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The 50-Bagger I Sold For 10 Times!


Parsad
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Normally when you make 10 times your money in 3 months, you are very content and happy!  In this type of pandemic and this type of market, I'm a bit lost, confused and today, feeling really shitty...even though for all purposes, I did the right thing.

 

Many of you know of the one stock I've made alot of money on, that everyone hates, and at this point I can call it "In & Out"!  That company, formerly run by a brilliant, nearly schizophrenic, paranoid genius, named Patrick Byrne is Overstock.com.

 

From my estimates of intrinsic value, understanding the underlying business over the years, I pegged intrinsic value around $20-30 per share.  When the pandemic hit, I saw the stock fall to $2.99, which is where I accumulated a large position in my personal portfolio and also bought a bunch of LEAPs.  I already had some LEAPs in MPIC Fund I, LP, that were about to expire in January 2021, and I had bought them when the stock was around $10.  Frankly, before the pandemic, I thought they would expire worthless in January!

 

As a well-intentioned and observant practitioner of deep value investing, I sold everything when the stock started rebounding...essentially sold the whole kit and kaboodle between $14 and $23, making about 5 to 8 times my money on the $2.99 stock, and the LEAPs for 10 times to 15 times in my personal portfolio...all within 2 months.  The LEAPs in MPIC Fund I, LP were well out of the money, but they too rebounded and I sold them for 10 times what I had paid a year and a half earlier.  Anyone on any regular day and era would say "fine job" whether lucky or not!

 

Now this is where the disconnect happens for value investors, because many of us deep-value guys, don't know how to just hold on...and often if we do let our winners run, we get burned as they turn quickly.  The stock I had bought alone would have been a 25 bagger today if I held on...the LEAPs in MPIC Fund I, LP would have been 50 baggers today, and the personal portfolio LEAPs that i bought alongside the stock would have been 70 baggers today...all in three fucking months!

 

Somebody buy me a drink, because this market is killing me even when I make money hand over fist!  Cheers!

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By the way, for those over the years wondering what I saw in Overstock.com, all you have to do is read today's quarterly report!  It's a frickin' cash cow, with  massive inventory turnover, and they are sitting on a ton of cash, plus all of their block-chain related businesses. 

 

The only two guys I feel more sorry for today than myself are Prem and Patrick Byrne.  Fairfax's stake would have been bigger than their investment in Blackberry and Patrick Byrne would have been a billionaire!  Both sold well before the pandemic.  There is no God!  Cheers!

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Guest cherzeca

when in doubt but you have profits to take, take half.  when in doubt and you have losses to take, take them all.

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Parsad, thank you for sharing that story.  As you know, it is a long game with lots of poker hands in your future.  This one you earned a lot on, and you had your risk management hat on to boot.  Perhaps deconstruct the hand and see if you would have played it different with the same imperfect information. 

 

It is all good to leave a little money on the table.

 

The tide comes in, the tide goes out.  Again, great story!

 

I need to go learn more about Overstock also.  I thought it was a "has been".

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Congrats on the play! I think I'm going to make a citizens arrest on anyone mentioning OSTK from here on out  ;D... I had a decent amount of calls that expired in March... Guess I should've rolled those puppies huh?? I feel like vomiting when I look at the price...

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Congrats on the play! I think I'm going to make a citizens arrest on anyone mentioning OSTK from here on out  ;D... I had a decent amount of calls that expired in March... Guess I should've rolled those puppies huh?? I feel like vomiting when I look at the price...

 

Feel exactly the same, even though I made a great return and stuck to my investing playbook!  Cheers!

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Guest cherzeca

Congrats on the play! I think I'm going to make a citizens arrest on anyone mentioning OSTK from here on out  ;D... I had a decent amount of calls that expired in March... Guess I should've rolled those puppies huh?? I feel like vomiting when I look at the price...

 

Feel exactly the same, even though I made a great return and stuck to my investing playbook!  Cheers!

 

retailing part of biz was trash, blockchain was the sizzle...seems that has been reversed.  OSTK was covidized

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I made a thread about Robinhood crowd going "Full Retard" on Kodak

 

This is likely what's driving this

 

10 bagger is a 10 bagger.  Can't complain. 

 

There were some hedges that I bought going into March that I liquidated for about 10-11x.  I had puts on Royal Carribean that I sold for a double.  $100 strike, March expiration, paid $1 and sold for $2.  Those would have been a 60-70x at its low.  But I had a broad basket that was up 10-11x.  Thanks for reminding me of this!!! I almost forgot about it! Attach trigger warning next.  JK.  I'm perfectly fine with the outcome. 

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Folks

For the uninitiated, is LEAP the same as out of the money call way out in the future ?

Or is it a combo option play with something else.

 

Just not sure why folks here call it LEAP instead of out of call calls.

 

LEAP is just a longer dated option. Can be in or out of the money.

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Now this is where the disconnect happens for value investors, because many of us deep-value guys, don't know how to just hold on...and often if we do let our winners run, we get burned as they turn quickly.  The stock I had bought alone would have been a 25 bagger today if I held on...the LEAPs in MPIC Fund I, LP would have been 50 baggers today, and the personal portfolio LEAPs that i bought alongside the stock would have been 70 baggers today...all in three fucking months!

 

Somebody buy me a drink, because this market is killing me even when I make money hand over fist!  Cheers!

 

I have the same issue around my Tucows trade, which was my first real value investment, and it was somewhat textbook: I had a profound understanding of the business (my own company is both a competitor and a client of Tucows), the realization they had off-balance sheet assets which were conservatively worth more than 3X the market cap of the entire company, that they had a clear path and plan to unlock that value (the Yummynames aftermarket portfolio), and the company was already profitable via their normal course operations and trading at a PE of 10.

 

Started buying at 0.60 (2.40 post split), and bought a lot, given my portfolio size of the time. Concentrated play - held for 8+ years. Then exited between $17-$19 only to watch it continue right up to $80+.

 

The way I made peace with it over the years was to understand that we all have regrets, regrets are unavoidable, and that some regrets are better having than others.

 

So, “I wish I bought more” or “I wish I let that run longer” are examples of benign, not-bad regrets to have.

 

“I wish I never tried heroin”, or “I which I didn’t bet the farm on Bitcoin in December 2017”, “I wish I never had that affair” are examples of bad regrets.

 

If you can get through your career and your life with mostly good regrets, you should come out ok.

 

 

 

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;D ;D ;D

 

Quite happy to read this! Although this could've been a 50 bagger, it's a great issue to have - to have sold way to early, rather than too late.

 

I thought the trade was brilliant - a debt-free enterprise that had an obvious tailwind. I can't believe I haven't thought about it myself.

 

However, I rather read about this then not know it at all. Live and learn.

 

Congratulations Sanjeev! Quite happy for yah!

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  • 3 weeks later...

Well, as Bernard Baruch said "no one ever lost money taking a profit." 

 

I remember once buying calls on Lear Corp and there was some positive news the next day.  I was up over 40% in ONE DAY!  Rather than sell, I held on and they eventually expired worthless. 

 

I'd rather have Bernard Baruch's problems than Gil Gunderson's any day.

 

Gil Gunderson from the Simpsons:

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