Bookkeeping: Weekly Changes to Fund Positions Week 38

Week 38 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: 13.0% (vs 31.3% last week)
56 long bias: 76.4% (vs 61.4% last week)
8 short bias: 10.6% (vs 7.3% last week)

66 positions (vs 64 last week)
Additions: Yingli Green Energy (YGE), iPath DJ Livestock ETN (COW), Goldman Sachs (GS)
Removals: Diamond Offshore Drilling (DO)

Top 10 positions = 31.3% of fund (vs 27.3% last week)
39 of the 66 positions are at least 1% of the fund's overall holdings (59%)

Major changes and weekly thoughts
Summary of week; another week of everything is fine, all bad news must be good because it cannot get worse than this, and away we go. Good times all around; the real US economy degrades but the stock market pops. And so we go. Not that economic reports matter in a "hear no evil, see no evil" environment but the major economic report is Friday's job report which is radically flawed but market lemmings will react in maniac nature one way or the other so we have to keep it on the radar - if you are new to my rantings on why the monthly Unemployment report is useless go to [Apr 2: The Underemployment Rate is Rising] Before that we have Uncle Ben and his merry band - most likely to stop cutting rates and CNBC will send the alert out to the world "yes Ben is ready to fight inflation - and we really mean it this time" The dollar should rally at least a bit, although at this point it seems everyone and his mother is awaiting this to be the last cut and "strong language about risks to inflation" in the statement, and the dollar rising.. so when everyone anticipates something, it makes it less prone to happen.

The charts are poised for a breakout on the major indexes, trying to escape a long range period of range bound action. We are right at resistance here at 1400, breaking to 1399 late Friday. An inability to break above would not be positive for bulls. We are about 2 weeks into the most heavy part of earnings season, and 2/3 or so of the major multinationals who could care less what country is doing well as long as some country is doing well... and they can print money and use the weak dollar as a major weapon, have reported. After this coming week we run out of multinationals. But no worries there either, retailers and other domestic based stocks now are running the past few days [Sector Rotation?] - the magic exilar of $600 rebate checks (that are just going to be saved, or spent on food or gas) apparently are enough to get the market hot and heavy even in these suffering sectors. So all in all, it's all good. No problems. Drink Kool Aid. Just buy.

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. Monday, I initiated a position in a former fund holding, Yingli Green Energy (YGE), on what looked like an apparent technical breakout but this move failed, and the stock retreated later in the week.
   
2. I cut back Powershares DB Agriculture Fund (DBA) as a major position in the low $38s, as the chart was starting to show signs of weakness. By the end of the week it was trading in the $36s. I did the same cut back for gold and silver a few weeks ago. So this is an interesting situation - are the commodities indicating a near term stronger dollar ahead of time? Many things, outside crude and nat gas, are showing signs of turning over. Or is crude turning into this era's gold? A store of value, but with more practical use than gold. We shall see. I would remain cautious on commodities for now.
3. I took just a bit of Jacobs Engineering (JEC) off the table ahead of earnings, but the company put out solid earnings and while the stock spiked the next morning, it pulled back later in the week. I still think the infrastructure group remains very under appreciated, but JEC is one of the most expensive in the group. In its stead, I continue to build up Foster Wheeler (FWLT) position, as it's valuation is at a major discount to JEC.
4. I mentioned last week, if I were truly running money I would of put in to my broker to get me as much Intrepid Potash (IPI) as I could (at the time it was going to price at $27-29).. it ended up pricing at $32. I would of been happy to unload my shares to the unsuspecting retail investors at $48+ for an easy gain of 50%+ on a stake I'd be willing to buy up to 8% of fund. This is a game in which all institutions can juice their returns for nothing else other than they get access to easy IPO trades like this. My return would be X% higher this week and you would of said, man that TraderMark is one smart fella - how'd he manage to pull 3% gain in a 0.6% week? I'd snicker to self...
   
5. Tuesday, I cut back to the bone my fertilizer exposure - we had a huge run, we had a rare IPO in the group, we had Neil Cavuto talking about fertilizer. My readership disagreed with my sales, but I held firm, it was time to go and in fact I did a short term increase in Ultrashort Basic Materials (SMN). I outlined Wednesday the risk factors 24 hours ahead of the Potash (POT) earnings, and true to form, we got a "sell the news reaction"; at which point I began rebuilding my stakes Thursday. I was hoping for more of a selloff than we got, but since a pullback to the 20 day moving average was all the market gods were willing to give, I bought more in my 3 fert names. I was able to get Mosaic at a nice 13% discount and Potash at 11% off. I love sale racks.
   
6. I also took a big slice of Mechel (MTL) off the table Tuesday, for all the same reasons as the fertilizer (too hot and heavy in here) - I was able to buy this position back (plus more) at a nice discount to my sale price (9%) Friday.
7. Wednesday, I decided to not sell down Apple (AAPL) ahead of earnings - and in fact added a bit later in the week after the "we won't sell you down 25% just because you gave us conservative guidance... that you always give" signal was given off their earnings.
8. I initiated iPath DJ Livestock ETN (COW) on a hunch that latter 2008 will be to meat what 2007 was to grains. I don't know the timeline of when this increase will be, but I sense we are getting the slaughterings now (depressing prices) which will lead to shortages later - time TBD. I am hoping by Labor Day so people can complain about their $400 BBQ while CPI will come in at 1.2%, and Uncle Ben call tell us "really, what is all the fuss about inflation - none of our reports say it's there so I refuse to believe. My butler also says it is not there."
9. Thursday on the wimpy commodities sell off, I added back some exposure I had cut back on of late at higher prices, mostly in coal and metals.
10. As Thursday wore on and no amount of bad news could bring this market down I started a larger scale, broad move into equities - you name it, I was buying it.
11. I initiated a new position in Goldman Sachs (GS) adding to last week's purchase of Morgan Stanley (MS) - both are technical buys - again, I might get more upside in Merrill (MER) or Lehman (LEH), but I consider the former two to be better quality firms and they have seemed to have navigated the credit morasse a bit better. I'm still a believer that their long term earnings growth is going to be impaired for a long time, but hey, Kool Aid is Kool Aid.
12. Late Friday, I sold out a long term position in Diamond Offshore Drilling (DO) - frankly this whole group has been a disappointment and the market does not seem to value these names as secular growth, but cyclical growth. I will probably move an allocation to Noble (NE) in the future...
    

The above do not include the majority of my trades in my Ultrashorts which I am trading quite often as the market ebbs and flows.