I Eat Bear

An imprtant part of any portfolio management is load balancing, and I have done some of that recently, but failed to report on it. I will correct that shortcoming now, in part.

First I added positions in QMAR to the tune of 600 shares. As an aquisition target of Excel Maritime (EXM), it is just plain under-valued. the takeover price put it at just over $26 a share, with $13 a share to come back in cash and almost half a share of EXM for each QMAR share, it offers both cash back, and shares of EXM. And EXM will retain the management of QMAR.
If I made a mistake here, it would seem to be I did not get enough of it.

I wanted more gold stocks, so I added Goldcorp (GG) and Gold Fields International (GFI). Both are gold mining companies. Niether stacks up to Kinross Gold (KGC) as a gold mining pick, but they add a reasonable diveristy at a time gold prices should be going up. I will also be adding 200 shares to Freeport McMoran (FCX) on the next dip.

Yes, I still needed more plays in oil too, so I added (SLB) Slummberger, which I consider to be the best internationally exposed of the oil drillers. I think the price is a bit high, but it can still go higher. I also added (STO) Strat Oil. I expect some stock price gains, but moreover, I expect a 4% dividend to be paid during this game period. They don't pay dividends by the quarter, like many companies, but more like annually. There is limited down side to this pick, but they do miss earnings periodically. I will gamble there is not going to be an earnings miss in the near term. They really got pounded for the last one.

The rest of my changes were to just add shares to existing picks. So far, some have been good additions, but some have not. I added 400 shares to DO and BHP, and 200 shares to IRBT.
I still maintain BHP is a great long term holding, as is DO. BHP is in the middle of a hostile takeover of RTP, and that is killing both stocks right now. BHP would go up, if they just walked away. Still, that may not be the best long term decision. I stick to my guns, and my faith in this company. DO had an earnings miss. Not a big miss, but the market is very unforgiving on those for the short term. Still I believe in the earnings growth I see for them, and think this will be an excellent pick for the long term also. I also think they will entertain the idea of a stock split later in the year. While a split does not increase value in the short term, more shares of a company that should maintain a growth mode, does make long term dollars and cents,,, and good common sense. IRBT is a gamble, and always was. I like the growth potential here, but it is too small of a company to say just when that turnaround may come. It is also in the technology sector, which has been a favorite whipping boy of the market lately. Still, despite it's drop lately, I did add 200 shares here. I will wait for a month or so, and re-evaluate that choice again later.

The rest of my load balancing has for the most part, worked out better. I added 200 shares to (KGC) Kinross Gold, as I needed the best of the gold miners. I added 200 shares each to (CMI) Cummins and (JOYG) Joy Global, both rising stars in industrials. And I added significantly more oil services with 300 shares of Smith International (SII) and 400 shares of Weatherford (WFT). I added 200 shares of (NOV) National Oilwell Varco, the premier of oil rig builders, and 600 shares of (RIG) TransOcean the deep water oil driller. Despite being in the red on my RIG pick, I have to believe it is still undervalued. And once the pains from the merger with Global Sante FE are absorbed, I expect them to come back with some benefits for the stock holders, in the form of increased dividends, and a stock split. Both of those actions may be after this particular game ends, but I got the stock for basically a steal. The 5% downturn I show on this one today, is just a growing pain, and I expect it to be back in the $140 range on stock price very soon.

Some disappointments I have my eye on are (CBI) Chicago Bridge and Iron, (TEX) Terex, and (MTW) Manitowoc. These are all in heavy construction, or suppliers of heavy construction equipment. Even industrial construction is being impacted by the housing construction crisis.
For right now, I am sticking with the fundamentals I see in these companies. I would even like to add positions to them, but the market is giving me no reason to do so right now.

I even have my eye on some of the banking sector, and specifically, some credit card companies. I just don't think the time is quite right to add them,,,,, yet.

In the next few weeks, I expect to add a few more stocks, and or positions, so that I am about 90% stocks, and 10% cash. That will relate to converting 10% cash to stocks. But, I am in no hurry. Lately, the downs have been more severe, and more frequent, than the ups in the market.
That is a fine reason to keep the cash on the sideline,,, for right now.. In general, I prefer to buy, and hold. If it was good enough to buy in the first place, it is good enough to hold, especially through a short term downturn.

Comments: View Comments |  Monday February 11, 2008