50% GAINS PORTFOLIO – AUGUST 17
KEY RATIOS:
TECH – 23%
NON-TECH – 77%
CASH - (-6%)
OPTIONS - .5%
BONDS - 6.5%
IN: ET (3.33), KZL (23.4), KSWS (19.32), RSTN (.91), IXJ (42.03)
OUT: SGDE, ARCAF, TBAC, SPAR, FB, QQQ calls, NXTL calls, PGO calls
TOP TEN: MAXF, ACGL, JDAS, OIH, DUK, BFCFB, NFI, SKYW, COGI, NXTL bonds. **Percentage of total portfolio: 59.5%. Top five holdings: 41%. Total portfolio: 32 companies (stocks, options and shorts).
CURRENT SHORTS AND PUTS: AFL-short (27.1), ZIXI Nov 5 puts (2.15)
SECTORS: Finance 47.5%, Energy 11%, Business Services 6.5%, Bonds 6.5%, Transportation 6%, Software 6%, Retail 5%, Real Estate* 4%, Broadcasting 4%, Defense 3%, Communications Services 2.5%, Biotech 2%, Communications Infrastructure 1.5%, Internet .5%, Cash (-6%).
*Real Estate now includes all mortgage REITs.
**Quicken 2002 calculates sector %’s as a total of all investments, including margin. Total Sectors plus/minus Cash will equal 100%.
HOLDINGS:
CATEGORY - STOCK (COST BASIS updated periodically to reflect averaging into positions)
FINANCE - ACGL (18.31), ACGL OCT 35 calls (.9), AFL-short (27.1), BBX Nov 12.5 calls (.4), BFCFB (7.55), CERG (3.78), ET (3.33), FMT (4.3), IPCR (28.89), MAXF (3.48), MCGC (17.9), QBEIF (3.35)
ENERGY – DUK (24.35), OIH (48.16), PGO (1.75), PGO Nov 5 calls (2.2)
BUSINESS SERVICES – ACN (21.01), COGI (2)
BONDS - LVLT 2008 11% Bonds (58), NXTL Sep 2007 bonds (76.50)
TRANSPORTATION - KZL (23.4), SKYW (18.3)
SOFTWARE – JDAS (13.3)
RETAIL - KSWS (19.32), PERY (12.05)
REAL ESTATE - NFI (22)
BROADCASTING - DIS (17.3), MIHL (3.3)
DEFENSE - PVAT (3.25)
COMMUNICATIONS SERVICES - NXTL Aug 10 calls (1.70), SBC (30.3)
BIOTECH – IXJ (42.03)
COMMUNICATIONS INFRASTRUCTURE - OCPI (1.18), RSTN (.91)
INTERNET - ZIXI Nov 5 puts (2.15)
**Monthly update on YTD performance: July 31, 2002: -4% YTD.
Dow -15% YTD, SP500 -20% YTD, NASDAQ -32% YTD.
COMMENT– The worst month I have seen in the market in years, worse than September 2001, the 2000 bubble bursting and the fall crises in 1997 and 1998. Panic ruled – earnings, cash flow and valuation ceased to matter as the lemmings ran for the exits. The smart moves for the month were go to cash and go short; but we can’t be smart all the time, so I consoled myself with nibbling on quality stocks at outrageous prices sometimes.
The rest of the market is obsessed with next week’s sentiment and the next set of economic data. I think it’s time for investors to look 6-12 months down the road and position themselves in companies they want to own then at much higher prices. They won’t be this cheap for much longer, IMHO. I am happy to own DUK with an average at 24 and BBY at 31 (EDIT – scratch the BBY comment after their warning), for example. The microcaps are ridiculous, COGI and PVAT and MAXF and SGDE should all be trading 50-100% higher based on their results.
My goal in the markets has always been to beat the indexes and most mutual funds over extended periods of time. The five-year 200% return on the portfolio has done just that, despite last month’s setback. Now let’s see if the markets can settle down this month and focus on rewarding value again. |
