Bookkeeping: Weekly Changes to Fund Positions Week 13

Week 13 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 weekly 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: 10.9% (vs 7.5% last week)
50 long bias: 81.3% (vs 84.5% last week)
4 short bias: 7.8% (vs 8.0% last week)

54 positions (vs 52 last week)
Additions: Garmin (GRMN), Fluor (FLR), Shaw Group (SGR), Yahoo (YHOO)
Removals: Baidu.com (BIDU), Google (GOOG)

Top 10 positions = 34.9% of fund (vs 35.0% last week)
40 of the 54 positions are at least 1% of the fund's overall holdings (74.1%)

Major changes and weekly thoughts
While my cash position ending the week is just under 11%, I was up to 20% cash going into the Fed meeting after culling winning positions earlier in the week to protect some profits. This proved to be fruitful on Thursday when everything was put on sale. My short ETF position was down to 7.8% at end of week but I sold quite a bit down Thursday and Friday; from memory it was at 11-12% of fund at peak this week, as I was slowly building these positions up Mon/Tue/Wed.

This week was a snoozer Monday and Tuesday as everyone sat on their hands waiting for the omnipresent Fed to make its decision. After some fitful trading the market decided to rally Wednesday afternoon post Fed, but then reality hit Thursday and investors decided that bad news actually mattered again on Thursday as the financial stocks continue to show their ugliness as we peel back layer after layer of the onion. The things we are seeing now are things people who did similar actions in the early part of the decade are now in jail for. However we instead are giving $160M pay packages and having the Treasury Secretary help create "outs". It's an amazing time and I'd argue it shows the desperation of the situation. Our "regulated" financial system is out of control with risk taking generals intent on finding profits any way they could so huge bonuses and pay packages could be paid out. Risk control is laughable. This is the king maker CEO culture at its best, where board of directors are asleep at the wheel at best and simply "buddy buddy" systems at worst. And now we all will suffer. And did I mention the Fed continues to make post 9/11 type of injections of money into the system, now on an almost weekly basis. But again, none of this matters except for 2-3 days every 3 weeks - otherwise we ignore it, and the market roars.

This makes for a tricky market - very near term the financial stocks are probably a bit oversold as sentiment is reaching a near term negative extreme; hence I reduced my short ETFs to financials and real estate to less than 2% of the fund - also rumors were making the rounds that Chuck Prince of Citigroup was going to be let go this weekend, so the lemmings in the market will push the stock up 5% Monday, as if kicking out a CEO makes any difference in a culture of excess and hiding bad stuff away from regulators off balance sheet. Unless the whole board disappeared it doesn't matter - they are all responsible. And then there is Merrill Lynch... it is great to know our major financial institutions are running so smoothly. Do you believe any of these profits from the past half decade anymore? Who knows what is in those black boxes. Next will come the politicians "outraged" and asking how did this happen and now its time to investigate. As with the mortgage mess, where were they the past 5 years? WHen times are rolling and profits are oozing, all the reality is ignored - only when the tide inevitably turns (as it always does), does the 'outrage' begin. Then as always, its forgotten within a year or two and we go through the same cycle. Sad, and pathetic - all of it.

To the indexes we have 3 indexes in 3 spots - NASDAQ technically great, S&P500 technically neutral, and Russell 2000 technically not good. But the ranges are so tight, a 2-3% move can change the complexion instantly, so it is hard to be anything but neutral for now until we see a clear trend one way or the other. Specifically to the fund, #1 position CF Industries (CF) [nearly 7% of the fund at the time] reported a great quarter and spiked into the $90s Tuesday (for a short time) - I took some profits, and built some cash along with quite a few other names as I did not want to be (over) exposed by a Fed surprise. Earnings season is always tricky, but no major holdings took a hit this week; minor holding Crocs (CROX) was bludgeoned but I took the opportunity to rebuild the position Thursday and Friday. I also re bought Garmin (GRMN) after an excellent quarter but downfall based on potential bidding war for an acquisition. I was able to increase my infrastructure exposure on Friday as the stocks, most of which are set to report in next 2 weeks, started pulling back. As always stocks with large runs and high expectations could pull back further post earnings so this group will be one I am looking at closely in next 14 days. I also had been cutting back on my energy exposure this week since I was overexposed to the sector and the stocks were not rallying along with mid $90s crude - Exxon (XOM) showed us why late in the week. My biggest risk to performance right now appears to be Blue Coat Systems (BCSI) as the stock has fallen under its 50 day moving average (where you 'should' sell)and a gap in the chart appears in the lower $30s - with earnings not for a few more weeks and sentiment rotten in this section of the sector, we could see a sizeable dip if the stock does not improve very soon. Hence I have held off adding as it's already a large part of the portfolio and a 20% dip to lower $30s would detract from performance as it is. My gut is earnings will be fine, and the company continues to perform but anxious investors have not cared about these things and are throwing baby out with bathwater.

Below are the fund changes this week - the specific rationale for each of these major moves is explained in the weekly posts which can be accessed in the left margin under archives.

Some of the larger changes (chronologically) to the fund below:

1. Monday and Tuesday were generally quiet days - I was doing some cutting back in Indian stocks which had roared up since my buying a few weeks ago, some solar exposure as these stocks continue a relentless move up but I cannot make heads or tails of valuation in this sector anymore, and buying some short ETF exposure.
2. While hoping for a near term spike to $100 on CF Industries (CF) off an excellent report, I instead settled for trimming the position back Tuesday in the lower $90s to upper $80s; this took the position down from just under 7% to under 5%.
3. I closed my Google (GOOG) position, simply to lock in profits - this was not a very large position. I realize the stock can continue to run but simply looking for stocks that had pulled back to support and offer better near term profit potential.
4. I added to my FMC Technologies (FTI) position as the stock reported a very nice earnings but the street was disappointed with something or another - the stock held near $60 all week so it looked like a good entry point.
5. I trimmed a bit of the 2 positions last week that got unfairly smashed, since they had nice rebounds early this week so I took some profits off the very low prices I got in during the panic selling post earnings - Cummins Engine (CMI) and NII Holdings (NIHD)
6. Unfortunately I trimmed some Mastercard (MA) under $160 ahead of earnings since the stock traditionally has sold off post - earnings; not this time. I sold a bit more later in the week near $200. Will be looking to add back on any pullbacks.
7. I started buying KBR (KBR) ahead of earnings in the low $40s as it had pulled back from mid $40s. While the market found something or another to get upset about with earnings, I saw a growing backlog and great sector and kept adding throughout the week as the stock pulled back to upper $30s.
8. I sold down some deep sea oil drilling stocks to raise cash and again, the sector was just not rallying along with the spike in crude which I found a bit troubling.
9. I cut back my iShares Malaysia (EWM) position which had spiked this week.
10. I did buy some Blue Coat Systems (BCSI) mid week as the stock pulled back to its 50 day moving average; unfortunately it did break through that level later in the week. The textbook technical analysis move to do at this point is to cut bait and wait for the stock to regain footing over the 50 day moving average - I am going against the text book in this one and just holding. Could come back to burn me.
    
11. I had closed my Garmin (GRMN) position ahead of earnings last Friday; when the stock sold off post earnings I bought back an initial position around $111 and then added to it later in the week around $100. While I don't expect a quick bounce due to the cloud overhead of a potential bidding war for Tele Atlas, I'd rather be a buyer at $100-$110 rather than $120+. The stock bottomed at mid $90s last push down so I would not be surprised to see a retest of that level.
12. Thursday, I started buying Crocs (CROX) back in the upper $40s to low $50s. I would of been happy to get back in scale in the mid $50s but the market offered even better prices so I awaited further discounts. I added more Friday in the mid $40s.
13. I bought Yahoo (YHOO) for trading purposes off the Alibaba.com IPO on Nov 6th in Hong Kong
    
14. I closed my Baidu.com (BIDU) position for the same reasons as Google above. That said, I can justify Google's valuation... but much like the solar sector, I cannot justify Baidu but that does not mean it cannot continue up for hundreds of points more. Once a stock detaches from any fundamentals it can continue indefinitely. Fundamentals will only matter when... they matter. Not a second before. (same with the solar stocks)
    
15. I trimmed my LDK Solar (LDK) on the foot dragging of the external audit - if all the numbers are legit I'd be happy to buy this $40 stock at $55. But I am taking the more risk averse approach.
16. I began selling off some of my short ETF exposure mid day Thursday, and more into the emotional selling late Thursday, and another batch morning of Friday.
17. Friday morning I went in and did quite a bit of buying especially in the infrastructure sector - establishing a new position in Fluor (FLR), re establishing a position in Shaw Group (SGR) and adding to many other names ahead of their earnings reports.
18. I also went in and bought some coal, agriculture, New Oriental Education (EDU) and Ciena (CIEN) in the networking group.