50% GAINS PORTFOLIO – AUGUST 8
KEY RATIOS:
TECH – 7.5%
NON-TECH – 92%
CASH – 0.5%
OPTIONS – 1%
LARGE CAP U.S. STOCKS – 1.5%
SMALL/MIDCAP U.S. STOCKS – 27%
INTERNATIONAL STOCKS – 66.5%
BONDS – 3.5%
IN: DDR (6.58), DDR-G (15.37), CSE 2011 5 calls (1.35), CYS (13.45), QABA (23.03)
OUT: MRTKF, YSHLF, CSE
REDUCED POSITION: DFT
ADDED MORE: CODI
TOP TEN: MHR, IDG, GTE, SAXPF, DNBHF, CSYJF, ACNDF, CSY, NBG, HRP-D, STD. **Percentage of total portfolio: 24.5%. Top five holdings: 14%. Total portfolio: 85 companies (stocks, options, bonds, funds and shorts).
CURRENT SHORTS, SHORT ETFS AND PUTS: SKF Jan 15 puts (.4), SRS Jan 10 puts (.8)
LOSS REPORT: This week: 24 stocks/5 options in the red - losses equal 11.3% of the portfolio, market value 26% of the portfolio (Last week: 23 stocks/4 options in the red - losses equal 13% of the portfolio, market value 28% of the portfolio)
SECTORS: Finance 28.5%, Energy 19%, RE 13%, Transportation 8%, Infrastructure (formerly Services) 5.5%, Bonds 3.5%, Latin America 3.5%, Broadcasting 2.5%, Communications Services 2.5%, Hardware 2%, Mining 2%, Retail 2%, Utilities 2%, Defense 1.5%, Asia 1%, Africa 1%, Agriculture 1%, Cash 0.5%.
HOLDINGS:
CATEGORY - STOCK (COST BASIS updated periodically to reflect averaging into positions)
FINANCE - AMPH (20.6), ANZBY (8.83), BAC 2011 Jan 10 calls (5.1), BBT Jan 22.5 LEAP calls (7.8), CODI (8.88), CSE Jan 2010 15 calls (2.95), CSE 2011 5 calls (1.35), CYS (13.45), DNBHF (7.75), EBKDY (6.5), IDG (20.37), III.L (1058 pence), IVTJF (6.83), NBG (5.08), PMACA (4.36), QABA (23.03), QBEIF (3.35), SAXPF (31.5), SKF Jan 15 puts (.9), SLFPF (2.6), SMPA.DE (21.35 euros), SMTB (13.21), SSBI (6.64), STD (10.31)
ENERGY – AOSDF (.49), ARVCF (502.75), BFRFF/BFR.V (.435), BPZ (4.33), CLLZF (.68), CMDXF (12.62), COPJF (.215), DPYGF (.71), END (1), GTE (3.33), HNTIF (6.05), IACAF (2.84), IOC (27), KPELY (6.8), MHR (.49), SBEAF (14.86), TNP (15.91)
RE – ACNDF (.625), ARE (31.53), 0337.HK (HKD 7), CCLHF (.66), DDR (6.58), DDR-G (15.37), DFT (3.76), FRSHF (.235), HRP-D (10), SRS Jan 10 puts (.8), SZNTF (.39)
TRAVEL/TRANSPORTATION - HKSHF (.62), KNCRF (39.65), LFL (10.62), NM (3.95), RJET (7.5), SBLK (2.5), ULTR (2.44)
INFRASTRUCTURE - AKKVF (16.84), CSYJF (.785), ERNTW (1.3), RINO (11.64)
BONDS - HPI (13.78), NCZ (5.09), PHD (9.18)
LATIN AMERICA – BRF (25.57), EEB (30)
BROADCASTING - CETV (20.43), DISCA (13.37)
HARDWARE - MNTWF (1.43), ZARLF (.47)
COMMUNICATIONS SERVICES – MTNOY (5.45), VIV (17.01)
MINING/MATERIALS - ARBWY (29.73), OMHLF (1.95), VALE Jan 25 calls (9.2)
RETAIL - SHOO (23.92), WTSLA (3.35)
UTILITIES - NRG (17.3), SZEVY (8.54)
DEFENSE – FRPT (4.63)
HEALTHCARE - HUM (28.43), MDSO (16.23)
ASIA – VCVOF (3.78)
AFRICA - GULF (15.67)
AGRICULTURE - ISCHF (17.35)
COMMUNICATIONS INFRASTRUCTURE - GILT (4.85)
INTERNATIONAL STOCK LIST (52 stocks): 0337.HK/SGHGF, ACNDF, AKKVF, ANZBY, AOSDF, ARBWY, ARVCF, BFRFF, BPZ, BRF, CCLHF, CLLZF, CSYJF, DNBHF, DPYGF, EBKOF, EEB, FRSHF, GILT, GTE, GULF, HKSHF, HNTIF, IACAF, IDG, III.L, IOC, ISCHF, IVTJF, KNCRF, KPELY, LFL, MNTWF, MTNOY, NBG, NM, OMHLF, QBEIF, RINO, SBEAF, SGLFF, SLFPF, SMPA.DE/SAXPF, STD, SZEVY, SZNTF, TNP, ULTR, VALE, VCVOF, VIV, ZARLF.
**Monthly update on YTD performance: July 31, 2009: +41% YTD.
Dow +4.5% YTD, SP500 +9.5% YTD, NASDAQ +25.5% YTD.
**Last 12 Months: Portfolio -15%, SP500 -22%.
JULY 2009 MARKET COMMENTARY
If you look at the two-year economic crisis as a slow-motion highway accident, you will understand better where we stand now. After zooming down the highway with a cigarette in one hand and a cell phone in the other and the speedometer pegged at 90mph, the global economy slipped on the housing/credit bubble and slid off the tarmac. No combination of steering or brakes was going to keep it on the road at that speed.
But instead of falling off the cliff by early 2009, concerted government interventions brought the careening vehicle to a halt short of the edge. That’s where we stand today; the palpable sense of relief that we didn’t plunge to our doom was enough to bring many stocks 50-100% off their drastically oversold March lows. The car we were zooming in definitely sustained some damage (housing, employment, credit availability), but the focus going forward will be getting the vehicle back on the road and continuing our long-term journey. Not more panic.
The “permabears” who still predict a return to the March market lows and beyond don’t understand that this is a dynamic process: first the excess, then a plunge, the end of fear, the beginnings of confidence again, and finally a slow slog back to economic growth.
Permabears believe the world is static. Assets can’t recover, confidence can’t return, consumer credit will never be available again, employment is permanently impaired and so on. But we know from history (both long ago and recent) that that simply isn’t true. All kinds of credit markets have seen bond prices rebound from their panicked lows, an immediate and undiluted vote of confidence from investors that the companies issuing that debt are not going under.
Banks (and several large REITs) raised enormous amounts of private capital in the debt and equity markets, enough for many to start paying back the government supports from last year. Few still want or need to sell their “toxic assets” into dysfunctional markets; far from being insolvent, many should start to post solid profits again in coming quarters. The notion that they were insolvent because they couldn’t all sell their assets at once and come out intact was another absurd “static” delusion from the permabears.
US economic growth recovered from a negative 6% rate in Q1 2009 to a negative 1% in Q2. We’ll find out very soon if July actually saw some positive growth indicators, which would indicate a growing US GDP in Q3. It seems likely.
There is no shortage of bearish headlines and anecdotes out there, for those who want to string them together and claim that it proves that we are inevitably doomed. But the markets themselves reacted to Q2 earnings by vaulting the indexes to new highs for the year. That, plus what should be a steady tide of improving economic data, is how real post-bear market rallies begin.
Very few portfolio holdings disappointed in their Q2 reports so far. I remain focused on solid international franchises plus selected small cap plays in the US energy and financial sectors. If this is the worst period they face, many of these companies will be multibaggers again, just as they were from 2003 onward. |
