Bookkeeping: Cutting Some Cummins (CMI) & Mosaic (MOS); Adding Some National Oilwell Varco (NOV)

Well my 'dream' scenario of this morning did work out - I wrote this when Cummins Engine (CMI) was in the $59s

My hope right now is the stock runs to mid $60s, where I'd lighten up and then refill the position as it eventually falls back to fill that gap in the chart - ambitious plan but it would be a dream scenario.

Since I'm not watching every movement of the market (damn day job), I missed the move to $64, but I lightened my position here in the $63s, selling down my position by 40%. (200 of 500 shares) Again, I'd like to add this stake back on a pullback. So if I am wrong and there is no pullback then I still have 60% of my position to ride the wave. If there is a pullback, then I will buyback my shares let go here in the $63s with a target of $56.50 - this would be a 10% reduction... if it worked out that beautifully, well I'd be a happy camper. This selloff still keeps the name at 1.7% stake in case it continues to run.

I am still reticent to add a lot of commodity exposure - I can see the "play it by the book" robots who rule Wall Street to sell them off as the "dollar strengthens" but I am going to selectively make buys here and there. One of my favorite oil service names, National Oilwell Varco (NOV) has pulled back significantly here from nearly $76 to $66 in just 7 sessions - so I am going to take this 13% drop as a time to begin rebuying this position... SLOWLY. The stock has fallen to its 50 day moving average. Once again, I could see all these commodity names selling off more significantly as long as people rotate to financials, retailers, and other related junk and out of things that will actually work in 2nd half 2008. I'm taking NOV back to a 0.9% stake, but if crude "falls" to $105-$110, panic will be in the air and we'll hear how the Fed is doing such a great job of fighting inflation. Again, ignore it - the Fed will be keeping rates low through the election, and putting even MORE liquidity into the system through their alternative means. That is not fighting inflation - that is stoking it. The dollar rebound will be short lived in my opinion. But that does not mean the lemming hedge funds won't all pile out the same exit at once and cause harm to portfolios. Hence I am taking it slow adding to any stakes and anticipating a broader selloff on the "vigilant" Fed - a total misnomer.

EDIT: 12:50 PM - I missed the small fact that NOV reported earnings this AM - oops. Here they are. More hamsters (my analyst team) that need to be fired... (interesting comments on the North American land drillers who I've mentioned a few times now as showing great charts of late - this is another group, much like natural gas that I'd abandoned for a few years - major names NBR, PTEN, HP, a few others)

• National Oilwell Varco Inc (NOV) said on Wednesday its first-quarter profit rose 44 percent as record crude oil prices boosted demand for its drilling equipment, particularly in offshore markets.
• Still, the company's shares fell nearly 3 percent as its outlook, which noted improved demand in North American land markets and growth in deepwater markets, failed to inspire investors.
• Here you have a company that is well positioned for the infrastructure build-out we are going to see in North America and internationally," Roger Read, oilfield services analyst at Natixis Bleichroeder, said. "But they didn't tell us anything we didn't already know two weeks ago."
• Net income for the Houston company was $397.6 million, or $1.11 per share, compared with $275.9 million, or 78 cents a share, in the same quarter a year earlier. Net income for the Houston company was $397.6 million, or $1.11 per share, compared with $275.9 million, or 78 cents a share, in the same quarter a year earlier.
• Revenue rose 24 percent to $2.69 billion.
• Backlog for capital equipment orders for the company's rig technology segment increased to $9.9 billion, compared to $9 billion at the end of 2007.
• On a conference call with analysts, National Oilwell's Chief Executive Officer said the company's outlook for North America had improved, citing the development of unconventional shale plays like the Marcellus in Appalachia.
• "I would offer up that the land rig building in the lower 48 is going to improve dramatically this year," CEO Pete Miller told analysts on a conference call.

I took 150 of my 500 shares of Mosaic (MOS) off the table for no reason other than the ones listed above... I could easily see a scenario where hedge funds all do their silly dance of "strong dollar means I need to buy Macys" blah blah. I continue to target $110-$114 for this name, so I took some off here in the $122s. If I am wrong and the stock shows strength and the "commodities are dead" play is not on, then I'll be happy to add higher since my year end target is much higher. This is simply a bit of a short term play, and takes my exposure back down to a normalized 3.7% stake. Once the fluff of "weak dollar plays are over" I am going to build this position back to a 6-8% stake; I'll start in that $110-$114 area... and pray for $100 or lower ;)

I would like to add to my coal plays here, but again - I am fearing the herd trade of "the end is here for commodities" which might be playing out at 2:15 PM this afternoon.

Long all names mentioned in fund; long Mosaic in personal account