Tuesday, November 16, 2010

Bookkeeping: Limit Order to Repurchase Magna International (MGA) Hits

This is a tricky time, because "buying the dip" worked non stop for months... but if this is stage 1 of a large selloff that takes us down to fill the downside gaps at S&P 1090, and 1110 any purchases in the near term will be painful a few weeks for now.  Hence, the solution is to marry purchases with stop losses and be willing to take (numerous) small-ish losses in case we have a much larger selling event in the future.  With that said, many of our portfolio holdings had super earning reports (along with some names we no longer own) and I want to buy them on dips.  Any potential selloffs in the future will be more due to market events - nothing trades in a vacuum - rather than company specific, so we still have to respect the price action if the selling accelerates in the coming days and weeks.

I cut back on Magna International (MGA) post earnings (Nov 5th) when the stock breached $99, lowering portfolio exposure to about 0.7%.  A very obvious gap in the chart stood out like a sore thumb and since this is not Netflix or Priceline, the gap had a much better chance to fill.  This has happened today, so a limit order to buy in the gap has filled; my price was $95ish but the stock has actually fallen another dollar from there.  I sometimes use the limit orders as triggers to watch a stock closer (i.e. pay attention), so my limit order was only a 0.55% exposure.   To that I've added another 0.9% in a market order in the low $94s, so alltogether I am adding back about 1.5% exposure with a blended cost mid $94s.

Magna International designs, develops and manufactures technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Our capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly.

[Nov 5, 2010: Magna International Crushes Estimates, Announces 2:1 Stock Split, Stock Buyback, Increases Dividend by 20%]
[Aug 25, 2010: Bookkeeping - Starting Magna International]

Long Magna International in fund; no personal position


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