Friday, December 7, 2007

Bookkeeping: 'Rising Tide' Performance Week 18

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Week 18 performance of the mutual fund

Comments: After a slow start to the week Monday - Tuesday, the market put in 2 strong days Wednesday and Thursday on the heels of consensus forming for rate cuts, potentially strong ones coming next week; along with a bailo....errr, assistance plan from the government for a small sliver of the mortgage market. While not in reality things that will help the fundamentals of the credit market much, they did sway sentiment to the bull's side. From a technical perspective after Thursday's rally, major indexes finally broke through some key technical 'resistance levels', and now sit poised above. Friday the market sat on its hands and as per usual ahead of Fed meetings no one can do anything or make any decision until we see what the Feds on Mount Olympus do.

For the fund, kept a cautious outlook Monday and Tuesday which helped performance; on the large rallies Wednesday and Thursday many groups that have been shunned for months (retail/ financial/ homebuilders) caught a bid and were the apple of everyone's eyes since bailouts... err, government solutions apparently fix everything - so the fund lagged those days. Most of the week I was selling into the strength and lightening up position sizes; after we "turned" technically positive on Thursday afternoon, I have changed my very near term mood to "reluctantly a bull". I have been searching for things to buy but other than chasing stocks that already made large moves (not my preference) it is hard to find much.

Now we just sit on our hands and wait for Mount Olympus to decide what us peons in the netherlands should do - if Mount Olympus does not cut enough than attitudes could turn negative on a dime and back down we go. If Mount Olympus does enough to appease the peasants than away we go to new all time highs in the face of the some worst economic problems approaching that we've seen this generation. But a few snaps of a government finger, along with heavy doses of liquidity and the equity (not bond) market believes it is all 'contained'. So I remain intellectually bearish while allowing the fact happy animal spirits may reign in the near term; but not trusting those spirits one bit. (remember what happened in November after the happy spirits of September and early October disappeared)

This week, the S&P 500 was up 1.6% and Russell 1000 was up 1.7%. Despite a very heavy cash exposure this week and (until mid day Thursday) a very high short exposure Rising Tide Growth Fund outperformed again on the back of long positions the market rushed back to; the fund was able to return 3.4% despite sitting with nearly 30% cash. If the market roars forward I expect to only "peer perform" or possibly trail the market for a bit, but rallies in the market have very little underpinnings with reality in the economy so it is hard to throw money into long positions with a blind eye. The ones I do have are outperforming so I can remain cautious and still maintain pace. At this point the fund has pulled away from the indexes measured against, by the largest amount since inception.

Price of Rising Tide Growth: $11.967
Lifetime Performance to date (vs Aug 3, 2007): +19.67%

Comparable S&P 500: 1,504.7 (+2.69%)
Comparable Russell 1000: 820.2 (+3.01%)

Fund return vs S&P 500: +16.98%
Fund return vs Russell 1000: +16.66%

Last week's results here.

Since the market cap of the median stock in the Rising Tide Growth fund (median $9.8 Billion as of November 07) is significantly below the SP500 index (median $13.1 Billion as of September 07) but higher than the median market cap in the Russell 1000 (median market cap $5.8 Billion as of September 07), I am measuring the fund against both indexes. Click here to see all fund's holdings as of mid November 2007.

Basis for indexes is 5 day weighted average of closing prices Aug 3-9
SP500 : 1,465.2
Russell 1000 : 796.2

To see why I use the 5 day weighted average of the first 5 trading days to smooth out the volatility of the indexes as the fund launched, see here.

Please click here: fund performance for previous updates

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