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Pastimes : Prudent Bear Fund (BEARX): contrarian investing -- Ignore unavailable to you. Want to Upgrade?

To: Follies who wrote (670)	12/20/2000 7:57:31 PM
From: Tommaso	Respond to of 793

I am not going to check everything out in detail in the annual report but one has to take note that by far the largest position is in short positions. As Flannery O'Connor put it, it's "plain as a pig on a sofa" if you just read what is actually in the report.

To: Follies who wrote (670)	12/21/2000 1:11:24 AM
From: Barry Brugman	Respond to of 793

"There was a long position in CMGI and then there was a greater offsetting short position in CMGI. QWhats that about? " The purpose of doing that is so he can immediately go short if the market turns down. To initiate a new short, you have to get an uptick in the bid price of the stock. In a severe downdraft, there may not be any upticks, but if the fund holds offsetting positions, it can sell the long position and instantly be short. Keep in mind that what you see in the report is a snapshot in time - one particular day. The next day he may have sold the long position and been short completely. Rather than trade by selling short and covering, he trades by selling short and then buying offset long positions from time to time, for the reason given above - so he can get short immediately. Actually, there is an even better reason to do it that way than the uptick rule - some stocks are hard to borrow, and if you are holding the offset position, you don't have that problem, because you already have borrowed the stock to go short. I hope that helps. The other comments about the treasuries are also correct. They need to have some security for their short positions, and they put the money in treasures, in order to draw interest on it, while it secures the shorts. I have been quite happy with how the fund has performed lately. If you don't like it, there are lots of other places to invest your money. No one at Prudent Bear is forcing anyone to invest in their fund. Good luck.