Here's How I Doubled My Money on Silvergate Capital Corp ($SI)
I sold half of my position on a double of SSI yesterday. I'm now in a risk-free position for life. I bet only a small size, but I think small is the way to go for longevity in this game.
I took this trade for two reasons: Fundamentals & Technicals. I'll break down both.
The Six Most Important Fundamentals
Firstly, the six most important fundamentals looked good. You can take a look at the fundamentals, here.
The fundamentals are broken down into six categories
Here are some metrics for SSI:
Value [good]
* P/B: 1
* P/E < 20
Dilution [great]
* < 25 million shares out
Cash [great]
* P/C < 5
* P/FCF < 5
Debt [not so good]
* D/E: 7
* Long-term D/E: 0
Growth [good]
* Quarterly Revenue Growth > 5%
* Quarterly Earnings Growth > 20%
Effectivness [good]
* Return on Assets > 0%
* Return on Equity > 0%
* Return on Capital Employed > 0%
These six fundamental criteria cover virtually all aspects of a stock's fundamentals, and it's the best way to get a clean, holistic view of a business.
These six fundamental criteria all kinds of stocks, whether they are high-growth, value-based, dividend-paying, small-cap, etc
Sometimes, businesses may have high debt (like this one).
However, if they have good cash-flow, that, in some ways, balances the high debt.
Why? Good cash-flows will be used to pay off the debt.
On Risk And Relax, you can choose the fundamental factors that you think are the most important, and ignore the rest.
This way, you can cleanly analyze a business without the noise.
In this case, SSI had a good score of over 65% when considering all six fundamental criteria.
Now, let's look at the technicals.
The Most Important Technicals
There are several technical indicators, but in my opinion, the most important "indicator" is market structure.
In other words, is the price shows signs of a bottom?
I want to see the price in the shape of a 'W'.
And around April of this year, that's exactly what I saw.
The Bottom Line
All other technical indicators are fine, but they add noise.
The goal should always be to subtract noise.
And the best way to do this is to focus solely on price action (market structure) and the six key fundamentals.
If both are a go, then I feel comfortable buying!
So, that's what I did. I bought @ $9, and I sold half of my position when the price hit $18.
I had the conviction to keep holding because of the fundamentals.
I hope this helped.
I also made a YouTube video on this investment. Check it out!
I took this trade for two reasons: Fundamentals & Technicals. I'll break down both.
The Six Most Important Fundamentals
Firstly, the six most important fundamentals looked good. You can take a look at the fundamentals, here.
The fundamentals are broken down into six categories
- Value
- Dilution
- Cash
- Debt
- Growth
- Effectiveness
Here are some metrics for SSI:
Value [good]
* P/B: 1
* P/E < 20
Dilution [great]
* < 25 million shares out
Cash [great]
* P/C < 5
* P/FCF < 5
Debt [not so good]
* D/E: 7
* Long-term D/E: 0
Growth [good]
* Quarterly Revenue Growth > 5%
* Quarterly Earnings Growth > 20%
Effectivness [good]
* Return on Assets > 0%
* Return on Equity > 0%
* Return on Capital Employed > 0%
These six fundamental criteria cover virtually all aspects of a stock's fundamentals, and it's the best way to get a clean, holistic view of a business.
These six fundamental criteria all kinds of stocks, whether they are high-growth, value-based, dividend-paying, small-cap, etc
Sometimes, businesses may have high debt (like this one).
However, if they have good cash-flow, that, in some ways, balances the high debt.
Why? Good cash-flows will be used to pay off the debt.
On Risk And Relax, you can choose the fundamental factors that you think are the most important, and ignore the rest.
This way, you can cleanly analyze a business without the noise.
In this case, SSI had a good score of over 65% when considering all six fundamental criteria.
Now, let's look at the technicals.
The Most Important Technicals
There are several technical indicators, but in my opinion, the most important "indicator" is market structure.
In other words, is the price shows signs of a bottom?
I want to see the price in the shape of a 'W'.
And around April of this year, that's exactly what I saw.
The Bottom Line
All other technical indicators are fine, but they add noise.
The goal should always be to subtract noise.
And the best way to do this is to focus solely on price action (market structure) and the six key fundamentals.
If both are a go, then I feel comfortable buying!
So, that's what I did. I bought @ $9, and I sold half of my position when the price hit $18.
I had the conviction to keep holding because of the fundamentals.
I hope this helped.
I also made a YouTube video on this investment. Check it out!
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