Summary:
My best week in a long time, up 6.9%. The big mover was ALSWF, up 20% on the week and also aided by strength in the Canadian dollar. Base metal miners also did well. Financials were mixed, with CMO doing well, but my CMBS plays going down. We’ll see if this turnaround sticks better than the last ones.
Not much news this week as earnings reports are all pretty much in. I suppose some of the movement this week was the market digesting those reports. I did look at the transcript of the NRF conference call and it was (naturally) a lot more optimistic than the Citigroup report I read last week. There were hints of more cash being generated for dividends. Who to trust: analyst or management? Hard to say. Obviously everyone has an agenda. But my gut opts for management and I was going to add but put in an order to sell a put instead.
One interesting piece of news was a former holding of mine Hudbay Minerals, announced the closing of one of their zinc mines. With zinc prices in the toilet, it is no longer economically feasible. This company earned over $5 in 2006, and with a price of around 20, looked like a screaming buy. Then costs when up and zinc prices went down. Its 2008 Q2 earnings were $0.26. The lesson here is that low P/Es alone are not a good indicator or value. It was certainly applicable to single digit PE homebuilders in 2006-07. I was fooled and didn’t short nearly as aggressively as I should have. My question now is whether this lesson also applies to QADMF and MLKKF. It seems they both have room to grow, but if copper prices tank?
Which begs the question will copper prices tank? This article in the Economist suggests no.
For the week I trimmed some of the RICK I bought last week, as well as some ALSWF, MLKKF, XSI, and the CMO that got put to me last week. I added some CNEH, ANH, and GREXF. Buy low, sell high.
While this week was encouraging, I don’t have a strong sense for where we go from here. I think I own a lot of stories waiting to happen — but the immediate catalysts are not apparent.
Positions:
Long: AHR AHR-C ALSWF ANH EPMWF GREXF MDNNF MEAOF MLKKF NRF QADMF RICK SGTI SNEN XSI WHX
Short: GAP GCI MEG MNI.
Calls Long: ANH Jan 7.5; CMO Nov 12.5.
Calls Short: .
Puts Short: NLY Oct 17.5, 16; NRF Sep 7.5.
Cash: 3.3%
Short Pct: 3.6%
Read:
Stocks Researched:
Positions most worried about: .
Positions most sanguine about:
Biggest market worries: another financial blowup.
Thinking about:
Outlook ( up-flat-down surety rating: 1-5 reasoning):
US: flat-down, 2.0; still not out of the soup.
Tech: ??
China: up, 2.0; strong economy and has fallen alot.
Silver: flat s/t, 2.0, price action; l/t up, 1.0, industrial demand, but price rises.
Gold: who knows?
Copper: flat-down, 2.0. US demand falling.
Real life: Mon and Tues were fairly productive. Too much market watching the rest of week. Seems my portfolio performance and productivity move inversely. I have to change that.
Weekly sleep and exercise: lots of soccer and boxing last week. I little less this week as its tiring me out. Will go hard next week. Sleep decent.
Mood: decent
