Bookkeeping: Weekly Changes in Fund Positions

Fund positions of 1.0% or greater can be found each week in the right margin of the blog, under the label cloud and recent comments areas; I highlight each week the larger position changes.

Being a long only fund, via Marketocracy rules, the only hedges to the downside I have are cash or buying short ETFs.

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash: 19.4% (vs 23.0% last week)
58 positions (vs 58 last week) - Completed exited Baidu.com (BIDU), initiated Titanium Metals (TIE)
55 long bias: 69.6% (vs 68.1% last week)
3 short bias: 11.0% (vs 8.9% last week)

Top 10 positions (excluding cash) = 31.1% of fund (vs 30.1% last week)
36 of the 58 positions are at least 1% of the fund's overall holdings

Major changes and weekly thoughts
Quite an eventful week - everything was quiet and traders were awaiting news of the Fed decision Tuesday afternoon. Up to that point all index charts and most individual charts I follow were sitting near to a major support/resistance level. I had positioned the fund cautiously going into this announcement and the huge spurt upward left the fund really lagging the indexes on Tuesday, lagging behind the SP500 by 1.5% and the Russell 2000 by 2.5%. However, the fund made most of that up on Thursday and Friday. Considering the fund has been between 20-25% in cash and 9-14% short for most of the week, the results were pretty good since I was able to replicate most of the market's upside with only a 70% long exposure. This shows the fund's long positions were really working great; I just did not have enough scale to outperform, due to my caution on the market as a whole. Some of the larger changes to the fund below:

1. I scaled back out of both long and short positions ahead of the fund meeting Monday. Since the action Tuesday was more akin to Vegas, I didn't want to be quite as exposed to a random event.
2. I cut back my largest position Ciena (CIEN) from 5.7% to 3.4% when the stock spiked a bit. This is simply a move to try to keep as much money churning forward as possible. I am very bullish on the fundamentals in this stock, but due to a convertible debt issue with strike price $38.15, this has put a ceiling on the shares from best I can tell. Once the stock shows signs of life again I plan to jump in, probably in even heavier scale than I had these past few weeks.
3. I cut back a bit on the oil deep sea drilling names; the chart for Pride International (PDE) took a turn for the worse early in the week, breaking the 50 day moving average Monday and Tuesday, but of course the Fed decision changed everything.
4. I was adding to the fund's Suntech Power (STP) position throughout the first half of the week as it broke out above its 50 day moving average and held it; Suntech Power at 4.2% of the fund is now the largest long holding.
   
5. I bought back some of my ultrashort ETF positions after the run up post Fed - partly because I think there are still a lot of cockroaches to be found once we hit earnings season in October and partly because on down days in the market this is the only way (aside from cash) to have any buffer for the fund.
6. I added to my 2 coal positions, Peabody Energy (BTU) and Consol Energy (CNX) that I started the previous week as I said I would when they pulled back closer to support levels.
7. I added to my Crocs (CROX) position on the bad rumor of the week; i.e. kids die on escalators when they wear Crocs... Crocs is now a top 10 holding in the fund. Why a retail name when I am bearish on the domestic consumer? First, this name has a lot of international exposure - second, there is a big difference in a $15K Harley versus a $24 shoe. My one concern is the CFO mentioned a move from 60 to mid 50s gross margins - I know that but does the average Joe who loves this stock know it or will he/she be 'disappointed' and flee in panic come earnings. Hopefully unit volumes sold will offset this.
   
8. I initiated a sizable position in Titanium Metals (TIE) as its chart (along with many other metal stocks) changed 180 degrees post Fed.
9. I followed through on my strategy to overweight Blue Coat Systems (BCSI) and underweight Riverbed Technology (RVBD) - although I like both names fundamentally, I like the valuation on Blue Coat Systems (BCSI) better at this time considering they have very similar growth outlooks. Hence I added quite a bit Blue Coat (up to 2.7% of the fund) and cut back my Riverbed (down to 1.0% of the fund) - this is almost the exact reverse of where the 2 stocks were two weeks ago in terms of weight in the fund.
10. I closed the fund's Baidu.com (BIDU) position - great gains % wise, but I certainly did not buy enough back in August considering the tremendous run in the name. Right now anything with the word Chinese is behaving as anything with the word '.com' did back in the late 90s so it makes me nervous to see a repeat of this lemming behavior. I'd like to buy Baidu.com back, just at a lower price - this is simply a valuation call but momentum traders can take this stock onward and upward - but the risk/reward is now too weighted towards risk for my taste.

So that's the week in a nutshell. Going forward I am torn between knowing the Fed gave us a license to thrill/speculate versus my thoughts that many of the domestic related stocks (without heavy international exposure) are going to follow the fate of Harley Davidson, Ralph Polo etc and disappoint the street in October (especially in regard to forward guidance). Also the smaller, regional banks won't be able to hide their losses as the large 'black box' investment banks can. So it's a mixed bag. I think avoiding (most) retail (save those who have good international exposure), most financial, and restaurants is still the way to go.

Thus far, even on very strong weeks like this, the fund has been able to keep pace despite only being about 70% long, so if this can continue on 'up weeks', and can provide a some buffer on 'down weeks' I will be content. The long positions I have been picking have done extremely well, so on that I am happy. Post October earnings season, we can re-assess this strategy.