Strange Earnings Morning

Some strange reactions this morning

1) Potash (POT) had great earnings but did not technically raise guidance so it was beaten down this AM. It fell as low as the $97s before recovering to $105 currently. Unfortunately I was not at the computer this AM for the first half hour so I missed the swoon or I would of bought more. This is simply an "expectations" game - people wanted them to raise guidance; they might of not in numbers but in words you can see how good business is. More later.

2) Cummins Engine (CMI) - I have not had time yet to delve into the numbers, but it does look like a miss; the stock is off 14% so I bought more. I had a 1.8% position in Cummins and bought 60 shares to the 150 I had, increasing the position by 40%. Again, stocks that take a hit off earnings don't usually recover right away so you don't want to overcommit.

I wrote yesterday about Cummins:
So we will see if strength in emerging markets is enough to offset the shoddy US economy. This might be one which sells of on weakness in US, creating a better entry point...

3) NII Holdings (NIHD) - Ok this one confuses me; the only thing I can figure out is there is some cell phone industry growth ratio that analysts had, which the company did not exceed. Or guidance was not good enough. They beat on the top and bottom line and the stock was trashed by 18%. I had a 1.7% position in NII Holdings and bought 130 shares to the 290 I had, increasing the position by 44%. Just like with Cummins I don't expect a quick rebound but when I can buy these quality businesses for a nice discount I will take the opportunity.

I wrote yesterday about NII Holdings:
I hope they come out with bad news, disappoint, and can finally sell down to an area it makes a bottom so it can begin the rebuilding process. I really like the potential in this company, but its been stuck the entire quarter in molasses.

*******
With both Cummins and NII Holdings, due to specific issues I had kept the positions sub 2% - Cummins due "US economy exposure" and NII Holdings due to the chart never showing strength the entire quarter. So now when the stocks get trashed, I can take the opportunity to begin building more meaningful positions. I will look into the earnings closer later today.

Since I was short on cash I had to let go of some of my short ETFs; I reduced Core Laboratories (CLB) by 25% from 200 shares down to 150 shares, and cut one of my sleepy small cap stocks Diamond Hill Investment Group (DHIL) by 100 shares down from 290 shares to 190. Diamond Hill is a company I really like but the stock has not been moving, and Core Laboratories I also really like but I needed to sell something to raise cash and I think the potential for upside near term might be greater in other names. I still wish I had gotten into that Potash this morning.

Long all names in fund; long Potash in personal account