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2009 year in review... panic, 10 baggers, 30 baggers, CAPs, and back to the real world

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December 25, 2009 – Comments (41)

Merry Christmas  my fine fellow CAPs game players.  It has been a remarkable year for Checklist.  A little bit of a recap is probably in order.  In all honesty the year has left me thrilled, numbed, tired, and at a bit of a loss.  

It all began last December, about a year ago exactly, when I decided to self-manage all of the money I had on this planet, more or less...  (some was professionally managed for a time).  On Jan 5th, 2009, I was up 5% or so I believe.  On Jan 20th 2009 I was down 7-8%.  On February 22nd I was down 20%.  On February 23rd Nova Chemical got bought out (it was by far my biggest position at the time) and on Feb 24th the markets were sharply up and I was back to being up double digits.  3 weeks later I was down fully 25% at the March bottoms.  Without Nova I'd have been down 40+%. 3 weeks later I was way up.  On April options day I was up about 50% and I lost 10% in a single day the following Monday.  A very famous hedge fund manager, that monday, told me that it wasn't a question of if, but just a question of when, I would lose it all, every cent.  3 weeks later I cleared "double my money" on May 8th.  At the July lows I had gone from being up well over 100% to up only about 50-60%.  In August or September sometime I passed triple my money and I currently stand squarely between 3x my money and 4x.  

This has been terrifying to the point of me sitting down and just accepting that my life wasn't going to be as good as I thought, and thrilling and painful and thrilling again. I've had several 10 baggers.  I've had one 30 bagger (General Growth Properties).  And I haven't held any shares for a year yet, I don't think.  A 30 bagger! In July I was in the Tampa airport on that day when the market just ramped up in the morning and had an all day +4% short squeeze.  From sometime after that until recently my life has become a sort of all-day, every-day party of sorts where I can't quit basking in the amazement of it all. 

In and among it all, I have posted some blogs here on CAPs and read many of your own.  CAPs has been a very nice thing in my life in 2009.  

So recently I've started thinking about the real world again.   I bought a stake in a hotel and in a private software company, also quite a bit of farm land, and ...  I have slowly felt the urge to start another business creeping in to me.  I have to do something besides sit around and stare longingly at my stock account all day.  

Whatever 2010 brings, its going to be hard-pressed to match the wild life-altering ride that each of 2004, 2005, 2006, 2007, 2008 and maybe even wilder than 2008, 2009.  I won't bore everybody will all the details, but I have got to be due for a nice quiet year where my life at the end at least seems similar to what it was at the beginning.  

godspeed, capsters!

41 Comments – Post Your Own

#1) On December 25, 2009 at 4:10 PM, checklist34 (99.71) wrote:

I am snowed in on Christmas.  My son isn't here, no family, no friends, just me stuck in the upper midwest in one heck of a snowstorm.  Roads closed, all of that. 

I have some toast and peanut butter and a coffee maker and thats pretty much it.  

oh well, worse things have happened to better people.

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#2) On December 25, 2009 at 4:29 PM, Sozurmama (22.32) wrote:

im alone as well, stuck in fort bragg until wednesday. played my guitars most of the morning, watched a few episodes of "curb your enthusiasm", now wishing the mall were open so i could buy a keyboard (of the musical persuasion). here's to waiting :)

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#3) On December 25, 2009 at 4:59 PM, checklist34 (99.71) wrote:

thats cool, sozur.  its not all that bad, really, gives you a chance to think about people you like in a way that I don't normally have time to with all of lifes chaos and what not. 

my original investment strategy was to go 50/50 into Ford and GM when Ford was in the 2's and GM was in the 3's.  Logic was the entire american auto industry can't go broke.

while there would have been some scary moments along the way, its interesting to note that i'd have about 2.5x my original investment now...

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#4) On December 25, 2009 at 5:48 PM, checklist34 (99.71) wrote:

in 2009 my biggest investment winners were companies that I researched thoroughly, my biggest losers were companies where a fair bit of my investment thesis was either simply low valuation or a recommendation by some firm somewhere.  Biggest loser:  BOFL (although i had a small stake of about 0.3% of my portfolio, I did lose about 60% of that 0.3%), bought on a deep valuation and a buy recommendation from Stifel Nicolaus.  My biggest winner is ASH, which i bought a big stake in after calculating the odds of it defaulting on loan covenants and concluding that it just wasn't going to happen.  That remains the safest bet I have ever seen and will likely ever see.  Should have bought more...  Not buying ASH today, just holding and watching call premium decay.  Tick tock, tick tock.  

I have encountered a handful of stocks that struck me as "the best bet on the market today".  These are

ASH in February.  ASH was without any doubt the best risk/reward  ratio i can think of back then.  

ACAS at the March bottoms.  Bought a huge stake, exited most of the stake in the $3s after collecting a $1 dividend.  Cost average was like 80 cents, so I won big, but I got it wrong.  ACAS was not and is not in as good of shape as they led people to believe back in March ...  or as I concluded.  Holding the remaining shares for a while.  I won big, but I was wrong.  Should have bought MCGC and ARCC in that space, not ACAS. 

GCI in July.  Gannet was cash flow positive and extremely cheap on a cash flow basis and it just seemed like the cheapest thing out there at the time.

RJET since they won Frontier.  They are trading at not more than twice what I estimate normalized earnings to be, which is pretty cheap.  So far that trade has been a bit of a dude.  Went from $6.50 to 10.50, back to 7 bucks.  In time.  

 

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#5) On December 25, 2009 at 5:48 PM, checklist34 (99.71) wrote:

in 2009 my biggest investment winners were companies that I researched thoroughly, my biggest losers were companies where a fair bit of my investment thesis was either simply low valuation or a recommendation by some firm somewhere.  Biggest loser:  BOFL (although i had a small stake of about 0.3% of my portfolio, I did lose about 60% of that 0.3%), bought on a deep valuation and a buy recommendation from Stifel Nicolaus.  My biggest winner is ASH, which i bought a big stake in after calculating the odds of it defaulting on loan covenants and concluding that it just wasn't going to happen.  That remains the safest bet I have ever seen and will likely ever see.  Should have bought more...  Not buying ASH today, just holding and watching call premium decay.  Tick tock, tick tock.  

I have encountered a handful of stocks that struck me as "the best bet on the market today".  These are

ASH in February.  ASH was without any doubt the best risk/reward  ratio i can think of back then.  

ACAS at the March bottoms.  Bought a huge stake, exited most of the stake in the $3s after collecting a $1 dividend.  Cost average was like 80 cents, so I won big, but I got it wrong.  ACAS was not and is not in as good of shape as they led people to believe back in March ...  or as I concluded.  Holding the remaining shares for a while.  I won big, but I was wrong.  Should have bought MCGC and ARCC in that space, not ACAS. 

GCI in July.  Gannet was cash flow positive and extremely cheap on a cash flow basis and it just seemed like the cheapest thing out there at the time.

RJET since they won Frontier.  They are trading at not more than twice what I estimate normalized earnings to be, which is pretty cheap.  So far that trade has been a bit of a dude.  Went from $6.50 to 10.50, back to 7 bucks.  In time.  

 

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#6) On December 25, 2009 at 6:51 PM, portefeuille (99.58) wrote:

I hope you have not lost money on ATPG.

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#7) On December 25, 2009 at 8:08 PM, checklist34 (99.71) wrote:

no, porte, i'm up on ATPG, which i continue to refuse to research.  you and awall are my investment thesis.  one of the guys on real money silver likes ATPG as well.  i have some from the day we talked about it and some more from a month ago or so, in the form of deep in the money longer term calls. 

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#8) On December 25, 2009 at 8:13 PM, anchak (99.85) wrote:

Good to see you back Checklist! Hans was little worried about you ....

Merry Christmas!

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#9) On December 25, 2009 at 8:15 PM, Tastylunch (29.19) wrote:

Congratulations on your well deserved success Checklist!

I think your farmland purahcse could be a very wise one.Jim rogers alos would likely agree.

and hey can't blame you if you wnat to get back in the business world.Stocks, while fun (especially when it works as well as it has for you) are a pretty passive experienc.

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#10) On December 25, 2009 at 8:20 PM, checklist34 (99.71) wrote:

as an aside, relating to 2009 and relating to investing, but mostly an observation on a personal level...

one of my greater accomplishments in life is going 3.5x my money with all of my money, all of my parents money, and all of my former business partners money in a year.  Also the savings accounts of a handful of close friends and former employees. Thats pretty good, and it has completely changed the outlook and financial situation of all involved.

But I live in this modestly sized midwestern town where... in all truth, and I mean all truth, I have not met one person, not even one, who even knows what a p/e is or even knows a ticker symbol.  

So there's a downside.  If you win a trophy at baseball when you're young, everybody knows what that means and congratulates you and you get your name in the paper and there is much to do about it all.  Hell, if you throw a half-decent keg party in college 50 people want to shake your hand and talk about it.  Throw a good one and its 500.  Do this, 10 people thank you sincerely, but even they don't really want to talka bout it.  Because to most people this is like talking about calculus or something.

Try owning some businesses that manufacture some tech kind of products for a new and eclectic application where its honestly difficult to explain how and why it all works to your family much less have a conversation about it at a pub.  

I need to do something really, really simple that everybody gets next so once in my adult life I can talk about what I do and have it make sense to people.  I think it would be very gratifying to talk about your occupation and job and business and have people not stab themselves in the eye with a pencil for distraction.  

It goes far better to talk about these things in, say, Manhattan where it seems like everybody is at least interested, proud of you, and curious.  Here nobody gives a crap.  Hell cocktail waitresses in LA or Vegas even think its cool that you have a big bar tab.  location, location, location.  

At least its all paid insanely well.  

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#11) On December 25, 2009 at 8:27 PM, anchak (99.85) wrote:

Interesting......Have you ever thought of the fact that possibly that remote and unencumbered position - gave you a level of clarity and purpose - which possibly served as a key aspect of your success.

Sometimes you do miss the forest amongst the trees - e.g GNW. Knowing what I knew - I never could look at it as an investment those days - although the valuation was crazy

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#12) On December 25, 2009 at 8:30 PM, checklist34 (99.71) wrote:

anchak, thanks man.  Who's hans?

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#13) On December 25, 2009 at 8:31 PM, anchak (99.85) wrote:

I call Porte Hans!

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#14) On December 25, 2009 at 8:32 PM, Tastylunch (29.19) wrote:

I can really understand that Checklist I live in the Midwest too. Although perhaps it's less of a problem from me since i live in a  city with nearly 2 million people.

Even if you do start a new company doing something complex, if you employ a lot of local people  and are civically engaged you'll get respect/accolades  assuming that you are successful. Eyes might glaze over when you talk about why you can do that but at leats it's something.

Certainly appreciation is greatly  magnified if you do something related to the masses, e.g. apple everyone knows their products even if the majority have little understanding of how they work (or what makes them special).

You know if you really really feel daring you could get into commercial real estate now. Personally I still am seeing persistant weakness in the market through my old CRE holdings, but that doesn't mean that is true in your location. 

People in my experience love talking with developers. They can be very very polarizing figures but they attract a lot of interest.

At leats then everyone thinks they understand what you do (eventhough a huge % really don't). :)

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#15) On December 25, 2009 at 8:33 PM, Tastylunch (29.19) wrote:

I agree anchak, that's part of Buffett's rationale for locating in Omaha

It can help avoid clouded judgement.

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#16) On December 25, 2009 at 8:38 PM, checklist34 (99.71) wrote:

tasty, yeah ...  even if it paid this well every year you'd eventually go insane because... unless you try to basically be a day trader, like say Doug Kass seems to be based on his posts at Real Money, there isn't anything to do most days.  You just watch.  I did alot early in the year, in July, sold/bought some hedges in August and september, covered some of those in November, but in all honesty most days are idle.

A person needs purpose to be happy in life as much as they need money or love or whatever else.  

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#17) On December 25, 2009 at 8:45 PM, portefeuille (99.58) wrote:

I noticed today that two papers I wrote about 5 years ago where cited in September. So far they have only been cited by the co-author or "buddies" of the co-author and one other group that probably includes a buddy of some buddy of my co-author. I spent about 1 year mainly working on those 2 papers and I highly doubt that anyone (excluding me and my co-author) have spent more than 10 minutes looking at them. And I would be even more surprised to hear that more than 10 persons (including all of the above) have spend more than 1 minute reading it. So your village story sounds familiar, only that my village is the universe, at least the part with an internet connection. Highly unlikely 50 people will ever want to shake my hand and talk about it ... 

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#18) On December 25, 2009 at 8:48 PM, checklist34 (99.71) wrote:

anchak, its possible...  From this small city, where there is no recession, where house prices never bubbled or crashed, where nobody I knew talked about losing money in stocks because nobody i knew had any except in 401k's or whatever.  Where not one girl you could meet at a pub would know what the S&P was...

It all looked pretty silly i guess, pretty obvious.  Yes the markets are crashing but for goodness sake the world isn't going to end so buy.  

To someone in Vegas it may well have looked like the world was in fact ending.  Or Manhattan.  

There is little doubt that the vast majority of the money managers we spoke to before deciding that I'd invest the $$$ were terrified, thought the world was ending, late last year.  

So yes, maybe my combination of new-to-the-markets status and locale played a role in the investment success.

good thought, very good thought.

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#19) On December 25, 2009 at 8:51 PM, checklist34 (99.71) wrote:

I bought a big pile of GNW in late march based primarily on that valuation and my inability to figure out how they could go broke with that much cash on hand...  Still sitting on it.  

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#20) On December 25, 2009 at 8:52 PM, portefeuille (99.58) wrote:

Hans was little worried about you ....

Who's hans?

I call Porte Hans!

I was not really "worried". I only wrote him about 2 weeks ago that I gave, at the time of writing, you being drunk and still in Las Vegas a probability of 0.2. He wrote that it was probably more a holiday/Christmas thing.

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#21) On December 25, 2009 at 9:02 PM, checklist34 (99.71) wrote:

Tasty, you make some nice points there.

My former biz partner and I are not particularily good self promotors.  We are thrifty at times as well, and our businesses generated large amounts of revenue per employee so we didn't employ, say, hundreds of people and we spent the bare minimum on facilities.  We had a palace of an office, but it was in a crusty old steel building in the middle of the industrial park.  The subject matter of the businesses was new enough that just hiring people was difficult, something the current owners have not been able to remedy unfortunately.  I hope they do well with that going forward.

If I ever do start another biz I will definiteloy, as you mention, try to have it take a bigger part in the community.  

You are 100%, dead right about CRE and developers.  they get talked and gossipped about all the time!

Good thoughts again, you guys are on a roll.  

 

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#22) On December 25, 2009 at 9:06 PM, checklist34 (99.71) wrote:

porte, that is an awesome story, i hope it doesn't get you down.  I am willing to let you talk about it while I drink belgian beer sometime if that helps.

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#23) On December 25, 2009 at 9:08 PM, checklist34 (99.71) wrote:

lol @ that 0.2 probability in Vegas, porte

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#24) On December 25, 2009 at 9:10 PM, anchak (99.85) wrote:

Well looks like some people are compensating for your austerity !!!!

 http://www.reuters.com/article/idUSN2514662220091225?type=marketsNews

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#25) On December 25, 2009 at 9:11 PM, anchak (99.85) wrote:

I ascribed the prob....Hans thought you were pretty much gone at the time ......he was speculating the looney bin - behind bars ie....due to Prancing Horse extravaganza!!!

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#26) On December 25, 2009 at 9:17 PM, checklist34 (99.71) wrote:

On a side note before I go drink my 10th cup of coffee on the day.  I honestly have toast and coffee and thats it.  No beer, no pasta, no milk, not even soda because I hate soda.  Water, toast, coffee. 

 

The funniest example I can think of relating to my small city in the middle of nowhere thought from above...  

While at some club in Vegas on my recent trip the cocktail waitress - with fake boobs and lips - wound up asking someone what on earth we did for a living (we had gottena  little carried away), he explained, she left me her phone number and email address and said I should call her to talk about it or if i'm back in town.  

I went on a date with an extremely nice girl here this summer.  She manages a local store and has a masters degree.  She left the date after asking me what I did for a living and having me explain and later told people that this guy she went on a date with was psycho and made up some story about having some business and selling it and it making tech something or other. 

lol.  not much you can really do but chuckle about it.  

location, location, location.  its all about location.  I wonder if anybody ever told that very nice girl that I wasn't making it up?

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#27) On December 25, 2009 at 9:20 PM, anchak (99.85) wrote:

Checklist .....I will piss a lot of people of with this...one .....what kind of Master's degree was it ....and I KNOW you are not lying.

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#28) On December 25, 2009 at 9:24 PM, checklist34 (99.71) wrote:

that was a fun trip to vegas, anchak, you guys should come next time.

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#29) On December 25, 2009 at 9:52 PM, checklist34 (99.71) wrote:

boy anchak, nutrition I believe.  She had worked at a spa in Chicago and had moved here to manage a health & beauty store. 

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#30) On December 25, 2009 at 9:53 PM, checklist34 (99.71) wrote:

why would that piss anybody off?

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#31) On December 25, 2009 at 10:04 PM, tkell31 (23.44) wrote:

No offense, but I'm guessing there is more to the woman thing then your work.  Please tell me you didnt order coffee and toast for dinner?  I go to Vegas all the time.  Be happy to give you some 180 if you want.  Next trips are Superbowl and first week of March Madness.  I stay at the Hilton, not a very flashy casino, but best sports book in Vegas.

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#32) On December 25, 2009 at 10:06 PM, topsecret09 (34.79) wrote:

#28) On December 25, 2009 at 9:24 PM, checklist34 (99.91) wrote:that was a fun trip to vegas      Did you ever buy that Watch that you were talking about ?   TS

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#33) On December 26, 2009 at 4:04 AM, mymini2 (< 20) wrote:

I am glad that you are posting checklist34. You are very much respected here within CAPS and I hope you will find the group that brings you more to life than just financial rewards but also the intelligent conversation and culture one needs to feel happy and mentally stimulated.  Please let us know your plans for 2010.

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#34) On December 26, 2009 at 6:27 PM, checklist34 (99.71) wrote:

tkel, my thoughts weren't about girls, but about locaqtion and how it affects what people seem interested in.  I think entire communities and areas develop their own interests and attitudes to some extent.  I thought the examples I gave highlighted that a bit. 

My story seems to be very interesting to people in some areas of the country but rather disinteresting to people where I live.  I am genuinely fascinated by that.

Also, I really would like to do something simpler for my next business venture, something that I could talk about with my fellow humans and have it make sense or at least so they'd know what it was.  Bit of commaraderie (sp?) in that, which is fun.  

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#35) On December 26, 2009 at 6:30 PM, checklist34 (99.71) wrote:

topsecret, I have not gotten a watch.  I was going to get one from Ultralong but I haven't been on CAPs for a little while.  I believe he said he was in the watch business. 

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#36) On December 26, 2009 at 6:44 PM, checklist34 (99.71) wrote:

mymini, thanks very much. 

You are right, a community like CAPs can bring alot of goodness to a life.  

In 2010 I think we should start a CAPs game hedge fund.  It would be very difficult to bring together, but it would at worst be a fun thing to talk about. 

My favorite stock for 2010 is RJET, although it may take a few quarters to start moving.  I also think that FSC has the potential to move quite a bit this year, and that MCGC and CNO have alot of potential for dividend return (MCGC) and substantial share appreciation (CNO) as past problems are slowly put in the rearview mirror.

 

 

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#37) On December 26, 2009 at 6:47 PM, checklist34 (99.71) wrote:

I like FSC because they have zero debt and a fair bit of cash to deploy and some potential with the SBA.  So basically i think its a nice stock as is (10% yield) but I think that in 12-18 months that yield could be up substantially if things go well.  They may be too conservative to take maximum advantage of the crisis however...

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#38) On December 28, 2009 at 12:27 PM, buildgreen (< 20) wrote:

Ill always rec your blogs check... your balls are big and you come from a positive point of view. Hard not to appreciate those traits.

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#39) On January 01, 2010 at 5:08 PM, checklist34 (99.71) wrote:

thanks buildgreen, I appreciate it.

I hope whatever advice I put on this site helps someone out, and I wish I had been louder and more vocal back earlier int he year when basically every stock was dirt cheap...

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#40) On January 01, 2010 at 6:12 PM, Starfirenv (< 20) wrote:

Ditto #38. +1

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#41) On February 04, 2010 at 1:43 AM, checklist34 (99.71) wrote:

thanks starfire

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