All Cash

Call me paper hands if you want. But I exited my entire position in the “All In” portfolio. At the peak the portfolio was up 130%. It is now up 92% and I have $45,180 in firing power.

The Evergrande news spooked me. Every other company I have investments in I didn’t sell. But met coal. Oh man. Any Chinese infrastructure downturn will send these producers back down to the ground.

Here’s the thing. 66% of pig iron production in 2020 went straight into China. 55% of raw steel production in 2020 went directly into China. So if the Chinese real estate market blows up, steel, coal, pig iron and all of businesses associated with these industries will get smacked extremely hard.

And given the artificial demand for all of these commodities, it is extremely hard to tell what the base case demand levels are for Chinese iron, steel and coal consumption.

So I decided to exit and de-risk my entire portfolio from any Chinese infrastructure collapse. Sure, these coal producers are likely to have record years in 2022, generating significant cash flows and transforming their capital structure.

But I was already up double digits on my coal investments in less than three months and absolutely killed it. I decided the right move was to take a step back, de-risk the portfolio and build up some firing power for when I find a new investment that has minimal downside and significant upside.

Two weeks left to invest in Piestro – the robotic pizzeria of the future (sponsor)

The US pizza market will be worth an estimated $54B by 2023–up from $46B today. But traditional pizzerias face high labor & real estate costs resulting in lower profit margins–estimated at 22% on average. 

Enter Piestro - the robotic pizzeria that makes pizza at a fraction of the cost of traditional pizzerias and boasts an impressive 48% projected profit margin.

In fact, Piestro recently announced a commercial partnership with global brand 800 Degrees Pizza. Valued at an estimated $530M and projected to kick off with 3,600 machines to be produced and sold over the next five years, this partnership will help drive future growth for both companies and allow consumers to access pizza 24/7 in high-traffic locations.

Invest before 9/30 to claim your slice of Piestro!

What is next?

I’m still searching for the next company I want to plow $45,000 into. I have a few ideas but want to stay patient and only swing at the ideas I know I have asymmetric upside to downside.

One company I recently bought a major position in could be a contender. They are a small retailer with a stock that recently gotten hammered. I owned this stock back in the spring and sold after it re-rated 100% in a few months. When the stock sold off this past month I took another bite from the apple.

Another company I recently wrote up could also be a contender for the portfolio. However I don’t understand the business model as well as I want to and there is significant downside risk should another hurricane come crashing into the southeastern states. But despite this, the large insider buying, forced selling and multi-decade lows encouraged me to take a small starter position.

I am sure I will find a great idea soon. I am always on the search for undervalued opportunities the market is not looking at. If you have any good stock ideas that fit my style please feel free to drop a ticker in the comment section.