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I am reducing my long exposure some more



September 16, 2009 – Comments (16)

despite losing money on every hedge I have in place today, my real life portfolio is up 3% again today.  It now stands at shocking gains since my beginnings last December, despite beingwell down on various hedges.

I am reducing my long exposure today via my usual means of selling some shares, buying puts, selling covered calls (more aggressively this time).

Any stock yielding 9% or higher with the yield current and sustainable I am not hedging.  

I'm still taking a tactic of case-by-case, estimating the likely future upside of each stock one by one and doing my best to pick the approrpiate hedge.  I took big hedges on WYNN and LVS as I think they're about played out.  I took gentler hedges against some insurance names as they are still below book.  I uppded my hedge in ASH, etc.  Case by case...  I am going to try to borrow more shares of levered bull ETFs to short as a long-term-winner-no-matter-what hedge that packs a good punch if we get a dip.

I'm far past my overall investment goals, and many of my stocks are approaching the target prices i'd estimated for them.  Som eare now past those prices.  

good luck to everybody!

16 Comments – Post Your Own

#1) On September 16, 2009 at 12:26 PM, sentinelbrit (56.63) wrote:

I feel the same way as you. I started back in November and despite selling some stocks too early, my gains have surpassed my expectations. I think the greater fool theory is now playing out. I have never used options but sounds like now is a good time to learn.

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#2) On September 16, 2009 at 2:02 PM, checklist34 (99.06) wrote:

i think now is a good time too brit,

check out collar, costless collar, synthetic short, covered call.  those are the moves I have made.  selling covered calls that range from above the money to at or even in the money to collaring stocks and recently some synthetic shorts.  I am focusing on options that expire more than 12 months afte rmy purchases of the stocks.

Every day we go up from here i'm reducing long exposure.  Every single dya. 

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#3) On September 16, 2009 at 6:09 PM, TigerPack1 (33.61) wrote:

Nice job of locking in your gains in this game and the real world.

My strategy has been to move money out of the low capitalization, risky/junk names into larger cap, high yielding, blue-chips, consumer product names especially, with super conservative balance sheets.

I think I am closer to 70% blue-chips now of the money invested in stocks like: KMB, MCD, YHOO, PEP, KO, BDX, JNJ, WAG, etc.  Given a 10% or so correction many of the above will shine, either by not declining much or actually rising with flight to safety buying.  The other 30% remains in higher risk ideas, like DZZ and ZSL shorts of the precious metals, some short squeeze names, and some cyclicals.  If the market rises from here, I plan to build the cash level a little.

My only regret (besides not holding LZB long enough) is not buying LVS in the $2-$4 range, despite Adelson putting even more money in the pot, my volume indicators screaming buy, and my own strong positive feelings on REITs as a group at the time.  Darn, I never put real money to work in that name.

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#4) On September 16, 2009 at 6:35 PM, portefeuille (98.32) wrote:

I have made a "performance update" for the "outperform" calls from my list. Some of those are also among your favourite stocks.


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#5) On September 16, 2009 at 6:35 PM, portefeuille (98.32) wrote:

you should really give biotechs a try!

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#6) On September 16, 2009 at 6:37 PM, portefeuille (98.32) wrote:

(at least when this "market rally" is done)

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#7) On September 16, 2009 at 6:41 PM, portefeuille (98.32) wrote:

I have also (like tigerpack) "shifted slightly" towards (boring) large caps in the past few weeks.

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#8) On September 16, 2009 at 6:44 PM, portefeuille (98.32) wrote:

So now who starts the hedge fund? I hate "paper work". I am fine with joining when the money to invest has arrived, hehe.

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#9) On September 16, 2009 at 6:48 PM, CMFStan8331 (96.04) wrote:

I've been taking some profits, have moved from 10% up to around 15% cash recently.  I know I need to start looking into options, just haven't had the time yet.  My individual stock portfolio is still pretty small at this point, so capital preservation isn't my overriding concern.  I have made a significant shift in the direction of dividend-paying stocks, but I'm mostly biasing in favor of dividend growth, versus current yield.  Trying to stick with only a smaller number of the very best growth stocks.

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#10) On September 16, 2009 at 8:56 PM, checklist34 (99.06) wrote:

porte, i also hate paperwork but am also all about diving in to figure stuff out once its showtime!  I am willing to hire accountants.  Some o fyou may face a day when I track you downto talk about this, including you porte.  :)

if anybody wants to know how I went 4x my money from the bottom, or well over 3x my money overall starting with the S&P at about 920 i think so about 15% lower than here, and after osing more than 20% at the march bottoms...

see here  .  2 recs (1 from me) 0 comments (except 1 from me).  Nobody cared.  I bet some doom and gloom stuff from GMX and Alstry got about 50 rec's and 50 replies about the same time.  That was 1 week before the low.

then see here.  1 day after the bottom I think.  maybe the day of Vikram Pandits memo.  

I offered a very cartoon-simple overview of mark to market accounting, and observed that if markets improved and valuations marked back up companie would mark book value back up, mark losses back up, and we may have a tremendous rebound in those stocks.

The mark-ups began in q2 earnings and the rebound has already been epic.  

I mentioned XL, HIG, various BDCs and various other insurers.  

About 1/2 of my portfolio coming out of the hole was bet against the tide of mark to market losses.  

My single biggest position was ASH, 5th biggest was TCK. 

And thats a wrap.  Even with many performance damanging mistakes along the way, newbie screwups, panicky premature hedges I lost money on and more I'm now well over 3x my money.

I am very very grateful for this outcome, for me, friends, my parents who can finally retire after living in poverty their whole lives (long story, they are more like 4x their money as they got in right at the bloody bottom on march 5th). 

Time to not be the pig that gets slaughtered.


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#11) On September 16, 2009 at 9:55 PM, checklist34 (99.06) wrote:

tigerpack:  great comment listing some regrets.  always good to reflect on where you  have messed up as much as celebrate where you did well.

mine are

1.  over-diversifying at the bottom.  i think i was afraid and figured very broad diversification would be better.  in retrospect there were 3 blindingly obvious buys with little actual material risk and massive upside:  DOW, ASH, XL. 

2.  I was wrong on ACAS to at least some exent.  Most of my money is off the table there and I've locked in huge gains (i think overall counting sold shares its like 4x my money now), but I got it wrong.  I took management too much to heart about the strength of their company, positions, and so forth and went for the ride.  made money, but only because I caught the bitter bottom for practically all of my buying.

3.  some serious flub-ups withDOW and MTW, see an earlier blog about that.  sucks

4.  not focuing enough on fair value and panicking about hedging gains way too early in the rally when the market was still far, far below fair value.  

5.   trading too much and periodically raising cash.  I don't think i'm ahead for it but I locked in some taxes.  


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#12) On September 16, 2009 at 11:24 PM, rofgile (99.57) wrote:


 Are you still invested in MTW?  I hold that as my major position, and in the last 4 weeks it has gone up a heck of a lot.  If you are still holding it, I would love your opinion...

 I'm more likely a long term investor still, and am thinking of holding onto the stock until 2010 december, regardless of if the market has a correction, etc.  I still think the company should be valued at $20-30 a share, which would make it a 3-4 billion company.  (Seeing as they BOUGHT Enodis for 2 billion)...



 I'm tempted lately to sell my longs as well.. since things have gone very well in the last month.  I am investing based upon how I think things will be in the macroeconomic world, which I still think will show a really nice Q3 and Q4 in 2009.  There was an interesting analysis I saw recently on large market gains (> 30%) that suggests that typically on such large positive moves, the gains are kept - and what happens is that the growth rate just slows down to 10-15% gains/year - rather than having a large correction.  That would fit with how I see the market as a reflection of the overall economy:

 1) Big dive from fear

 2) Big market recovery from seeing that the fear was false

 3) Market gaining fast still in Q3 and Q4 (to S&P 1100-1200) on lots of positive news of GDP growth.

 4) Market gaining, but very slowly through 2010 as the GDP growth slows and jobs only slowly trickle back. 

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#13) On September 17, 2009 at 1:27 AM, checklist34 (99.06) wrote:


I am long MTW.  I completely messed up some moves with MTW earlier, sold low, wash ruled myself, hopefully my biggest folly in stocks ever.

 Ibought a notehr stake for abou $5 a while back. 

The good with MTW: 

#1 in cranes, #1 in food service equipment, those are good things to be #1 in.

Covenants worked out and they aren't likely to violate the new ones, thats a plus and eliminates a huge potential downside catalyst

going to live, no bankruptcy here.  

Could benefit from stimulus things both here and abroad through the crane business

Should benefit from what is probably a long term secular trend towards more eating out and less cooking at home (due to 2 people working and so forth).  I think that trend is still in force.

Eventually the cyclic businesses will come back "on-cycle" and big earnings should be seen.  As with many businesses, an uptick in revenue should flow nicely to profits due to cost cutting.

As they pay down debt they will experience intrinsic profit leverage.

Its definitely not in favor...  sat idle for much of this rally, no monster moves until lately.


The cons to MTW:

i'm not sold on management.  They weren't all that on top of their situation earlier this year, they bought really, really high with Enodis, I'm just not sold on them.  They bought the Enodis ice business super high and had to sell it super low.  Sucks.

Big debt load and now fairly high interest rates on it.  This will choke profits for a time until they can start paying the debt down in sizeable chunks.

they were overvalued at the peak in share price and I don't think the stock will get back there anytime soon.


Frankly if the PPS went much higher maybe they could benefit / shareholders could even benefit from a small secondary to lump off a little debt and get the process of paying it down started.


I suck bad at predicting short term market moves, and I mean I suck bad at it.

But I would think that the shares will be lower than today at some point in the future, and if you trimmed a little to take profits it wouldn't kill a guy.

I may sell a covered call against my shares tomorrow.


MTW is interesting.  If it comes "on-cycle" in its cyclic life and becomes in favor, get mentioend on Fast Money somedya....  who knows how high it could go?  certainly higher than $10

But I don't honeslty know quite how to value it or so what I think about it at $10.32.

good luck



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#14) On September 17, 2009 at 10:18 AM, rofgile (99.57) wrote:

Checklist - thanks for your opinion here.  

 Its been very very tricky to invest in this stock.  When it fell to $22 from $55, I thought that was the low.  Then it fell to $15.  Then it fell to $10, and I believe even as low as $2.50.   It seems not just us, but everyone is having a hard time figuring out the correct price of this stock.

 The uncertainties are definitely management (were they smart?  losing out on Enodis to another company maybe would really be a negative in 2 or 4 more years in the future - or very stupid for buying at a high price in a bidding war?).  I think it would have been nice if the Justice dept would have recognized that it was unfair to force the selling of the ice business at a time when no one would be buying a business and no one could get a loan.  But, I am learning more and more that the Justice dept is quite messed up.

 I am expecting 2010 to be a good recovery year for cranes, not to anywhere near 2005-2007 levels, but with at least growing sales.  There's a big red MTW crane right now on my street fixing a church steeple - that's got to be a good sign!  

 With this stock, I could have sold many times at the $8-9 level, and stil rebought at the $5 level.  I feel like I should take that for granted.  One of these price rises (perhaps this one?) will not result in falling back down, and the train will be gone from the station.  Then I would have to buy back in with even higher risk.  My plan is to invest and sell, not based solely on how quickly the price has risen, but on a time line (2 years for recovery and beginnings of economic expansion to occur).   As I am an IRA investor, I might continue picking up shares of MTW if the price falls below $6 again, but I think I'm going to hold all my shares until 2 years / $20-30 / share happens.

 If MTW does keep rising, I'll put my money into other sectors, such as dry shipping - which contains some companies that won't go bankrupt and are at a similar level of fear as to what MTW was in March..


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#15) On September 17, 2009 at 11:10 AM, checklist34 (99.06) wrote:

rof, I am planning to take a long hard look at MTW one of these days and, not that my thoughts are that good or anything, i'll maybe start a thread about it.

on a side note, i've upped my hedges once again.

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#16) On September 17, 2009 at 8:47 PM, CMFStan8331 (96.04) wrote:

I started out with a small position in MTW and sold half of that, but even with only a tiny slice of the pie, the recent run-up has been fun. Tempted to let it ride, but given MTW's recent spate of blunders, wondering if it might be smarter to just take the money and run...    

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