50% GAINS PORTFOLIO – AUGUST 24
KEY RATIOS:
TECH – 24%
NON-TECH – 76%
CASH - (-1%)
OPTIONS - 1%
BONDS - 6%
IN: GRTS (20.25), TWTC (1.18), L Jan 10 calls (1.10), STZ Sep 30 calls (.4), MCCC-short (5.85)
OUT: PERY, ACN
TOP TEN: MAXF, JDAS, ACGL, OIH, DUK, NFI, BFCFB, COGI, MCGC, NXTL bonds. **Percentage of total portfolio: 63%. Top five holdings: 44%. Total portfolio: 35 companies (stocks, options and shorts).
CURRENT SHORTS AND PUTS: AFL-short (27.1), MCCC-short (5.85), ZIXI Nov 5 puts (2.15)
SECTORS: Finance 47%, Energy 11%, Bonds 6%, Software 6%, Transportation 5%, Business Services 4%, Real Estate* 4%, Broadcasting 4%, Retail 3.5%, Communications Services 3.5%, Defense 3%, Biotech 2%, Communications Infrastructure 1.5%, Internet .5%, Cash (-1%).
*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)
BONDS - LVLT 2008 11% Bonds (58), NXTL Sep 2007 bonds (76.50)
SOFTWARE – JDAS (13.3)
TRANSPORTATION - KZL (23.4), SKYW (18.3)
BUSINESS SERVICES – COGI (2)
REAL ESTATE - NFI (22)
BROADCASTING - DIS (17.3), L Jan 10 calls (1.10), MCCC-short (5.85), MIHL (3.3)
RETAIL - GRTS (20.25), KSWS (19.32), STZ Sep 30 calls (.4)
COMMUNICATIONS SERVICES - NXTL Aug 10 calls (1.70), SBC (30.3), TWTC (1.18)
DEFENSE - PVAT (3.25)
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. |
