Wednesday, July 22, 2009

Bookkeeping: Cutting Most of Riverbed Technology (RVBD) Ahead of Earnings

I am simply repeating what I did with Skyworks Solutions (SWKS) late yesterday afternoon with Riverbed Technology (RVBD). In both we had scintillating runs, exceeding my expectations. I am going to lock in my gains and let the after hour games go on without me (RVBD reports tomorrow), I am cutting this from a 2%ish position to 0.2%, selling RVBD here around $24.90. This one has been so good to me, our last big batch was on the dip to the 50 day moving average where we snared a bunch at $20.80. [Jul 8: Bookkeeping - Adding to Riverbed Technology] So that's about 20% in 2 weeks with the most recent buy to go along with the earlier monster run.

All I can say to RVBD is thank you, and I fear for the day that gap is filled in this chart.

While my "bullish" stance in the last post might seem strange with all the selling I have done over the past week, I am making a short term tactical switch - moving from individual stock risk to market risk until some of these individual stocks come back to Earth. Some of these sales have been simply to liquidate stocks that have had huge runs in a short period of time, but some of these are earnings related. There is obviously a lot more risk of losing 10-25% overnight in any 1 name (especially in earnings season) than in the market overall - hence the slight switch in tactics as the market continues to run. Skyworks continues up another 3% today after I sold most of it yesterday but that is fine - we captured the body of the move and will let the tail risk (and potential reward) go to someone else. Same with Riverbed. I apparently have a lot more risk aversion than those who are chasing these names up on momentum based strategies :) How quickly fall 2008 and Jan-Feb 2009 are forgotten by the masses.

I am actually trying to find something to buy to replace the long exposure we've sold off the past week, but almost every stock of interest is very overextended, and on a 5-6-7 day winning streak. So for now, we'll replace lost long exposure with index related instruments. (with parachute strapped) The simple fact I am looking so hard (and not finding) stocks to enter, should be a bearish sign.

Long Riverbed Technology, Skyworks Solutions in fund

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