Year In Review: Special Situations & Other Holdings
A Look At Everything Else That Happened In The Portfolio Over The Last Year
Year In Review
Today is last post for the Year In Review, and I’ll be going over the miscellaneous holdings in the portfolio. Coal and offshore oil services are the bulk of my investments, but sometimes other situations are interesting enough to add to the portfolio. Vornado Realty Trust VNO 0.00%↑ was the biggest winner, but Enterprise Products Partners EPD 0.00%↑ and NewLake Capital Partners have provided decent returns as well. Enovix ENVX 0.00%↑ and Calumet Specialty Products Partners CLMT 0.00%↑ are two losers I’m still hanging onto, while Vertex Energy VTNR 0.00%↑ was one where I cut my losses after trying to catch falling knife. Sable Offshore SOC 0.00%↑ and Patria Investments PAX 0.00%↑, which are two of my more recent investments, are basically flat so far.
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Vornado Realty Trust
This one in particular was a contrarian trade if I do say so myself. We had the Silicon Valley Bank blowup, worries about commercial real estate and the banking system, and sentiment on office real estate in particular was that the sky was falling. I bought my Vornado shares last March, and it was a medium sized position in the portfolio. I sold my shares in November, only to watch shares rip to $30 over the next six weeks. Poor timing on selling to be sure, but I can’t complain too much about the returns from Vornado in less than a year. It’s still on the watchlist if it gets cheaper, but I wanted to buy other things more than I wanted to hang onto my shares.
Average Cost Basis: $14.32
Sale Price: $22.77
Return: 59%
Enterprise Products Partners
This was a holdover from a time when I was more focused on income than contrarian opportunities or asymmetric setups, but it was cheap (still is) and paid a nice distribution with a long track record of growth. I was buying Enterprise in 2021, and I sold it to buy Warrior Met Coal HCC 0.00%↑ last fall. You would have a hard time finding a better run MLP, but I didn’t find the long term upside to be in the same ballpark as Warrior, and that assessment has turned out to be correct so far.
Average Cost Basis: $22.86
Distributions received: $3.36
Sale Price: $27.36
Return: 34%
Enovix
This holding is one of the companies that is more speculative. Enovix is a battery company that is currently working to scale up their manufacturing operations in Malaysia. The stock is going to be driven by the short term news, but if they execute as planned over the next couple years, the stock isn’t going to be below $10 for long. If they don’t, shares will go a lot lower from here. They recently announced a development agreement with a top 5 smartphone maker and the stock went from $6.50 to above $10 before pulling back a bit this week. I’ll be writing a more detailed piece on the company next week, but I think now is an interesting time to look at the company, and I’m considering adding to my position.
Average Cost Basis: $13.20
Current Price (as of 5/5): $10.10
Return: -23%
NewLake Capital Partners
This one is a holding that has quietly been one of the better performers over the last year as well as YTD. Part of this is recent news and changing sentiment on the sector, but NewLake Capital Partners is a small cannabis REIT that should benefit from regulatory changes. Unlike some of the operators in the sector, investors get paid to wait for those changes. I was buying this one near the end of 2022, but I’m hoping I’ll get a chance to sell somewhere closer to fair value in the next year or two. The balance sheet is still nearly debt free, the dividend keeps growing, and the valuation is cheap.
Average Cost Basis: $16.82
Current Price (as of 5/5): $19.90
Return: 18% (Dividends are included in cost basis since I have been reinvesting the payouts)
Vertex Energy
This was a holding that was very shortlived. I didn’t get around to doing a full writeup on the company, but Vertex Energy was a situation where I tried to catch a falling knife and I got cut. I was buying shares in December and it was a small position, but a large percentage loss. This was one of the avoidable mistakes I was talking about on Sunday. I should have just taken one look at the balance sheet and passed on it, but I got caught up in the asset value relative to the market cap. Eventually, I just decided it was better to cut my losses than to wait for a turnaround that might never come. In a roundabout way, it did lead me to the next holding on my list, Calumet.
Average Cost Basis: $3.47
Sale Price: $1.38
Return: -60%
Calumet Specialty Products Partners
This is another small position, but I think it is a very interesting company with several catalysts on the near term horizon. Calumet reports earnings tomorrow, and I’m planning on writing a more detailed update on the company next week. I bought a small slice of the January 2025 $20 calls to avoid the K-1 tax form, and if things play out as expected, I think I might be exercising these calls later this year after their upcoming C-corp conversion.
Average Cost Basis: $2.37
Current Price (as of 5/5): $1.83
Return: -23%
Sable Offshore
This one is a binary outcome, but something that is worth keeping on the watchlist. Sable Offshore is trying to restart production from the Santa Ynez field in California and if they get it done, shares are very cheap at the current price. If they can’t get regulatory approval, or the process drags on for too long, their balance sheet is going to be an issue. I bought this one about a month ago, but depending on how things play out, I might be adding shares to make it a real position in my portfolio. As a reminder, this is a minutely small position to track the company (I’m currently down two bucks on my position of ten shares).
Patria Investments
This one is outside of my focus area of energy and commodities, but I think Patria has a long growth runway and a cheap valuation. It’s too early to judge on this one, but my opinion on the company hasn’t changed after Q1 earnings. I added some shares after the recent selloff, and depending on what happens with shares in coming months, I might keep adding. As long as AUM and the dividend continues to grow, Patria is a compelling risk/reward proposition at the current price.
Average Cost Basis: $13.44
Current Price (as of 5/5): $12.90
Return: -4%
Conclusion
Hopefully readers will get an idea of what my process looks like, and what’s in the portfolio from the Year In Review. I’m not going to claim to have a 100% hit rate but my returns have been pretty good so far. We will see what they look like over the next couple years, but I’m excited about the portfolio and the growth of Kontrarian Korner, which has been growing much faster than I expected. I appreciate all the readers, and I appreciate the support from the paid subscribers. If you find my work valuable, now might be a good time to consider upgrading to a paid subscription. I’ll be back to the regular posts next week to look at two stocks I talked about today, Enovix and Calumet.
Disclaimer
I own shares of Enovix, NewLake Capital Partners, Patria Investments, and Sable Offshore. I also own calls on Calumet. You should do your own research before making any investment decisions. Different investment strategies have different risk/return profiles which should be considered before making any decisions.