June Update - Top 10 Winners & Losers

Previous editions can be found

1. May 1
2. Mar 16
3. Dec 18

Here is our every so often look at best and worst contributors to the fund; as long as the winning group in aggregate is larger than the losing group we should be in good shape.

On the winning side, essentially a long fertilizer/coal paired with short financial/commercial real estate has been our core winning play. Fertilizer really helped us last fall/winter and coal has taken the reigns this spring. Keep in mind I use a basket approach for most sectors - so in theory I could of had "1 huge winner" in each sector instead of multiple large winners as shown below. Alpha Natural Resources (ANR) has only been with us since early April, when I switched into it from Peabody Energy (BTU) and in that short time it's cracked the top 10, even though my weighting has been 3-4% of fund at most. Financials have been helping us almost every month. In the next tier of winners (slots 10-15) are non commodity names such as Illumina (ILMN) which has not been a major weighting for a long time after a huge run in 2007, and Baidu.com (BIDU) which has not been a great buy and hold stock (some traumatic sell offs), but I've traded this one very well. Of course the magnitude of dollars gained is in large part based on weighting I've put on each stock - i.e. Mosaic (MOS) has many times been a 6-8% weighting in the fund whereas Illumina or Mastercard (MA) has rarely been over 2%.

Top 10 Winners
Mosaic (MOS) +57.2K - fertilizer
Ultrashort Financial (SKF) +38.6K
CF Industries (CF) +33.3K - fertilizer
Potash (POT) +28.5K - fertilizer
Mechel (MTL) +23.9K - steel/coal/iron
Consol Energy (CNX) +21.3K - coal
Massey Energy (MEE) +10.0 - coal
Ultrashort Real Estate (SRS) +17.9K
Alpha Natural Resources (ANR) +16.1K - coal
Mastercard (MA) +11.0K - credit cards

On the losing side, most of these names have been sold off so there is no chance to "improve" on the losses. Trina Solar (TSL) hemorrhaged even more money since last we looked in early May - in fact 3 of my 10 losers are solar names. I've come to the conclusion that my style of investing does not mesh with the way these stocks trade - I like to build up positions on strength as opposed to weakness, but much like the dry bulk shippers - this is one group that is so volatile you simply must buy them when the charts look completely broken - since when they do rebound, the rebounds are swift and you do not have time to rebuild positions in a structured, incremental way. Specific to Trina Solar is a year's worth of underperformance, but that's a whole different matter. One day I hope to see some of these names switch to the other side of the ledger (big winners) instead of big losers. On the good end there is only 1 new name added to this list since last we looked (the less new additions, the better for us obviously). The only newcomer is my "insurance" policy (hedging vehicle) against my basic material (i.e. the closest thing I can have to short agriculture/chemical stocks) - Ultrashort Basic Materials (SMN). While it is a loss, it is actually doing it's "job" - as stated when I bought this position, if I am losing money on it, that means the counterweights (long positions) in the same sector must be doing well. Which they are. That said, I'd like to see this loss reduced - hopefully shortly.

Top 10 Losers
Thornburg Mortgage (TMA) -25.6K - high end mortgages
Trina Solar (TSL) -25.5K - solar
LDK Solar (LDK) -14.1K - solar
Riverbed Technology (RVBD) -11.0K - networking
MFA Mortgage Investments (MFA) -9.5K - mortgage REIT
Crocs (CROX) -9.0K - plastic shoes
NII Holdings (NIHD) -8.1K - cell phone
Ultrashort Basic Materials (SMN) -7.5K
Solarfun Power (SOLF) -6.6K - solar
Chicago Bridge & Iron (CBI) -6.1K - infrastructure