whateverworks

Search for All My Children

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Lincoln Electric Holdings Inc. (LECO) has been down lately. Not yet willing to give up on the company totally, I sold only half. Still, this still left me with yet more cash; so I wanted to reinvest.

My goal is to put some more money into recession-resistant fields such as agriculture. Rather than performing yet another screen, I decided to revisit some old acquaintances. For over 25 years, now, I've worked for an investor relations firm which specializes mostly in growth companies. These are mainly small and very small. However over the years some have become quite large, for example a little, speculative start-up named AOL. Having a large pool of potential investments, a where-are-they-now search was in order.

This turned up AGCO Corp. (AG) which is still doing well. It manufactures agricultural equipment which it sells worldwide. Then fellow StrategyLab blogger Krishna Rathi (stocksrider) mentioned MOO the new agricultural ETF. I still had enough ETF allotment to add MOO.

Is biotech really a recession-proof field as people say? Former client Invitrogen Corp. (IVGN) looked good so I bought it, too.

Of course many companies have been bought out, merged into a larger company or changed name/symbol. PharmaNet Development Group, Inc. (PDGI) is "descended from" SFBC International (SFCC) and perhaps no longer resembles the client we had. However, it looks good. I decided I will buy it after taking some profit in Hughes Communication (HUGH). The satellite company is still up but the stock has not been doing as well lately.

Speaking of satellites, I managed supremely bad timing when I bought former client Novatel (NGPS) on Nov. 28. It is in the process of being bought by Hexagon AB, a global technology group and, in a press release that same day, announced that people holding shares prior to the 27th would receive cash from Hexagon. Obviously shares are not going to go up past the buyout price. So, in maybe my fastest sell-after-buy ever, I am getting rid of NGPS. I may replace it with Kratos Defense & Security Solutions, Inc (KTOS) a "descendent" of our client Wireless Facilities Inc. (WFII).

In my Magic Micro Caps (MMC) fund Span-America Medical Systems (SPAN) reached a level of 30% below the price at which I bought it; so I stuck to my investing method and sold even though I still think the company has potential. Luckily I had noticed another former client, Exactech (EXAC), which has been doing well, has decent figures AND was still under $250M market cap. So I was ready with a replacement.

You may be wondering if Wall-Street.com has any current clients who are a shoo-in for growth during the coming year. Well, if I had inside information of course I couldn't tell you or trade on it myself. I would even avoid trading on it here at Marketocracy. Although this is just a game it has also become publication of a sort.

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Landing in Knots

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There is still no definitive answer on the status of the Strategy Lab fund after January 1. Can it go forward as a non-contest fund? Will it reset to zero when (if) becoming a new contest? So I decided to play it with very short-term strategy at this point, not knowing if I can (or want to) keep it long term.

I believe the market will stay level or slightly bullish through the holiday season because: A. Holiday cheer raises everyone's spirits and optimism; B. Stores, banks, the government will all try to put out favorable news so as to encourage the best seasonal spending surge possible. I believe that at some point in January everyone will sober up and the overall bear trend will resume.

ESEA was the weakest of my seagoing stocks and was down close to my limit so sold it. I replaced it by re-buying the offshore, contract, drilling company Transocean (RIG). That stock took a surge when it recently merged with GSF (which I owned); then I sold because I thought RIG would subsequently fall as the government questioned merger strategy.

I decided China would be up through the rest of the competition so I sold the ETF FXP (Ultra Short China) and bought back more of the ETF FXI (bullish on China).

To increase biotech/pharmaceuticals, which are doing well, I bought Sanofi-Aventis AG (SNY). I found this big, French company when looking for smaller health care companies for my MagicMicroCaps fund. It was a competitor to Repligen Corp. (RGEN), another former client which I have been trying to buy using a limit price. (I have some "extra" cash for biotech in MMC, having sold Trinity Biotech plc (TRIB) on news that they are restructuring.)

So far no luck using limit price. The result is that the stock simply isn't bought at all.

For MMC I am looking at 2008 strategy and am trying to get the best possible group of stocks in preparation for the yearly Jan./Feb./March microcap surge. Though this year the surge may be a ripple.

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Pushing the Falcon over the Crest

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Coming to the end of the StrategyLab contest, I've made a few changes to that fund.

Continuing with my belief that December will end generally up, I sold part of SRS, the Ultra-Short Real Estate ETF. I bought Unilever NV (UN), continuing to beef up holdings in the area of food and consumer staples.

To get more cash, I sold DSX, my lowest stock, but will probably buy back this shipping company sometime if the contest fund can continue.

Now I am buying Tradestation (TRAD) which is being discussed in Marketocracy forums as an especially good stock for a bear market. They have a product traders need when times get tough. This company probably would not show up tops on my stock screenings; however the financials look OK.

Probably, for the end of the contest, I should have sold everything that was down over the past month and sunk the resulting cash into those stocks which have done best over the past couple of months. However it is difficult to think in terms of everything coming to an end in about a week. And I do want to keep the fund long-term, if possible.

I've been very busy trying to keep up with developments in my non-contest MagicMicroCap Fund. When RICK grew to over 150% in December I took some profit. (I sell about half at 100%, 150%, 200%, etc.). FSTR topped 100% growth; so I sold part of that, too.

It was time to clean house again and sell any stocks that were not up during the past 12 months, even though some had grown previously and may again, someday. So I said goodby to SPAR, TRT, TGE, UCTT, EDGW and WPCS. To replace them I bought ITI, ODC and ABHH. ABHH was a short-term oddball choice. It is being acquired which should result in a small but hopefully quick profit. I also bought more ARSD because it will be moving to NASDAQ.

I nervously sold TAYD. Taylor Devices is proposing to merge with its closely linked affiliate, Tayco Developments, in a move that they announced would save the companies about $35,000 a year. This sounded good but the price immediately dropped. I decided to follow the market's sentiment and take this as bad news rather than good.

Then I bought yet more RGEN, CCF and USAP because these stocks have been doing OK lately in spite of the volatile market.

My StrategyLab-Type Fund is probably much more "sensible" and may ultimately do better than my fund from the erratic MicroCap world but with MicroCaps life is always fast-paced.

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The Edge of Another Life

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On this last day of the first SLO contest my fund, along with the markets in general, went a little bit up. I had predicted a better year-end rise in spite of housing and retail figures; however, I believe the assassination of Benazir Bhutto put everyone in a more somber mood than usual.

In spite of this sad year-end news, I am looking forward to an interesting 2008. Although I believe the US will continue with a bear market, the opportunities in developing countries should give the world a lift, overall.

I've just learned that I can keep my present SLO fund and use it in 2008 for both the short-term and the long-term contests. The fund won't reset to zero but will continue as-is for the long-term bracket. It will also show a cumulative return from the start of the second round (Feb.'08) for the short-term bracket.

I predict that many SLO contest picks will be foreign companies. A big problem is that many aren't available at Marketocracy. Therefore, my New Year's resolution is to increase my skill at Hilary Kramer's game, Six Degrees of Making Bacon. For example: considering Russia's potential to sell a lot more desperately needed fertilizer if only they could transport it, I'm searching for a budding UPS of the Slavic world. Or a truck manufacturer selling to such a delivery service. Or a tire company selling to the truck factory. But the tire company may not be traded at Marketocracy or may not be public at all. Continuing onward a couple of degrees, I might find the truck factory's supporting bank (hopefully US traded) or perhaps an ETF investing in the bank.

And, then, there is the most pressing question of all -- should I continue on with soap opera titles or should I choose another theme for the 2008 blog? Decisions, decisions.

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