Fishtown Capital Q3 Holdings Update

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I entered 2022 with bullish energy and cautious tech while maintaining an overall defensive stance with lots of cash, and how good that decision looks right now. Even after the absolute destruction that many technology companies have suffered, it is still not find the attractive sector.

YTD performance and outlook 2022/2023

As of September 30, I am +29.1% vs. -23.9% for the S&P 500 (SPY) mainly driven by the strength of Cenovus (CVE), Energy Transfer (ET) and H&R Block (HRB).

Portfolio performance up to the third quarter


I remain cautious at this point with cash near 30%, but after a 20% drawdown, the risk/reward has skewed a bit more favorably. I added my first major new position at Dole (DOLE) in the last month at a base cost of $7.65.

There are still things I like: the job market is extremely strong, housing is still holding up after interest rate hikes, and the consumer is still strong. GDP was positive in the 3rd quarter. I also think the supply chain situation will resolve itself quickly, which was one of the reasons I bought Dole. That said, I think we’re in uncharted territory raising rates so fast after a decade of low interest rates, and we haven’t seen the real impacts yet.

New Positions

Alms (7% position) Open at $7.65

Investment Case Recently Described in Dole: Poised for a Big Bounce.

I think Dole can double in 12 to 18 months.

Closed Positions

Bank of New York Mellon (BK) (3% position)

It closed at $45 with a 12% loss after opening at $51. Nothing company specific other than the lack of catalysts. I just decided that I was more comfortable in cash for now. It’s starting to look interesting to me again.

Whitehaven Coal (OTCPK:WHITF) (3% position)

Bought on 8/15 for $4.63, sold on 10/7 for $6.90.

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The Australian thermal coal producer is trading at a very low valuation. The key risk is Newcastle coal prices. Prior to my sale, Newcastle coal prices have weakened significantly, while Whitehaven is up 20%. That was enough for me to book the win.

We are in the shoulder season for coal and the bullish sentiment towards energy in general seems to have dissipated in the last month. But winter is coming, and if WHITF falls further and/or Newcastle coal prices recover, I would be back in.

Existing Positions

Cash (30%)

Less painful to keep yielding 3-4% at this point. I don’t buy into the idea that in an inflationary environment like this, I need to hold assets, otherwise I’ll lose to inflation. Why? Because inflation doesn’t look the same to everyone, and because cash optionality is important to me.

Cenovus Energy (25%)

My first position, Cenovus, was established at an average price of $9. I cut some of this around $21 because it had become too large a position. My risk management was out the window at $16. At $21, it was too extreme and I made a bit of a profit in my nontaxable account.

I remain very bullish on this name, especially in light of recent OPEC moves. Cenovus is likely to hit its debt targets sometime in the first quarter of next year and then start returning all of its free cash flow to investors. If oil prices and crack spreads stay strong, I could see Cenovus hitting $30 sometime next year.

Berkshire Hathaway (10%)

Berkshire Hathaway (BRK.A) (BRK.B) is an anchor in my portfolio and I consider it to be an extremely safe stock, even if it is not as cheap as it was last year. It continues to outperform the S&P500 and is a much better option in an inflationary environment, as I recently described in Berkshire Hathaway Performing Well In this Down Market.

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H&R block (10%)

A big winner in 2021 and now a big winner in 2022. Finally, I shorted a small amount of H&R Block (HRB) stock and sold $40 and $42 January calls against my current position.

I still like stocks, but there has been a lot of appreciation quickly in a tough market. I sold the calls because I questioned how much more I had.

At $41, it has a forward P/E of ~10 while returning almost all of its cash flow to shareholders. It’s the best recession-proof business I can think of.

One of H&R Block’s competitors, NextPoint Financial (OTCPK:NACQF) (the parent company of Liberty Tax) recently reorganized and its shares were delisted. Liberty Tax is still in business, but the future of that business looks shaky.

I still like stocks and would be happy for calls to expire worthless.

Energy Transfer (15%) – I added another 20% in units to my position at $11.70 and bought $12 calls in January 2024 for $1.07 when the stock fell back to $10.

I updated my thoughts on Energy Transfer (ET) by calling it Energy’s last bid in June when the stock was in the low $11 range. Considering that most of Energy is still well below its June highs, this call has held up well.

I reallocated part of the CVE portfolio to ET. I really like both, but I think ET is a bit safer, albeit less upside if oil prices stay strong. I’ve been meaning to update my thoughts on this name, but Ray Merola keeps stealing the spotlight from me and writing everything I want to stay with.

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ET has been strong this year and I think it’s about to qualify again. In the next 4 months I think we will see distribution restored to $1.22, another 2 successful quarters, with news that they hit their debt leverage targets. At $12.70, a distribution ET of $1.22 would generate nearly 10% with significant excess DCF to continue deleveraging or buying back units. I think a unit price of $15 early next year is likely.

Banks: JPMorgan (3%)

In my last update, I said

This concern and the Russian conflict made me bitter with the banks, so I sold Citigroup. My cost base at JP Morgan is $80, which is why I kept it. Every time I keep something because I don’t want to pay taxes, I regret it.

Well, right on cue, JPMorgan (JPM) fell from $135 to $106, but recently recovered. I think it’s a buy here and banks in general can be a good value going forward.


I still believe that we are in a time where protecting capital is job number 1, especially since cash now produces something. I still think that now is, at best, a mediocre time to buy stocks. My opinion would change if the stock fell significantly from here, all things being equal.

I also think the S&P500 is unlikely to outperform other asset classes in the coming years as it has consistently in the past, which is why I’m taking a hard look at other asset classes, namely preferred stocks and corporate bonds, for the first time in a while. Both will do well if the Fed reins in inflation, but bonds are likely to do better if the “soft landing” doesn’t happen.

Stay safe out there!

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