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  • Writer's pictureIshfaaq Peerally



Here's some of the stats for 2019: The returns of the $DJ30 were 22.3%, the $NSDQ100 35.2% and the $SPX500 28.8%. Our portfolio did 29.6%, which means we beat the market.


The first stock I'm buying is Fitbit $FIT . This is an arbitrage play. Fitbit is being bought by Google $GOOG for $2.1 billion or $7.35/share in an all cash transaction. Right now the stock price of Fitbit is about $6.50/share, which means there is the possibility of making a 13.5% profit on this investment. Whenever I look for arbitrage, I look for at least 10% spread. Last month, I started buying Fitbit and now as the stock price keeps falling, I'm buying more. Fitbit makes smartwatches for the sportswear niche and their main competitor is Apple $AAPL . Unfortunately, they cannot compete with Apple. This acquisition by Google will be a good fit for them. As for Google, they have an investment in DexCom $DXCM , which is also an Apple partner. DexCom CGM works only with Apple Watches so far and, therefore, an buying Fitbit makes sense for Google too as they can integrate it with their healthcare venture.

Second stock I'm buying is GameStop $GME . This one is a cigar butt investment. GameStop stock is not doing great. The stock has been crashing for years but the stock is going to bounce most probably with the new consoles coming out this year, the PlayStation 5 from Sony $SNE and the XboX Series X from Microsoft $MSFT . GameStop stock is cyclical. The same thing happened in 2013 when the new consoles were launched. GameStop has a great balance sheet. People are buying Tesla $TSLA right now but GameStop has a far better balance sheet. The company is buying back its shares. It already bought back 35% of the company and will buy another 35% this year. They are trading under book value.

Third stock is Travelers Companies $TRV . It is one of the largest insurance companies in the US. Actually, their business insurance segment suffered the most because of asbestos claims. They are still fighting in court that they should not cover businesses which have asbestos in their buildings and factories when the employees get sick from the asbestos. Their combined ratio right now is above 100%. This is not good but if we look at their investment portfolio, they are doing quite good. They own $63 billion in bonds, mainly corporate, municipal and state bonds. All these bonds are high quality bonds. There is a bond bubble and Travelers Companies management have been smart enough to sell some of these bonds. Even if the bubble burst, with the asbestos claims, Travelers Companies is a great company for the long-term.

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