Bookkeeping; Raising Cash

I am taking some off the table into this rally to raise some cash - below are the positions and why. As stated yesterday this is my near term strategy (raising cash, building some more hedge positions) until the market is clearly back to bull mode. S&P 1490 was a support level on the way down (it held 5 times before the dam burst) and now is acting as near term resistance on the way back up. Most of these trades below are simply taking back off the table some of the stock I bought at fire sale prices Monday when my favorite sectors were hit indiscriminately

1. McDermott (MDR) - I sold about 27% of my position in McDermott. I have bought many infrastructure names in this downfall Friday and Monday, and am favoring other names for the very near term. McDermott's chart is now very much in the same league as the names I sold yesterday. The stock has fallen below its 50 day moving average, and now has come right back up to touch that level ($54). McDermott is now down to a 2.5% position; when McDermott has a better technical chart I will consider buying more (or if it falls back further; it was as low as $47s yesterday) I am very overweight this sector but right now prefer other names for heavier exposure. I did take a 6.5% loss on these shares sold today, but if the stock rallies further its chart can improve very quickly; and I really like the fundamentals here even if the analysts don't.
2. Same reasoning as above for 2 oil service names I favor National Oilwell Varco (NOV) and FMC Technologies (FTI) - my 3rd oil service name I already reduced quite heavily - Core Laboratories (CLB) - at a higher level. I still like all 3, but the former 2 are in same chart position as a McDermott - right below its 50 day moving average and it could go either way from here. A fall back to a weaker level or a push back up and we are back on track. Until I see it, I am cutting back both positions by 25-35% range.
   
3. Foster Wheeler (FWLT) - I bought more yesterday AM in the low $130s; the stock has rallied nearly 15% from that point in 25 hours. I am going to book those gains - this name remains one of my favorites for the months/quarters ahead, but it would not be prudent not to look in such short term gains. This is still a top position at 3.9% of fund.
4. Mosiac (MOS) - I had built this position up to nearly 5% in the selloff Monday. I took out the shares I bought in the $61s for a 10% gain in 2 days. This remains a favored position and 4.1% of the fund.
5. JA Solar (JASO) - My entry point in JA Solar was poor; I had bought on the initial pullback to the $59 to $61 range post earnings report when the stock was bludgeoned. The stock fell as low as $48, so with this bounce to $54 I am going to lighten up on the position and take it from 1.9% to 1.1% of fund. JA Solar is certainly not my favorite solar stock, and I believe it is possible to get a better price in the future or find other opportunities in this space if the market returns to test lows. I continue to be cautious on solar despite favorable news from Canadian Solar (CSIQ) today (up nearly 40%) - still far too many speculators in this space.
   
6. Crocs (CROX) - I continued to average down in this position to the mid $30s ($36s range to be specific) - with the stock now rebounding to $41s and below its 200 day moving average of $43, I am going to take out the shares I bought in the mid 30s around $40; I was not at the computer this morning so missed the highs in the $41s. This is still a short term gain of 12%.
7. Excel Maritime Carriers (EXM) - This was a shorter term type of trade, but this sector (dry bulk shipping) still has me wary. I sold stocks yesterday on the basis they could be effected by fears of global slowdown and despite stellar results yesterday they "did not beat analysts expectations" and after a huge gain yesterday the stock is down 8% today. More worrisome is Diana Shipping (DSX) knocked the ball out of the park on its earnings and is barely up today. So I am going to step away from this sector, just like I have (mostly) done with solar and let the speculators romp. I will revisit at a later date. I sold the last of my position - 400 shares for a 10% loss in this name. If I return to this sector it will probably be with Diana Shipping... but at this time I prefer to stay in sectors I have more conviction in. Excel was a 1.7% position when I sold.
8. Potash (POT) - On the fright that was Monday I bought a large swig of Potash at $103; today the stock is in the upper $110s. So I have a 14% gain since Monday 3:59 PM. I am not selling the entire stake I bought Monday because I really like this name for the long run, but I am taking 75% of that stake off the table. This reduces my exposure to Potash from 2.9% to 2.2%. I don't plan to reduce any further come hell or high water in this name, and am hoping for a fall back to the lower $100s to rebuy back what I just sold.
   
9. KBR (KBR) - everything I wrote about McDermott above applies to KBR to the tee - I reduced my KBR exposure by 40% (1000 shares down to 600 shares) - on the 400 shares I sold I took about a 5% loss. KBR's 50 day moving average is $38 so we'd like to see a close above that level to feel more confident near term
10. Shaw Group (SGR) - this stock has regained its 50 day moving average unlike KBR and McDermott (MDR) but I did have some buys in the low $60s Monday so I want to book those gains and not give it all away if the market turns back down. So I've reduced this position by 28%, but it remains a favored name for the quarter ahead. This sale has reduced it from 3.2% of fund to 2.3%
11. VMWare (VMW) - I am closing this position with a 2% loss. My entry point in this stock was poor - the stock had fallen from $125 to low to mid $90s in just a week where I pounced. However the stock continued to fall in the NASDAQ carnage to upper $70s, and since my cash was deployed in other areas I did not average down in this specific name. It's valuation is quite extreme and in this sort of environment valuations might actually matter for the near term. I bought in the low to mid $90s about a day too early, and the stock is now back to low $90s. I'd like to be back in VMWare but with a lower cost basis. So I am selling this smallish position (1.2% of fund) for about a 2% loss. This was part of my basic of high beta teflon stocks that I bought in the NASDAQ selloff.
12. Baidu.com (BIDU) - Everything I wrote for VMWare applies to Baidu.com - as I noted in the blog I tried to by in the last minutes of Monday at $300 (stock is now in $350s), but I could not get the order in, in time. So I am exciting this position flat (very small position on 30 shares) - if we retest $285-$300 I will be interested in buying back.
    

So the natural question is why sell some of the stocks above you believe in for losses. Again the very near term, I use technical analysis (nothing fancy) to see how stocks are reacting. The infrastructure group is a great example - some stocks have held their 50 day moving average despite the carnage - Foster Wheeler (FWLT), Shaw Group (SGR), Chicago Bridge & Iron (CBI) and others have failed to rally above this key technical area - McDermott (MDR), Fluor (FLR), or KBR (KBR). This is usually a sign of what stocks near term the market is favoring or not. The group that has rebounded already back above those technical levels are also the ones with the most impressive earnings report - no surprise there. While all stocks in this group should have great long term results, the market is a very short term looking animal at times and is now shifting its focus to the group that did the best in the last earnings report; so I will shift with the herd, despite liking the entire group.

Another answer is "sell when you can" not when you "have to". On Monday, if I panicked or were an over leverged hedge fund facing margin calls I would of had to sell into the worst of the action; instead I was buying where I could (although I was buying more heavily on Friday with my remaining cash). And now I am selling into some strength when these stocks rebound from absurd levels. If the stocks continue to rebound and this is yet another "V" shaped recovery (sharp sustained bounce off a drastic low) as we saw in February 07 and August 07 I still have a lot of skin in the game. If we fall back, then I have some cash to redeploy at lower prices when others are panicking (like Monday).

These sales get my cash position up to about $157K or just under 14% of the fund. I am starting to shuffle back into some of my UltraShorts which I had basically sold down to nearly 0% exposure as of Friday.

Long all names above in fund ex-Excel Maritime Carriers and VMWare; no personal positions