Fund my Mutual Fund

Top Performing Stocks of the Past Quarter

2008-07-05T14:15:00.001-04:00

Usually we do a weekly top performer list but let's save the trouble this week - it looks almost identical to last week - loaded with gold stocks with a few natural gas stocks thrown in. Nothing else was really working despite a relatively benign fall in the market indexes. I was relatively accurate when 2 Saturdays I wrote in the top performers list:

I've lowered the % gain threshold this week to 7%, but its still a sparse group (understandably considering the bad week in the markets) - what can I say - fertilizer, coal, and natural gas (and/or oil exploration) continue to dominate. This is not a bipolar market.... this is plainly an incredibly narrow market where you have to be in teeny slivers of subsectors to make any money. It's harsh out there.

My gut (just a hunch) tells me this could be one of the last (if not last) weeks these same groups will be on this list ... if the 'rotational' selloff does in fact continue per previous patterns. Some of these stocks in the "blessed sectors" are nowhere near even minor support levels, so there are some major "air pockets" below if they do begin to sell off.

We have been moving away from these 'blessed' groups for a few weeks (too early, as we left some upside on the table, but you can never nail the tops or bottoms) and just this week we kept fleeing [Jul 1: Cutting Some Generals] but even the remaining exposure to said generals whacked us this week. This is why I fear going "long oil" right now. Because when it reverses I think it's going to make some of the moves we saw this week in coal, fertilizer and the like look like child's play. But I could always be wrong.

Anyhow, we've looked at the top performers for the year a few weeks ago, so let's look at something a little longer than a week but shorter than the year to date time frame. To review, after a horrid March, the markets suddenly turned up without looking back (literally) on April 1st - rallied well for nearly 2 months on hopes of the '2nd half recovery', and then had the worst June since the Great Depression - wiping out all those gains. So let's see what stood out during that period. I just used an arbitrary 20% gain for the quarter as a cut off - this returned a solid 127 names; but dominated by a few sectors. Sectors thankfully we were in. (fertilizer, oil, coal, natural gas)

However, by being cautious about the economy as a whole and thinking surely this nearly 2 month rally (April, May) cannot continue on Kool Aid alone - I retarded our performance somewhat as we owned some of the biggest winners in large % of holdings (coal) but we cut them back to smaller holdings after realizing very good gains, only to watch them go on to stupendous gains. Frankly it is always harder to sell than to buy in my opinion... momentum takes stocks far further than you ever imagine. I thought coal was a 2009 story so the stocks would begin to react later in 2008, so to see this thesis already working out surprised me. On the other hand, don't want to beat ourselves up too much because we made the flip to Alpha Natural Resources (ANR) (+110%) from Peabody Energy (BTU) (+48%) and that doubled our gain in that 1 portion of the fund. [Apr 8: Changing Coal Allocation - Peabody Energy Out - Alpha Natural Resources In]

Criteria as always

Market capitalization $2B+
Average trading volume 100K+
Stock price $10+

Green we own, blue we have owned or discuss in the blog. (note - ENER & WLT are marked green but we did not own them during the quarter - although we highlighted both in early May. Ouch.) Considering we generally own 50-55 issues on the long side, and we owned roughly 15 of this top 127 throughout the quarter - it shows just how bad the rest of the market was since it still was like pulling teeth to make money. A lot of former holdings we have since sold off did great this quarter as well - PCX, FFIV, BTU, SGP, CNX, BRCM, NIHD, FTI, CAM

Symbol	Company Name	% Price Change Last Qtr.
PCX	Patriot Coal Corp	176.3
GDP	Goodrich Petro Ord Shs	168.9
HK	Petrohawk Energy Corp	142.1
CLR	Continental Resources Inc	118.1
ANR	Alpha Natural Resources Inc	110.0
CRK	Comstock Resources Inc	105.5
MEE	Massey Energy Co	98.3
ENER	Energy Conversion Devices Inc	97.9
XCO	EXCO Resources Inc	93.1
EAC	Encore Acquisition Co	82.6
WLL	Whiting Petroleum Corp	71.0
SD	SandRidge Energy Ord Shs	68.9
JBL	Jabil Circuit Inc	66.7
ESI	ITT Educational Services Inc	65.9
ELN	Elan Depository Receipt	65.4
WTI	W&T Offshore Inc	65.0
FFIV	F5 Networks Inc	60.7
PVA	Penn Virginia Corp	60.2
AGU	AGRIUM INC	59.0
SQM	Sociedad Quimica y Minera de Chile	57.7
SM	St Mary Land & Exploration Co	57.5
FCL	Foundation Coal Holdings Inc	57.4
CPX	Complete Production Services Inc	54.4
MRVL	Marvell Technology Group Ltd	51.1
SAF	Safeco Corp	49.9
CHK	Chesapeake Energy Ord Shs	48.6
BTU	Peabody Energy Corp	48.5
FDG	FORDING INC	48.3
UNT	Unit Corp	47.5
PXD	Pioneer Natural Resources Co	47.4
SOHU	Sohu.com Inc	47.1
HP	Helmerich & Payne Inc	45.1
GTI	GrafTech International Ltd	44.3
CLF	Cleveland Cliffs Ord Shs	43.9
NBR	Nabors Industries Ltd	43.0
ACI	Arch Coal Inc	42.6
CNQ	Canadian Natuaral Resources	41.2
CXO	Concho Resources Inc	41.0
BZP	BPZ Resources Inc	40.9
SGP	Schering-Plough Ord Shs	40.5
APPX	APP Pharmaceuticals Ord Shs	40.4
FST	Forest Oil Corp	40.0
BIG	Big Lots Inc	39.9
EDS	Electr Data Ord Shs	39.7
HERO	Hercules Offshre Ord Shs	39.3
WLT	Walter Industries Inc	38.3
TS	Tenaris ADR	38.1
FLIR	FLIR Systems Inc	37.8
NOV	National Oilwell Varco Inc	37.5
VRTX	Vertex Pharmaceuticals Inc	37.2
CNX	CONSOL Energy Inc	36.7
EW	Edwards Lifesciences Corp	36.0
FRO	Frontline Ltd	35.8
CF	CF Industries Holdings Inc	35.6
GGB	Gerdau SA Depository Receipt	35.5
WHQ	W-H Energy Services Inc	34.7
OCR	Omnicare Ord Shs	34.4
GDI	Gardner Denver Inc	34.4
MDU	MDU Resources Group Ord Shs	34.3
KEG	Key Energy Services Inc	34.2
SWN	Southwestern Energy Co	34.1
DRS	DRS Technologies Inc	33.3
ME	Mariner Energy Ord Shs	33.3
BRCM	Broadcom Class A Ord Shs	33.1
OIS	Oil States International Inc	32.8
SCHN	Schnitzer Steel Industries Inc	32.3
POT	Potash Corp	31.9
STRA	Strayer Education Inc	31.9
HAL	Halliburton Ord Shs	31.8
DV	DeVry Inc	31.8
PTEN	Patterson-UTI Energy Inc	31.5
CTV	CommScope Inc	31.4
NIHD	NII Holdings Inc	30.4
MOS	Mosaic Co	30.2
MYGN	Myriad Genetics Inc	29.4
CPO	Corn Products International Inc	29.0
HES	Hess Corp	28.5
SPN	Superior Energy Services Inc	27.7
EP	El Paso Corp Ord Shs	27.5
V	Visa Inc	27.4
BUD	Anheuser-Busch Companies Inc	27.2
PXP	Plains Exploration & Production Co	27.1
TE	TECO Energy Inc	26.9
PWR	Quanta Services Inc	26.6
VMW	VMware Inc	25.9
NXY	NEXEN INC	25.9
COSWF	Canadian Oil Sands Trust	25.5
FTI	FMC Technologies Inc	25.2
FMC	FMC Corp	25.1
HLX	Helix Energy Solutions Group Inc	25.1
DRC	Dresser-Rand Group Inc	25.1
TRA	Terra Industries Ord Shs	24.9
CAM	Cameron International Corp	24.7
CCU	Clear Channel Communications Inc	24.5
APOL	Apollo Group Inc	24.5
WDC	Western Digital Corp	24.3
WWY	WM Wrigley Jr Ord Shs	24.1
FLS	Flowserve Corp	23.8
CEDC	Central European Distribution Corp	23.8
PBR	Petroleo Brasileiro ADR Reptg 2 Ord Shs	23.7
BUCY	Bucyrus International Inc	23.7
ONXX	Onyx Pharmaceuticals Inc	23.7
ATW	Atwood Oceanics Inc	23.5
COG	Cabot Oil & Gas Corp	23.4
CIG	Companhia Energetica Minas Gerais	23.3
CXG	CNX Gas Ord Shs	23.3
NBL	Noble Energy Inc	22.9
SGMS	Scientific Games Corp	22.7
CMI	Cummins Inc	22.6
CCJ	Cameco Ord Shs	22.5
TRMB	Trimble Navigation Ltd	22.4
STR	Questar Corp	22.2
WFT	Weatherford International Ltd	22.1
NE	Noble Corp	22.0
NFG	National Fuel Gas Co	21.9
NDSN	Nordson Corp	21.9
CMP	Compass Minerals International Inc	21.1
PCZ	PETRO-CANADA	21.0
PSYS	Psychiatric Solutions Inc	21.0
SE	Spectra Energy Corp	20.9
FLR	Fluor Corp	20.9
PDE	Pride International Inc	20.7
DRQ	Dril-Quip, Inc	20.5
EGN	Energen Corp	20.4
MR	Mindray Medical International Ltd	20.2
ESV	ENSCO International Inc	20.1
EQIX	Equinix Inc	20.1

Some Parts of the Economy are Booming - Like Yacht Building

2008-07-05T10:30:00.000-04:00

Since I don't want to make the blog a place of constant sour news I'm always on the look out for slivers of good news.... we've been talking for a long time about the weakness in discretionary spending and just hit recently on the troubles of those (normal folk) who buy normal boats for normal fun [Jun 30: Listen to the Companies, Not the Government Reports - Brunswick Corp (BC) and Smithfield Foods (SFD)] However, there is always a bull market somewhere! Such as the nuevo rich [Jun 27: Global Millionaires - the Shift from West to East] and the booming market for super yachts. Our global gilded age continues - the gap between rich and middle class will widen. (poor - non starter unfortunately - falling farther and farther behind). I look forward from writing this blog from my super yacht a decade from now ;)

While writing this piece, my research let me to such fascinating sites as The International Superyacht Society, Superyacht.com, and Superyacht Times.com. In case you are in the market here are some for sale. Follow Me 4 caught my eye as a potential purchase... in 2028. (grin) If any Super Yacht owners find my blog, have I mentioned I'm looking for pledges for my future mutual fund? ;)

Fuel prices are soaring and credit markets tightening, but the super-rich are still lining up to pay tens of millions of dollars for mega yachts. The well-heeled buyers of the floating mansions are increasingly coming from emerging economies — in the Middle East, Russia and South America. The source of their wealth runs the gamut — technology, venture capitalism, new industries. And, yes, oil.
These days, the biggest problem at Trinity's shipbuilding yards is having enough workers to handle the 24 custom contracts the company currently is working for the luxury vessels.
"Nobody is buying these yachts because they need them," said William S. Smith III, Trinity's vice president. "They're buying them because they want them."
Another builder, YCO Deuxil PLC, has nine yachts under construction — more than double from last year. Sales for the first five months exceeded the entire amount for 2007, the London-based company said.
There are about 3,800 yachts over 80 feet in service around the world now. About 1,800 of those have been built since 2000. The study predicts that that by 2010, there will be 5,000 such yachts on the water.
"There's not enough supply," said Ed Slack, editor of International Boat Industry. "It takes two years to build some of these yachts and the demand hasn't slowed down."
So far, Trinity's largest vessel has been a 192-foot yacht that would carry a replacement price of $60 million to $65 million. The company is working a 242-footer that will have a price tag in excess of $90 million.
Francois van Well, chief executive of Feadship America, said about 50 percent of his company's business comes from the United States, but more buyers are coming the rest of the world.
And it's not old family money. "Most of our clients have earned their wealth in one generation," van Well said.
And these vessels don't depreciate in price. "We have one owner and this is his fourth boat and he's never taken delivery," Dane said. "Rich people don't want to wait on a boat and they'll pay a premium. This owner has taken that premium and moved to the back of the line."

Bloomberg: Teens Skip $50 Jeans in Squeeze of Gas, Job Shortage

2008-07-05T10:15:00.000-04:00

In all the excitement this week I skimped on some fundamental/economic stories to focus more on the market and transactions. So we have some catching up to do.

I said long ago as the economy weakens the last things to go would be teenagers and their Abercrombie (ANF) $100 jeans, and video games/gadgets. Well it appears all we have left now are the video games/gadgets. You know Americans are "pooring" when they won't even splurge on their kids. (Note to Bloomberg reporters - $50 jeans? In what Abercrombie store did you not visit to file your report?) (Note to Wall Street pundits - what will it take for you to admit we are in recession?)

The financial pressures of adults are finally catching up with American teenagers. Since summer jobs dried up, gasoline prices topped $4 a gallon and parents ran out of spare cash, teens have had to cool it on spending for clothes.
``I've had to cut down on a bunch of stuff because I don't like spending my own money,'' said 14-year-old Haley McClelland from Waldwick, New Jersey, who was shopping at the nearby Paramus Park mall. She said her parents are ``more careful'' about what they give her.
Teens like Haley are among the last American consumers to cut back. Even as adults trimmed purchases, the kids managed to prop up revenue for Abercrombie & Fitch Co. and American Eagle Outfitters Inc. because of handouts from parents and part-time jobs, said Adrienne Tennant, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Virginia.
Retailers dependent on that group are feeling the pinch. First-quarter net income at American Eagle plunged 44 percent because of discounting, and the retailer may post its first annual profit drop in five years. Same-store sales have fallen for the past two quarters. At Gap Inc.'s Old Navy chain, sales in May were off 25 percent from a year earlier. Abercrombie's same- store sales dropped in five of the past six quarters.
Looking forward, U.S. teen spring fashion budgets may be reaching the lowest level in seven years, based on results of a survey of 5,000 youngsters by Piper Jaffray Cos. in Minneapolis. Teenagers said in April they would spend $1,183 on fashion this year, 19 percent less than last year and down 23 percent from 2006
``Gas is the main thing right now,'' said Pete McCullough, a 19-year-old from Oradell, New Jersey, who can't afford the designer clothing he favors. ``Just coming to the mall costs $4.'' McCullough said he earns what he spends, juggling school with construction work.
Add to that the biggest jump in joblessness among youths in at least 60 years, according to the U.S. Labor Department. Unemployment among those between the ages of 16 and 19 soared to 18.7 percent in May from 15.4 percent in April, the government said. It was the biggest one-month increase since Labor began collecting statistics in 1948. (this is because their parents are forced to "downsize" into the jobs the teens normally would be taking, as their own adult jobs are eliminated)
Hurt by sliding home values and rising food and energy costs, parents said they would spend 28 percent less on their teens this year, Piper Jaffray's survey showed. Klinefelter estimates that heads of middle-income households provide as much as half of teen spending money.
With prices 20 percent to 30 percent cheaper than American Eagle's, Aeropostale has improved the quality and fashion of its clothes, said Christine Chen, a retail analyst at Needham & Co. in San Francisco. (Aeropostale (ARO) has actually been doing very well considering their sector and niche within the sector)

Washinton Post: Vital Part of Housing Bill is Brainchild of Banks

2008-07-05T10:00:00.000-04:00

We've touched on these subjects in the past, but as we get many new readers I like to revisit them and add new data. Back in April [Apr 4: Congress is Rushing to Help Homeowners Out!! (Not)] I pointed out how the wonderfully cute and fuzzy "Foreclosure Prevention Act of 2008" - which sounds like a wonderful thing for consumers - was in large part simply a program that mostly benefited banks and homebuilders; two of the top 10 lobbyist groups on the Hill. Think Washington D.C. is a broken model that can't get anything passed? Think again - the homebuilder lobby basically said we are going to suspend contributing to campaign coffers and not more than 60 days later they received their gift - the new bill. And ta-da, the spigot of campaign contributions suddenly turned back on. And that kids, is how a bill gets passed in this country.

Now let's move on to the latest handout... err bill. Well as the Washington Post reports, it's basically built on the back of a proposal by Credit Suisse and then Bank of America. Completely unbiased sources of course. I've typed in the past about how much risk is being thrown onto the back of Fannie Mae (FNM) and Freddie Mac (FRE) (who are now absorbing about 70% of the country's mortgages, up from 40%ish in the past) and as the banks offload risk to the Federal Reserve and these 2 entities (which are pseudo government arms), the "socialization of risk" away from the banks and onto your backs grows. Because if these fail, that means your money is going to pay for it. While the banks laugh about it in the corner. [Apr 15: Could the USA Lose its Triple A Rating?] How are those 2 entities doing? Just fine thanks for asking.

In a sign of continuing trouble in the housing market, mortgage delinquency rates doubled over a 12-month period at Fannie Mae and Freddie Mac, the two industry giants reported yesterday.
Neither company's figures fully captured the problems borrowers have had making payments, because they excluded loans for which payment terms had been relaxed.
After years of hand-wringing about the risks that Fannie Mae and Freddie Mac's rapid growth might pose to the financial system, the government has loosened restraints on the companies in the stated hope that they will help prop up the housing market.

But back to "how dysfunctional government works"

A key provision of the housing bill now awaiting action in the Senate -- and widely touted as offering a lifeline to distressed homeowners -- was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials.
Credit Suisse, a large investment bank heavily invested in mortgage-backed securities, proposed allowing hundreds of thousands of homeowners to refinance their mortgages with lower-cost government-insured loans, relieving financial institutions of the troubled debt. After the bank proposed this to Congress in January, it became known as the "Credit Suisse plan" among congressional staffers and lobbyists. It later formed the basis of housing provisions in both the House and Senate.
Bank of America, which is acquiring Countrywide Financial, the country's largest mortgage lender, followed with a similar and more detailed proposal, principal negotiators on the legislation said.
But the measures would allow financial institutions to get cash out of foreclosed properties that would otherwise sit on their books as dead weight.
Since the new loans would be guaranteed by the Federal Housing Administration (FHA), taxpayers would ultimately pay for defaults. The Congressional Budget Office projected that this could cost $1.7 billon over five years.
Still, critics expressed disappointment that banks were given such a large hand in writing legislation designed to ease a foreclosure problem they helped create.
"It is ironic that Congress, responding to a crisis that was created in large part by irresponsible lending, would produce a bill, the main beneficiaries of which are likely to be those lenders," said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal research group. "There are aspects that work hugely to the banks' advantage." (yes "ironic" isn't it?)

Cramerica. For the corporation; by the corporation. We're only along for the ride.

Readers with Blogs

2008-07-04T14:00:00.004-04:00

Just a quick administrative note - any bloggers out there who read the site on a consistent basis and have a blog/website devoted to economics/markets/stocks etc please give me a heads up on your blog. I am going to create a new section in the left side of the blog "Our Readers' Websites" and hopefully help you get some traffic.

We've been fortunate to grow very quickly in under 1 year, and it always helps other people's traffic to be linked to other sites with solid traffic, so hopefully this will help blog writer/readers draw some (new) readers to their sites and build up their statistics.

So far off top of my head I have Zach, BD, J.Folly, RM Jeff, Guy, John (not sure if he visits often), Doug... (Zen)Rob I think you might have a site as well. Anyone else feel free to drop a comment onto this entry or email me with site url. (if you're relatively active around here)

Probably by the end of 2008 if/when we launch for real, we'll be shutting down this site and moving to new digs - where we'll need to start over to rebuild traffic statistics, but we'll always have memories of fundmymutualfund.com - you never forget your first (site) ;)

Have a good holiday and for everything wrong at the "top" in the country, it's still the Land of Opportunity where no name bloggers can build up a virtual client base and follow their dreams of launching an investment business. :) Where else can you do that???

Back to our normally scheduled griping tomorrow...

Bookkeeping: 'Rising Tide' Performance Week 48

2008-07-03T13:32:00.004-04:00

Week 48 performance of the mutual fund

Comments: The market continued to degrade this week, albeit at a slower pace than the previous 2 weeks of back to back 3% losses. Luckily the market closed early today because it felt in the last hour like a football team with a 1 point lead and we were just trying to run out of the clock before the bears made a comeback... in stock market parlance we were hoping the market would not fall back below S&P 1260 at the close and make a new low. We held... by inches. But a lot of individual names took a lot more pain, than what the indexes showed this week.

Oil just continues to go up in unrelenting fashion. The economic news continues to be poor but at some point "some of it" must start getting priced into the market. While we did stave off S&P 1260 there at the end, we still remain in a very dangerous position as a break below should/could/would set off more selling. On the "positive side" we can finally name a few things turning "better" (a) everything I read is negative now on other sites (b) the worst of breed (financials, retail, but not homebuilders yet) have begun to perk up the past 2 sessions - which has been typical of the bottoming process the last few times around as people flee out of global growth.... and (c) the last "positive"- our friend to the right finally found his way to our type of holdings and hence no hiding places are left in the market. Fertilizer was slapped around early in the week, coal was dismembered Wednesday and this morning, and natural gas finally took a hit very late Wednesday and today. We knew this day was coming, as we've avoided "him" all during the month of June while the rest of the market melted down. I wrote last week in the weekly summary

At some point the grim reaper will be coming for us and exact it's toll - perhaps next week; we can't hide forever. But we've built up a huge cushion so we are ok with that.

(Note to self: I wish I were wrong more often on my predictions) Truth be told it never feels very good when it actually happens, but it is part of the process. It happens every correction so we'll just continue doing what we've done in the past - layer into our favorite positions as they crumble and make our weekly performance stink, take the near term hits, and realize in a few months down the road the purchases we make during the worst part of the market are the ones that generate the best gains. It is very easy to look at a chart 2 months from now and say "wow if I had just bought at that low, I could of made a mint" but 2 months later you are not remembering the situation/mood that you do in real time. So hopefully we are making purchases that in 2 months from now we'll look back on and say - yep, some good buys near to the bottom.

Since we hold a concentrated portfolio there is not much we can do to avoid periods when the long positions are attacked for 20%-25%+ losses (in 1 day in some cases) but since we saw this day coming we cut these 3-4-5% of portfolio type of positions down to 1-2%, so the damage was not as bad as previous corrections (so far). However, if the past is any indication usually this period of pain in our type of holdings lasts more than 1 week, so next week could be not so fun as well. While we are hedged, most of our Ultrashorts (this week) were going up 2-4% while some of the longs were taking 10-15% hits (Wednesday some were near 20% in 1 session) so while it is better to have these hedges over nothing, it's not going to quite do the job of saving our bacon. These are weeks I'd really love to have ability to short individual names - look at how "great" some of our favorite Pooring of America stocks have performed...

So we can only watch that happen and not benefit.... but we'll work with what we have so all we can do is soak up good merchandise as it falls and try to offset it with some of the Ultrashorts. One more week of this and I think I can call myself bullish because usually we begin to feel the real pain within the last 2 weeks of previous corrections. I'll call this week 1. According to our proprietary poll 17% of readers are already on the "puke train", and another 48% would probably join in with a bit more of this action. The other 35% are smug and confident and in fact enjoying this! :)

After a long string of outperforming (why? I could not tell) the smaller caps (more tied to the US economy) lagged the large caps again this week. The S&P 500 fell 1.2%, while the Russell 1000 was hit to the tune of 1.7%. Rising Tide Growth asked "can we go back to June when we avoided all the mess?" and meandered to a lowly 5.1% loss. One bright item of news - I'm finally catching up to Mr. Heebner - CGM Focus (CGMFX) lost 5.9% yesterday alone. (ok I'm searching hard for silver linings here - hah) Again, if the past is any indication, we generally take the big hits towards the very tail end of a correction and it lasts 2 weeks, so hopefully only 1 more week like this for us. It's been a bad week but a great year relative to the market - 4 more weeks to close our year 1.

As always if interested in pledging an investment when fund is ready to launch (shooting for late 2008) please attach a comment here, or send me an email (need your state please). We have now breached >$3 million pledged - great news and thank you.

Price of Rising Tide Growth: $11.517
Lifetime Performance to date (vs Aug 3, 2007): +15.17%

Comparable S&P 500: 1262.9 (-13.81%)
Comparable Russell 1000: 690.9 (-13.22%)

Fund return vs S&P 500: +29.0%
Fund return vs Russell 1000: +28.4%

Last week's results here.

Since the market cap of the median stock in the Rising Tide Growth fund (median $7.1 Billion as of April 08) is significantly below the SP500 index (median $13.1 Billion as of September 07) but higher than the median market cap in the Russell 1000 (median market cap $5.8 Billion as of September 07), I am measuring the fund against both indexes. Click here to see all fund's holdings as of May 2008.

Basis for indexes is 5 day weighted average of closing prices Aug 3-9
SP500 : 1,465.2
Russell 1000 : 796.2

To see why I use the 5 day weighted average of the first 5 trading days to smooth out the volatility of the indexes as the fund launched, see here.

Please click here: fund performance for previous updates

A Quick Word about the Unemployment Report

2008-07-03T12:36:00.004-04:00

I don't like to waste space talking about the fictitious monthly report because by the time I read through the details I am generally laughing too hard to make a cogent posting, and why recreate the wheel when Mish does a full blown analysis but I do want to point out some of the funnier things this month (by funny, I mean pathetic/sad)

First, if you are a newer reader head over to [May 2: Employment Report and More Fed Actions] and read points 1 and 2 so you have an inkling of what the following means.

So as Mish points out even "if" you believe in the accuracy of these numbers (remember it is a survey, not some huge database of information - and it gets revised by very large amounts a year into the future) but let's say you do believe the data... (Mish data in brown below)

Highlights

43,000 construction jobs were lost
33,000 manufacturing jobs were lost
8,000 retail trade jobs were lost
51,000 professional and business services jobs were lost
7,000 service providing jobs were added
24,000 leisure and hospitality jobs were added
29,000 government jobs were added

A total of 69,000 goods producing jobs were lost (higher paying jobs), and for the second consecutive month service providing jobs were weak. Government, the last pace one wants to see jobs, added 29,000 jobs or the service sector would have contracted. Last month education and health services added 54,000 jobs, this month 29,000.

So once again my beef is the only places we are really creating jobs are healthcare and government - the two places we LEAST want to add jobs because they are becoming a tax burden on all of us. But so it continues. (and the city/state government jobs will soon be cut back as budgets are busted - all that will be left are federal government jobs increasing)

Now on to my favorite part the Birth/Death Model aka "the part we make up figures out of the blue" or the official explanation "it is very hard to survey small businesses that are newly created so we're guessing"

Here is how it looks

(click to enlarge)

In fact, don't bother to look - let me tell you YET again the BLS (Bureau of Labor Statistics) has found in in their heart to find 29,000 NEW construction jobs. 22,000 NEW professional jobs as the entire real estate industry shrinks and realtors, mortgage brokers, and the like go out of business. 86,000 NEW hospitality and leisure jobs (hello, staycations?) and in total 177,000 new jobs out of thin air. In a recessionary economy (ex natural resources) Got it.

Last piece of fun is what I call the underemployment rate - all the people who want jobs but have given up, all the people in part time jobs but wish to have full time jobs - even the governments skewed numbers show a 9.9% rate. I think it's higher than that myself since the government undershoots everything, but certainly the reality is a lot higher than 5.5% unemployment rate espoused on tonight's nightly news.

Why do we keep mentioning this stuff? So when people scratch their head and say why do people feel so uncertain and why are they cutting back on their shopping, when unemployment is historically low and inflation is benign and all the data show things are just fine thank you - well those media folk are using government reports. Which have been altered over the years to the point they are becoming plain useless. So any comparisons to "how great everything is compared to the 1970s when people REALLY had things to complain about" is a poor argument as we have completely different ways of creating our numbers in the '00s.

Bookkeeping: Cutting Some Strong Positions to Raise Cash

2008-07-03T11:30:00.007-04:00

Since we are running low on cash I am looking at a few names that have held up in this abyss (shuffling money from the strong to the weak), to help raise some cash. In a real mutual fund I would hope to open the mail and see a whole slew of new cash coming in as investors see this is a "great buying opportunity" to get shares of Rising Tide Growth on the cheap ;) but since this is a closed system once I am low on cash I need to find more cash by selling something. Or if I got a slew of panic stricken calls saying get me out of this market I'd need some cash to send to you. So I'd rather have it on hand then be forced to sell something into a downturn.

We obviously did a slew of buying this week. Until we get back north of S&P 1275 the bounce is still suspect. These 2 names seem to have help up the best in the past month.

Selling 100 of 150 shares in Illumina (ILMN) here in the $89s. The stock has been incredible and maybe there is more upside to go but I could not ask for more from this name, and we'll harvest some of these gains to raise cash. ILMN is down to a 0.4% stake, from 1.2%.

Selling 250 of 850 shares in DB Agriculture Double Long ETN (DAG) in the upper $28s. Let me make clear my thesis here has not changed, it simply has been acting like a nice money market for us - holding up while the rest of the market crumbled, so I am liquidating some of the position and if we get more of a selloff I at least have some cash to work with to buy other merchandise. DAG is down to a 1.4% stake from 2.1%.

Long both names in fund; no personal position

"Invisible Hand" Video

2008-07-03T11:05:00.003-04:00

Hah - thanks to a reader for sending this to me. I love the comment about "who actually executes these orders". The answer is not surprising for blog readers - we just talked about them yesterday - it is their market, they just allow us peons into the sandbox. ;)

(click on the small photo for a 3-4 minute video)

Plunge Protection?

[Jan 9: An Amazing Blunt Commentary on the Plunge Protection Team]

I was a bit taken aback to see this quite blunt commentary about the Plunge Protection team in the UK Telegraph (you see me source articles from them quite a bit since they have a different view than most stateside papers - a more pragmatic view I'd say). The American press never really talks about this group - or at least I have not found a lot of articles (try googling for it), most of my stories about them come through the British press. Interesting....

I half sarcastically discuss this group as the "invisible hand", and a lot of things you see over time (especially the last 6 months) seem to be more and more blatant attempts at 'propping things up'. But the more you see of it, the less conspiracy theorist it sounds and the more grounded in reality it becomes.

Bookkeeping: Trading Position in James River Coal (JRCC)

2008-07-03T10:35:00.003-04:00

I am adding a new coal name here but unlike the others this one will (I think) only be a shorter term trade: James River Coal (JRCC) has dropped from $60 to $41 in 2 sessions, or about a 32% loss for people buying 2 days ago. This is a much more speculative smaller cap coal name unlike the type I hold in the fund for "investments". It is unprofitable this year but should show a massive amount of profits next year as it is very unhedged in its pricing for 2009. At a $1 Billion market cap it is also a buyout candidate. Maybe I am convincing myself to keep it longer, as I type this :)

One complaint I had with the hot sectors like coal is the stock prices were nowhere near any support. Well, within 36 hours some of these have gone from nowhere near support all the way to the 50 day moving average. Now that's a correction.

For now I began with a 1.8% stake with purchase in the mid $41s.

Long James River Coal in fund and personal account

1260 Broken on S&P 500

2008-07-03T10:03:00.005-04:00

Could be the day we have the panic; current S&P 500 1253. Natural gas finally breaking down - Ultrashort Oil & Gas (DUG) finally working, etc. Generals being hammered everywhere. Good things to finally form a bottom. It will be ugly if this continues but the type of cleansing we have been waiting for.... have puke bags at the ready.

Financials ARE holding up (relatively speaking) as are retailers in general - so this is classic repeat action of previous "rotation" corrections. So a swoosh does not necessarily need to happen for market as whole since we are smoking out all the "hiding place" sectors, one by one.

However, a nice swoosh to S&P 1225 would do the body good at this point. Seeing some "dislocations" (stocks dropping 8-12% out of the blue) which were seen at other panic points. Then we could have a nice 3 day weekend to hear about Black Monday, et al. ;) All fun stuff.

Continuing to look for merchandise into the abyss... current strategy is to apply CASH (entered the week with 20%) but KEEP short exposure to help offset (a little) the long side pain. Once the smoke clears - empty out short exposure and be a Kool Aid toting long.