Bookkeeping: Weekly Changes to Fund Positions Year 2, Week 10

Year 2, Week 10 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 (1 position [SHV] + cash): 19.1% (vs 24.0% last week)
33 long bias: 76.9% (vs 63.3% last week)
7 short bias: 4.0% (vs 12.7% last week)

41 positions (vs 38 last week)
Additions: Research in Motion (RIMM), Apple (AAPL), Mastercard (MA), CME Group (CME), Ultra Russell 2000 (UWM)
Removals: Buffalo Wild Wings (BWLD), Buckle (BKE)

Top 10 positions = 43.2% of fund (vs 38.4% last week)
26 of the 41 positions are at least 1% of the fund's overall holdings (63%)

Major changes and weekly thoughts
Not sure where to even begin. At this point (almost) everything is being thrown at the system and it's a question of confidence. No need to talk about fundamentals, technicals, or anything like that at this point. The world is acting this weekend

• The French government plans to propose a law Monday that would offer a state guarantee for banks and create an agency to help channel capital into them.
• The U.K. government is finalizing plans to invest billions of pounds in four of its largest banks as part of its efforts to stabilize the country's financial system, a move that could lead to the suspension of London stock trading Monday.
• Similarly, Germany's government will set up a fund to provide as much as 100 billion euros ($135 billion) of equity capital to help the nation's banks through the economic turmoil
• Portugal's finance minister announced Sunday that his government was offering a 20 billion euro state guarantee for banks endangered by the global financial crisis
• In Oslo, which is outside the euro zone, the Norwegian central bank moved to provide banks with $58 billion in additional liquidity.
• Australian Prime Minister Kevin Rudd said Sunday that his government will guarantee all deposits with institutions for the next three years to bolster confidence in the banking system. In addition, Australia said it was doubling its pledge to purchase residential mortgage-backed securities to A$8 billion.
• New Zealand said it would guarantee all retail bank deposits for the next two years to free up liquidity flows
• The United Arab Emirates said Sunday it will guarantee all credit risks and deposits at national banks and interbank lending among all banks operating in the UAE. The Abu Dhabi-based central bank also promised to inject extra liquidity if needed, as local banks are being frozen out of international debt markets and liquidity in local money markets is becoming increasingly scarce
• Saudi Arabia's central bank made 150 billion Saudi riyals ($40 billion) available for its banks on Sunday

Further, all Euro interbank loans are going to be guaranteed.

• Leaders of the 15 eurozone countries were set to announce a plan Sunday to guarantee new medium-term loans between banks, Agence-France Presse reported. The measure, which will last for an "interim period," will see governments underwrite loans of up to five years, AFP said, citing a draft of the statement.

The "market" has gotten everything it has asked for the past week - literally all risk going to the governments of the world and off their backs. If "the markets" are not happy with these events, then there is no pleasing them. At this point analysis is hour by hour - projecting out even 24 hours is useless with the information flow so hot and heavy. Overnight LIBOR rates improved tremendously Friday, so we'll see what they do Monday - this seems to be the most watched figure in the world right now.

We went the most "long" in a while (except for a brief moment on the Friday before the House vote on the bailout), but if the market rejects all these measures and begins to falter we'll change direction. S&P level of 840 is the line in the sand - I don't expect it to be "the bottom" but the low Friday should be "a" low. All lows are retested at some point - the hope here is we can build a decent rally for a while (although I expect the short term to still be rocky) before we retest this level in some weeks/months time. But the way things are going this level could be breached Monday. The US should begin injecting capital into US banks soon and all eyes will be on Morgan Stanley (MS). There are a lot of other issues, both in the real economy and the financial markets - but after a 30% drop in just a few weeks if this market can not be bought, then there is no market that can be bought. We'll take it by the day.

Lost in this mess, is this is the heart of earnings season...

The larger weekly changes (chronologically) to the fund below:

1. A-Power Energy (APWR) had an eventful week - Monday they announced a 50 unit wind turbine contract, and the stock was rewarded with a 30% haircut. On top of a 50% haircut the previous 2 weeks. I added some in the $4.80s. Tuesday, they announced due to a lack of disclosure cited by an old employer, they were letting the CFO go - since this was not an accounting issue I bought more in the $5.20s.
2. Sequenom (SQNM) had an interesting week as well - the stock had fallen back to fill a gap it created in its chart after its positive Down Syndrome's data (down from $29 to $21) so after taking profits higher, I began rebuilding a position @ $21. Tuesday MORNING, a report came out on a "competition" threat and the stock was hit about 8% so I added more in the low $20s. Tuesday AFTERNOON, just by looking at how awful the market was acting, and seeing that $18 was a support level that if the market gapped down Wednesday morning could be broken in minutes (and lead to a much more dramatic fall) I decided to reverse course and sell about 2/3rds of my position in the $19.30s. By Friday, the stock had fallen to just above its 200 day moving average (just below $14) - Friday morning I bought some in the $15s and $16s. It was a nutty week.
3. Tuesday, to close off just about all exposure to the US consumer, we closed our "best of breed" names in consumer discretionary - Buckle (BKE) and Buffalo Wild Wings (BWLD). Both stocks obviously closed the week lower, but in a relative sense they performed "ok" for the week and Buckle reported yet another month of great same store sales later in the week. I still like these names and if the market ever gets it feet, I expect these to do well.
4. Wednesday, LDK Solar (LDK) raised guidance yet again (multiple times this year) - but the stock was hammered - this was one of the names we added back Friday morning.
5. Research in Motion (RIMM) seemed to be holding up relatively well Wednesday, so after selling the last of our position 1 month ago at $103, we restarted in the $59s. It did not act so great Friday but in this market, what hedge fund is liquidating is more important than any technical analysis so I am not reading too much into it. This was (until Friday) going to be our proxy on the NASDAQ.
6. Thursday morning when we had a quick rally, I sold down a lot of exposure as I saw very bad action in Morgan Stanely (witch hunt) and just felt it was not worth it to be it in the market... that move proved to make the week and month - as we had a horrendous day and we went from "up" to one of the worst days in history down on the Dow. I added a lot of short exposure once the S&P 500 broke 960 which happened in late afternoon - the market was straight down after that.
   
7. Instead of selling the short exposure into the dark close Thursday, I was hoping to get a washout selloff the following morning. We did get that and into that disaster I dumped a ton of short exposure and began adding to quite a few positions back. 3 new positions were started - all previous stocks in our portfolio that we fled at much higher prices - Apple (AAPL), Mastercard (MA), and CME Group (CME).
8. Since it is too much work to buy all these individual names back just for trades - I decided to use the index ETF for the Russell 2000 - and bought Ultra Russell 2000 (UWM) late in the day as a proxy for "bullishness". While there is no guarantees and historical precedent means nothing we are the farthest below the 200 and 50 day moving averages than in any time in history - including 1929 or 1932 - or any Great Depression era you want to bring up. Unless the end of capitalism comes next week, we should have a bounce sometime in the next month.

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