I hope you had a great Labor Day weekend, far away from your desk, and that you completely missed my Saturday update. Yes, really.
That Saturday update was to let you know I’ve been working on an article on our “bonus plays” – MDM, ANGL, short mall REITs, and all the others that I’ve recommended since the beginning of the year. These plays are not included in our official portfolio, and I have heard from a number of readers who are afraid that I’ve “forgotten” them.
Most of these plays still have quite some time to mature, so don’t be surprised that we haven’t seen many big moves yet. But we’re going to…
One recommendation needs to be adjusted because (in my view) it is too long dated. And on the bright side, several of our long plays have begun their long, slow ascent.
Here’s what’s happening…
Our Bonus Short Plays
First, a note on VRX. I first recommended this play on October 15 of last year, so it is not strictly one of our “bonus” plays, but I feel it deserves an update. Since that time, I have suggested several rounds of puts. The earlier ones did very well (making some readers as much as 700%), while the later ones have been disappointing. The stock continued to fall, but the options did not. I think this happened because my latest puts are too long-dated – there was too much time-value embedded in the options, so the puts did not fall when the stock did. Stay tuned for a new recommendation.
Now, a brief note on each of our true bonus plays. As always, I recommend puts as a less risky way to play the short side.
- Short Citi: Recommended August 18. Up about 1.4% since then. No change to this recommendation. Citigroup Inc (NYSE: C) is a derivative-riddled monster that has bitten off more than it can chew.
- Short Mall REITS: Recommended May 10. Simon Property Group Inc (NYSE: SPG) is up a little over 1% and General Growth Properties Inc (NYSE: GGP) is down a little more than 1% since then. No change to this recommendation. Retail is getting worse.
- Short HY Bonds: Recommended July 26. iShares iBoxx High Yield Corp Bond ETF(NYSE Arca: HYG), and the SPDR Barclays Capital High Yield Bond ETF (NYSE Arca: JNK) are each up about 2%, while iShares MSCI Emerging Markets ETF (NYSE Arca: EEM) is up about 6%. No change to this recommendation. The high yield sector is getting more overvalued while defaults continue to rise rapidly.
- Short Euro Banks/Euro: Recommended June 16. Since then, Vanguard Total International Bond ETF (NASDAQ: BNDX), iShares International Treasury Bond ETF (Nasdaq: IGOV), and SPDR Barclays International Treasury Bonds ETF (NYSEArca: BWX) are all up 1 to 2%, while ProShares Short Euro (EUFX) is up 0.85%. No change to this recommendation. The Euro will weaken long-term.
- Short China/Chinese Stock Market: Recommended January 29. iShares MSCI Emerging Markets ETF (EEM), iShares China Large-Cap ETF (FXI), and iShares MSCI Singapore ETF (EWS) are up 25%, 24%, and 18% respectively. No change to this recommendation.
- Short Yen/Japanese Stock Market: Recommended May 6. Since then, CurrencyShares Japanese Yen Trust ETF (FXY) and iShares MSCI Japan ETF (EWJ) are up about 4.8% and 8.6%. No change to this recommendation.
A note on short platinum, which I recommended February 24: I am not particularly interested in this metal, to be quite honest. I don’t care what it does. I believe it will go down long-term, but I have better things to do than track it. If you would like to continue following it, be my guest.
Our Bonus Long Plays
- Buy CZR: Recommended April 13. Caesars Entertainment Corporation Common Stock (NASDAQ: CZR) is down 11% since I recommended it, but this is a longer-term play that will take some time to mature. Over time, I expect Caesars stock to rise sharply as the company’s value is shifted from creditors to equity holders. No change to this recommendation.
- Buy ANGL: Recommended May 3. MV Fallen Angel ETF (NYSEARCA: ANGL) is up 6.4% and will continue to rise. I have heard from a number of people who are making money on ANGL. No change to this recommendation.
- Buy MDM: Recommended July 28. Mountain Province Diamonds Inc (NASDAQ: MDM) is up 5.5% since I recommended it, and 73% since the beginning of the year. No change to this recommendation.
- Buy UUP: Recommended February 3. PowerShares DB US Dollar Index Bullish (NYSEARCA: UUP) is down 2.8% since I recommended it, but bear in mind that the US Dollar strengthened a bit in August with the US Dollar Index (DXY) closing the month around 96 after drifting down near 94 at mid-month. No change to this recommendation.
Editor’s Note: An earlier version of this article mistakenly stated that we were pulling our short yen recommendation. This is incorrect.