TMFHelical (99.03)

Helical Port Raised Cash

June 23, 2011 – Comments (1)

Gumble ....

I don't like being right in my concerns about the market being due for a drop.  Back in May, I was getting nervous and started to outline a strategy for dealing with such a drop.  Like all things this strategy is, and likely always will be, a work in progress.  I noted earlier this month that the Helical Port was getting a bit battered, and in danger of coming down 6% from the start of the month, a trigger point for some activity.

Well, it did indeed drop 6% from the start of the month, and cash was raised.  As I went through this process, which I had indeed been thinking about, I found myself holding my more speculative positions, which were bought largely for their long term growth potential, and in many cases selling my more conservative holdings.  That seems a bit counter-intuitive, but the conserservative postions are more likely to move 'with the market' and the high cash position mitigates the risk to a degree -- at least that is the current theory.  I am still philosophically conflicted over being an investor or a trader or worse, some ill-defined hybrid.  I am OK with being a hybrid, I just like a philosophical framework i.e. soft guidelines.  My other question was 'how much cash' would I drive the portfolio to, and I decided on ~50%.  This was a reconcilliation between a trader mentality (100%) and investor (stay the course).

In any case, 200-2009 did indeed color my investment philosophy, in particular that I give more creedence to portfolio management over investment management.   While I am recovered from 2008 (and the Roth actually flourished), it did take 'time' which is never in large enough supply.  Acting on 'recency' can lead to poor decision, but this shift in philosophy should prove prudent over time (we'll see).  This blog continues to be a very useful place to solidify my thinking both through writing and its 'public' aspect.  I keep an investment diary, but since that is only for me, I find myself musing less in that format.

It is a bit funny to me that I once use to say I hated the oft quoted Buffett rules 1) Don't lose the money 2) Don't forget #1.  I'd argue that if you weren't willing to put the money 'at risk', and be willing to potentially 'lose it', then gains would also be elusive.  While that is still my opinion regarding individual holdings, the appreciation of the heirarchy of portfolio management over investment management has me giving more credene to this investing mantra.

The details are as follows:

Sold on 6/13

Amedisys - all (50sh) - revisit after next quarter

Bio-Reference Labs - all (150sh)

Cardinal Health - all (70sh) -  revisit if cheaper later

Cepheid - some (65sh) - reduce position, still a long term hold

Genomic Health - some (200sh) 

JNJ - some (50 sh) - company still in recovery, so not all

Novartis - all (50 share) - revisit if cheaper later

Irony

On 6/16 I made a buy with an initial position in Complete Genomics (GNOM) - 125 sh for $2028.24.  This was done after the news I blogged on that I think may be signalling an era of increased market attention on complete genome sequencing. 

What is left

As of today, the Helical Port is worth $54,979.78.  Still up ~9.6% YTD (quite respectable), but well off the $59,200.89 value that it entered June with.  Cash is 51% at $28,068.53.

Retained are:

Athenahealth - 50sh - long term play on health IT

Cepheid - 135sh - long term play on diagnostics and genomic information

Complete Genomics - 125sh

CVS - 100sh - due to activist presence

Exelixis - 300sh - long term biotech play (these have to be bought to hold long term IMO)

Genomic Health - 125sh

JNJ - 60sh

MAKO - 200sh - long term growth play in robotic surgery

Seattle Genetics - 150sh - long term biotech play

A very volatile and likely turbulent port to be sure (perhaps save JNJ and CVS), no way I would ever have this set as 100% of port value (I'm just not wired for that), but with a 50% cash position, I have sleep well with these speculations.

One issue of 'going to cash' is always when to redeploy, and getting too caught up in becoming a market timer.  As noted, it didn't take me long to dip back in and buy GNOM when I saw a signal, but this had been on my watchlist for sometime. I don't expect to do any more before the end of the month (and should do a 6 month reveiw after the holiday - no promises), and currently think redeployment of cash will be slow.  Investors are often asked to 'style box' themselves as growth, value, whatever, and I've generally responded with 'behavioral' for myself in the past.  I'm quite willing to invest on impressions of trends, especially in healthcare where I am quite immersed.  I didn't think this would lead me to start paying attention to crude technical analysis, but of late it has, particularly in the broad market, and sectors.  I think at best TA doesn't yet affect how I invest, but can influence when I deploy.  Like all things, use is a work in progress, and one I hope to comment on here as I flesh out my thinking.

Thanks for listening

TMFHelical

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