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RVB's Market Musings

What began here as an avenue to interact and learn has far exceeded those goals.

If you are a prospective employer, please consider this site a place where you can see my passion for investing...

Monday, April 17, 2006

Interesting Day!

Today was a strange day. At around 2pm Eastern Time, the Naz was down just over 1%. Most stocks were down, but things weren't as bad as they seemed. All of my Marketocracy funds - "Smart Buys", "Value and Income" and my Bearish fund all had up days. This is very rare. Let's look a little bit further at what drove today's performance:

Value and Income Fund
Today's big winner was Black and Decker (BDK) (+6.42%), which has done absolutely nothing in the 13 months it has been in the portfolio until Credit Suisse finally realized it needed an upgrade. Where have you guys been? It's about time.

After BDK, shares in Conoco-Phillips (COP), a new portfolio addition, as well as Kirin Brewery (KNBWY), Brascan Corp - er...Brookfield Asset Management (BAM) [recently the name changed] kept the portfolio strong today. Since BAM and KNBWY are non-US companies, it goes to show that sometimes dipping into foreign stocks can be a great diversification tool. What's more is that both of these businesses are incredibly well run. Ask Bill Cara about Brascan!

Smart Buys
Oil exposure was strong here today, as Petrofund Energy Trust (PTF) as the co. announced a merger with Penn West trust to focus on growth. PTF had been in the portfolio not only because of its super high 7% dividend yield, but because the company has been growing rapidly - sort of a best of both worlds in the oil sector. I'll need to do some homework on Penn West, as I am unfamiliar with it. Chesapeake Energy (CHK) also had a nice day. The pop in Oil and Nat. Gas prices obviously had an impact. Overall, however, these are the only two oil names, and they represent just over 10% of the portfolio.

Some of the more aggressive names had great days, also. Core holding Blackboard (BBBB) was up over 3% on no news - indicating that perhaps someone is beginning to add shares. Trident Micro (TRID) - the single largest position in the portfolio - was also up nearly 3%. This name is a play on the lcd monitor / tv world, and has high growth expectations (the company lost 1 cent per share last year). My portfolio management rules prevent me from selling any shares since the stock rocketed immediately after purchasing it (Up 20% in the first month, 31% in the 4 months following). Some would say it is overvalued and time to sell, but in this case the market is telling me that Trident could be one of the big winners of the next couple of years and it's time to ride the stock through it's ups and downs, so long as the bull continues. Revenue growth could reach 100% this year.

Bearish Fund
Somanetics (SMTS) was today's biggest short winner, down 6.45%. This medical device small-cap company missed expectations recently, and it looks like it's time to cover this short when the downward momentum ends. The healthcare sector in general has been selling off, which has not helped SMTS. But, the reality is that this company is getting close to a "buy" at these price levels. Growth here is staggering, the company is investing heavily, there's little competition, and at a trailing P/E of 26, the company is getting cheap, since I think the quarter was a glich on the road to prosperity for SMTS.

Aside from SMTS, there wasn't much of note in the bearish fund. In general, this fund has served as a good learning experiment on shorting, because performance has been miserable.

As a reminder, you can always track the performance of any of these funds by clicking on them on the right hand side of this page.

This way, you can call me really dumb, or really smart - whichever you so desire. Just make sure you have a reason.


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