Bookkeeping: Weekly Changes to Fund Positions Week 21

Week 21 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. I cannot short individual equities.

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash: 7.4% (vs 13.5% last week)
54 long bias: 73.6% (vs 79.2% last week)
5 short bias: 19.0% (vs 7.3% last week)

59 positions (vs 59 last week)
Additions: Trina Solar (TSL)
Removals: Frontier Oil (FTO)

Top 10 positions = 36.6% of fund (vs 26.8% last week)
37 of the 59 positions are at least 1% of the fund's overall holdings (62.7%)

Major changes and weekly thoughts
After a short lived Santa Claus rally (2 days?) last Friday and Monday, we ended the week with 2 quiet days sandwiching a down day on Thursday. All in all, we just continue to make lower highs since the October peak [Like a Moth to the Flame], and if this pattern is once again repeating itself we are at the top of a channel, which would point to downside ahead. I have repeatedly said, I am worried about this earnings season in particular - not so much for what companies will be saying about quarter 4 2007 earnings, but for what they say about their 2008 guidance. The tells on the broader economy weakening are everywhere when you listen to the companies themselves (Fedex, Target, Darden), and ignore the bogus data from the federal government (they can't manage any program effectively so why should we believe their financial figures anyhow). So I'd make the arguement the weakness is now spreading from the 'low cost', subprime folks to our middle class. Our largest "middle class" retailer is telling us, our largest "middle class" restaurant chain(s) are telling us, and the two largest transport companies are telling us. Only the talking heads and our politicians are telling us the opposite.

I think this market is very tough for all but the most apt traders especially if you are not in a very narrow piece of the stock market. A lot of stocks have been relatively comatose of late even on the very short rallies, or at best they are just making up lost ground. Not an easy market as shown by the action in the indexes. With earnings estimates for 2008 far too high for many sectors in this market I remain cautious as the market needs to adjust to the 'new reality' at some point. I do still feel areas I am focused on such as fertilizer, infrastructure, et al have pricing power and a lot of visibility - but these are again, very narrow parts of a very large economy and stock market. Do you think any consumer based stock outside of a select handful (Apple?) has any idea where things will be in summer 2008? Not likely. Just simply rolling out a 10-13% annual growth figure as many have done the past half decade won't cut it this year. Analysts might actually have to do some work this year and not just nod "yes" to everything the company's say for 2008 guidance.

For the fund, we caught some major breakouts from the November lows with many of the top holdings giving very good returns. However, after such big runs I have turned cautious and indeed cut back on a lot of these names, whether from fertilizer, to infrastructure, to technology. You can see the top 10 holdings on the long side are dominated by companies that will benefit from a slow growth economy and if the market takes a downturn hopefully will hold up better than some of the stocks I've had there for the better part of the quarter, which in many cases are not near any technical support level and hence could have quite a ways to fall if the market does indeed fall. (no guarantee the market will fall of course)

With my Ultrashorts, I have moved to more of a focus on the commercial real estate market Ultrashort over financials. While financials still have many shoes to fall, at least they are on the radar of everyone at this point... I don't think commercial real estate has been mentioned much. When you start hearing CNBC whine about it every day then you will know it's starting to reach public consciousness and it will be time to reign in that position more. By that time, the next shoes in the financials should be dropping (i.e. auto loans going bad, credit card defaults, etc). And then eventually people will see emerging markets are not immune after all to the western world slowing down. So we have a lot of opportunity on that side of things in 2008 - it is just a matter of when the market chooses to acknowledge these things (perception is reality). Remember, I went negative on financials and the market chose to smack me for that after the Fed made its first rate cut. Father Fed would save us all and the market went on a gigantic upswing. Perception was reality. Perception was the Fed would be all knowing and financials would be fine. It took time for that perception to fade away and reality to hit us. And eventually that Ultrashort Financial became a big winner for the fund, despite hurting performance in late August and September when the market was drinking Fed kool aid. [Top 10 Winners and Losers so far]. So I am confidant the rest shall also come to pass, it is just a matter of waiting until the market sees the truth and perception matches reality. It could be Monday, it could be 6 weeks or 6 months.

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. In a general sense, all week I took some more off the table in one of my favorite groups, fertilizer. These stocks have run so far in a month, and I want to lock in some profits. I am generally early on these calls, but better safe than sorry. Maybe Goldman called a near term top with its upgrade of Potash (POT). This is my lowest exposure to this group in a long time, but I plan to begin rebuilding in increments on pullbacks to support levels.
2. Monday I sold down some Shaw Group (SGR), which is an infrastructure name I really like. However, the market doesn't seem to like it of late, so I don't want money sitting idly by until the market agrees with my views. The stock continues to trade below its 50 day moving average, while some of its brethren are making nice moves.
3. Wednesday, I cut back by 50% what has been left of my Silver Wheaton (SLW) position. The more I think about the actions of the world's central banks the more I think gold and silver have more to go. As we devalue all paper currency to help bailout the subprime nation (aka USA) gold & silver which is a hard physical asset looks like a good alternative. This is not a new view, and in fact I am late to the party. I am looking to add back to Silver Wheaton on any pullbacks, but with its huge move I chose to take some profits.
4. We had another week of solar mania, with the 'worst of breed' being run up by the retail speculators. I don't own those for this type of fund because I never want to be stuck with something I would not want to own for the long run, but the most speculative name I own (which in relation to the junk that is really moving in this space is not speculative at all), Solarfun Power (SOLF) was cut back to a miniscule position on this latest run up. I didn't catch the top, but then again, I did not expect the stock to reach such heights so quickly either so I was happy with the profit I did get. When I use the word speculative I simply mean in relation to say a Suntech Power (STP), not that this is a pure gamble like some of the stocks making 30% moves on hopes of revenue in 2009.
   
5. I had some fortunate timing with Mechel (MTL) and Huron Consulting (HURN) - 2 stocks with larger exposure in the fund. I sold a portion of these Wednesday as they both had made very nice short term moves, but was able to buy some back (smaller positions) on pullback in the downfall Thursday. I had hoped for a $94 price to get back into Mechel but got some back at $95-$96 instead. Again, not major moves - it is not like I sold 80% of these stakes and bought them back the next day, but some trading around the edge of core positions.
6. I sold down some CNH Global (CNH) Wednesday, as the agriculture fervor seems everywhere right now, and I am wary of this bandwagon overloading. It has had quite a performance, just like Mechel and Huron Consulting, in a very short time, so I took some off the table. I am a bit worried about the strong euro's affect on exports for this company so we shall see how it plays out in the longer run, or if the agricultural boom has no bounds, strong currency or not.
7. Speaking of solar, I restarted a position in a former fund holding, Trina Solar (TSL) Wednesday afternoon. I had been waiting for this long lost stock to finally make a move, and from a technical perspective it looked poised to break out. With the continuing strength in the later afternoon I in fact added even more. And on weakness Thursday I added more... and now this is the largest long position in the fund. While I am extremely wary of the entire solar sector, Trina has not participated in the recent mania and is closer to key technical levels than most in the sector hence has some downside protection in case if falters. The stock acted very well late Friday, and if the market had not been so weak Thursday (especially solar stocks) I think this stock would of been well on it's way to a breakout - but then again I'm biased. :)
8. Thursday, I sold some Atwood Oceanics (ATW) - this has been an incredible short term move. I (re) added this position back to the portfolio December 17th @ $84.66. In 2 weeks its approaching $104. So I locked in some of those very quick profits. I just wish I had bought more this time around - I had a much larger position the last time I held this name... the deep sea oil drillers is a group I have been bullish on for a long time but have been dead money for most of the fund's history - until the past 3 weeks.
   
9. I sold down some Core Laboratories (CLB) for the exact same reasons I mentioned with Shaw Group in item 2 of this list. Stock I like, that has made a nice run, but sits below a key technical area.
10. Friday, I cut back some exposure to Chicago Bridge & Iron (CBI). As I mentioned, not much difference to me between this name and a Shaw Group or Foster Wheeler but the market has pushed this name up, so I am locked in some profit. My infrastructure approach is to buy a basket of favored names... what the market does with each individual name is tough to figure at times.
11. I closed the fund's long standing holding in refiner Frontier Oil (FTO). While I think this is best of breed, the market is just not buying the refiner story, and since this is more of a cyclical story rather than secular, I will wait for the market to rejoin the sector at some point in the future. At that point I will be back.
12. I added some short exposure here on the back end of the week, as the markets failed to break out and now appear below key technical levels. We keep repeating the same song and dance so until it changes, I will keep doing the same jig. Eventually it won't work anymore, but so far so good.
    

Worldwide Readership

One of the amazing things about the internet is the flattening of the world. It is quite amazing how one can communicate with people all over the world in this manner. Just for kicks I thought I'd post where the worldwide audience is coming from (over the last month). Of course the USA is far and away the #1 audience member with 83% of visits, but some interesting places making up the other 17%. In the past month alone, people from 90 countries have visited the web site. (although people from 89 countries could not invest in the mutual fund!)

Amazing stats - especially since this website was not in existence in July. Granted probably people from 20 countries got here by mistake (20 countries only had 1 visit - hey I don't hold it against you Ghana, Latvia, Malta, Kenya, Luxembourg, Oman, Nepal, Bolivia, Afghanistan, Syria, Monaco, etc etc - no Jessica Alba pictures here unfortunately)

Here is the Top 20 Countries (I'm a statistics nut so this sort of data Google provides on web site usage is just fascinating to me)

1. USA
2. Canada
3. India
4. United Kingdom
5. Germany
6. Belgium
7. Singapore
8. Spain
9. Estonia (I think 1 person who comes every day)
   
10. Taiwan
11. Israel
12. Australia
13. France
14. Hong Kong
15. Sweden
16. Thailand
17. Slovenia
18. Russia
19. Switzerland
20. Netherlands

Top US cities

1. New York (I knew Cramer was reading the blog...)
   
2. Houston
3. Bellevue (aka suburb of Seattle)
4. Seattle
5. Chicago
6. (not set)
7. Brooklyn
8. Beverly Hills (hey throw me a dime fellas)
9. San Franscisco
10. Weston (aka Miami)

Strange to see so much traffic out of Seattle - and a suburb outside of Seattle. Perhaps a lot of Microsoft investors need to find a place to park all those decades of stock options. The next 10 (11-20) is dominated by CA cities. The next 10 (21-30) is dominated by TX cities. Guess it makes sense as those are huge population states.

What Countries Stay on the Website the Longest each Visit (on Average)?

1. Ukraine (nearly 17 minutes)
   
2. Ivory Coast
3. Uruguay
4. Indonesia
5. Vietnam
6. US Virgin Islands
7. Israel
8. Panama
9. Estonia
10. Austria (nearly 6 minutes)
    

And I Thought I was Negative

For those who have been reading the blog, you know I've been negative on the coming year in the economy since inception. [Et tu, September] Sometimes having this type of position (especially in the summer) I felt like a lonely voice in the wilderness... but as each week passes, more and more things are coming to fruition. About 3-4 weeks ago 2 of the 5 major investment banks chief economists have turned quite negative on the 08 economy as well. I updated my thoughts a few weeks back. [Et tu, 1st Half 2008? Predictions for the Coming 6 months]. I found this article on Minyanville.com and boy, if you thought *I* was negative [What to Watch for in 2008]- I will highlight the points below. This is more of a long term prediction, going out a year from now and how we will feel on Christmas Day 2008.

• A credit contraction is well underway, oil remains near its all-time high, the housing free-fall is accelerating, and central bankers are freaking out. So, who would have predicted that the Dow would reach an all-time high in October and still hover within about 6% of that number as the year drew to a close?
• The market’s relative buoyancy reveals a touching faith in the powers of the Fed and other father figures of the financial landscape. Will this faith remain strong enough to surmount the tests that lie ahead?
• With equity-free (not to mention upside-down) homes proliferating across the country, consumers turn to their retirement accounts and credit cards to keep afloat. This stop-gap proves very short-term, and consumer credit takes a trip down the subprime path.
• The rush to sovereign wealth funds for rescue money slows dramatically as politicians and the public push back, alarmed about foreign government interference and the prospect of a Dr. Evil gaining access to American technology.
• Xenophobia, economic stress, and – this is a sure thing – pandering politicians lead to resurgent protectionism. The march towards legislation is interrupted, however, as international investors remind politicians that the U.S. now works for them.
• Counterparty risk moves to the foreground as banks and institutions discover that those companies from whom they bought CDS and other types of insurance were just kidding about their capital reserves.
• The pendulum swing away from libertarianism and towards a more positive view of government and regulation accelerates as insolvent consumers and companies clamor for safety nets and bail-outs. Investors, scorched by hundreds of billions in losses on trillions in asset-backed securities and derivatives, urge regulators to slam shut barn doors across the financial landscape. With structured finance stuck in the penalty box, CDO-financed lending diminishes to a trickle.
• A dollar crisis forces the Fed to halt interest rate cuts even as the economy moves deeper into recession (yes, the recession has already begun).
• Corporate defaults and bankruptcies finally begin to rise as over-levered companies find that raw material costs remain stubbornly high (squeezing profit margins), demand continues to soften and that bankers have learned to say "no."
• Continued drought in the U.S. Southeast and Southwest wrecks more economic harm than Katrina, and drives home the point that global warming's impact comes more from changes in precipitation than in temperatures. Atlanta becomes the poster child for the economic risks of water stress. As water tables fall, H2O rises as an investment theme.
• Total oil production again fails to meaningfully exceed peaks established in late 2005 and mid 2006. Prices rise and stay above $100 a barrel despite a global slowdown. Emergent bubbles develop in companies specializing in energy conservation/efficiency and alternative energy. Event-driven, regional supply shortages scare the pants off politicians and consumers alike.
• Faced with shrinking credit and falling asset prices, officials stop talking about inflation, and the dreaded D word resurfaces.
• As the de-leveraging of the economy continues, the savings rate rises further, cutting corporate profits. With financial earnings under pressure, equity prices either have to fall or P/E ratios rise. You make the call!

So it's nice to read someone who is more negative than me :). I have touched on most of the points above - however some things I have not stressed quite so severely. I have mentioned that consumers are now turning to credit cards to replace the house ATM, and we are seeing the first signs of 401ks being raided to help sustain people. I should mention I expect the latter issue to accelerate and while that will help "bouy" the near term economy, what does it mean for the long term of our country? Nothing good. As with many things in this country, especially in our political decisions we focus on kicking the can down the road - just trying to make sure things don't get bad now, and the future will somehow "take care of itself". Myself? I worry about a lot of people working as Walmart greeters until they literally keel over - instead of enjoying a traditional retirement.

Regarding sovereign wealth funds, while initially celebrated and constant referels to how the 'bottom must be in' because sovereign wealth funds are 'buying' (i.e. smart money) what will the same pundits be saying when the next round of capital is necessary from these same players? Or a third? All at lower prices? Buffet certainly is not finding any value in financials.

Berkshire Hathaway Inc. Chairman Warren Buffett said Wednesday that he rebuffed financial firms that have approached him recently about buying stakes in their companies.

Just because you have a lot of money from one arena doesn't mean you are a smart investor, especially if your money is through no work of your own. We've seen many people (think Paul Allen of Microsoft fame) who took huge sums and proceeded to destroy much of their wealth in their future investments. Is that smart money? Are heirs of fortunes from their parents "smart money"? Do you think Paris Hilton's investing prowess is something to be excited about? Are people who just happen to be sitting on huge amounts of long dead dinosaurs suddenly "schrewd"? That's the talking points we are handed by the financial media. I'd rather listen to Buffet myself. Remember, when you print billions of dollars each day due to your dead dinosaurs you can afford to be "early" or "buy high" for the "very very long term". For the rest of us, we don't have those benefits, so we need to invest accordingly.

As in the article above I've stated to look for more and more bailouts from the politicians, as the economic situation worsens. While I don't agree that a "more positive view of government" will emerge I suppose in our short sighted manner if the government uses our tax dollars to bail out people, those people who got bailed out will see the government is a more positive view. I sure won't.

I agree with the corporate defaults and bankruptcies increasing as I mentioned in my recent investments in 2 firms that specialize in such a thing (and their stocks have been reacting very positively of late as more people jump on the bandwagon) [2 New Recession Plays] I agree with the stubbornly high input costs as I mention constantly in the blog [A World of Shortages]. In fact at this point I think in the larger macro sense we are going to be entering decades of higher inflation as our world is not currently suited (first) for so many people and (second) so many people trying to live urban Western lifestyles of consumption. While this will ebb and flow from year to year, its a long term issue. At some point technological innovation will help solve some fo these ills but we could be talking decades to solve some of the issues. And projections for worldwide human growth only continue to grow.

The drought issue is an interesting one. I've long though that water, not oil will be the commodity that wars are fought over in the coming century. You are already seeing serious strains in the southeast of America and western regions. Unfortunately there are very few investable themes in this area and it is "very very long term", but one day I do think we will be talking about water like we talk about crude today. As for crude, I will be curious to see how it reacts - if in a slower growth world economy crude stays high, this will lend credence to the peak oil theorists. Also keep in mind the USA has had 2 years without a major hurricane. Not sure how much longer we avoid that bullet, and it has a tendency to really spike energy prices if the right area of the country is hit (let's hope not).

His last point is the one that I think will be the most important from the perspective of an investor. All these other bad things he (and I) talk about - well that only affects us in our real lives. It only affects the 'real economy', and the vast majority of this country.... not the investor class (as much). Not until corporate profits actually fall do I suppose the top 5% really begin to care about the bigger issues because then their portfolios may actually fall. (gasp). So, much like he, I suppose if one is a raging bull on the market in 2008 you must ask yourself do you think P/E ratios are set to rise in the coming year as corporate profits fall? If so, the market should hold flat or heck make new all time highs. Certainly possible but not the probable situation in my book....

With that said, the stock market and the economy are at times two different things and with central banks worldwide committed to trying to 'inflate' assets to keep us out of a slowdown one could envision a scenario where markets hold up (or at least far better) than the real economy. All this money circulating and being created needs to find a home - real estate in this country is not an option, and bonds yield almost nothing post inflation. So equities seem to be, by default, where money is going. As more money is being dropped on us, the more can go into equities. While on the surface this sounds "great", keep in mind this helps prod along inflation and when your equity return is 7% and real inflation is 2%, that is no different than when your equity return is 13% and real inflation is 8%. It just 'feels' better because your equity return is 'measurable' whereas real inflation is harder to assess. I think this is the path we are on now. Further, with large parts of the market "un-investable" i.e. financials and most of retail, that eliminates about 25% (20% of S&P 500 was financials before this correction) of the choices to invest, except for those who enjoy trying to catch falling knives. So more and more of the new money goes into the other 75% of the market, further buoying those names. An interesting conundrum. But certainly this could be the case to be made for a sustained rally in the market - it is always important to see the other side of the fence, and opposing views to your own.

Bookkeeping: 'Rising Tide' Performance Week 21

Week 21 performance of the mutual fund

Comments: A quiet week overall, we had some continuation of the Santa Claus rally Monday, a very quiet day Wednesday, a mild sell off Thursday on some bad economic news and bad news out of Pakistan and another quiet day Friday. Most of the fund performance this week actually came on the two quietest days, Wednesday and Friday. [These are the days to make Hay] The bad economic news continues in relentless style and even the most bullish of prognosticators of last summer are now acknowledging "we might get a teeny tiny slowdown for at least a few months" now.

I was a lot more invested to the long side as of last Friday, than I had been in quite a few weeks, but by the end of this week, while my cash position was still lower than it's been for a long time (well below 10%), I have balanced my long positions with some 'insurance' with my Ultrashort positions. [Back to Large Short Exposure] In a general sense, all the sectors I like have really had tremendous runs so I am increasingly finding new opportunities difficult to uncover. Hence I have pulled back on some of my favorites, and in the past at times like this when my favorite sectors had put on such runs, the market was ready to pull back.

Rising Tide Growth Fund generated a +1.92% return this week. This compares to -0.40% for the S&P 500 and -0.48% for the Russell 1000. This created leading an outperformance this week of roughly +2.35%. (which is 1/5th of my YEARLY goal, in just 1 week)

I've surpassed my yearly goal of beating the indexes by at least 15% this year, in 5 months - with 9% extra to spare. So hopefully the remaining 7 months I can build on that and not give away these sizeable gains. As they like to say in the mutual fund literature, "if you had invested $10,000 on August 3rd, 2007 you would have $12,500 today" (ok $12,499 to be exact) ;)

Price of Rising Tide Growth: $12.499
Lifetime Performance to date (vs Aug 3, 2007): +24.99%

Comparable S&P 500: 1,478.5 (+0.91%)
Comparable Russell 1000: 804.5 (+1.10%)

Fund return vs S&P 500: +24.08%
Fund return vs Russell 1000: +23.89%

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

Back to a Large Short Exposure

Well after our Santa Clause rally (seems so long ago?), once again I am approaching a 20% Ultrashort exposure (19.1%) after buys yesterday and today. Per my own "rules", since this is not a hedge fund but a long focused mutual fund, I try to stay in the spirit and stay within a band of 0-20% on the short exposure, so this is about as far as I go on the 'dark side'.

We have broken S&P 1490 now and don't appear too interested in breaking back above it (but I suppose anything could change in a thinly traded market). Even if we did, we have the 'ceiling' above that. So we appear to be in the band of 1490 to 1440 now. As (or if) we move back to 1440, I expect some fight to be put up there; once again. At some point these repeated retests will fail and we will move down to the next area.

In the big picture we have made what is technically known as a double bottom (definition here) on the major indexes (August and November lows). Generally you get a nice bounce out of a double bottom (which we did). Generally, triple bottoms fail in spectacular fashion. So in S&P 500 world this means the next time we rest those lows around 1400-1405, the inclination is we will have a very good chance to break through... and fall to the basement.

Coinciding with earnings season in January, which will be full of confessions (I believe), this is my working thesis. Again, note the words "generally" I use. Nothing works every time. Nothing is fool proof. But in a mid term view (out past a few days), this scenario has the potential to unfold. But even if it did work out this way, the potential for surprise counter rallies can happen at any moment in a downtrend. And S&P 1440 which every one ("the invisible hand") knows is key, will be defended strongly as well. So neither bulls nor bears can rest too easy. :) But I plan to hold these Ultrashorts far tighter to the vest in the coming time frame as I expect a lot of land mines in earnings season about 3 weeks from now.

I expect January 2008 to be a very interesting month!

Bookkeeping: Closing Frontier Oil (FTO)

I am closing the remaining refining play in the portfolio, Frontier Oil (FTO) with a total loss of about 1.1%. I've owned it since August 6th, 2007. So essentially this has been a lot of dead money. Of all the refiners, this one remains far and away my favorite as Frontier has shown an ability to make money in a very difficult environment [More Refining News] but with some additions of late the portfolio is getting more names than my target so in reviewing what should go, I decided on this name.

Refiners are not my typical cup of tea (much more cyclical than secular growth) but a few times a year they are generally good for a nice solid run. But we haven't seen one in a long while - even an upturn in crack spreads has done nothing for these stocks.... very very strange.

The technicals in this stock give a very easy roadmap so by selling the position and waiting for a breakout I can conserve cash or apply it elsewhere, long or short. Simply put we want to see Frontier Oil break back above its 50 day moving average, currently $43 (and falling), and then we have the potential for this good move. The stock has been 'basing' in a narrow range for 3 weeks so this could happen at any moment (or not happen at all). But with crack spreads rising, you'd think the stock would reflect this sooner rather than later.

So this might be a temporary exit, as we await the stock chart to firm up. I had lowered my exposure to Frontier Oil to 1.2% of the fund and am selling all 350 shares @ $41.75. I'd gladly pay $43+ when the appropriate time comes. Much like the deep sea oil drillers, I have been in and out of these stocks during the life of the fund, getting nowhere fast - but of course the deep sea oil drillers finally took off once I had sold out my exposure. :) Hopefully the same will not happen here - I will keep a close eye out. If crude falls in 2008, profit margins should expand meaningfully in this space and perhaps we get "the run" then....

No position

Bookkeeping: Cutting Back on Chicago Bridge & Iron (CBI)

Cutting back my position this AM in this excellent infrastructure stock, Chicago Bridge & Iron (CBI) by 20%. This is more of a technical move, and locking in some profits. The stock has blasted off and is nowhere near any meaningful support - i.e. the 20 day moving average is down at $58 (8% lower), so as the stock pushed to $63, I am going to take some off the table here.

You can compare this stock performance to Foster Wheeler (FWLT), and see a stock correcting and pulling back to support in the latter name, so before this happens to CBI I want to lock in some profit, and in fact I redistributed some of these profits into a small buy in FWLT (hoping to see $150 or lower on that name to add more). Fundamentally, I am as bullish on both names (and the sector) but these two names are interchangeable to me on a fundamental basis but one is being favored by the market at this moment and one is not. Now, I am breaking the "technical analysis" handbook here which tells you to buy the the one breaking out, but that's just a stylistic choice of my investing style and for purposes of this fund I am taking a longer term view - for you swing trading types you'd be wanting to buy Chicago Bridge & Iron for example (wh