50% GAINS PORTFOLIO – OCTOBER 11
KEY RATIOS:
TECH – 15%
NON-TECH – 84%
CASH – 1%
OPTIONS – 1.5%
BONDS/CONVERTIBLES/PREFERREDS – 3%
IN: TCOW (.32), TRDFF (9.9), FFEX (5.09), APF (10.53), L JAN 05 10 LEAPS (2.05), RRI JAN 05 LEAPS (1.90)
OUT: L, RRI
REDUCED POSITION: NPSN
ADDED MORE: None
TOP TEN: BRKB, MAXF, SCRB, CEE, TWTC bonds, UFCS, SOA, TKG, WTM, MTF. **Percentage of total portfolio: 30%. Top five holdings: 18%. Total portfolio: 57 companies (stocks, options, bonds, funds and shorts).
CURRENT SHORTS AND PUTS: None
SECTORS: Finance 24.5%, Energy 15%, Transportation 15.5%, Communications Services 9.5%, Asia Fund 6%, Europe 5%, Healthcare 3.5%, REIT 3.5%, Latin America 3.5%, Bonds 3%, Broadcasting 2.5%, Communications Infrastructure 2.5%, Africa 2.5%, Retail 2%, Services 1.5%, Hardware 1%, Cash 1%.
HOLDINGS:
CATEGORY - STOCK (COST BASIS updated periodically to reflect averaging into positions)
FINANCE - ACGL (26.15), AMPH (5.11), BLX (10.44), BRKB (2067), FMT (9.32), MAXF (3.48), MTF (4.04), QBEIF (3.35), UFCS (33.86), WTM (306)
ENERGY - CRK (10.71), GLNG (10.50), MSSN (1.30), OGZPF (19), PXP (8.7), RRI JAN 05 LEAPS (1.90), TKEGF (2.75), TMR (3.16), TNP (11.5), YUKOY (49)
TRAVEL/TRANSPORTATION - ACRFY (18.75), ASR (14.4), FFEX (5.09), IDR (13.96), LFL (9.45), LGN (3.75), SCR.B (6.7), TP (16.82)
COMMUNICATIONS SERVICES - ENT (7.07), STHLY (11.20), TKG (17.55), TLD (14.65), TLK (10.92)
ASIA FUNDS – APF (10.53), GCH (9.5), TTF (4.35)
EUROPE - CEE (15.48), IRL (10.31)
HEALTHCARE - HLSH (.57), TGRNF (1.65), TVIN (1.27)
RE - FBR (8.89), NFI (58.45)
LATIN AMERICA – CH (9.11), LAQ (11.65)
BONDS - TWTC 2011 bonds (50.75)
BROADCASTING - AOL Jan 05 10 LEAPs (3.8), L JAN 05 10 LEAPS (2.05), NPSN (34.16)
COMMUNICATIONS INFRASTRUCTURE - KVHI (14), UTSI (20.52)
AFRICA - SOA (14.12)
RETAIL - NUTR (10.43), SCNYA (13.75)
SERVICES - TCOW (.32), TRDFF (9.9)
HARDWARE - OBAS (6.92)
**Monthly update on YTD performance September 30, 2003: +61% YTD.
Dow +11% YTD, SP500 +13% YTD, NASDAQ +34% YTD.
INTERNATIONAL STOCK LIST: APF, BLX, MTF, QBEIF, GLNG, OGZPF, TKEGF, TNP, YUKOY, ACRFY, ASR, LFL, SCR.B, TP, ENT, STHLY, TKG, TLD, TLK, TRDFF, CEE, IRL, NPSN, GCH, TTF, TGRNF, CH, LAQ, SOA, OBAS
COMMENT - The market finally found a banana peel to slip on the last week in September. Not surprising after everyone and his brother called for a pullback sometime. The “mo-mo” stocks that move mostly on herd momentum took a quick dive, as thousands of hedge funds ran for the exits ahead of the quarter-ending bonus date, September 30.
I’m glad to say we didn’t have to generate stacks of needless commissions and short-term capital gains taxes to lock in profits. Our portfolios are slightly off the new highs reached in mid-September, but still ahead for the month compared to 1%+ losses in the major indexes.
More important, the quarterly performance beat the pants off the indexes. Since June 30, the Dow managed a 3% gain, the SP500 only 2% and the NASDAQ a respectable 10% (though way off its 18% gain reached September 19 – a big swing, ouch). Our portfolios posted 10%+ gains for Q3. Like always, the average PE and beta is much, much lower in our holdings than the main index components. We get to enjoy top performance and sleep well too.
The US economy continues to produce a sputtering jobless recovery. GDP growth figures are respectable, but employment has not rebounded while consumer confidence is dropping (almost as fast as President Bush’s approval ratings, no coincidence). I don’t see much confidence outside the financial and energy sectors that have performed well all year. Technology is a crapshoot; a few companies are making real money again, but many have bloated stock prices with skimpy earnings – again. I don’t chase bubbles or get wet when they finally blow up any more. Been there, done that, already have the T-shirt.
International stocks still get much of my attention. Emerging markets like Thailand are thriving at reasonable valuations while the Japanese stock market finally turned the corner (for now at least) with news that banks like our MTF holding are finally cleaning up their balance sheets. Latin America continues to look promising, and even southern Africa has started to shine as the region stabilizes and benefits from the technology and influence of big players like SA Telkom Group (TKG).
The September-October nervousness has another four weeks to run. If we get to the other side of that scary gulch without any real damage, the Santa Claus effect should start to kick in for a nice year-end rally. Whatever happens, you can be sure we will stay in the solid value stocks that generated such good returns all year. |
