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As many investors
search for the next big thing in investing, many investors agree that it will
somehow be in the arena of energy independence and alternative sources. In
such an environment Electric Cars is one of the promising sectors. The sector
is still young and largely dominated by a few companies but the products
developed such as Tesla Model-S and GM Volt is inspiring. In addition from an
investment perspective, the sector should be given the benefit of the doubt
as valuations are reasonable and many of the companies have other traditional
business lines which decreases the risk. The Electric Cars
Fund aims to benefit from this sectors expected rapid growth as Electric Cars
get accepted and the necessary investments are made to install the
infrastructure to support these cars. The Fund's main aim will be to
accumulate the shares of the main players of the sector at reasonable prices
and hold those investments without short term trading. In the case of
expected major market reversals the positions may be decreased to adjust risk
and reinvest at lower levels. The Fund will
also maintain a sizable position in USO (United States Oil), as the growth
and success of the Electric Cars are very much dependent on the price of oil
remaining at elevated levels in the United States. The Fund will also try to
alleviate volatility with this hedging position in USO. |
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Since Inception Relative Performance
Graph vs DJIA and 7 -10 Year Bond Index Latest Trades
Comments June 18th’
12 15:46 TSLA is up close to 10% from its lows in
the $29 range due to its approaching Model-S launch. I should have seized
this trading opportunity and it goes down as an easy miss. I just put my
attention on the AONE position which has done well recently and I missed on
this trading opportunity. June 12th’
12 15:57 Finally!!! AONE up 52%. This is the reason
why I have a long position in this stock. Any positive news and the short
squeeze will result in days like this. The AONE position in the Fund is about
15% although the effect on the Fund itself is somehow negated by the loss in
the USO position. May 14th’
12 11:37 Not much to trade in the Electric Cars
stocks. I am happy that AONE has somehow stabilized from its declining trend.
However the big increase I expect and hold the stock for has not happened and
the fact that I have to wait for it increases the volatility of the Fund.
AONE usually moves around 5% a day and the longer have to hold that position
to wait for its big short squeeze, the more that daily volatility increases
the risk of the Fund. As for TSLA it is hovering around $28 despite the
approach of the Model-S launch. TSLA does not seems
to have enough hype to overcome the market weakness. At least it is nice to
know I haven’t missed out on a big rally in TSLA. Apr 11th’
12 15:37 My concentrated position in A123 has proved
to be brutal for this Fund. However I will continue to hold this position as
the market cap is so low compared to the accumulated technology in this company
that worse comes the worse it will be a takeover target and the trade will
still make more than a 300% return. Mar 28th’
12 12:14 A123 continues to slide and I used it to
average down my cost. This might be a harder trade than I initially expected. Mar 26th’
12 15:53 I initiated a sizeable position in A123 as
the stock has sold of significantly and the upside potential is worth the
risk in my opinion. From these levels zero bound limits the downside but
upside could be up to a %500 return. I also initiated a long position in oil
(USO) to balance the volatility in A123. Jan 17th’
12 15: 02 Seems it was a big mistake not use the
carnage in TSLA yesterday as a buying opportunity as the stock has recovered
almost all of its losses. I should have gone with the valuation call at $21
and bought up some shares. No excuses. One other thing to note is that
though, this recent event has shown that there is very little depth in
trading for the TSLA stock, as the stock can move down 20% and then up recover
all of it in 2 days. So gotta be careful and
probably go with the valuation rather than technicals. Jan 13th’
12 15:13 TSLA is down about 17% on news that two of
its chief engineers have left the company. The stock is down to levels I am
comfortable with valuation. However these kinds of news usually take a while
more to play out, so I will wait a little more until trading shapes up a
little more. Also, I just don’t comfortable with the state of the market with
its recent strength, and no matter the valuation the general market movements
do matter to these high beta stocks, so just not willing to take the risk. Jan 11th’
13:58 The battery maker A123 Systems have had a
very good run-up in the last month. I should just go ahead and admit that it
probably has a lot to do with the strength in the market as this is a
high-beta stock. However these guys are scoring some very good deals such as
providing batteries to the some utilities and the recent deal to provide
batteries to VIA which converts popular vehicles to all electric versions for
fleet use. It makes me quite comfortable investing in this stock once the
market pulls back from its lofty levels. Although they are still burning
through cash quite fast, they seem to have a solid customer base that continues
to evolve. Dec 8th, 11
15:47 I
just don’t feel comfortable accumulating shares in the Electric Cars sector
with this European situation hanging over the market so, similar to other
Funds I have pumped this Fund with long term Treasuries also. This should
provide a little return until market gets more stable. Meanwhile, TSLA is
down more than 10% on a Morgan Stanley downgrade, but I am more comfortable
starting to buy up shares at low to mid 20s so I will wait a little more Dec 3rd, 11
13:04 The
main stock of the Electric Cars Fund will be TSLA, roughly 30%. The reason is
that TSLA seems to be the company that has the revolutionary product that has
the edge in design, practicality and performance to make the breakthrough
from a niche market to the actual market. The other positions in the Fund
will be used to manage the risk exposure of the Fund. One of the other stocks
that will be heavily weighted is BMW, at roughly 20% as their iSeries seems to be the one of the only other available
R&D product that could breakthrough to the mass market. As BMW also has
very strong and growing traditional business it should balance the risk
profile of TSLA. To gain exposure to the components makers which are very
volatile but also very promising in case of the electric cars taking off,
roughly 20%-30% of the Fund will be devoted to the components makers such as
A123 and ENER1. There will also be a position held in USO roughly equal to
15% of the Fund, since high oil prices are a necessity for the viability of
electric cars. Also the position in USO will decrease the risk profile off the
Fund. All of these positions will be accumulated at reasonable levels at
market pullbacks to decrease the risk of a major correction as the electric cars is still a
rather volatile sector. |
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Since Inception Performance Chart vs Equity and Bond Benchmarks
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