I mentioned yesterday I wanted to get fertilizer name Mosaic (MOS) in the upper $80s, and Potash (POT) in the mid $130s - both targets achieved today so I am adding in a serious way, cognizant they can go lower - but very happy they are now reaching my targets. (although the fund is of course taking a bit hit today)
- Fertilizer Mosaic (MOS) to the gills in $89.00-$91.00s (my prime target was upper $80s) - now a 5.5% stake
- Fertilizer Potash (POT) in $138s (my prime target was mid $130s) - now a 3.7% stake
- Russian iron ore/steel/coal Mechel (MTL) added a ton today in $115s (falling to 50 day moving average) - now a 3.8% stake
Other additions
- Infrastructure Foster Wheeler (FWLT) in $48s (this is a broken chart so I did not add a ton but the price now is approaching ridiculous) - now a 4.2% stake
- Iron ore Cleveland Cliffs (CLF) in $106s (just a bit below its 50 day moving average) - now a 2.3% stake
- Natural gas Cabot Oil & Gas (COG) in $43s - now a 1.5% stake
- Home builder DR Horton (DHI)
- Medical Illumina (ILMN) [hate to sell it but simply needed the cash]
- Tech Apple (AAPL)
- Tech Research in Motion (RIMM)
- Chinese travel Ctrip.com (CTRP)
Now the stocks I bought today could go further down in a panic, but I sold off my top 3 targets at much higher prices and now am able to buy back at prices I had been hoping for a while - this is consistent with my strategy of always keeping a core in my favorite names but trading around the positions. If they continue to fall, I'll find other things to sell to purchase more - I will need to study the chart to see where the next level of support is - I was just happy to finally see these prices after waiting weeks on end for weakness that never seem to have come. Again, my objective is never to catch the bottom or top - but buy on panic/weakness (layer in) and sell when everyone things unicorns and butterflies abound (layer out). And try to continue to catch the meat (middle) of the move. The risk in this environment of course is a much more general index erosion, but when I see my favorite names hit long awaited price points I have to get constructive.
Long all names mentioned in fund; long Mosaic, Potash, Mechel, Foster Wheeler in personal account
5 comments:
The great beta unwind of hedge funds looks nasty. Infrastructure, Metals, energy and Ag all in unison. It's a selling freight train right now, good entry points will appear just not sure this is it.
agree - probably early, best to have some liquidity here.
given that DBA is getting beaten like a red headed step child, are you still treating that as a money market fund?
Well my comment would be more over the long run, due to macro themes - and 90% of the time. When you have a severe correction which should happen every 8-10 weeks obviously it won't be like a money market (the other 10% of the time). But it is right below where I started the position and I took profits along the way in the $40-43 range so I am just slightly negative (just a few hundred) at this point on the stake. Which is about 0% net, which is the same as I earn on cash in the fund. I get no interest here.
Over a 3-5 year period I still think it will be a very good store of value and act like (or better) than any money market. If it weren't for the big sell offs in other names I'd be buying here - but with that said the commodity markets are volatile, and small and hedge funds have racked the area the last month or so. Remember, I also said this would be a slow and steady riser - that was before wheat started trading daily limits as hedge funds piled in. That all happened after I was in the position so the dynamics of the vehicle changed due to the participants now in these markets.
But it doesn't change my long term view.
gecko, bob - definitely could be early but can't nail a bottom or top. Simply buying in larger scale the more we fall in the favored names.
Right now we are in almost exact same stage we were in last 2 weeks of January and the fund performed almost identical. People moved from previous winners to "early cycle" names - financials, retailers, homebuilders, etc. That lasted all of 2 weeks before the next round of carnage started, and people fled right back to the last round of winners. Eventually these "early cycle" guys will be correct, but I don't think they will have any money left as they keep buying on that thesis only to see the stock holdings demolished thereafter.
If I had not seen this literally play out not even 8 weeks ago I'd be a bit more dismayed but the fund had 2 gosh awful weeks as Ultrashorts in Financials and Real Estate worked against it, concurrent with all the top holdings falling as people "rotated". But within a month everything went back to normal. I expect the same this time around. I am trying to figure out what my hedges should be going forward - Financials are probably approaching the point homebuilders reached late last year - so beaten down that they cannot go down much more no matter how bad the news is... especially with the federal backstop. I am struggling what to use since the EEV (emerging mkts) and FXP (China) are at all time highs so its late to get to that trade, and the normal things I use are now working against me since we are in this early cycle recovery mantra. So it is hard to be short anything at this point since its either not worth fighting the herd on the early cycle at this point or the stuff that is working is so overextended it is hard to buy at 52 week highs.
I'm going to remain patient. I had the same issues in August 07, November 07, January 08 - just less readers and less double guessing :) Everything goes in cycles - and I expect money to be flowing back to these names in due time. No different than the last 3 times they experienced bad corrections - hard to see that now in the middle of it, but these purchases are what always pushed the fund to outperform over longer periods of time and I'm confidant even if they drop another 10-15% from here, they will remain the strongest stocks in 3-6 month time frames. Everyone wants instant gratification (incl me)
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