Author: Brendan Ruchert-Dixon
Covestor model: Alpha Trapper
Disclosure: Long ASFI; Short FAS, SQQQ, and TMV
June started out a little shaky, as the market dropped on worries about the economy and the Greek debt crisis.
My new purchase of ASFI was dragged down along with everything else for a while, so I continued to purchase more as it became even more attractive.
Around mid-month, the trend shifted to positive for ASFI, gaining further momentum after the company announced a $20 million dollar share repurchase program while also announcing that its cash position had increased to about $102 million as of June 16. With 14.6 million shares outstanding, that cash position works out to about $6.98 per share. The buyback is a great move for shareholders – it will likely add both upward momentum to the share price and increase the book value and EPS for all remaining shares.
Other moves I made recently include short sales of leveraged ETFs FAS, SQQQ, and TMV that aim to allow the model to benefit from a volatile market that I believe lies ahead.
The Greek bond crisis may have cooled down momentarily, but the sovereign debt problems of Greece and many other nations (including the U.S.) are far from over and will likely come back to haunt the market several times within the next year or two. I believe there will be both rallies where investors momentarily ignore these issues, but also large corrections as debt and austerity concerns come back into focus. My tricky task is to try to benefit from both.
Source:
Company press release “Asta Funding, Inc. Announces Share Repurchase Program” 6/22/11 http://www.astafunding.com/releasedetail.cfm?ReleaseID=586802
