Wednesday, March 19, 2008

Bookkeeping: Closing FCStone Group (FCSX) After a Short Rental

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I am closing my small position in FCStone Group (FCSX) after a very very short stay in the portfolio [Mar 10: Beginning Starter Stake in FCStone Group]. This stock was absolutely destroyed in the panic Monday [Mar 17: FCStone Group Already Getting Smacked - I Barely Knew You], down 50% at one point, before rallying 45% yesterday. Frankly, the thesis on the name has not changed but I cannot stand for that sort of risk - I did not realize just rumors could drop something like this down 50% and I don't want to carry that risk on the books even if it means giving up profits. Not worth it to me, in this enviroment which is still fragile - stocks that move up/down 40-50% in a day are just not my cup of tea, and that's now how FCSX usually trades.

I am selling my 1% stake in the name @ $33.65, and booking a $1600 loss; compared to how bad the situation was Monday I'll be very thankful to escape with such minor damage. Thankfully I had been patient on waiting for an entry point or my loss would of been much more substantial. Again, this does not mean the stock is going down or cannot rally 50% higher from here. Logic would dictate there is some great value here but when logic gets thrown out the door, it doesn't help the portfolio one bit. I'll revisit in 6 months or so when things calm down.

No position

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