It shouldn't come as a shock, but writing these posts when my stonks kept going up was significantly more enjoyable than trying to muster the energy to do so when they are going down. There have been quite a few developments since my last missive so let's get to it.
A Personal Update
The company I work for was recently acquired by a private equity firm. As part of the process I have been given the opportunity to co-invest along the PE company. The terms are quite favorable, starting with a valuation I believe is fair, an exit plan that appears doable, and a yield to go along with the investment (likely ~10%). So, naturally, I have expended much brain power trying to determine how much to invest. Some additional context is below.
Current Financial Picture:
After Tax Funds: ~200K
Cash: ~325K (Mostly due to selling quite a bit of the after tax funds)
The options as I see them:
Invest $350K in company - leave $200K in market for liquidity needs etc.
Sell ~150K of stock and invest $500K in company. Replenish after tax as available
Take out $150K loan at ~7-8% - invest $500K in company and leave ~$200K in market.
Not totally sure which way I'll go, but strongly considering levering up (option C)). Contacted a few fee-only advisors to try and talk things through, but thus far no responses - holler at me if you/someone has opinions :)
Current Portfolio
I have sold off a ton since my last post. None of which I really wanted to, but the risk reward in the private investment is, in my mind, too good an opportunity to let pass. The remaining portfolio has basically three themes - Cannabis, Commodities, and Call Spreads (the 3 C’s).
Cannabis:
I've written a lot about cannabis companies (US, specifically) and I remain a believer that they represent a unique risk/reward proposition over the upcoming years. My top position is $AYRWF, though I have sold some down over the last month or so. $GLASF and $VRNOF both seem cheap down here. I have a love affair with $INCR that I can’t drop so it remains a small position. Some flyers on $GRMWF (just seems way too cheap - so many years to start making money) and $GNRSW (solid assets, SPAC should close end of month). And in Sheep I trust, $ANEB.
Commodities:
Sold too early on my natural gas plays - $AR and $SD - which were both big winners and large positions. Sold other oil/gas exposures here, too - $AMPY, $BSM. Probably too early, but seems like the truly easy money had been made. The remainder of my commodity exposure is Uranium, Copper, and Lumber. Somewhat hilarious $ICLTF is my current largest holding, but the Lumber Baron himself is on the board now so what could possibly go wrong. Oroco should have some drill results soon which I will be eagerly awaiting not understanding and hoping the fine folks of Twitter inform me if it is good or bad news.
Calls / Call Spreads
As I was selling down positions I wanted to maintain some upside exposure to the bets I thought were solid without risking as much capital. As such, I put on a decent amount of call spreads in various names. Mostly a continued bet on $HGEN and more leverage toward cannabis with $MSOS, but I have some hope in $XERS as well. $GRPN is mostly a lost cause at this point, but have some exposure if it ever gets it act together. As given2tweet noted, vol seems underappreciated as thigs thing has been going crazy after earnings.
Performance Tracking
It’s been a humbling time in the market - but volatility is to be expected. Hopefully can rebound in Q4 and into ‘22. Down about $50K versus “just throw it in an index fund” which is disappointing, but not that bad - absolute drawdown obviously much worse.