Bookkeeping: Weekly Changes in Fund Positions: Week 9

Week 9 Major Position Changes

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: 1.3% (vs 14.3% last week)
60 positions (vs 57 last week) - Initiated CNH Global (CNH) and restarted Garmin (GRMN) and LDK Solar (LDK)
57 long bias: 87.7% (vs 73.2% last week)
3 short bias: 11.0% (vs 12.5% last week)

Top 10 positions = 41.2% of fund (vs 36.2% last week)
40 of the 60 positions are at least 1% of the fund's overall holdings

Major changes and weekly thoughts
On the bullish front, the market turned from a narrow rally in a few sectors, to a broad rally which brought along the previously shunned areas including retail, housing, and financials. Also the small caps responded very well, after lagging the large caps much of the past 2 months. "All news is good news" mantra continues. When financial stocks reported bad quarters it was seen as the "bottom" and the next quarter will of course not be any worse (but if in 3 months they report YET another kitchen sink quarter, will anyone remember that this last quarter was supposed to be the kitchen sink quarter?)

The jobs report Friday was strong which would in theory quell the calls for continued Fed rate cuts but the market rallies nonetheless. Essentially the market wants to rally, and performance chasing (including by this author) is necessary to keep up with the averages. This heightens risk substantially because on any pullback, being fully invested is not really a good thing. With earnings season around the bend, let's see how the guidance for these companies plays out. I continue with the thesis that large multi national companies are going to report the best times in their history and ultra bullish guidance whereas smaller companies tied to the domestic consumer will report major caution. How the market reacts to that is the important question. Technically, all the major index charts look in good shape as the Russell 2000 bounced off a support test last week; it was the previous laggard. China no name small cap stocks remain the speculative fire under the market, but big cap tech also is still booming. Metals, energy, agriculture types took a break this week.

Some of the larger changes to the fund below:

1. Re-initiated a position in Garmin (GRMN) in low $100s that I sold last week @ $117. I continued to buy throughout the week as the stock tested its 50 day moving average and seems to be holding it (thus far).
2. Continued to build Ciena (CIEN) as the largest fund position on Monday, adding to the position build last Friday ahead of Analyst day. I did take some profits later in the week, as the stock ran up 22% in 4 sessions, but this name seems destined to hit $50 as it shows no sign of weakness. Ciena remains the 2nd largest holding in the fund @ 5.3%.
3. I threw in the towel to some degree on the index shorts on Tuesday as the pain was too great, and it was starting to seriously impact fund performance. I did buy a bit back later in the week (big mistake, again). Note to self - index shorts suck in bull markets.
4. I sold some Gmarket (GMKT) on Wednesday after a 32% gain in 2 weeks; selling in mid $26s. The stock corrected later in the week, and I just bought back some today in mid $24s so I made about 7.5% in that transaction over 48 hours. Usually when I sell anything of late, it just keeps going up, so it's nice to see it work out every so often.
5. I am continuing to buy more coal exposure as the good news overseas continues in terms of pricing. There might be some near term hits, especially in Consol Energy (CNX) due to a closing of a mine, but this seems to be the forgotten commodity and China is turning into a net importer... when China has become a net importer of anything else, you can see what happens to the price of that commodity. The fund's 4th and 6th largest positions are now coal stocks.
6. I wanted to increase my agricultural exposure and this week's pullback provided an opportunity so I took it. I added quite a bit of Mosaic (MOS) ahead of its earning report next Tuesday and a pullback to its 20 day moving average, and then opened a brand new position in an farm equipment related play, CNH Global (CNH) and outlined the case for CNH Global vs Deere (DE). I started with a 1.3% stake and added more CNH Global as the stock pulled back on weakness (down to its 20 day moving average) later in the week to make it a 2.1% position in the fund.
7. I added a lot of solar exposure mid/late week - restarting a position in LDK Solar (LDK) and adding to Trina Solar (TSL). I started pretty small on LDK Solar with only a 1.3% stake Wednesday but on confidant management comments Thursday morning I bought a lot more, which at this point has proven to be a poor choice (in the near term) as the stock has stunk and is now technically in a poor pattern. However, Trina Solar (TSL) has no reason to be down on LDK Solar's company specific bad news, so I also added there. Eventually LDK Solar will wash out, and its stream of contracts provides comfort in knowing it's legit. 2 party contracts detailing massive revenue opportunities are not something you can 'make up' - but the credibility with management right now is casting a pall over the name, so until the outside audit of issues comes through this name could be weak. LDK Solar looks like it has some reasonable long term support in the $40-$45 range if it were to continue to weaken. It had risen so fast it had major air pockets in the chart, so when it fell, it fell hard.
8. I cut exposure to 3 names, Titanium Metals (TIE), Pride International (PDE), and NII Holdings (NIHD) due to technical reasons - these are wishy washy stocks that can't seem to make up their mind; I am going to wait for more confirmation on their charts before adding more, but wanted to cut back in case they weakened further and concentrate on stocks in firm uptrends. I have been whipsawed quite a bit in these names as they gyrate up, down, around key technical levels. To repeat, I like the business all 3 of them are in, and eventually the rising tide will lift their boats.
9. I added Blue Coat Systems (BCSI) throughout the week (including today) as it pulled back to its 20 day moving average, and split 2:1. Downside risk is about 10% down to the 50 day moving average of $36, and I still think upside will take Blue Coat to $50 by the end of the year (or my old $100 target presplit).
10. I bought back some of my Perini (PCR) position that I had sold when the chart was in bad shape. When I looked at all my stock holdings in technical buckets, this was the name that had changed complexion the most in the past week and a half, and I was very underweight. I still am, but now am hoping for some pullback as this space (global infrastructure) is on fire. Do you know in the first few weeks of the fund McDermott (MDR) and Foster Wheeler (FWLT) were the fund's top holdings? I pulled the trigger far too early on these names - pull up a 2 month chart to see why... again, correct stock (and sector) selection supercedes trying to time things in this type of "hear no evil, see no evil" market. I have to remind myself of my own fund's name from time to time. Talk about leaving performance on the table...
    

As always, none of these names are new - it is simply re-allocating funds to names that have either pulled back to a good technical level, or cutting some exposure when stocks have had pretty significant runs to lock in some profit. In this type of market it is almost always 'wrong' to lock in profits and stocks never cease to go up, but this is a bit atypical of a market.

Long all names in fund