Mosaic (MOS) is now a 5% stake in the fund, up from 4.2% entering the day. If the stock is dropped to $90 or so, I'll move this back up to a 6-8% type of position. If we ever see low $80s again it will probably go to a 10%+ position...
Note this is not a "technical" buy - the chart is actually showing a series of lower highs, so one might argue for the very near term it is actually a good short (which I could not argue with) but the focus in this fund is longer term fundamentals, and I can't find a space with better so I'll continue to layer in as the stock drops. Main concern with these type of "winning" stocks is hedge funds continuing to need to deleverage and sell what they can since they cannot sell the illiquid junk.
EDIT @ 12: 58 PM: Added another 50 shares @ $100. Now up to 5.4% stake
Long Mosaic in fund and personal account
2 comments:
Why would anybody want to short MOS?? GS just upgraded this sector??
The main arguement can be that hedge funds who need to deleverage will sell their winners since most of their losers have no market - i.e. all their toxic paper cannot be sold so when investors come calling and want to take their money out they need to sell what is available.
Not much to do with fundamentals - that appeared to be the reason for the stark selloff 2 weeks ago. Fundamentals didn't suddenly change in a 4 day period, but the stock prices sure did.
Last is this belief in "2nd half recovery" - the more it is believed, the more a rotation could happen from "old winners" to the "new winners" (homebuilders, financials, and retailers)
Again, investing is more art than science and logic has very little value. You have to suspend belief much of the time and realize if the herd believes something so strongly they can collectively make it happen. Anyhow I am just giving both sides of the story - my favorite story fundamentally but you can make a case technically the chart is showing weakness and I could at least make a bear case for why the stock could sell off. You need to not be dogmatic and see both sides of every story even if you disagree with it. I own 1 homebuilder even though I don't think the housing market is coming back for years - but I realize the power of the herd.
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