50% GAINS PORTFOLIO – JULY 13
KEY RATIOS:
TECH – 21%
NON-TECH – 79%
CASH - (-8%)
OPTIONS - .5%
BONDS - 6%
IN: CERG (3.95), JDAS (13.9), HOLX (10.5), MCCC-short (5.65)
OUT: GG calls
TOP TEN: MAXF, NFI, ACGL, JDAS, BFCFB, TBAC, FB, MCGC, NXTL bonds, IPCR. **Percentage of total portfolio: 53.5%. Top five holdings: 36%. Total portfolio: 38 companies (stocks, options and shorts).
CURRENT SHORTS AND PUTS: EXTR-short (9.86), MCCC-short (5.65), OMC-short (40.9), SSRI-short (6.35)
SECTORS: Finance 40%, Real Estate* 14%, Retail 13%, Business Services 9%, Software 9%, Bonds 6%, Energy 5%, Biotech 4%, Transportation 3%, Defense 2.5%, Communications Services 2.5%, Hardware, Gold, Broadcasting (short only), Cash (-8%).
*Real Estate now includes all mortgage REITs.
**Quicken 2002 calculates sector %’s as a total of all investments, including margin. Total Sectors plus/minus Cash will equal 100%.
HOLDINGS:
CATEGORY - STOCK (COST BASIS updated periodically to reflect averaging into positions)
FINANCE - ACGL (18.31), ACGL OCT 35 calls (.9), AIB (27.75), BBX Nov 12.5 calls (.4), BFCFB (7.55), CERG (3.95), IPCR (29.83), MAXF (3.48), MCGC (17.9), PFI (10), QBEIF (3.35)
REAL ESTATE - FB (26.77), IMH (7.76), NFI (9.95)
RETAIL - BBY (33.4), PERY (12.05), TBAC (11.44)
BUSINESS SERVICES – ACN (21.01), ARCAF (9.9), COGI (2.25),
GREY (832), OMC-short (40.9), RAZF (.55)
SOFTWARE – HTEI (4.4), JDAS (13.9), PVSW (3.2)
BONDS - LVLT 2008 11% Bonds (58), NXTL Sep 2007 bonds (76.50)
ENERGY – DUK (29.58), PGO (3.82), PGO Aug 7.5 calls (1), PGO Nov 5 calls (2.2)
BIOTECH/HEALTHCARE - AVD (14.8), HOLX (10.5)
TRANSPORTATION - SPAR (8.21)
DEFENSE - PVAT (3.6)
COMMUNICATIONS SERVICES - NXTL Aug 10 calls (1.70), SBC (30.3)
GOLD - SSRI-short (5.96)
HARDWARE – EXTR-short (9.94)
BROADCASTING - MCCC-short (5.65)
**Monthly update on YTD performance: June 28, 2002: +11% YTD.
Dow -8% YTD, SP500 -14% YTD, NASDAQ -25% YTD.
COMMENT– I can live with a modest 1% loss while the markets fell apart. In June alone, the Dow and SP500 lost 7-8% while the NASDAQ dropped more than 10%. The WCOM blowup didn’t cheer anyone up either. At least warnings season wasn’t too bad – now we find out who can post decent numbers for Q2 2002.
Quality and earnings are still the watchwords for surviving this market on the long side. Good stocks with real cash flow may get dinged in market downdrafts, but they rarely slide 30% in a week or blow up overnight and open 50% lower the next day. Small caps also have the advantage of little or no large mutual fund ownership. They don’t get sold when the indexes are dropping and Wall Street’s finest are running for cover. Small cap funds are doing well this year, and sticking with their winners.
With techs mired in a depression and the retail sector struggling to pick up the slack, financials and mortgage REITs continue to look like the best bet, along with transportation stars like SPAR. Gold is a daily casino play, shooting up and down $5+ based on the global herd’s sentiment. Be very careful there. Energy looks moribund for the summer. Hopefully both oil and gas plays and utilities will do better this fall.
The bottom line: sit tight, ride out the bumps and buy good stocks when the market offers them to you at big discounts to fair value. Let the big market players trash the big cap sector, the small investor can stay under their radar and make decent profits, even in a raging bear market. |
