My Personal Finance Journey

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OCA: Another Double Bagger

Contributed by mm | April 14, 2004 5:10 PM PST

Three weeks ago, I reported that I had the first double-bagger, ZMEFE (MSFT Jan 05 $25 Put) in my portfolio. Thanks to the inherent volatility of options, ZMEFE has since retreated from $2.85 to $2.05, representing a mere 49% gain now.

Today, with a spectacular 7.9% gain, my holding of OCA in Datek now stands on top of 107% capital appreciation. It only took just a month for OCA to climb from $6.10 on March 15 to $9.83 as today's close. My original purchase of 1,000 OCA shares back in April 2003 is delivering in excess of $5,000 gain now, making OCA my best investment so far.

Actually, I held another 500 OCA shares in my Roth IRA account until I sold them for $8.65 apiece last week. I don't regret that ... OCA is my largest holding and by selling the 500 shares I'm decreasing the volatility of my portfolio. Yes, I left some money on the table -- I'll be $600 better off if I didn't sell, but in my value investor's mind, $8.65 is an appropriate price for OCA when both the growth prospect and the receivable collectability are unclear.

The question for now is: how should I deal with the remaining 1,000 shares. By next Monday, these 1,000 shares will enjoy the favorable tax treatment of long-term capital gain, so it is testing my greed and nerve.

Frankly speaking, I feel the intrinsic value of OCA is appropriate $8 to $10, and the recent runup is more driven by possible short squeeze. I probably will ride it for a while (curious to see how high this issue can go when bears rush to cover), but I will most probably sell another batch of $500 if it hits $12 in the near future. Also, if this issue loses its momentum (defined by two weeks of relative price stagnation), I am willing to sell all of them.

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