Monday, October 20, 2008

Bookkeeping: Taking some Mosaic (MOS) Profits

Posted by TraderMark at 3:17 PM TweetThis
This almost feels foreign - taking a partial position off in a very large move; it's almost like spring 2008 again. Mosaic (MOS) had been increased to our #1 stake late last week as the stock scraped $30 Thursday and Friday. With the stock now up to low $38s in a matter of 1-2 sessions, in a market that can stab you in the back within minutes, I'll shuffle off some profits and reduce the stake from 5.8% to 3.9% of the portfolio. As the chart I put up this morning showed, the stock is SO oversold that even after this enormous 25%+ move, we still have upside to the upper $40s before any technical resistance is even sniffed. But that's old fashioned chart talk - the open question nowadays is where is the hedge fund resistance? Who knows what hedge fund is lurking in the weeds ready to cough up millions of shares. I assume they have done most of their dirty work until later in the year but who really knows. Just in case another case of hedge fund "dismembering" returns soon we'll lock in about 1/3rd of our gain with a very quick gain.

I put some of this money into peer Potash (POT) which has been lagging and has a similar chart. Potash is up to a 5.3% stake. Recall earnings are October 23rd here... expectations should be very low considering how impaired the stock has been. I still find the commodity/global growth space with the best potential for short term gains as long as hedge funds don't have inventory the margin clerks demand. Hence I want to maintain exposure for at least a bit more. Remember, commodities in fall 08 are like banks in spring 08 - hated, disliked, disgusting - but oversold bounces will create massive gains in a short amount of time. Before they are thrown to the garbage bin again in a few weeks ;)

I'll maintain the bullishness I noted this weekend until S&P 1030s/1040 or so where our first tests begin. Still running with little hedges on the short side since the market is grossly oversold, although less so then when we entered the day. A ton of earnings tomorrow and our friends from Cupertino, CA will probably determine our fate here in the next few days.

Long Mosaic, Potash in fund; long Mosaic in personal account

Posted by TraderMark at 3:17 PM Comments (3) | Edit This Post | Create A New Post

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3 comments:

gap said...

Any trading advice on POT. I bought 50% of my portfolio at 173 (utter stupidity) , neither did hedge it. Needless to say retail investor keeping the head above water.

Prior to earnings dont have guts (stupidity in the making may be) to buy POT at this level.

Any 'trading' advice you can share.

October 20, 2008 4:29 PM  
TraderMark said...

No advice for *you* because in this day and age anyone can sue anyone for "bad advice" but I'll tell you what I see. If I had a multi year timeline I think you'll get back to even in time. The open question is if you had cash today what would you buy with it? If the answer is POT you keep it, if not you sell it and try to make the money back. People keep losers too long just trying to get even.

Put another way, ask yourself where the next easiest 30% gain is after you take a loss - if you'd rebuy POT then you keep it, if not you put the money where you think you can make 30%. That's how I approach things mentally (or try to) I have a few big losers I lug around but try to keep that to 5% of my portfolio.

Looking @ POT chart multiple resistance levels: 105, 140, 160. I'd be happy with 105 for now, and plan to cut back if you got any sort of gap up into earnings. But that's more of a trading outlook.

The CEO is excellent, the potash reserves are excellent, the moat is wide on the potash business (but they do have nitrogen and phosphates exposure) and I like this story for years. The market could punish it until 'global growth' is back although I think fertilizer and global growth don't have that much to do with each other. The market disagrees.

When I'm in your shoes I usually would cut a portion of my position on the next rebound so I'm smaller - that way if the stock resumes back down I have some money out and can do something else with it. If not, and it keeps going up, I can partake. But this is not some fly by night internet stock - its a good business with great cash flow, a determined CEO, and the type of guy who if he has to buy back every share sounds like he would :)

October 20, 2008 4:41 PM  
jegan said...

If Morgan Keegan moves the market, then their recent upgrade of some of the oil service companies might be a means of piggybacking on their 'sway'...
---------------------------------
Morgan Keegan

WE ARE REVISING OUR INVESTMENT thesis on the oilfield-services industry to greater focus on companies with high-quality assets, high-quality managements, and earnings visibility. While essentially the entire industry remains relatively cheap on a valuation basis (even after the negative earnings revisions) we believe this new investment thesis is the best course of action given the continued uncertainty in the economy and financial markets.

While almost certainly this downgrade would have been better timed three months ago, we do not believe that the bottom in oilfield-service stocks will be a "V" shaped bottom, as a global recession now seems to be an almost foregone conclusion.

Admittedly, with fears of crude-oil prices falling to $60, we could have been more aggressive with our estimate revisions. At this point, our estimate revisions are more reflective of the slowdown in U.S. drilling activity in 2007 than the complete collapses that occurred in 1998 and 2001.

Accordingly, we are reiterating our Outperform ratings on Transocean (RIG), Helmerich & Payne (HP), Boots & Coots International Well Control (WEL), and Natural Gas Services Group (NGS).

We are lowering our investment rating from Outperform to Market Perform for Diamond Offshore Drilling (DO), ENSCO International (ESV), Hercules Offshore (HERO), Noble (NE), Rowan (RDC), Pioneer Drilling (PDC), Allis-Chalmers Energy (ALY), Basic Energy, Complete Production Services (CPX), Parker Drilling (PKD), RPC (RES), and StealthGas (GASS).
---------------------------

RIG has some amazing numbers, hasa backlog of work and is a darling of the industry... GASS on the other hand is not so impressive. WEL is cheap... A hundred shares will set you back about $175... Possibly down to $160 if we get a pullback later this week.

jegan

October 20, 2008 10:57 PM  

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