Tuesday, August 24, 2010

Bookkeeping: Rebuilding BorgWarner (BWA)

Let me preface this piece by saying I don't expect to make money in the near term on today's purchase, I am simply rebuilding some of the long exposure I cut back the past 3 weeks.  It's not a "short term trade".

BorgWarner (BWA) is a position I sold almost all stock in, on August 6th in the upper $46s.  The timing was quite good as the stock topped out the next trading session.  At the time I wrote:

BorgWarner (BWA) has had a big run, relative to the type of stock it is (staid).  I am going to sell the majority of what I have left (keeping a holding position of 0.1%) and try to buy back lower (hopefully below $44).  I am locking in roughly a 19% gain.

So that time has come, and we are under $44 on the name, as the stock approaches its 50 day moving average. Of course I will throw the caveat out as I do with any stock in this HFT, EFT dominated world - if the S&P500 is headed to 1010, this purchase will quickly show losses and support will be meaningless since the entire market is a derivative of S&P500.  Hence, as I stated above it is not a 'fast money' trade of any sort.  That same disclaimer will go for any purchase I do in the next 40-50 S&P points (down) if 1010 is the end game.  Simply will be holding my nose and buying some of the stronger companies along the way, picking here and there.

I made 2 purchases today, one an outstanding limit order and then a market order; together I should come in somewhere in the $43.50ish area as an average cost, so we were able to (a) sell - lock in our 19% gain - and (b) effectively relaunch the position at a 7% discount to where it was sold.

Looks like the housing data was putrid, as our country reliant reliant on government handouts, suffers the shakes without the bosom of Uncle Sam to suckle on.  .

Long BorgWarner in fund; no personal position


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