10% (I had set 90% as my goal) given my view that the market is quite overextended and the potential for a significant pullback quite high.

One other note, Radio Shack has traded up nicely since the beginning of the year on no specific news. I’m just kicking myself for not being a bit more adventurous and takin a full position when the shares approached my $2.00 buy-in price.

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