3SOF

This is the portfolio where you will find stocks in which the fundamental value is not reflected in the stock price.

All picks are based on a fundamental analysis of the company's earnings, market potential and/or products.

We will still use TA to set a stop loss for all value picks.  It is a paradox for a value investor that the more a stock falls the more attractive it becomes  . In many cases this is because all information is not available for the investor. We will use TA to protect our investment from unexpected events.

The lower target might be raised in order to protect our profit. We are however more patient with 3SOV picks than with technical motivated picks. After all our investment is protected by the fundamental value of the company.

The trading team will follow all fundamental picks closely but you might find that there will be fewer updates on these picks, as fundamentals shouldn't change on a daily basis.

Each pick will have a target based on the fundamental fair value of the stock when possible. When that target is reached we will sell the stock. The target will be below the fair value as it often takes months to squeeze the last dollar out of stock! The target for a pick will be adjusted if there is a change in the company's fundamentals. Expect to see a lot of writing around earning releases and other fundamental events which can change the outlook for the company.

Sometimes it takes days for an undervalued stock to reach fair value, sometimes it takes months. We will therefore not have any time limit on our picks to this portfolio. We might sell a pick within 48 hours or we might hold it for years. The people who sold Microsoft a year after the IPO had a great investment but still missed out. We don't want to make the same mistake should we stumble over the next MS   

We do not, however, want to sit on dead money. For most people money is a scarce resource and we want money to work for us. If a stock does not start to appreciate significantly in value within 4 months after it was bought for the portfolio we will sell no matter how undervalued the stock is. 4 months is, for many investors, an eternity but value plays can take time to play out.

Hi Michael, congrats again on becoming apart of the 3SOF team. I was just wondering if there has been any discussion about your and elites tie in to ownership of the stocks you are reccommending. We all know very well that being monetarily attached to the stock makes a big difference.

Look forward to your reviews

uc.

Hi UC

I know exactly what you mean. In fact that is why I joined 3SOF. Members here are playing with their own money. If you look at the big financial institutions and funds they are playing with other people's money and there is a hell of a difference if you ask me.

I am a bit lucky because I am already holding a number of the stocks in 3SOV:

AOB bought at 1.85
INSM bought at 2.05 (bought the first time at 2.38)
GIGM bought at 4.53 (bought the first time at 1.76)

I don't own DIET (sold at 7.46), TRAD and TGB.

As most 3SOF members I have two scarce resources: Time and Money. To do fundamental analysis takes a lot of time and I would feel a bit stupid if I didn't buy the stocks I recommend to the board.

Concerning DIET, TRAD and TGB we need to make a trading plan for these. I will use the weekend to complete this. As part of this I will also decide whether to buy the stock for my own portfolio.  I think it is fair to make that decision public so that will be part of the update over the weekend.

Hi Michael,

Congrats on joining the trading team!

A few questions:

- Are you planning to set stop loss on AOB and INSM?
- What is your stop loss criteria?
- Are you planning to establish a sell target for these stocks?
- Are you planning to do buy/sell all at once or incrementally like you did sometime?
- What will be your typical buy criteria (i.e. how much appreciation do you expect when you buy?)
- How many stocks are you planning to have in 3SOV?


-Louis

Michael, is this 3SOV the same as the 3 SOF Fast mentioned in the guide "How to use the 3 SOF Premium Service" by David Randolph dated November 6, 2005?

I am a new member, got this guide today and am now trying to find my bearings on the website.

Maestro

Quote from: valueseeker on March 17, 2006, 12:49:13 AM
Hi Michael,

Congrats on joining the trading team!

A few questions:

- Are you planning to set stop loss on AOB and INSM?
- What is your stop loss criteria?
- Are you planning to establish a sell target for these stocks?
- Are you planning to do buy/sell all at once or incrementally like you did sometime?
- What will be your typical buy criteria (i.e. how much appreciation do you expect when you buy?)
- How many stocks are you planning to have in 3SOV?

Thanks Louis!

Yes all stocks should have a stop. Even the best due diligence is no guarantee for nasty surprises like what we have just seen with DIET and VPHM

The criteria for a stop loss really depend on the stock. It will normally be a mix of FA and TA and I am discussing the stop loss with eliteG and Ramsburg. The difference in this portfolio and 3SOF is that we normally will give the stock more space to move to the upside and downside.

I was planning to do that but it can sometimes be very difficult especially if the stock is undergoing a transition. What is the fair value of INSM? It really depends on the news from the pipeline and the commercialization of iPlex.

Again this is a difficult question. What is best: 10% over a week or 50% over 6 months? Many people see value investment as a synonym for long-term investment. I see it as investing based on the fundamentals of the companies. You could have a take-over situation and you expect a 10% higher bid from a competing company. I would put that pick on 3SOV and sell it with a quick 10% profit if and when the higher bid becomes a reality.

Glad you finished with an easy question. When 3SOV is fully invested we will be holding 10 stock with 10% invested in each.

As you can see we have 6 slots open so I would love good ideas from you and all the other members of 3SOF. We need the money to work so we can show the same results as the 3SOF portfolio!

Quote from: Maestro on March 21, 2006, 03:12:07 AM
Michael, is this 3SOV the same as the 3 SOF Fast mentioned in the guide "How to use the 3 SOF Premium Service" by David Randolph dated November 6, 2005?

I am a new member, got this guide today and am now trying to find my bearings on the website.

Maestro

Hi Maestro,

Welcome on Board and keep posting good questions and ideas!

3SOF Fast was a portfolio 3SOF had for a very short time (probably around November last year) for short term picks. These picks will now be in the 3SOF portfolio.

It seems we need to update guide. Thanks for reminding us 

Michael,
         Have a suggestion,and since you are the fund. trader and adminstrator,you would be a perfect choice to start a thread which talks about wealth building equities.Anything from high yielding stocks to funds to income trusts.I hope you like the idea.

Suggest add a gold/copper play for long term. I am holding EZM (copper & zinc) since it's first recommended on 3SF and added NXG (gold & copper) this week. I also have AUY in my Canadian retirement portofolio.

Quote from: valueseeker on April 21, 2006, 10:05:04 PM
Suggest add a gold/copper play for long term. I am holding EZM (copper & zinc) since it's first recommended on 3SF and added NXG (gold & copper) this week. I also have AUY in my Canadian retirement portofolio.

You are right to have a value portfolio without a gold stock is a bit embarrassing these days

I like NXG so don't be surprised if it will be added to 3SOF one of these days 

Gold stocks has been a great investment in their own right but they also serve as a safty net if the market crash.....

Quote from: akclide on March 21, 2006, 11:34:36 AM
Michael,
Have a suggestion,and since you are the fund. trader and adminstrator,you would be a perfect choice to start a thread which talks about wealth building equities. Anything from high yielding stocks to funds to income trusts.I hope you like the idea.

Hi Akclide,

High yield stocks seem like a dream for a value investor. You get cash into you bank account on a regular basis (at least in theory!). Most stock with a high dividend is however fundamentally weak and all too often you will se your dividend being eaten up by a decrease in the value of the stock.

High dividend is a benefit for a fundamentally strong stock but from my experience it is not a good criteria to select stocks.

Income trusts and funds are outside the scope of 3SOF. After all we are here because we love to pick great stocks so why pay somebody else to have all the fun 

Quote from: Michael on April 23, 2006, 03:09:32 PM

Quote from: valueseeker on April 21, 2006, 10:05:04 PM
Suggest add a gold/copper play for long term. I am holding EZM (copper & zinc) since it's first recommended on 3SF and added NXG (gold & copper) this week. I also have AUY in my Canadian retirement portofolio.

You are right to have a vlaue portfolio without a gold stock is a bit embarrassing these days

I like NXG so don't be surprised if it will be added to 3SOF one of these days 

NXG:  my pick for the last contest.  Too bad the contest started right at the beginning of a correction.  And too bad I didn't add it to my own portfolio.