50% GAINS PORTFOLIO – JANUARY 15
KEY RATIOS:
TECH – 11.5%
NON-TECH – 87.5%
CASH – 1%
BONDS - 1.5%
OPTIONS – 1.5%
LARGE CAP U.S. STOCKS – 1.5%
SMALL/MIDCAP U.S. STOCKS – 41.5%
INTERNATIONAL STOCKS – 53%
IN: ARGEF (.42), LGL (23.94), HDY (7.38), HDY Feb 5 calls (2.6), ACOM (33.82), WWWW (10.19)
OUT: SFSF-short
REDUCED POSITION: None
ADDED MORE: None
TOP TEN: TOP TEN: MHR, GTE, ACNDF, CTEL, PSDMF, SWHS, MLPG, COPJF, ECON, EPM. **Percentage of total portfolio: 31.5%. Top five holdings: 22.5%. Total portfolio: 76 companies (stocks, options, bonds, funds and shorts).
CURRENT SHORTS, SHORT ETFS AND PUTS: None
LOSS REPORT: This week: 10 stocks/2 options in the red - losses equal 0.5% of the portfolio, market value 8.5% of the portfolio (Last week: 8 stocks/1 options in the red - losses equal 0.6% of the portfolio, market value 8.5% of the portfolio)
SECTORS: Energy 47%, Finance 9%, RE 7.5%, Hardware 7.5%, Communications Services 4%, Mining 4%, Infrastructure (formerly Services) 3.5%, Retail 3.5%, Transportation 3.5%, Internet 2.5%, Funds 2%, Bonds 1.5%, Broadcasting 1.5%, Communications Infrastructure 1%, Cash 1%.
HOLDINGS:
CATEGORY - STOCK (COST BASIS updated periodically to reflect averaging into positions)
ENERGY – ATPG (19.5), AVNDF (5.63), AXAS (4.75), AZZEF (.4), CAAEF (.66), CENJF (5.82), COPJF (.30), CPX (25.98), CYSVF (11.2), DEJ (.32), EPM (5), EPM July 7.50 calls (.45), GEOI (11.84), GTE (3.33), GUKYF (2.12), HDY (7.38), HDY Feb 5 calls (2.6), IACAF (1.52), IOC (70), MAUXF (.246), MHR (.49), MHR May 2.5 calls (1.8), MLPG (25.34), NEYYF (1.09), PBEGF (16.26), PMGLF (32.31), RCKHF (3.55), REN (10.52), REN-WT (2.57), SDRL (21.2), SSN (1.39), TAT (3.42) , TTRHF (1.25), XCTGF (5.75)
FINANCE - ALTE (18.95), BAC 2012 17.5 LEAP calls (4.1), C 2012 4 calls (1.13), C 2012 5 calls (.62), CATM (10.78), FIG (4.31), FSC (12.14), MIG (8.49), QBEIF (3.35), SF (44.87), SSBI (5.70)
RE – ACNDF (.625), ARESF (8.9), NRF (4.45), PEB (19.58), SPPR (1.22), STRS (9.32)
HARDWARE – ARTW (10.4), DYSL (3.58), LGL (23.94), NNOCF (1.75), PSDMF (2.54), TRPLF (.48), ZARLF (.47)
COMMUNICATIONS SERVICES – CTEL (6), EGHT (1.44)
MINING/MATERIALS - AABVF (.51), AMHPF (4.75), ARGEF (.42), OROCF (3.05)
INFRASTRUCTURE - CSYJF (.54), SWHS (2.78)
RETAIL - CHS (11.99), CHW.L (2.66), ECON (21.23), FINL (15.87)
INTERNET - ACOM (33.82), SBSNF (27.3), WWWW (10.19)
TRANSPORTATION - ALK (45.07), CMI (108.48), MAPGF (.665), UAL (22.3)
FUNDS - FFD (14.85), KROO (30.04)
BONDS - EMLC (25.99)
BROADCASTING - CETV (21.27)
COMMUNICATIONS INFRASTRUCTURE - IDCC (42.62)
INTERNATIONAL STOCK LIST (42 stocks): AABVF, ACNDF, ALTE, AMHPF, ARESF, ARGEF, AVNDF, AZZEF, CAAEF, CENJF, CHW.L, COPJF, CSYJF, CTEL, CYSVF, ECON, EMLC, FFD, GTE, GUKYF, HDY, IACAF, IOC, KROO, MAPGF, MAUXF, NEYYF, NNOCF, OROCF, PBEGF, PMGLF, PSDMF, QBEIF, RCKHF, SBSNF, SDRL, SSN, TAT, TRPLF, TTRHF, XCTGF, ZARLF.
Africa/ME - HDY, MAUXF, TAT
Australia - AZZEF, COPJF, MAPGF, QBEIF, SSN
Asia - ACNDF, CENJF, CSYJF, CTEL, IOC, KROO
Europe - CHW.L, GUKYF, IACAF, NNOCF, PSDMF, SBSNF, TRPLF
Canada - AABVF, ARESF, ARGEF,AVNDF, CYSVF, NEYYF, PBEGF, TTRHF, ZARLF
Latin America - AMHPF, CAAEF, GTE, PMGLF, OROCF, RCKHF
Bermuda - ALTE, SDRL
Global - ECON, EMLC, FFD
**Monthly update on YTD performance December 30, 2010: +42.5% YTD.
Dow +11% YTD, SP500 +12.5% YTD, NASDAQ +17% YTD.
**Last 12 Months: Portfolio +42.5%, SP500 +12.5%.
DECEMBER 2010 MARKET COMMENTARY
If anyone still wonders what our approach to investing really adds up to, the past year could be the poster child. The main US indexes were up in the low to mid-teens; our average client portfolio enjoyed a 30%+ return, and my higher-risk personal portfolio scored a 42% profit. That's the difference between index funds and successful stockpicking, pure and simple.
The top ten stocks in the portfolio today are strikingly similar to the top ten a year ago. Five stocks remain, including MHR, GTE and CSYJF in the top three slots. Of the rest, two were bought by other companies and dropped from the portfolio. The consistency in the top holdings, coupled with the strong returns, illustrates perfectly how buy and hold small cap investing can be so successful, provided the manager keeps a close eye on value, quality and execution. Those three have never let us down so far.
No New Year's reflection is complete without some resolutions for the new year. I have two. The first concerns a small healthcare company, American Surgical, whose brilliant results for one quarter conned me into believing that they were on the verge of a breakout, and a legitimate speculative value buy. Instead, management turned out to be far from ready for the big time, and we paid the price. The company eventually sold out to a private equity outfit after we were long gone. Hopefully, grownup supervision will make it a company worth owning again once they are inevitably brought back to the public markets. My mistake was to assume too much too soon. Live and learn.
My second resolution is to keep better track of the top large cap growth companies, like AAPL and several others. Larger companies tend to have much more analyst coverage and institutional holders, leaving them less likely to be mispriced at any given moment. But some turn out to be multitbaggers every year anyway. Rooting those out is high on my To Do list in 2011.
No update is complete without a glance at the macro situation. Last year played out largely as expected with moderate economic growth and steady high unemployment in the US. The private sector is creating enough jobs to hold steady more or less, but no better. Few economists expect any better for 2011. The global situation continues to look more promising with the BRIC countries still fueling strong growth and trade. Much of our attention will remain outside US borders, especially if the dollar takes another leg down.
That said, we will always remain overwhelmingly a bottom-up stockpicking operation, dedicated to finding overlooked value plays with the potential to bring us multifold returns, but not cost us too much sleep either. I never know when I will come across the next great little idea; if someone asked me what I do all day, I would have to say that much of the time is just an extended Easter egg hunt, nosing around in nooks and crannies looking for the next winner to put in the top ten for years to come.
It's a game that I love, and one that has brought us all considerable success and prosperity in the last year. Break out the champagne, folks, we earned it. |
