PORTFOLIO UPDATE FEBRUARY 27: I decided to cut back the format here to save time. The continuing decline in small caps has pulled the portfolio down to +5% YTD, largely due to paper losses in MXTR and FLYR plus a few others that gave up their recent gains. But we are still ahead of the averages and most mutual funds. And the year is young.
Since February 6, I sold FHT when it was bought out and dumped the rest of my LOR calls. Out of CMGI since Thursday (too soon maybe?), added FRNT for diversification (from the Market Gems thread) and picked up EPAY at the IPO. Took advantage of Friday's selloff to average down in PROG, MXTR and SE. Shorted TSCN and took 1½ points profit on Friday.
No one argued the point so I unilaterally decided to classify Internet retailers as non-tech stocks, even when they are selling hardware and software. Sales are sales, as far as I am concerned. So the long portfolio is now at 55% non-techs and 51% tech stocks (counting 6% on margin). Short portfolio equals about 12% of the long holdings, not counting BEARX.
Core holdings: BRKB, WCOM (out of CMGI temporarily – could re-enter on any dip), XLY (shifting this from the 50% Gains category): 34%.
Mutual Funds: BEARX, SCGEX: 12%.
50% Gains Candidates: FLYR, FOX, PROG, CPU, FRNT, NETS, VRIO, SE, MXTR, MFNX, FNDTF, RNWK, EPAY, CMIV, WIZTF: 57%.
Tradin' Trash: NRAG, JADWF, MFCO: 3%.
Options: HMK Sept 16.6 calls, OMPT May 5 puts: .5%.
Current shorts: IMON, RACE, PRBZ, GBUR, ICCSA.
Winners (ranked from largest % gains): WCOM, FNDTF, BRKB, MFNX, RNWK, EPAY, FOX, BEARX
Break-even: MFCO, FRNT, XLY, VRIO
Losers (ranked from largest % loss): NRAG, JADWF, MXTR, FLYR, NETS, CMIV, PROG, CPU, SE, WIZTF, SCGEX
SECTORS:
Financial/Insurance: BRKB (17%)
Software: FNDTF, SE, WIZTF, EPAY (16%)
Communications: WCOM, MFNX (15%)
Mutual Funds: BEARX (Shorts), SCGEX (Europe) (12%)
Internet Services: RNWK, VRIO (11%)
Hardware: CMIV, MXTR, MFCO (9%)
Cyclicals/Transportation: XLY (6%)
Internet Retailers: PROG, NETS, CPU (7.5%)
Travel: FLYR, FRNT (6%)
Broadcasting: FOX (3%)
Gaming: NRAG (2%)
Misc: JADWF (.5%)
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Thought for the week: if I had stuck with a hard and fast “no loss over 10%” rule, the portfolio would be up 13% YTD (excluding NRAG loss from 1998). But I believe that MXTR, FLYR, CMIV and PROG are very solid companies that I don't want to give up on just yet.
Software moved up significantly in the sector rankings, while Internet services dropped without CMGI. The Internuts look strong right now but this could be a “lower high” runup before we see even lower lows on the next bit of bad news from somewhere. Internuts are always a guessing game. But I have cleared 25 points on CMGI since it split in January, while its absolute price is only up $2 since then. No complaints if I miss the latest run. CMGI was also a great cash cow in December.
Travel also moves up with the addition of FRNT. FRNT could be a buyout target with airline consolidation, but it's a 50% Gain candidate in its own right with projected earnings well over $1. Even a modest airline PE should get it into the teens soon.
I am very disappointed in BEARX so far. It is not compensating for long losses on down days. I need to poke around more and find out just what they are shorting. I thought they had bet against semis but the SOX was slaughtered on Friday and BEARX hardly budged. BEARX is too much of a drag on the cash account to tie up in a dead end.
If MFNX runs to the high 40's again I will seriously consider taking a profit and buying the next 5-point pullback.
As always, comments and questions are welcome.
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