Monday, December 3, 2007

Bookkeeping: Taking some Fertilizer Names off the Table

Posted by TraderMark at 10:17 AM TweetThis
I know Gordon Gecko says greed is good, but we have had some tremendous moves in the fertilizer names, and today especially the 2 potash producers, Mosaic (MOS) and Potash (POT) are running hard. I don't see any specific news driving these names.

Mosaic, my top holding had put on a quick 25% move in just over a week - as I stated last week when I started to take some off the table in the mid $60s, I felt true value was at least $80 but in this market environment I am taking profits where offered, and I sell in layers, so I am stripping off another layer in both names. Again I am very glad to see when the market calms down, true value be rewarded. I am very top heavy in fertilizer names and plan to be for quite a while, but will be cutting here with hopes of buying back at lower prices.

Long both names in fund, long Mosaic in personal account

Posted by TraderMark at 10:17 AM Comments (5) | Edit This Post | Create A New Post

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5 comments:

Pankaj said...

Some report on expected agritcultural spending for the next year was going to be released today I remember and that may be the reason why DE and other fertilizer stocks are popping today.

AJ

December 3, 2007 11:01 AM  
Anonymous said...

when you say you "layered off"...what does that typically mean? did you sell 10%, 20%, 30% of those positions today?

December 3, 2007 11:28 AM  
TraderMark said...

Hi, I believe Mosaic was close to 6% of portfolio last week when it was down at 59/60. When the market first bounced I peeled probably 10-15% since at that time we were still in the mood where 300 pts up could mean 300 pts down the next day. Now as we have a bit more strength I am taking more% off - I usually have been being more specific in the posts i.e. selling 100 of 700 shares sort of thing but it's a bit inconsistent.

Today for example sold 50 of 725 shares of MOS, and 50 shares of 30 of POT. Just took off about $7K worth of dollars from each (so about 15%), and if we get a nice pullback will plow it back into those names. With the market being more of a "down" or trading range (at best) this has been unfortunately the way to make money - not 'buying and holding'. But even in uptrends, I like to book gains - this locks in profits and saves you in stocks that take hard falls like Crocs or Blue Coat Systems.

I did a similar strategy in the August downturn with McDermott and Foster Wheeler - my error there is I peeled too much and those positions were down to sub 1.5% and then kept rallying. (i.e. there was NO pullback as we were in full bull mode due to love of Fed cuts). So this time I plan to keep at least 2.5% type of positions even if the stocks rally 20% more from here since I want to keep overweight in best ideas even if prices get ahead of themselves. For example right now I cut back Suntech Power - it seems to have run too much but I won't sell any more even if it goes up 30% from here since I don't want to it to get far below 1.5% allocation (it should be higher but I did not have enough cash at the time to buy even more in the $59 range when it pulled back very quickly)

I try to this in general and rarely will I do a 50% type of cut (or even 30%) - I did a heavy cut like that last week in Tesoro when the story changed, i.e. a tender offer was looking like it was going to be withdrawn, but in general they are smaller moves to increase/reduce exposure. This is why my "turnover" is so high in the fund - it doesnt represent me doing wholeselling closing or adding positions, I just do a lot of little changes - taking profits along the way up, and buying back on the way down, but about 40 of my 60 positions have been consistent from day 1 of the fund, just in different sizes. If I had more room in the sidebars of the blog I'd write out this "strategy" for new readers, but its not really set up for such detailed discussion.

December 3, 2007 1:05 PM  
Brian said...

It looks like all of these fertilizer names were ramping up today because of the earnings call by Agrium (AGU).

December 3, 2007 4:06 PM  
TraderMark said...

THanks Brian. I dont see any sort of earnings from AGU but it appears they bought out a company for a 27% premium which shows a lot of confidence in the space. Whatever the reason, when the market is not tanking 4% a week this looks like a great space. It continues to be my #1 'recession proof' sector, even if investors sell it off in panic from time to time. I am hoping for a sell off myself right now so I can reload what I let go in the past week ;)

December 3, 2007 4:16 PM  

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