Thursday, December 1

Today has seen a deeper continuation of the bull market in Crude Oil. We’ll also see a meeting of Credite Suisse this evening that has sent our holdings in GE on a shallow run. In an effort to fundamentally diversify our portfolio we took up three new positions today, only one of which was a fundamental play on Oil.

Our biggest position by far was a new take in Chesapeake Energy (CHK), an obvious move in a bullish oil market. Low energy commodity prices have absolutely decimated Chesapeake’s NAV over the last two years, but the assets that they still hold are all their most efficient and are usually the most streamlined in their given market. They still carry much of their high debt load but with high oil prices here to stay they will easily be able to meet their obligations. The default risk on this security is gone – all that’s left is upside. The most conservative analysts have revised their price targets by $0.50.

EDIT: We saw CHK crash late in the day, but there doesn’t seem to be a fundamental reason for it. I attribute it simply to CHK’s increased volatility since the OPEC announcement. Since this is a mid-term holding we maintain a price target at $9 and are ignoring that $0.20 drop for now, even if it created a significant overall portfolio loss in the short term.

I’ve also taken two much smaller positions based on projected book values of one small-cap company, and one undervalued.Tel-Instrument Electronics (TIK) is under 50,000 in daily volume. Both TIK and Groupon (GRPN) are significantly undervalued based on NAV alone, and both are expected to announce increased earnings this quarter. If TIK’s earnings are even a third of what they are projected to be they should see a significant increase in market value. My remaining concern is that low volume might make TIK a hard asset to liquidate. I expect to hold both of those positions into February, regardless of price movements between now and then.

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