Trimming Petrobras, Caterpillar in Secular Trends Portfolio (PBR, CAT)
Posted on | August 10, 2009 Time: 11:50 am |
There hasn’t been a lot of activity here for a couple of weeks, the unfortunate result of other obligations and my ongoing intent to put in 5-6 hours of good reading and research time for every hour spent writing up my conclusions. But hey, if it’s not broke; The Secular Trends Portfolio continues it’s alpha generation, beating the S&P by roughly 30% since its inception last September.
I’ve said repeatedly that I’m not a big believer in technical analysis, and it will certainly never be the sole impetus for a change to the Secular Trends Portfolio. But I’m a little worried about the crude oil chart in the face of rising inventories and a possible shift in regulatory stipulations surrounding speculators. And because Petrobras (PBR) tracks crude so closely, I want to reduce the potential risk of this larger-than-average position in the portfolio. I’ll be looking to re-beef the PBR position as soon as crude inventories stop shooting to the moon…
Trimming about 2/3 of the existing position, 1000 shares, at $41.85:
Caterpillar has been on an extraordinary run, and the position size is now nearly 10% of the overall model - just too high. I continue to believe CAT is well positioned to generate outsized gains relative to the market. But after reading through the latest conference call and analyst day notes, I’m a little worried about how the Street will view a “dip” in earnings during the 3rd quarter, which could occur on a superficial level. And only a greedy bastard would look a 30 day, 50% rally gift horse in the mouth for too long. Trimming just 20% of the exiting position of 2180 shares by selling 400 shares at $46.80:
WYSIWYG!
As with all activity to the Secular Trends Model, trades and position sizes can be accessed from the Portfolio Page. 100% full transparency is the only method of presentation allowed here.
Ryan Barnes
Tags: Caterpillar > Crude Oil > Petrobras > Secular Trends Portfolio
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Pragmatic commentary on U.S. & global investing, demographics & secular trends, and the valuation of anything worth valuing. Objective, unbiased research; We believe in minimal design, zero gimmicks, and maximum results.
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