Friday, May 9, 2008

Bookkeeping: 'Rising Tide' Performance Week 40

Week 40 performance of the mutual fund

Comments: We began "our" 4th quarter in rip roaring fashion. While the market stagnated in a quiet week, most of our positions did quite well - and unlike the past 2 weeks when the "early cycle recovery" stocks jumped upward on an "imminent recovery, strong dollar" thesis, thereby hurting our short positions, we actually made money on that side of the ledger this week. Topped off by a very good run in coal to begin the week and a lot of smaller names finishing off huge 5-6 week runs, we were able to make some serious hay this week.

As for the market, technically - the indexes did not really go anywhere but we just continue our sector rotation, back to the themes that have been working for much of the past year. We remain range bound between roughly S&P level 1430 on the top, and 1370 on the bottom. We've been here now for over 3 weeks, so until we make a climatic move either up or down through one of these levels we are turning to a more neutral stance. The news flow continues to be awful but until the market acknowledges the reality on the ground, we can't turn into full bore bears. Where we are now is just what I call a "white noise" area - neither here nor there. Maybe $140 oil might make this market care about the reality on the ground - I don't know.

I spent most of this week raising cash after entering the week with a 3.3% position; and selling off a portion of a host of our winners. In a non mutual fund environment I'd probably be in a much higher cash position as I believe risks remain high here. Again it's very reminiscent to September/October 2007 when we rallied off the first Fed discount rate cut (parallel to Bear Stearns bailout) where we rallied hard for 5-6 weeks and then began to tail off ... almost identical set up right now. We'll see what happens; predicting the future of the overall market is a fool's game so we'll take it day by day. But just about every position I favor has made a huge run in the past month and a half, and the risk/reward no longer is in our favor in terms of adding new monies to these positions. Digestion of superior gains is now needed. We made a lot of transactions early in the week (mostly sales) as we cashed in winners, and built up cash reserves. The rest of the week was relatively quiet.

The S&P 500 lost 1.8% this week, and the Russell 1000 lost 1.5% ; Rising Tide Growth Fund generated a +3.1% return, so we had a very positive week, creating positive return on both absolute and relative basis. I expect to give some of this back next week since the gap versus the indexes was so huge.

I'll have an update next week on our progress towards fund pledges - we've had a huge month thus far - thank you!

Price of Rising Tide Growth: $12.084
Lifetime Performance to date (vs Aug 3, 2007): +20.84%

Comparable S&P 500: 1,388.3 (-5.25%)
Comparable Russell 1000: 759.2 (-4.65%)

Fund return vs S&P 500: +26.09%
Fund return vs Russell 1000: +25.49%

Last week's results here.

Since the market cap of the median stock in the Rising Tide Growth fund (median $7.1 Billion as of April 08) is significantly below the SP500 index (median $13.1 Billion as of September 07) but higher than the median market cap in the Russell 1000 (median market cap $5.8 Billion as of September 07), I am measuring the fund against both indexes. Click here to see all fund's holdings as of April 2008.

Basis for indexes is 5 day weighted average of closing prices Aug 3-9
SP500 : 1,465.2
Russell 1000 : 796.2

To see why I use the 5 day weighted average of the first 5 trading days to smooth out the volatility of the indexes as the fund launched, see here.

Please click here: fund performance for previous updates

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