Blog Layout

January 2017 Newsletter - Sylva International

Ross Silver • Jan 02, 2017
The picture on the "cover" of this article is that of my office which is a two story building not a one story building which may be deduced from viewing the photo. As of Tuesday the Governor of my home State of Oregon (go Ducks & Beavers) declared a State Of Emergency because the State infrastructure is in shambles as a result of a nasty storm that pounded us for five thousand five days which seemed like an eternity. I have shoveled north of 100,000 lbs of snow and am thinking of entering into the World Strongest man competition as a result. For those of you who watched Rocky IV, Rocky's training regimen in Russia is child's play compared to that of Ross Silver shoveling snow while having at least one of my two boys on my shoulders shouting orders to me about areas of snow I did not fully dig out and how I need to not take breaks and dig faster.  I read an article this morning that stated across the nation, the average temperature is 16 degrees. I realize global warming is real but good grief, it sure feels like global cooling instead of warming. To those about to bash me as an uneducated dunce with a keyboard for that last comment, I fully realize an effect of global warming is hotter summers than the historical mean and colder winters than the historical mean. Don't worry, there is some semblance of a brain inside the head of the person typing this letter, I think :).

Enough of the chin wagging verbiage and onto the reason why you are reading this piece, how do you benefit from what is taking place in the equity markets and what is going on in the equity markets? I have your answers or what I believe to be the answers. For the first time in about 8 years, my Ross Confidence Meter Of Equities ("RCME") is near all time highs and lows. What a contradiction you are likely saying to which I will respond, there are two scenarios related to the RCME and I am not sure which one plays out. Scenario #1 is that our incoming President actually fulfills his campaign promises and we become a "shovel ready" economy meaning improvements to our infrastructure are coming and these projects will be government sponsored. This is great for defense stocks, materials companies and anything to do with construction. Now, we must remember that our incoming President used to be a game show host (remember "The Apprentice") and has run a number of companies into the ground including his one billion dollar Taj Mahal casino and resort built in 1990. One billion dollars in 1990 is valued at around $2.2B today, yikes.

Before I start pressing the buy button with two hands I have to check myself a bit and wonder if he can actually pull this off or whether his promises on the campaign trail were just a bunch of campaign nonsense. I am leaning towards the latter which is why the RCME is near all time lows. I think President Trump, wow that felt weird to type, will not fulfill his campaign promises of a shovel ready economy given there is more red tape in Washington DC than at an art supply store. As such, all these proposed infrastructure improvement projects will be delayed and President Trump will enjoy living in the White House for four years. After his inglorious tenure, Mr. Trump will resume his career of telling people why they are incapable of running businesses and whatever his made for tv character is paid to do.

So what should you do? My answer is simple, find stocks that will succeed regardless of the macroeconomic picture and have a portfolio comprised of blue sky stories along with significant EPS growers that pay dividends and safe havens like utilities and consumer staples. Perhaps the high beta portion of your portfolio does incredibly well and you will harass me for being too big of a chicken but perhaps not. Either way I am personally hedged in this environment wherein I am buying ideas I like and think will work and also buying safety in case President Trump falls on his face and the global economy sours. I can tell you that every pundit on Earth, even the respectable ones, are bullish for 2017 and that scares the living four letter word starting with "s" and ending with "t" out of me. Happy 2017 and good luck!

Wells Fargo (WFC) – banks soaring, a leader
Vuzix Corp (VUZI) – dropping from this list, still think they can disrupt market
Snipp Interactive (SPN.V) – revs exploding and my guess a takeout in 2017
Facebook (FB) – absolute beast, $2B in qtly profits, wow
Insignia Systems (ISIG) – a standout in the industry
Oracle Corp (ORCL) – I expect a strong 2017
Nano Dimension Ltd. (NNDM) - Revolutionary 3D printer, major market disruptor
CLS Holdings (CLSH) – waiting on permits and game changing tech
Sysroex Global (SYRX) – running again post financing, IOT a white hot area
Goldman Sachs (GS) – the leader of banking stocks
Biogen (BIIB) – awesome combo of pipeline and drugs on market
AcelRx Pharmaceuticals, Inc. (ACRX) – a favorite idea of mine for 2017, late stage assets
Soligenix (SNGX) – just completed a financing and plans to move to Nasdaq
Gilead Sciences (GILD) – love this management team, acquisitions have been strong
Mast Therapeutics (MSTX) – merged and gone, produced a 130% return since mention
Inovio (INO) – an industry leader and highly disruptive science
Replicel (RP.V) – Autologous cell therapy pipeline, up 3x since last letter
InMed Pharma (IN.CN) – Orphan disease candidate may reverse EB and other assets
GrowBlox Sciences, Inc. (GBLX) - medical grade cannabis producer, top flight mgmt
GW Pharma (GWPH) – Largest cannabis company by market cap, compelling pipeline
Towerstream Corp (TWER) – Equipment in field worth more than mkt cap
At&T (T) – Industry leader, I like the satellite tv acquisition
PeerLogix, Inc. (LOGX) – Highly disruptive tech and in a white hot adtech market
Qualcomm (QCOM) – mega cheap and institutions starting to take a look again
Fiserv, Inc (FISV) – Solid company
Jack Henry & Assoc (JKHY) – Growing top and bottom line
Cachet Financial (CAFN) – Looks like guidance of $8-$10M for ’16 in the bag
Cummins Inc (CMI) – A nice spot to be in a shovel ready economy
Power Solutions Intl (PSIX) – Mgmt remains optimistic, could see this one up 3x soon
Navistar Intl (NAVI) – Well run business
BioHiTech (BHTG) – Revolutionizing industry and well run company

Random Musings

The NCAA football championship was an awesome game. I thought Bama would roll over Clemson but the Tigers were tougher than I thought. Bama looks like the team to beat in 2017-18 though as they return a number of key players and have an absolutely silly recruiting class filled with what may be 7-8 NFL first round draft choices in a few years, recruiting analysts are drooling over this recruiting class.

The NFL playoffs now begin and due to the fact I have three children and it has been nothing but snow for two months here, I have not had the ability to watch any football. My friends tell me the Pats in the AFC and Falcons in the NFC are the teams to beat. We shall see.

Enjoy the holiday weekend!
Disclaimers & Disclosures: For a full list of disclaimers and disclosures, please visit: https://www.sylvacap.com/disclaimer
Share by: