50% GAINS PORTFOLIO – JULY 22
KEY RATIOS:
TECH – 10.5%
NON-TECH – 89%
CASH – 0.5%
OPTIONS – 5.5%
LARGE CAP U.S. STOCKS –8%
SMALL/MIDCAP U.S. STOCKS – 20%
INTERNATIONAL STOCKS – 66%
FUNDS – 7%
IN: NSC (50.41), OPYGY (44)
OUT: LFL, AIRM
REDUCED POSITION: None
ADDED MORE: ALY, DRAGF
TOP TEN: KPELY, MTNOY, WNDLF, SBK+warrants, OGZPF, TEF,ATPG, TREMX, MERKX, CLLZF. **Percentage of total portfolio: 25.5%. Top five holdings: 14.5%. Total portfolio: 81 companies (stocks, options, bonds, funds and shorts).
CURRENT SHORTS AND PUTS: CORS Sep 27.5 puts (.75), CTX-short (45.62), EK Jan 07 20 puts (2.35), GM Jan 07 10 puts (.9), JOE 08 35 puts (1.95), KBH-short (40), LEN-short (39.31), PHM Jan 30 puts (2.1), SBUX Jan 35 puts (2.6), UIS Jan 5 puts (.3), WCI Jan 25 puts (2.1).
LOSS REPORT: This week: 30 stocks/10 options in the red - losses equal 4.3% of the portfolio, market value 33% of the portfolio (Last week: : 26 stocks/10 options in the red - losses equal 3.6% of the portfolio, market value 30.5% of the portfolio)
SECTORS: Energy 37%, Finance 13%, Funds 7%, Communications Services 7%, RE 6.5%, Retail 5.5%, Transportation 5%, Asia 4%, Mining 4%, Hardware 3.5%, Europe 3%, Broadcasting 2%, Software 1%, Communications Infrastructure 1%, Healthcare .5%, Cash 0%.
HOLDINGS:
CATEGORY - STOCK (COST BASIS updated periodically to reflect averaging into positions)
ENERGY - ALY (13.6), ARVCF (502.75), ATPG (42.25), BAM (40.21), BTU (53.37), CFK (12.75), CHK July 30 calls (3.2), CLLZF (.68), DJEEF (.525), DRAGF (3.5), ECA Jan 50 calls (3.7), EXC (55.65), HELX (35), HNTIF (5.65), HULCF (3.25), KPELY (6.8), OGZPF (7.5), PBEGF (11.64), PDC (14.07), PTEN 08 30 calls (6.5), SCRGF (.8944), SELA (2.55), SSL (19.6), SU Jan 98 70 calls (20.4), TOLWF (20.57), WHIT (7.8), WLEYF (1.10), WMB (20.55)
FINANCE - BRKB (3075), CIB (24.82), CORS Sep 55 puts (1.5), ET (20.84), EWC (24.82), IAAC (10.25), ING Oct 40 calls (2.20), MTU (7.66), SBK (3.96), SBK warrants (1), QBEIF (3.35), SOV Jan 08 25 calls (2.50)
FUNDS - EGLRX (26.47), MERKX (10.56), TAVIX (18.18), TREMX (20.62)
COMMUNICATIONS SERVICES - CN Dec 35 calls (3), MICC Jan 35 calls (3.3), MTNOY (5.45), TEF (48.18)
RE - CLLDY (3.15), CTX-short (45.62), HRP (11.3), JOE 08 35 puts (1.95), KBH-short (40), LEN-short (39.31), MPW (10.3), PHM Jan 30 puts (2.1), WCI Jan 25 puts (2.1)
RETAIL - BRRAY (21.5), EK Jan 07 20 puts (2.35), GM Jan 07 10 puts (1), NVZMY (61.25), ORKLY (40), SBUX Jan 35 puts (2.6), WLWHF (2.1)
TRAVEL/TRANSPORTATION - BILIY (7.75), EJETF (3.75), NSC (50.41), RAIL (49.85), WAB (37)
ASIA FUNDS - EWA (20.94), EWS (8.5), IIF (39.66), TTF (8.95)
MINING/MATERIALS - EZM (2.15), FCX 08 55 calls (11.2), NTO (4.43), OPYGY (44), PD Jan 09 70 calls (28.9), SXRFF (7.55)
HARDWARE - AAPL Jan 65 calls (4.8), CMHXF (1.20), GEMP (5.16), STX (13.53), UIS Jan 5 puts (.3)
EUROPE - WNDLF (37.5)
BROADCASTING - NPSN (17.7)
SOFTWARE - SMSI (14.6)
COMMUNICATIONS INFRASTRUCTURE - RWC (3.84)
HEALTHCARE - MCU (1.83)
INTERNATIONAL STOCK LIST (48 stocks): ARVCF, BAM, BILIY, BRRAY, CFK, CIB, CLLDY, CLLZF, CMHXF, CN, DJEEF, DRAGF, ECA, EGLRX, EJETF, EWA, EWC, EWS, EZM, GEMP, HNTIF, HULCF, IIF, ING, KPELY, MCU, MERKX, MTU, MTNOY, NPSN, NTO, NVZMY, OGZPY, OPYGY, ORKLY, PBEGF, QBEIF, SCRGF, SSL, SU, SXRFF, TAVIX, TEF, TOLWF, TTF, TREMX, WLEYF, WNDLF.
**Monthly update on YTD performance June 30, 2006: +12.4% YTD.
Dow +4% YTD, SP500 +2% YTD, NASDAQ -1.5% YTD.
JUNE 2006 MARKET COMMENTARY
I can’t add much to what I already said about the last two months. Inflation fears and rising interest rates knocked the socks off every asset class from stocks to bonds to gold to real estate. As one analyst put it, if you did anything right the last three years to make money and still held those position in mid-May, you got hurt. Sometimes the market penalizes you for being right (i.e. when too many people follow the same profitable path, the route is quickly obliterated by the herd).
Ironically, we ended the quarter not that far away from where we began, if you ignore the huge swings up and down. Personally, I could use some Dramamine the next time we go through gyrations like that. But I hope we don’t see that again this year.
The Fed’s move to increase rates another 25 bps in June and leave the door open to a possible pause in August left the markets temporarily mollified. We won’t know what the third quarter holds until earnings reports trickle out in mid-July and we see how the markets react. The traditional summer doldrums and the conventional wisdom that September-October is always weak (it isn’t) could combine to keep investors on edge. The ideal combination would be a “soft landing” slowing in inflation and growth in the US, no Fed moves in August and decent earnings outlooks from the big names next month. Whether we get that Goldilocks combination is anyone’s bet.
I moved my personal portfolio back to a fully invested position, mixing some old familiar names with several new stocks. I won’t do the same for clients, however, until we see if there really is a solid bottom under our feet going forward or not.
Oil prices remain high, keeping our energy names ahead of many other stocks. Natural gas in the US is more problematic with high storage levels and no hurricanes yet. The long-term supply-demand equation for both is very clear, clear enough to keep us in energy stocks to some degree for a long time to come.
Once the crazed flight out of emerging markets subsides, the compelling values there will be clear again. Like energy, the long-term future is with strong growth outside the US and the EU. Eventually our burned fingers will heal enough to grab more cheap shares there.
We will have a much better idea about market direction in two weeks, after the July 4 holiday in the US, the first full week of large cap earnings reports and the inevitable warnings that some companies will issue once they close their books for the June quarter.
Hang on tight. |
