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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (39808)	10/28/2010 3:40:28 PM
From: E_K_S	Read Replies (1) of 78459

More Portfolio Management - Building the Value Basket Hi Paul - When you build your value basket of E&O stocks what is the size of each position, how many positions provide sufficient diversification and what is your total portfolio exposure target? I am initially looking at building a total portfolio position in small E&O's at 5% portfolio exposure I am targeting five or more companies with .07% portfolio exposure each. I plan on buying shares in no more than three separate buys over 3-6 months time period. If any one position represents more than 3% of the portfolio, I will re-balance the position based on my general "basket" sell criteria. The "basket" sell criteria is to begin to peel off shares when the basket of E&O's begin to approach 8% of the total portfolio taking out shares from both the top performers and selling out the bottom performers. The key is to let the winners run to where the initial seed money is returned and/or general "basket" ROI meets or exceeds 5% annual yield (selling options or hedge by including some high yielding preferreds in the basket mix). I have tried to establish an initial game plan going into the investment build up rather than just randomly buying many different positions. My Basket Mix so far: MHR_PC 10.25% - I include the income generated to my E&O basket MHR common shares (Full position) up to 50% MHR covered calls - income added to the basket GMXR common (Full position) SSN common (1/3 position) MPET common (no position yet but like the company profile) ==================================================================== I do not count the larger companies I own that have E&O divisions like MDU, BKH & WMB. Keep throwing out ideas and other potential E&O candidates. You offered Northern Oil and Gas, Inc. Comm(AMEX: NOG) about a year ago which I watched move from $7.00/share to over $19.00/share. At the time you warned that it was a very speculative bet but now the company actually makes money with a forward PE of 19. finance.yahoo.com EKS

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