Tag Archives: investing

Semantics in markets

9 Apr

Bond market vigilantes – recent events in Europe centred around sovereign debt concerns has forced  investors to seek additional protection and security by demanding higher levels of interest in the face of worldwide money printing.  Higher inflation is also compounding the issue as real rates of return are being diminished. This is quite distinct from the behaviour of a vigilante.   Investing in sovereign debt is dicey and speculative, these nations are essentially bankrupt; their borrowing capacity should be set by the market.

Debt ceiling –  this is supposed to be fixed indicating a state of permanence. Caps should be enforced and followed; the debt ceiling is not an open top roof or a temporary ceiling.

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UP 33.5% YTD Sold out everything except SLV, AGQ, SU

5 Apr

I’ve been concerned about the debt ceiling since 2000.  Additional pressure now has heightened these concerns.  I am wary that there will be a lot of volatility over the coming months and with a significant positive performance it would be reckless not to rebalance the portfolio.  I would always advocate portfolio hedging and purchasing protection. I have posted a number of relevant articles at Seeking Alpha here http://seekingalpha.com/user/894781/instablog which I will also post here on the blog shortly. Because the market in these positions are very liquid this is a sensible strategy.

21 Mar 2011 – UP 20.5% YTD

21 Mar

Adding the cash generated from exit positions including merg-arb in Genzyme and exit from BRCD. NDN position also exited after takeover proposal.

Children’s Place (PLCE)

12 Mar

This was an add to my portfolio at approx $42.  The market cap at the time was $1.07 BN approx.  Children’s Place is a pure play on apparel/clothing and is also held by the hedge fund Metropolitan Capital – Karen Finerman. Basically at that valuation it was trading at 7X P/E  approx backing out cash and looking at their balance sheet fundamentals. The stock had a lot of downward momentum following Q3 2010 downward guidance revision however at that valuation this was at a comfortable level that offered a considerable amount of margin of safety.

Additionally, PLCE had already announced a $100M buy-back, a significant amount of the outstanding shares almost creating a put level in the stock. PLCE is a premier franchise in children’s apparel/clothing; children’s clothing is price elastic and better able to weather price increases; parents seeing their child in adorable clothing are less likely to be as price sensitive relative to other apparel markets.  PLCE therefore can better able manage margin compression with rising cotton and input prices.  At that valuation takeover/private equity etc. would also seem to be a viable possibility with an appropriate premium.

Now at approx 9X this is still at an attractive valuation and still below the px before Q3 2010 downward earnings revision.

The current portfolio $100M total 12 MAR 11 YTD: 19.55%

12 Mar

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