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explo

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explo last won the day on September 11 2018

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About explo

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    1.2/0.9 Alpha/Beta

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  1. explo

    Solar News

    I haven't read all articles on demand speculation, but following this industry for 10 years I've seen that low price on money is usually boosting demand. FED and ECB pivot to economy accommodation will make those spreadsheets on solar IRR look more attractive. Who's making money on the demand is then decided by the forex moves. Keep your cost in weak currencies and sales in the strong ones. Note that the places where money is cheap can see its currency strength effected by this. Sure what's going on in the industry and at its companies matters too 😉
  2. Since your accounts have quite different holdings your total risk-adjusted return is likely higher than the average of the individual accounts. Diversification offers a free lunch when investing. This can maximize returns when combined with leverage to achieve the desired risk level. It sounds like you have a good setup for your risk comfort zone. It's cheaper to lever down than up.
  3. Although the leverage target is fixed the actual leverage is opportunistically flexible, but its level at any given time is rules based (to buy when relative prices are low) not by discretionary macro or other speculative decision. During Q1 it averaged 2.36x. I've let it naturally grow a little to avoid excessive costs during recent reconstruction as I expanded the asset allocation pool and increased the volatility target (but not the leverage target). If I were invested with your 0.8x lever my return would be almost 3 times lower at 12.45%. So my return on assets was below all of your returns, but likely with less volatility. When I recently increased my volatility target (thanks for you tip leading me to examine that path again after changing the allocation pool) more IT and Healthcare was allocated at the expense of Consumer like we discussed before. I think your asset allocation might still be more growth aggressive than mine and dominate your volatility (dampened by your low leverage) while my volatility is still quite low for the total asset allocation and is more dominated by the high leverage. Since the period above is short and the return is high the risk-free return is negligible which means return on risk can be normalized simply by dividing with the volatility (normally the risk-free return should be deducted first). Since I'm still in the build up phase while you are closer to the tapping phase one cannot say that one level of volatility would be correct for both of us. My new higher risk target remains to be tested by time. The December volatility spike was a good test for my previous volatility target and caused a drawdown depth of 25% compared to the market 20% as correlations spiked simultaneously but ended much more quickly than the market.
  4. Thanks. Your returns were likely achieved with lower volatility. On a risk-adjusted return basis it was still a very nice benchmark beat for me during Q1. I'm by my 2x leverage target around 200% invested, but with a reasonable Beta value target of 0.9. The volatility target is 25%, which is 150% of the average market volatility, but with more normally distributed returns (less volatile short-term volatility) than the market.
  5. 2019Q1 Return Volatility Portfolio 36.74% 16.97% Benchmark 12.71% 13.52% Difference 24.03% 3.45%
  6. Yes after a decade of negative retained earnings trend they might finally get back that 2.5 billion of raised shareholder capital that they now have burned down to below zero. Not. The company is still valued at over a billion for this achievement. That's what's impressive.
  7. Now that we are in 2019 I'm re-incepting the portfolio as of January 1st 2019 since there were major changes to the portfolio end of 3Q18 when the massive diversification of both stocks and funds was introduced. Since the funds basket is no longer completely different during its initial period I can now break down the return not only by the risk streams but also by the asset streams of the portfolio. Further I'm breaking it down by the capital streams too now. I'm also changing the illustration of the portfolio allocation to be a more simple high level view.
  8. What's strange (or maybe natural investor psychology) is that there's more of "this could double from here" when it's at $40 than at $10.
  9. I have discovered when looking broadly at the stock universe that it is usually good to buy into strength. I think the point pg6solar is making here is that these CN solar stocks have not shown any clear long-term uptrend. They have however shown extremely cyclical behaviour, which means buying in the trough post weakness and pre strength is extremely profitable and buying post strength can be tepid and turn extremely costly later. You have to be contrarian to get best risk and reward trade off in these stocks. I rode the 2009 and 2013 recoveries and it was "yeeha" wild 4 digit percentage appreciation from bottoms to tops. The recent ride from below teens to above 20's in CSIQ pales with one zero less in rise. So maybe that's a sign it still has the big multiple 100's of percentage appreciation left but I doubt it since we never went deep enough, the trough might not be in and we might just have bounced. The alternative is that the stock is finally ready to break the high of 2008 and start forming some evidence of long-term growth. Some perspective. CSIQ traded in 30's during industry good times in 2010. Later it bottom in the 2's after several large fake bounces. The easiest decision to handle this was simply to buy when very cheap and sell when no longer very cheap. Remember a rise from 20 to 40 is no better than a rise from 2 to 4.
  10. The capital preservation point is let's be open to circumstances evolving and not rely too much on something: In early 2011 a lot of investors salivated over the fixed prices as input costs fell and they did the math on the margin impact. Of course those bloated margins to one mid part of the chain being accommodated by the rest of the chain was never realized and pulling up a chart of how investors re-priced our favourite stocks in 2011-2012 could be a sobering history lesson. Even poly suppliers had to change prices for their fixed price and volume "take or pay" contracts. When companies try to reassure investors with messages of "sold out at fixed prices" it is usually time to take the money and run in this industry.
  11. Did we learn nothing from 2011? All talk about "don't worry we are sold out at fixed contract prices for 2012" were worth nothing after market prices changed a lot. PV goods sell at their market value by companies that care about their future market share. Customers will stop buying from suppliers that are killing their competitiveness them by forcing them to take goods at prices far above current market value. Sure you can enforce contracts but it affect your place in the future of the industry.
  12. explo

    Beyond Solar

    Yes, it is sort of confirming that the strategy picks well, but the strategy assumes picking well something that can contribute for a long time. To me it seems now that if an asset is too good to hold for public shareholders someone will take off the public market. So far it's only a few cases, but in each case the buyers has offered their stocks in exchange but those stocks have been far away from qualifying for allocation, which means that my pool is getting depleted of quality. So far its only a few stocks, but at this rate the strategy might not work as easily as I had hoped over the long-term. I was aware it needed maintenance for failures, but I did not realize that buyouts might be a far more frequent cause of quality depletion. The strategy can be somewhat compared to managing a soccer team and the philosophy is sort of: That Ronaldo and Messi are now proven good providers for the teams they've played in. Their outperformance is more likely to continue than not and therefore I will pick them for my dream team and I will pick other individually good players that are also complementary to each other to make the team greater than the sum of its parts. However some previously good players can fail by getting irrecoverable injury or loss of motivation or similar, but in this case it is like somebody buy them out to join a higher league or something and they are no longer available to soccer team managers in this league and the buyout premium is nowhere close to cover their long-term contribution potential and I'm offered another soccer player in exchange that is not competitive in my team (low performance or not good match of complementary qualities with the rest of the team). It's not a complaint more an observation and realization that constructing outperformance is no simple one-off recipe. The big leagues will claim the talents discovered and the scouting has to continue. The strategy might still work, but not as well and effortlessly as presumed.
  13. explo

    Beyond Solar

    Some M&A activity in fintech. FIS is buying my WP. https://finance.yahoo.com/news/fis-worldpay-combine-accelerate-future-070000204.html I'm getting a bit tired of my picks for long-term success getting bought..
  14. I have looked at them. There is a problem with the chart during the dot-com bust that prevents it from getting allocated. If they were listed after that they would get allocated. It's a know flaw with strategy.
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