• Portfolio Management for May 9, 2016

    After two days away from the markets, the portfolio is in cash, with a long list of short ideas and a smaller list of long ideas.

    MSFT and OI look interesting, but so does AEO. AEO releases earnings on May 18. If you buy, make sure that you sell before earnings.

    You certainly do not want to own a stock like ENDP that loses 40% on its earnings. I am glad I sold two days before earnings. A 40% loss on a 10% position would have put a 4% dent in the portfolio. You can recover from such a loss, but since it is easy to avoid, it is simply safer not to hold a straight position during earnings.



    We can see below that ENDP is now in a favorable Supply position: most holders are locked in. Hence, it is possible to trade a bounce up to $19.5. However, I do not believe I will trade ENDP, because large players are not showing any signs of buying and mostly because I have no idea what the bond covenants are for ENDP. Bondholders might start putting pressure on management to simply force better deals.



    The trade ideas for today are below