Washington, D.C., Political Witch Hunt Claims Its First Portfolio Victim

U.S. and global stock markets closed their first negative week across the board in recent memory.

The S&P 500 fell 0.36%, while the Dow Jones pulled back 0.48%. The Nasdaq tumbled 0.37%. Bucking the positive seasonality of Q4, the MSCI Emerging Markets Index closed the week down 1.46%.

Prem Watsa’s bet on BlackBerry Ltd. (BB) continued its strong recent run, jumping yet another 4.52%. This position is now up 26.03% over the past month.

Chase Coleman’s bet on Priceline Group (PCLN) recovered 4.48% after a sharp decline in recent weeks.

Bruce Berkowitz’s bet on The St. Joe Company (JOE) bucked the negative market trend by rising 3.62%.

Your most recent recommendation — David Einhorn’s General Motors Company (GM) — rose 3.12%, catching a well-timed bounce.

Finally, Charlie Munger’s bet on Costco Wholesale (COST) rose another 3.10%. After the growing competitive threat of Amazon induced a sell-off in COST at the end of the summer, the stock has now gained 7.24% just over the past month. That makes it the third-highest gainer in your portfolio over that period.

Seven of your positions continue to sport double-digit-percentage gains, headed by an 82.57% rise in PayPal Holdings (PYPL).

Priceline Group (PCLN), Liberty Broadband (LBRDK), Restaurant Brands International (QSR), Berkshire Hathaway (BRK-B), Vanguard FTSE Emerging Markets ETF and Navigator Holdings (NVGS) are all trading below their 50-day moving averages and are currently HOLDs.

Portfolio Update

With your big gains in PayPal Holdings (PYPL), I am recommending that you raise your stop to $69.40 to lock in at least a 70% gain in the stock.

With your position in Fiat Chrysler (FCAU) up over 50%, raise your stop to $16.30 to lock in at least a 40% gain in the stock.

Your position in Navigator Holdings (NVGS) has been in the news of late because of its commercial relationship with a Russian company, Sibur.

In the frenzied and politically charged atmosphere of Washington D.C., this has turned into a problem for Commerce Secretary Wilbur Ross.

That’s because Sibur is partly owned by the son-in-law of Russian President Vladimir Putin and another businessman who is under U.S. sanctions.

In a recent earnings call, Navigator Holdings management said that its contact with Sibur goes back to 2009 and its relationship has consistently been on a professional and managerial level. They pointed out that Sibur was not a sanctioned company when they began their commercial relationship, nor it is today. Sibur completed a successful offering of $500 million in Eurobonds just a month ago with an international syndicate including J.P. Morgan and Goldman Sachs.

A commerce department spokesman said that Ross was not involved with Navigator’s negotiations to engage in business with Sibur, that he never met the Sibur shareholders referenced in this story and, until now, did not know of their relationship.

In short, it appears that the attack against Wilbur Ross and Navigator Holdings is part of a political witch hunt.

Nevertheless, Wilbur Ross is disposing of his position in Navigator Holdings. That means that we will be doing the same over the coming weeks.

With the position currently down compared to our purchase price, I am going to wait for a more opportune time to recommend selling the stock.

Sincerely,

Nicholas A. Vardy