Positions Update

Used the most recent dip in the market to add positions to WMT and BP. Still bearish on the Euro Zone. While I make no predictions about the stock market, I have found no good reason behind the recent rally and think there is no good news still coming out of the Euro Zone.... Used the recent run-up in CSCO from the bottom to shed 20% of the position.... mainly for lowering risk more than anything else...

New Positions and Current positions added!

Been using the dips in the last couple of weeks and initiated positions in Johnson n Johnson (JNJ), Wal-Mart (WMT), British Petroleum (BP) and Microsoft (MSFT). Initiated positions in AIG warrants (AIG.WS) Overall impact to portfolio was about 5% conversion from cash to stocks. Expect to build up a few of the stocks mentioned above into bigger positions over a period of time.

Added positions to Wells Fargo warrants (WFC.WS) and Bank of America (BAC.WS) warrants as well!

I will be limiting adds to my overweight financial stocks in the portfolio with more financials stocks. Still over 50% in cash. No more major moves planned for now.

Behind all the smoke and screens, the fundamentals in the economy have improved very little in the last few months.

A small silver lining for the portfolio, Cisco (CSCO) rallied after last week's earnings announcement and cut my losses big time. A classic mistake of building a position too quickly too big in the last six months.

Inactivity is the key till I get new investment ideas or wait for my investment thesis in the above stocks to pay out... Patience is the key...

Market Turmoil this week and Portfolio

Used the recent market turmoil to close my two short positions on the S&P. Realized Annualized returns of 97.8% and 100.4% on the two positions. However, my long positions continues to bleed in the market.

Also, added a modest amount to the Bank of America TARP warrants. Impact due to the addition was less than 0.5% of portfolio. Sitting on over 70%+ cash on the portfolio.

The recent news is that S&P is planning to cut the AAA rating. link. Who the f cares what S&P and Moody’s thinks anymore…. Everyone with two cents worth of brain knows that US cannot be AAA if there are doubts about its ability to make interest payments.

Markets are starting to get a point where I am getting really interested in the valuations of some of the companies. Attractive entry points are available for Wal-Mart and Johnson and Johnson.. More misery for my long portfolio also means attractive entry points for others.

It is all about discipline in investing and patience at this point!

New Positions!!!

Initiated two new positions today.  TARP warrants of Bank of America (BAC.WS.A) and Wells Fargo (WFC.WS). Both positions are individually slightly over 1% of the portfolio and are long term plays with a 5 to 7 year investment horizon. The positions are small enough to warrant more buys if prices decline further. Bank of America TARP warrants are a current holding of Francis Chou. Bank of America stock is held by Bruce Berkowitz. Wells Fargo is a well documented holding of Warren Buffett and Prem Watsa. Francis Chou holds warrants on WFC as well. The risk reward scenarios on the warrants are a lot better than the common stock.

I, probably hold the most hated list of stocks in the US market today. Long on Cisco, Goldman Sachs, Bank of America, Wells Fargo and Fairfax financial. Short on the S&P. The portfolio is positioned to be more volatile but consists of undervalued companies with a margin of safety.  With utter disregard to the macro economy and the concentration in the financial sector, I will be lagging the market for a considerable time. A significant portion of my portfolio is still in cash. However, I am finding a few cheap stocks in the large cap environment.

I am continuing to evaluate Wal-Mart, Google and Johnson and Johnson. Will post more on the warrants.

Current Investment Ideas

Am currently investigating the following investment ideas

Large Cap ideas!!

1. Wal-Mart --> Strong Competitive Moat around the business, trading at a PE of 12. Similar to a bond... a recession proof play.

2. Google --> Strong competitive moat with excellent management. A rock solid business model to monetize search with a free real option of a social networking business (google+) PE after cash is in low teens.

3. Johnson and Johnson --> Strong competitive moat and an earnings increase of 10%+ over the last hundred years. Recession resistant stock as well. PE is low double digits.

Large caps are presenting compelling ideas for now!

Detailed research on the above ideas soon...