For the past couple weeks I have been on vacation. From Christmas at my family’s to heading out South for an extended weekend. I’ve been absent from my regular articles on Alpha Letter and haven’t participated much in the Telegram Group over the past couple of weeks. My vacation is now over and it’s back to the regular schedule of trying to find undervalued stocks that Wall Street isn’t looking at.
I wanted to take the time this morning to give a review of 2022 and what 2023 could look like. Overall, 2022 was a tough year. Since the year 1920, the year 2022 was the 7th worst year ever.
2022 was worse than the 1973-74 Bear Market. Worse than 1941 in the midst of World War Two. Worse than the 2001 Dot-Com Crash. Worse than 1940, another bad year during World War Two. And worse than the 1957-1958 Recession. It was a tough year by all comparisons.
If you are reading this, you made it through a really tough period. If you are down this year, don’t worry, everyone else is down too. If you are up in 2022, congrats, you did what 99% of investors were unable to do. Seriously, pat yourself on the back and round of drinks on you.
What will happen in 2023? Who the hell knows. Any expert trying to predict a macro driven event like a deep recession, tech recovering, the Fed pivoting, etc. is just a waste of time. No one can successfully predict macro events. You can look smart doing it. But at the end of the day, it is a losing man’s game. Show me several macro driven funds who have outperformed year after year and maybe then I will change my mind.
Instead of wasting everyone’s time on my useless macro predictions, let’s talk a bit about what Alpha Letter will do to provide great stock research for 2023.
In 2022, Alpha Letter published 152 newsletters. 95 of these were free and 57 were exclusively for Alpha Letter Pro subscribers. Alpha Letter Pro subscribers received, on average, 4.75 high quality stock ideas per month, more than my original goal of 1-2 per month in 2022. Said another way, Alpha Letter Pro subscribers received 57 high quality stock ideas and original research on stocks very few other investors are talking about or investing in.
For 2023 I want to increase the high quality content and research on Alpha Letter. Here are some high level goals I have for 2023:
Continue to uncover and research value opportunities in the public markets: With 2022 being a horrendous year for equities, now is the right time to be buying stocks. I don’t know when the market turns around, but you usually end up pretty ok buying stocks in a down market. I’m seeing a lot of good opportunities in public markets and I am excited to share them with everyone over the coming weeks and months.
Focus on special situations: I’ll be spending a significant amount of time in 2023 focusing on special situations like spin-offs, restructurings, carve-outs, acquisitions, M&A, mutual conversions, tender offers, etc. There is good money to be made in public markets exclusively focusing on these special situations and I want to start sharing them with Alpha Letter Pro subscribers. I’m thinking a weekly special situations article once per week highlighting interesting opportunities.
Following insider transactions: I already started tracking major insider transactions on equities and it is starting to payoff. I’ve found a lot of unique undervalued opportunities where CEOs, CFOs and Directors are buying their own stock hand over fist. Their stock is trading at 52 week lows, which implies there could be significant upside. Insider transactions will be a weekly edition to Alpha Letter and should provide high quality value to any reader.
Activist Monitor: Every week I will publish updated 13D filings. 13D filings are essentially required filings with the SEC on any investor who plans to go activist or engage with the board of directors in a public company. When 13Ds are filed, stocks tend to move. A weekly Activist Monitor will keep us all on track of everything interesting going on in public markets and who is making big moves.
Off The Radar OTC Stock: Over the years I have found a lot of value in OTC stocks. These are stocks traded on the bulletin board, which 95% of investors tend to ignore. Bombed out securities with almost zero analyst coverage. Every week I want to write up a new OTC stock and why it could have value. OTC Stock of the Week!
Community Banks: Community banks could get pretty interesting over the next twelve months. Valuations have gotten hit pretty hard as bonds held within banks have gotten slashed. Comprehensive income (losses in this case) has soared. There isn’t as many people buying houses and interest rates are through the roof. It makes sense why investors would sell banks off — they are just too hard to understand right now. But therein lies the opportunity. In 2023, I plan to write more about banks and what opportunities I see in them. These won’t be the JP Morgan’s of the world. These banks will be the smallest banks out there. 7-10 branch banks that just happen to be public.
Index Deletions: For the past few years one of my favorite ways to find stocks to buy is when an index like the Russell 2000 kicks a stock out of the index. There is a large amount of selling pressure and anyone who has done their research on the stock has the opportunity to load up on that equity when there is a non-fundamental seller. These opportunities only happen a couple times per year, but I plan to be all over it when the next deletion is announced.
Those are just a few of the high level goals I have for Alpha Letter. I plan to increase the high quality content with a sole focus on finding good stock ideas to invest in. In addition, everyday I will be in the Telegram group talking to Pro Subscribers about these names and other investing ideas we are interested in.
I’m looking forward to 2023 and uncovering more investing ideas. If you are not an Alpha Letter Pro Subscriber and want to get involved in a community of likeminded investors, subscribe today, shoot me an email and I will hook you up with a research report. If you don’t like the content, unsubscribe anytime, no questions asked.
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Ended the year +2% from a trading strategy based around your names. Pretty happy with that.
Going into 2023, I'm wondering if the better play might be a mix of short term CDs and T-bills in addition to equities, Currently getting >4% with <6 month CDs through my brokerage account, which is now my baseline risk-free rate of return.
How did these 57 do? I know EXPR sh*t the bed if you bought and held.