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Monthly rollup | December 2023

Stocks Mentioned: Africa Oil (AOI.TO), Anglo American (LSE:AAL), Sibanye Stillwater Limited (SBSW), Generation Mining (GENM.TO), Seatrium Ltd (S51.SI), Danaos (DAC), Eagle Bulk Shipping (EGLE), Star Bulk (SBLK), Okeanis Eco Tankers (ECO, OSE:OET)

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December 01 2023

Nasdaq new highs - new lows index barely got back above zero in the recent sharp rally off the October lows. Market breadth continues to deteriorate even as the Mag 7 pushes the index to extremes. At this point, I've given up on timing when this will collapse, but we are very, very close.

December 02 2023

December 04 2023

Buy Africa Oil (AOI.TO)

December 06 2023

Longer version of the buy recommendation on Africa Oil (AOI.TO)

December 08 2023

Buy Anglo American (LSE:AAL)

Today's selling climax presents a good buying opportunity. I'm bullish on stagflation as I've mentioned earlier, and the opportunity to buy one of the world's biggest miners right as everyone else has given up on it, is too good to pass up. This may not be the bottom but this is a great price and if I'm wrong, then so be it.

December 10 2023

December 11 2023

December 12 2023

When the CPI came in hot last month, the market shrugged it off because it was 0.1% below estimate. The market had the same immediate reaction this time as well, but the early gains did not hold. Worse, it looks like investors have finally started bailing out of the Magnificient 7, making it hard to sustain the gains in the indices. Only a matter of time before the whole thing blows.

December 13 2023

A move like this on high volume, with buyers just taking out offers and the stock barely correcting, means someone knows something. Skeena released a DFS a month ago and hasn't announced a financing on the back of that, which again means something is brewing. Took a decent sized position at $4.35. There should be a press release after the close.

December 15 2023

December 18 2023

Palladium appears to be at the beginning of a new bull run. This goes in line with my thinking we're entering stagflation. SBSW is best positioned to capitalize on this, but if you're more adventurous you can look into adding Generation Mining (GENM.TO). The company owns a palladium-copper deposit in Canada and is a cheap call option at the current market cap of C$42 million.

High volume breakout on Hapag-Lloyd as the Red Sea attacks on container shipping continue. Buy!

December 21 2023

December 22 2023

December 25 2023

Note the timelines on these articles. My short report on Nvidia has garnered a lot of attention, but the Fed's loose money policy has unleashed a bubble that shows no signs of abating. We saw similar conditions in 1982, when the Volcker Fed ended its tight money policy, and in July 2020, after the Fed unleashed $3 trillion in QE to battle a virus which might cause a few people to contract the flu.

Will the attacks on Red Sea shipping and the ensuing disruption to global trade give the Fed the needed excuse to turn on the money printer? Or are they going to do it in any case to help with Biden's re-election campaign? Yellen has already dropped pointed hints indicating the Fed is going to do just that.

Against this backdrop, I see no reason to focus on publishing short side research, or even look for shorts other than on pure technicals.

I'm good at spotting trends and picking stocks with tremendous upside. 2022 forced me to evolve, in keeping with the bear market and the expectation that the Fed would end its 14-year streak of flooding the system with money. Turns out, we merely got a Fed pause in QE, not a real rate hike cycle that ends in a recession.

America’s Endless War Over Money - This is not surprising since the Fed is after all a political institution.

As I've shared in my December outlook, the next recession will be stagflationary, and Powell is going to imitate William McChesney Martin and Arthur Burns.

Kashyap's Macro Outlook - December 2023 - Let's focus on commodities, shipping and crypto, which will benefit from the ultra-loose monetary policy to come, and forget about the overvalued stocks and accounting frauds.

While I'll still put out TA driven ideas, I'll not be publishing short-side reports. I will look for a good exit to close the current short positions.

I'm working on a new format, and will be back to writing long-form fundamentals driven trade reports like I have been doing since 2016.

December 26 2023

Buy Seatrium Ltd (S51.SI)

Seatrium operates a shipyard in Singapore capable of building and servicing offshore drill equipment (rigs, support vessels, etc) for the oil & gas and wind energy sectors. The company also has assorted other capabilities catering to shipping and LNG. Think of it as the marine equivalent of a body shop.

Chart-wise, that's a textbook double bottom, making it easy to place a stop. The move above the 50 day moving average (red line) is the buy signal.

December 27 2023

Containership lessor Danaos (DAC) just made a 52-week high. We've made money on this stock before, notably selling into the blow off top in February 2022 at $96.

The story is the same. The company is a cash cow turned value trap turned value stock now that the market is chasing value again. DAC has a market cap of $1.4 bn and $2.5 bn in revenue backlog from vessels already chartered by ocean liners. The company has a $100 million share buyback program, a ridiculously low net debt of $111 million, no significant debt maturity until 2027-28, and trades at a little over 1x 2023 revenue, 2x net income.

DAC also owns a 16.7% stake in Eagle Bulk Shipping (EGLE) which will be monetized since Star Bulk (SBLK) is acquiring Eagle. Like their previous ZIM investment, this one has been a winner. Now it remains to be seen if they do the right thing and return the cash to shareholders, or hoard it all like they have been accustomed to. 

Currently, the market seems to think this value trap is changing its colors. I am cautiously recommending Buy, with the caveat that value plays take patience and this stock should be purchased with a 6-12 month holding period as fundamental improvements will likely be slow to come.

As we approach the end of another year, it's time to take stock. I know I haven't been as active in 2023 as I was last year, which is why I did not give out many trade recommendations but instead chose to highlight trade ideas and talk about what I was doing.

This year has been mixed for me. I achieved some long pending life goals, but at the cost of neglecting my portfolio and letting losses run waiting for the trend to change. Or missing out on major moves while staying heavily in cash and having a life outside markets.

That said, my trade recommendations have done pretty well overall. As of Nov 30, I have closed 141 trades with a 47% win rate. The winners averaged 24.8% while the losers averaged 17.2%. And that's with three option trades going to zero. Removing the option trades takes the average loss down to 13.7%, which is pretty good for a period when fundamentals have not mattered to stock prices.

We caught the wild move in Solana early this year, and I pounded the table on adding crypto exposure during the June sell-off, which turned out well for my personal account. The put option trades did not work out as well, but I took profits in October which minimized my loss.

The energy positions are beginning to work, while the gold miners (highlighted in September) have already turned around. The biggest losers are the tech and $CACC short.

I'll look for a good exit to clear out those trades, and get back to focusing on long-only trades where my understanding of the fundamentals gives me an edge.

I am going to make this a closed group beginning next year, following which I will be announcing a soft launch for my paid newsletter.

The Russell 2000 just had its quickest move from a 52-week low to a 52-week high. Small caps are so back, and that's my specialty. I have avoided writing about my small cap picks in this group and Twitter, but that all changes in the paid newsletter.

Most small cap newsletters tout the initiation report and present a track record based on that, which is not helpful for those who get into the trade at different points. In my days at The Dollar Vigilante, I created individual pages for each stock I covered and updated on the fundamentals periodically. I will be replicating that approach so you will always have guidance on where I stand based on both the fundamentals and the remaining upside from current market prices.

I have some exciting things planned, so stick with me and I promise a banner year in 2024.

Happy holidays, everyone!

December 28 2023

Buy Okeanis Eco Tankers (ECO, OSE:OET)

Okeanis is an oil tanker company which recently got a secondary listing on the NYSE. The company operates an ultra modern fleet of 14 oil tankers, comprising of 8 VLCCs and 6 Suezmaxes.

The firm is controlled by the founding family, which owns 57% of shares outstanding. This is a good thing (for now), since both insiders and other investors will benefit from the increased trading activity.

At current market cap of $875 million, the stock is fairly valued on an NAV of fleet basis. However, the cash flow generation potential given the current Red Sea situation is not priced in to the stock. Nor is the upside to NAV as VLCC prices go up. A newbuild VLCC now costs upward of $124 million, and the company's fleet is fitted with scrubbers, ballast water treatment system, and is an eco-design. All of which means they command a premium time charter rate and premium valuation.

The stock is currently flying under the radar. This week's sell-off in shipping is the perfect opportunity to add tanker exposure.


The Okeanis fleet

December 30 2023

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