Portfolio. Stakes overview

BCS (current result +9,58%) - we see what we wanted to see. BCS was really attractive and now we have $13.5bn deal to sell its Barclays Global Investors unit to BlackRock.
DW, USG, TECUA - nothing special we had on this stocks, sector.
VOXX - before this stock show its weakness but yesterday we had good report on retail sales. This catalyst pushed stock huge higher, but then we saw pullback. So nothing special now. Just holding short.
MSFT - having some talks about their search engine Bing which they started on 1st of June. Microsoft invested nearly 100mln in this project. Also have talks about their products. They will not sell their own fin program, will make own antivirus program. So with good balance sheet and strong fundametals this stock is on the move now.
IBM - feeling good. They improve their buisness activity now. Looking for oportunities deals. They opened a new center in China to drive the development of high tech railroads, builds networked security system in Chicago, takes social networking to its channel partners, etc.
SOHU - no changes. Exelent fundamentals.
ABFS, CNW, VMED, MHK - no changes.
ABX, NEM, HMY - we see a range this week in gold between 965$ and 945$. We assume gold prices falling in short term period. Our middle and long view is the same.
FWRD - we saw huge up on this due analyst upgraded by KeyBanc Capital Mkts. Bullshit :-) .
SPWRA - up move in oil prices helped this stock to go higher. But now we see nice resistance in oil. We shouldnt expect large up move in oil in short term as we think this growth explaining not by increasing demand on oil as commoditie but just as safe active, inflation hedge, etc.

Our portfolio. Beta calculation

Monday. Portfolio

Coefficient which we will calculate for our portfolio
Alpha. To see how effectively we running fund.
Beta. To see fund volatility.
Long's relative strenght (comparing with S&P including long's beta). Do we really bought strong stocks?
Short's relative strenght (comparing with S&P including short's beta). Do we really sold weak stocks?
Drawing a chart of fund valuation every day.
Other coefficient that figured in portfolio theory is not usefull for us know. 1st because we havent history of our fund. 2nd - its developed for more long term investing.

Portfolio. Weekend overview.

Portfolio structure by sector
Total invested money - 480852$
Long - 287164$
Technology - 136104$
Financials - 54480$
Gold - 97030$
Short - 193238

Short - 193238$
Services - Trucking - 83480$
Electronics wholesale - 6920$
Media - 16980$
Overall services - 107380$
Industrial goods - General building materials - 46850$
Textile industrial - 19345$
General contractors- 20293$
Overall industrial goods - 86488$

Biggest drodown we have in "gold" part of our portfolio. Its not strange, we had big gold drop on friday. Nothing change fundamentaly. Our look to gold the same as before. So we will not change gold stakes in short\middle time.
Another drodown - SPWRA - SunPower Corporation. Solar-energy companies's sector known for its volatility and speculative interests. Usually this sectors going up when oil prices increasing. Before companies from this sector reported about better earnings then expected. We dont expect strenght of this sector until we will see stong trend up in economy and large increasing of oil prices. We expect slow growth\range of oil prices.
VMED - we should be more carrefull next time about shorting of Richard Branson company :-). Richard - adherent of theory of chaos have motto - "To the devil all, undertake and do" :-) . Not far ago he bought Hefner's Playboy. On 3rd of June Virgin Media closed 1$ billion bond offering. We are carrefull about it, but dont see power for growth on it now.
BCS - we are in 2.59% plus on it know. We wont to see institutional support on it.
VOXX - we are now pretty right of VOXX shorting. Nothing special now. Just looking for 5$ price now.

Portfolio. New stakes.

New stakes
Long. Technology
IBM
SOHU
MSFT

IBM
MSN rank 8
large non-US revenue base
IBM's Q109 results indicate its strong position in emerging markets, which should continue to help drive growth.
Company has focused on driving its bottom line through cost cutting efforts. It re-affirmed EPS guidance for the full year of 2009 and 2010. Although, revenue is not expected to grow by much, expecting margin improvements in 2009.

MSFT
MSN rank 8
Big hedge fund support
Nice classical coefficients

SOHU
MSN rank 9
Sohu - is the second-largest Internet portal and one of the most well-known online brands in China. Sohu's pipeline for its new online games remains strong and is expected to drive meaningful growth in late 2009 and 2010.
The company spun-off part of its gaming division Changyou.com via an ADS offering, which is expected to increase its user base and help gain shares in the MMORPG (massively multi-player online role-playing game) market. We are also encouraged by the company's growing cash balance as well as its debt-free balance sheet.
We believe that the current stock price does not fully reflect the company's intrinsic value. Concerns related to online ad spending, as consumers remain cautious in their spending.

Shorts
Industrial Goods
MHK - textile
SPWRA - general conducator
VOXX - Electronics Wholesale
TECUA - General Building Materials

Also we shorted aditional 700 shared on DW for portfolio long/short balancing.

Portfolio overview

My thanks to SeekingAlpha . Its wonderfull resource!
For today we have fully balanced portfolio on Beta coefficient.
BCS - 3000 shares
P/E ROE% Div Yield% Price to book Value Net profit margin%
4,9 14,63 9,6 0,63 28,97
Can Slim Rating - 82
Key Abu Dhabi investor on Barclays sold his stake yesterday. Analysts began to speak that this is a time for profit taking on financials. We have a risk that we will see self powered down trend on financials on this catalyst. But also we can suppose thats nothing fundamentaly change on this and BCS is still attractive for investors and they could use this possibility to long BCS.
Paulson & Co hedge fund have short stake on Barclays @16.86
BCS havent now institutional support.
If BCS will not find large investor in short time - we will close this position.


Below our gold stakes. About our look on precious metals i wrote before.
NEM
P/E ROE% Div Yield% Price to book Value Net profit margin%
34,17 7,85 0,82 2,73 11,66
Can Slim Rating 74
MSN Rank 9


ABX
P/E ROE% Div Yield% Price to book Value Net profit margin%
52,31 4,11 1,1 2,14 20,31
Can Slim Rating 73
MSN Rank 6


HMY
P/E ROE% Div Yield% Price to book Value Net profit margin%
15,12 6,29 0 1,4 32,35
Can Slim Rating 93
MSN Rank 9

Shorts
Our trucking picks
Trucking shipment data is often a gauge of overall economic health, because truckers haul more than two-thirds of all U.S. manufactured and retail goods.
The American Trucking Association's advance seasonally adjusted truck tonnage index fell 2.2 percent in April, after plunging 4.5 percent in March.
Compared with April 2008, tonnage shrank 13.2 percent, marking the worst year-over-year decrease of the current cycle and the largest drop in thirteen years.
We can expect trucking growth when we will see recovering in real sectors of economy. This is sector which have delay from overall economy. We are looking to USA indicators of buissness cycle. Here we can see that down trend is over. So lets keep eyes on it closely.

CNW
P/E ROE% Div Yield% Price to book Value Net profit margin%
-15,53 1,3 3,34 -15,82
Can Slim Rating 61
MSN Rank 4


ABFS
P/E ROE% Div Yield% Price to book Value Net profit margin%
282,75 0,4 2,2 1,15 -5,34
Can Slim Rating 45
MSN Rank 6


FWRD
P/E ROE% Div Yield% Price to book Value Net profit margin%
20,34 14,88 1,4 2,81 -3,21
Can Slim Rating 20
MSN Rank 4

Media

VMED
P/E ROE% Div Yield% Price to book Value Net profit margin%
-41,57 2,2 0,86 -16,46
Can Slim Rating 59
MSN Rank 3

Industrial goods - Building Materials
DW
USG



Our portfolio wasnt hedged yesterday and overnight. All short positions was opened today in the morning

First positions in our portfolio

Today we bought
BCS@18.25
ABX@37.20
HMY@11.8
NEM@48.00
BCS - one of our banks stock which was on the buy list. We use opportunity which market gave us today. BSC fell on 14% today. One of Abu Dhabi investors from royal family went out from this stock on what he entered on October 2008 and made 54%. He explained it that they want to have free money for energy investing.
Three other positions ABX, HMY, NEM are gold stocks. We plan to make good bet on gold, silver, commodities companies as i wrote below.

Industry analysis. Gold/Silver. Show me guy who want sell gold

Gold Analysts Not Expecting Inflation This Year. They expect avarage price 918$. In generaly i am agree with them. But markets are driven not by facts but by expectations. They dont see inflation in 2010 now, but if market will grow up more we could expect increase infaltion even in 2010.
Nevertheless, the funds continue to pile into metal. Hedge funds and other large speculators increased their net-long position in New York gold futures last week, by 7.7% over the previous week, according to CFTC data.
Hedge fund manager John Paulson recently bought tons of gold and gold miners.
There is the gold/silver price ratio. For most of history, this ratio has averaged roughly 15:1. However, currently, this price ratio has swung to an extreme ratio of nearly 70:1. This alone should make silver an automatic first choice among investors.
Here we see from what places we demand on silver.
Ratio between gold and silver can be reduced as silver is not only precious metal but also its using for industrial needs. Two nonprecious metals reasons for Silver's upside: It is an Industrial metal which means greater usage in the years to come and its supply has been disrupted since it is a byproduct of the mining of other Base metals whose prices have to go up before they reopen.
My conslusion
We have big inflations expectations and doubtful market growth. If no risks will be converted in to reality we will see continue of market growth and gold growth too. Market will growth by better fundamentals, gold will growth by inflation expectations - if economy is began to recover - inflation wiil begin growing quick. If we dont see real economic recovering now, we will see second wave of recesion. It will mean more money to print again, bigger inflation in future, so market in this scenario will go down again, but gold after some down move, will grow even more quickly. For our fund we wanna to acumulate positions in gold, silver, stocks which are producers of commodities. The focus of our fund will be on silver.

Industry analysis. Financials.

Really it is hard to imagine any banks are in trouble with everything the US taxpayer has given up for them....
It is widely agreed that the banks are undercapitalized.
Further confirmation that the various central bank liquidity facilities and capital injections are having the desired effect of unclogging credit markets comes from Goldman Sachs’ Financial Stress Index (FSI). This index includes four factors related to the degree of impairment of financial markets: counterparty risk (US dollar 3-month LIBOR-OIS), liquidity risk (MBS to treasury repo differentials), refunding risk (commercial paper outstanding) and broader risk aversion (percentage of monies held in money-market mutual funds in relation to equity market capitalization).

FDIC's Fund Reserve Ration Plunges to 0.27% of Deposits. Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, released the latest information on “problem” banks on Wednesday. The list now includes 305 institutions, up from 252 at the end of 2008. We have had 36 bank failures this year and if no more than a quarter of the “problem” institutions fail, we will be over 110 bank failures for the year. But i think thats a delay indicator. Bank closures are not a leading indicator of economic health and can continue for some time even after the economy begins to recover. A lot from deposits will be invested. We havent much risk on it now. President Barack Obama on Wednesday afternoon signed into law two major housing bills, one of which would allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department to protect the deposits of bank customers.
On the financials - we can use GS as an indicator of health. Goldman Sachs (GS) is one of the few companies with increased profit estimates in the marketplace today. Over the past 90 days their current quarter profit estimates have increased from $1.92 a share to $2.44 a share, a 27% increase. Likewise the next quarter estimates and the year profit estimates have also moved higher with the analysts that cover the stock.
Some banks announced that they will be able to begin to repay the government.
We see that bank's CDS become to cost less.
Goverment are all in financials, they will not give one more time possibility to drop.
The Fed, in a report issued Thursday, said commercial banks averaged $38.153 billion in daily borrowing over the week that ended Wednesday. That was down slightly from $38.155 billion in the week ending May 20. Investment firms didn't draw any loans over the past week from the Fed program. In the prior week the firms also took a pass on the emergency loans, something that hadn't happened since early September. Firms drew just $482 million in the week that ended May 13. Good trend.
Conclusion If nothing will be changed - we will see big growth in financials. It will not be exponential, just strong selfpowered trend. We have risks, but more we growing in financials - less risks we have. More financials shares getting up - more confidence crodw will have on it. More confidence crowd will have - less wholes in balance sheets we will see. Governments main target - to keep crowd confidence about finacials growing. So we will see a proccess which very nice described by Soros theory of reflexivity. Banks are good look by classic fundamentals, exept wholes in their balance sheets. But i write above how rather quick this wholes can disappear. The contrarian opinion analyses saying that financials are interesting for long. The most people just saying about stability growth in financials but still dont make big bets on it. So, nice potentional for growth, maybe only speculative now, but speculative growth can be a reason for a next fundamental growth.

Portfolio strategy

Our target is to build portfolio which will give good returns independent from market conditions. In portfolio we have strenght stocks in long and weak stocks in short side that are balanced (equal). Our ideal target to get this situation. Let’s suppose that we have ideal balance in long and short side of portfolio and market is in zero point. If market changing up on 1 basis point, long side ads 2 basis point and short side ads 1 basis point. So on market move on 1 basis point our overall result is 2-1=1. Next market making move down on 1basis poing. Long side minus 1, short side minus 2. So overall 1-1+2=2. Now we are in profit of 2 basis points. So in every next market’s step in 1 basis point our portfolio growing on 1 basis point.
For balancing long and short side of portfolio we are using Beta coefficient. If we have different Beta we entering a position with more or less quantity for making position equal.
At first we are looking which sectors are the most interesting for long/short. This analyses we do with calculating next data Market cap, P/E, ROE%, DIV Yield%, Price to book value, Net profit margin%, price to free cash flow. We pick most interesting on this and then doing discretionary analyses. We researching expections on this sector, catalysts, risks, events, etc. Then we took stocks from the interesting sectors and doing the same analyses on companies. So we have to be sure that we are picked the strength stocks from strenght sectors and the weakest stocks from the weakest sector. Also we are using technical analyses for sectors charts and stocks to identify important levels. We dont entering in market on all portfolio in one time. We trieng to enter in right time on every stock. So we have some risks, because we have a time when our portfolio is not hedged in all.
Also for picks we are using two ratings.
1st – Stocks Chekup on www.investors.com . Its site of CAN SLIM system developer – Williahm O’Neil. He developed this system many years agos, its very popular, but this system representing not changing financial principles and CAN SLIM will work for many many years more. CAN SLIM system developed for picking stocks with amasing potentional of growth. So we use it for an evaluation of growth potentional. Below we can see basic principles of CAN SLIM:
C & A
Sizing up a stocks earnings growth.
N
The biggest stock winners had new products, new management or new conditions.
New price highs offer new opportunities.
S
One of the most basic economic principles is the law of supply and demand.
L
Steer clear of stocks that are laggards.
I
When it comes to investing, it pays to watch the pros.
M
This section will help you learn to size up the health and direction of the stock market.

2nd – MSN Rank.
It includes fundamental, ownership, valuation, technical analyses. We use it to see strenght or weak stock are. For buy the best picks are with rank between 6 and 9. Its show that company have potentional for improve. Very good if it is confirmed with our rating of potentional growth – CAN SLIM. The same, only reversal, for our short positions.

Some writes about our portfolio creating

We developed strategy for our speculative portfolio. We have some modifications of it. so i think we will have at least 2 portfolios. One of them will be more wide. Maybe i will write about strategy in some time. So know i want to show you small potentional part of our portfolio.
Our potentional part of speculative portfolio short part.
This all picks are from Services sector. This short side of portfolio will be added by stocks from industrial goods sector.
DAL
ABFS
CNW
FWRD
VMED
Maybe you should value this picks and write me if you will do it. Just interesting.