After the TM and Ford experience, I sent some more money over and went long on eBay and short on EQR. I extended my position in both positions through the last year and still hold them. Right now I am long eBay for 2 times the value that I am short EQR.
I like eBay as they own Auctions in many markets, have the dominant online payments system in PayPal, and have an interesting telecommunications option with Skype. Any one the these businesses can drive massive growth.
EQR is Equity Residential, which is into buying and managing residential rental accomodation. I saw it as a nice short on the housing market.
So – how did I do?
Well I first sold EQR in aug 06, and kept selling until November – which, as it happened, was when it hit a little peak. I bought back half of them on late February, which was not too bad a move, but not that slick either. The price of EQR rose after a sister commerical property company was bought out by a private equity firm, so I considered the early sale to be a prudent risk-reducing maneuver.
Overall I am 6.77% up on EQR, before costs.
I bought the bulk of the eBay stick in late June-August, 2006 – which turned out to be a great time to buy. I’m in eBay for the long term (baring craziness). The weighted average purchase date is almost exactly a year ago, so I am happy with my 14.56% (net) return to date.
So between the two I am 10.8% up.
Before leveraging.
You see when I sold those EQR shares, I was able to use some of the proceeds to buy the eBay shares. I can’t see exactly how the leveraging worked as the entire portfolio is leveraged, but overall at the moment I am long 83% and short 75% of my total portfolio worth. That would imply a return of about 15.7% for the long-short combination – before dividends (negative EQR ones) and costs. I’m very happy with that.
Lance Wiggs 