"The Age of Scarcity" by Jeff Rubin (CIBC World Markets)

This one ought to get TraderMark over at Fundmymutualfund.com all riled up. He has been over there pounding the table with his coined phrase "world of shortages" as an investment thesis for some time now. Then, Jeff Rubin over at CIBC World Markets comes out with a slideshow entitled "The Age of Scarcity." Hat tip to Paul Kedrosky, author of Infectious Greed who originally posted the link to the slideshow.

There's 31 slides in all, but I wanted to post up a select few of slides that really illustrate some macro themes we are seeing.



First, we'll look at Global GDP Growth. As you can see from the chart above, Emerging Markets are clearly the leader as an overall % of global GDP growth. And, this comes as no surprise, as pretty much everyone not living in a cave already knew that. What I am more interested in is the percentage that Central & Eastern Europe is accruing. If they are truly benefitting from Russia's emergence, then you would expect their share of global GDP to increase in the coming years as well. After all, they have already surpassed Japan (but I guess that's not much to brag about is it?). For my money I really think Russia has the best risk/reward setup in terms of Emerging Markets.



Next, let's look at the slide above depicting other regions' dependency on the US Market. And, surprisingly enough, Europe, Latin America, and Asia are all less dependent on America than they were back in 2000. Obviously, the world has become a true global economy and nations have diversified their dependency, which is a good thing. Although I do not want to get into a coupling/de-coupling argument here, I do think it is worth noting that the overall trend the past seven years has been that other markets are less dependent on exporting to the US market. But, at the same time, it must be noted that Emerging Asia easily is the most dependent on the US out of the 3 regions. There has been increasing chatter about how the US slowdown could be affecting China, and that chatter is warranted. The US market represents 16% of their exports and we will have to carefully monitor this situation as numerous investment theses hinge on China's continued growth.



Thirdly, I want to stick with the China theme and glance at the Resource Demand Growth slide pictured above. As you can see, China consumes MANY more resources than we do, and they are seeing average annual resource demand growth of 30% for aluminum and 28% for nickel. This just goes to show that a) China is a hungry monster and b) they are a huge piece of the "age of scarcity" puzzle. Also, I just want to point out that this slide further reiterates my bullish stance on aluminum/Alcoa, as I mentioned here. Demand for these resources is unreal.



Lastly, I want to turn to the housing sector in the US. This slide above shows what we already know: the housing market sucks and prices are falling. What's interesting though is that so many people out there are calling for a '2nd half recovery,' yet they don't seem to realize that the housing market will STILL be in turmoil. In fact, it could very well be even worse by then considering that this summer another major wave of ARMs (Adjustable Rate Mortgages) are resetting back from their low teaser rates to sky-high interest rates. This reset window will obviously take a few months to truly affect the homeowner, as they soon discover their mortgage payments will increase substantially. And, as this plays out months down the road, these homeowners will face forclosure, guaranteeing the next leg down in the housing market. And, it will slap all those '2nd half recovery' pundits right in the face. Interestingly enough though, CIBC here predicts that housing prices and subprime mortgage delinquencies will in essence stabilize towards the beginning of '09. So, they seem to be calling for a early-mid '09 housing recovery cycle. What you cannot see from this chart though is prime mortgage delinquencies, which I anticipate will also see rising delinquencies as people who might have good credit were still baited into taking the teaser rate ARMs which will be resetting. So, while CIBC could theoretically be right in calling a stabilization of subprime delinquencies, you still have to take into account the various other types of mortgages (like prime) which will also undoubtedly see rising delinquencies due to the crazy mortgages people with various credit grades and people from all walks of life were signing up for.

Those are the main slides I wanted to highlight, as I felt they clearly depicted some macro themes we have been seeing and will continue to see. You can check out the entire CIBC World Markets "The Age of Scarcity" slideshow by Jeff Rubin and Avery Shenfeld here.

Peter Thiel / Clarium Capital

Peter Thiel is the co-founder and former CEO of PayPal. Now, besides this endeavor, you might not know that he now runs a hedge fund, Clarium Capital. They are a macro based fund and have been doing quite well for themselves. 1440WallStreet had a great post about him the other day, including a video with some of his macro thoughts. The video is older, but is a must watch if you employ any sort of macro approach to investing. He's a smart guy and has been making tons of money by simply identifying trends.

Make sure you check out 1440WallStreet's write-up on Clarium and the vid of Thiel here.

Possible Snag for Wind & Solar Plays

Taken directly from tradethenews.com,

"

6/17/2008 02:50pm

US Senate vote blocks extending wind and solar energy tax breaks

- in a 52-44 procedural vote that blocked closure of debate on the bill, Republicans blocked the tax break extension for the second time this week. 60 votes are needed to end debate and move it toward a formal up or down vote."

Will be interesting to see how this plays out and how it might affect Wind & especially Solar stocks. Can they really survive without tax breaks and subsidies?

Adding to Walmart (WMT)

I like the looks of Walmart (WMT) here on this pullback. I added my initial position on the pullback to around $55 on the 50 day moving average just a few weeks back. It's run up and then now its back down testing the 50day ma support again, so I'm adding. I cannot stress enough how this is literally the only consumer name I'm playing (could make an argument for MA & V though). When times get rough, people flock to the cheapest of the cheap, and that's WMT. In my first post regarding WMT i mentioned that their stores are PACKED even at 11pm on a friday night when my friends and I stopped in to pick up some drinks.

If you're going to be long the consumer in any way shape or form, this is the play. The chart is perfectly uptrending, using the 50 day moving average as support; it really speaks for itself, just have a look. Buy WMT on the dips as the tight consumer only gets tighter. This can give your portfolio some good diversification away from energy, tech, and commodities (ie: the things that have been working in this market).

Long WMT (have half my position now & will add more on future dips)

3g iPhone = Huge Margins?

Let me start out by saying: don't worry, this is not yet another 3g iPhone hype post that you can find all over the internet. Instead, this is a post about meaningful implications for AAPL as a stock based on some recent information. Ok, so we all know the 1st iPhone was a semi-success, but now that AAPL will be releasing an even better version, expectations are much higher. The initial hype surrounding the 1st iPhone was about growth. "Oh this will be a huge growth product for Apple..." blah blah. The point is that apparently now not only will the iPhone be a growth story for Apple, but it could also be a huge margins story. Portelligent (through EETimes) are out with research stating that they think the new iPhone will cost as little as $100 to produce. This when the 1st gen iPhone cost around $170 to produce. Note: They haven't actually gotten their hands on a new iPhone and disassembled it. Instead, they've done some channel checks in terms of components to gauge pricing and come up with this sum. Although this can be an accurate ballpark figure, I just want to throw that caveat in there. But, even if that figure is just slightly off, the point is that AAPL will still be seeing huge margins and here's why.

AAPL is Billy Badass when it comes to component pricing. If you're familiar with their tactics, then you know they aggressively buy components to ensure their competitive market advantage. Carl Howe over at The Yankee Group gives a timeline of AAPL's business savvy:

"Apple paid $1.25 billion in 2005 to guarantee flash memory for iPods through 2008; that purchase made it nearly impossible for other flash music players to have competitive supplies and profit margins. Apple reportedly negotiated another similar deal in 2007."

And, Howe made this powerful statement as well:

"In fact, if these numbers are true and the carriers are subsidizing the phone, the iPhone 3G could end up being the most profitable product Apple makes. But more likely, this means that Apple has a lot more pricing flexibility than analysts have given them credit for."

The point is that AAPL will be paying much less for components this time around due to technological/engineering advancements and the bullying approach they take in the component space. The display will most likely cost them half as much this time around. Additionally, AAPL will be getting memory for the phone on the cheap and in turn can sell it to consumers for nearly 5x as much as they got it for. The point is that AAPL has significantly reduced their input costs this time around; even with more/newer components in the phone.

In terms of pricing, the phone will most likely sell for $399 straight up no-contract or $199 with the At&t subsidy for a 2 year contract. These figures already show the huge margins AAPL will be seeing with this product. The At&t subsidy is actually a great thing for AAPL because they will be selling the phones to At&t at full price ($399 or so) and then At&t will take the hit in terms of the subsidy to guarantee they get customers in the door buying the phone and signing up for 2 years of service. Zero risk for AAPL there, they don't take a hit.

So, why is this all important? Well, we all know the iPhone is a growth story for AAPL. What I don't think most people realize is the huge margins AAPL will be seeing with this product. With all the high-tech gadgetry inside this phone, people assumed it would cost a pretty penny to produce so AAPL's margins wouldn't be all that high. Au contraire; it sounds though as if those revenue figures would be massively understated. The Mac computer has been the driving force behind AAPL's success all along as they continue to steal market share and crank out sales of macbooks and mac computers. This is the perfect silhouette for what the iPhone very well could be. Mac computers = high growth + high margins. If the new iPhone follows this same formula, then AAPL could see a meaningful boost to their bottom line come September/October. And, the best part is, At&t will be taking the hit by providing users with the subsidy. This gives the iPhone a very competitive price point and many of the features the first gen iPhone lacked. In the end, all you have to ask is: What is AAPL best at? They create high margin products that people HAVE to have. End of.

Some Good Online Resources for Research

Just wanted to take a quick second to point out some great online research resources for those who might not know about them.
First, I want to point out The Wall Street Journal's Money Flow pages. These pages monitor "Buying on Weakness" in which they list the stocks that are down for the day but have seen the largest inflow of money. They also monitor "Selling on Strength" which shows stocks that are up for the day but have seen the largest outflow of money. Buying on Weakness can be found here. Selling on Strength can be found here.

Second, for those who are not necessarily actively trading in the commodities markets, but still want to know what's going on with oil and natural gas, here's your quick solution. It can be found at Bloomberg on their self-updating Energy prices page found here.

Thirdly, I want to link up Goldman Sachs' Conviction Buy List. Goldman is undoubtedly one of the best i-banks/hedge funds on the street right now, having navigated successfully through the credit crunch and recession (so far). Therefore, you should at least keep tabs on the info they release. Not to mention, the stocks that get added to/subtracted from this list will definitely move based on that news. StreetInsider tracks the list here.

Next, I want to link up MSN Money's Insider Buying/Selling tracker. This page monitors the top 10 largest insider purchases and top 10 largest insider sales in the last 30 days, The list is updated weekly on Friday and is based on Form 4 SEC filings. You can find that here.

In terms of news, you need to keep an eye on certain Economic developments and this calendar sets you up with all the action that will take place during the upcoming week on Wall Street. Its a great resource to have so you know what kind of catalysts are coming that will move the markets. Check it out here.

Lastly, just wanted to post up an Options guide for those who might be newer to Stock Options. They're a powerful and useful tool for investors, but you've got to know how they work and the various strategies you can use. TheOptionsGuide has a very good breakdown of all the various strategies here.

Alright, that's just a few for now, I'll add more as the days go on. Please feel free to add any other worthwhile sites in the comments section!

FundMyMutualFund.com - Check it out

Hey everyone, just wanted to take a minute to point out TraderMark's site: http://www.fundmymutualfund.com/. Many of you reading now undoubtedly came here through Mark's site, so you already know what he's up to over there. If you're unfamiliar with his site, he's on a quest to start his own mutual fund and has been cranking out pledges from readers, with this past month being his highest month ever in terms of pledges. This past month, he raised $901k and that brings his total pledges up to $2.5 million. He runs a virtual fund right now via marketocracy and has a solid track record based on his macro investment platform. If you're familiar with mutual fund managers, then think Ken Heebner (CGM Funds) with just a slight twist. He's very transparent, outlining his thought process and investment rationale through the blog. His investment style is very similar to mine and that's how I found him in the first place. Macro investors ftw!

At any rate, just wanted to give him a mention as he's doing a great job and deserves to be running a fund for his track record and the amount of time/hard work he puts into his passion of investing (all while maintaining a normal job as well!). You can pledge by dropping him an e-mail on his page or by posting a comment on one of his posts. If you're not interested in pledging, at least stop by to check out his economic commentary and market thoughts (well worth the read).

You can find his most recent reader pledge update here.

Housing Market Still Sucks... What Else is New?

In the spirit of my post below reminding everyone that we're still in a downtrend, I wanted to point out a post at The Big Picture by Barry Ritholtz. He posts up some staggering statistics taken from RealtyTrac, an aggregator of foreclosure data. In the month of May:

one in every 483 U.S. households received a foreclosure filing during the month of May. This is the highest monthly foreclosure rate since they began tracking foreclosures in January 2005.

And then accompany that info with the following chart. Obviously California, Nevada, Arizona, Colorado, and Florida continue to feel the pain. What's interesting to see is that the problems in Michigan seem to be slowly oozing into neighboring states Indiana and Ohio as well.



To everyone trying to call bottoms: give it a rest. The housing sector is accelerating to the downside. All you have to do is look at the data.

Just a Friendly Reminder: We Are Still in a Downtrend

While we may be due for an oversold bounce near-term, it's always good to take a step back and look at the big picture. Focus on the green trend lines I've drawn in. Until we get a full break to the upside of that trendline on some strong volume, we are still in a downtrend.

Chart: 1 year S&P500 daily


Chart: 1 year S&P500 weekly


Just your friendly neighborhood reminder.

Investing in Tottenham Hotspur Football Club TTNM.L / TTTHF

(Note: This write-up is prefaced by a post on investing in publicly traded professional sports teams found here, right below this post).

If someone gave you the opportunity to buy a stake in the Chicago Cubs, would you do it? How about the San Antonio Spurs? Or, *insert popular and/or successful team here*. The point is, I think everyone out there, regardless of what team they are a fan of, knows a successful franchise when they see it. And, as investors, we wouldn't turn down the opportunity to invest in such a thing. Now, Tottenham Hotspur aren't quite as dominant as the New England Patriots or New York Yankees, but they're generally the 5th or 6th best team in their league. So, think of a team that is generally 5th best overall in any given American league, and ask yourself if you would buy a stake in them if you had the opportunity. My point is: to most investors, investing in professional sports teams is usually off limits because they are private entities (not publicly traded) and you don't have the millions on hand to buy these teams. However, in England, this is not the case. Some of their teams are still publicly traded companies and you can buy as little as 1 share.

I'm an avid football/soccer fan and a regular follower of the English Premier League. So, my homework is already done, as I've been following the league for years and I know many teams inside and out. So, teams that can be bought on the London Stock Exchange are limited to: Sheffield United (SUT.L), Tottenham Hotspur (TTNM.L), Birmingham City (BMC.L), and Watford (WFC.L). Now, right off the bat we're limited in our options because we want to be buying teams who compete in England's top division, the Barclays Premier League. Sheffield United and Watford compete in the second division, so we don't want them. And, we don't want Birmingham City either because they've just been relegated down into the 2nd division this past season after a horrible performance in the Premier League. So, that leaves us with one option: Tottenham Hotspur. And, surprisingly, having only 1 option to invest in is not a bad thing at all, considering how well positioned Tottenham actually is. And, here's why:

1. Tottenham continually finish in the top half of the league and usually finish anywhere from 4th-8th place, just outside what is known as the "Big 4": Manchester United, Arsenal, Liverpool, & Chelsea. And, since all the above teams are already private, Tottenham are actually our best choice based on team performance should an outside buyer want to purchase them. On paper, they are the best available option in terms of available publicly traded buyout candidates. This past season was full of turmoil for them due to mid-season coaching changes and player transfers. But, now that they are building up their squad, they are ready to compete again.

2. They have a strong fan base & thus a strong revenue stream. Tottenham finished 3rd overall in terms of "Best supported Premier League Teams," behind only Arsenal and Manchester United. Tottenham Hotspur's White Hart Lane (their stadium), saw the total amount of people that attended matches last season: 683,370, an average attendance of 35,967 in a stadium with a capacity of 36,247. This means that their stadium was 99.23% full throughout the season. Again, I want to emphasize that Tottenham are 3rd in the entire Premier League (20 teams) in terms of best supported clubs. They definitely have strong revenue streams.

3. They've made some great acquisitions as of late. First, they brought in their new coach this season: Juande Ramos. He has previously won numerous UEFA Cup titles with his old club Sevilla, provides new hope. Secondly (and more importantly), they've signed Luca Modric from Croatia and Giovanni Dos Santos from Mexico, two promising young stars who've already proven they have talent. Basically, they've signed two very good attacking players who can only get better in order to complement the core of players they already have.

4. The stock itself is up 15% over the past year, and 664% over the past 5 years. Yes, that's correct, 664%. This reflects the growth of the Premier League itself as well as Tottenham's emergence as '5th or 6th best.' I say that mockingly because breaking into the Top 4 of English football is quite hard to do, as those teams are immensely talented. However, with Tottenham's recent signings, they are definitely sending signals that they are here to compete and are here to break into the top echelon of teams in the league.

5. Takeover rumors have begun to swirl over the past few years. The number being tossed around in one of the other rumored takeovers was £400 million, while the club currently has a market cap of £121 million. Believe it or not, there were rumors at one point that Phoenix Suns' guard Steve Nash wanted to buy the team (it's his favorite football club). After all, they are now the only publicly traded team left in the Premier League. If the trend continues, that won't last for long and they'll be bought out. And, the main part of this investment thesis was based on the identification of this buyout trend.

6. Two groups already have somewhat prominent stakes in the club, so they might want to takeover the club themselves, and a foreign buyer might not even be necessary. The current chairman's group, Enic, is the club's largest shareholder with 32% of shares. Secondly, Sir Alan Sugar, the former chairman, owns 14.6% of the shares. So, in addition to possible foreign buyers, you've got some large stakeholders who could possibly launch a bid as well.


At the same time, there are some barriers to entry & some possible downsides to this investment which need to be detailed.

1. Liquidity. It is only available on the London Stock Exchange or the Over the Counter (OTC) markets. And, unfortunately, if you're in America, this presents you with a problem. Even if you have an E-trade account with global trading, you still can't purchase TTNM because it does not trade directly on the London Stock Exchange, it trades on a secondary exchange (think ARCA for NYSE). E-Trade only lets you trade on the main exchange so this option does not exist for American investors. Secondly, even if it was available, this thing is not very liquid at all. Today, it traded just barely over 2000 shares. So, the only option American Investors are left with is to go with the OTC version: TTTHF. This trades just like the TTNM stock. But, you won't be able to track it easily since its OTC. For instance, if you pull a quote up for this, it shows that there is no volume, weird bid/asks, etc. Additionally, numerous brokerages won't let you buy OTC foreign ordinaries, so make sure you check with your brokerage.

2. Stock coverage. Over here in the states, you won't get the daily updates surrounding this name seeing as it trades in England. So, you'll have to take a proactive approach if you want to monitor the possible takeover situation. Not to mention, you'll want to keep an eye on the League Table/Standings, to see how well the team is performing (seeing as the stock will trade slightly based on how well they play). So, if you're not a soccer fan, this could become a burden. Not to mention, you can't even really track the equity you're technically invested in, TTTHF. You'll have to keep track of TTNM, the one that trades in London.

So, wrapping up. This is definitely not an investment for everyone considering the barriers to entry and the task of tracking developments. We have to evaluate this name by a different set of metrics simply because it trades differently than most equities. The closest comparison I can think of is biotech/biopharma stocks. Often times, biotech stocks trade on future pipeline and FDA approval, so you have to evaluate those equities in a slightly different manner. Tottenham is even more odd in that it trades on performance of the team, player signings/transfers, & possible takeover rumors/bids. Although the finances do of course matter, they play second fiddle to all the things just mentioned. I'm confident in this name because I'm an avid football/soccer fan and I have followed the league for years now. I am not biased because I'm not a fan of Tottenham. In fact, I'm actually a fan of a completely different team. So, favoritism obviously played zero role in my decision. I tried to look at things objectively from an outside , neutral perspective. Tottenham are easily the best available publicly traded football club left. And, even if there were more options for us in terms of publicly traded teams, I'd still choose TTNM.L/TTTHF simply because they're consistently in the top 33% in the league, they have a very strong fan/revenue base, and are the best possible option right now. Not to mention, reatil investors will never have a realistic chance of investing in the top 4 teams in the league (ManUtd, Arsenal, Chelsea, Liverpool).

This thesis is mainly based on a rising secular trend. We've seen increasing foreign ownership in Premier League clubs as new ownership groups take these clubs private. While this trend is gradually rising, we have to highlight that this is an event driven play and the timeframe for a catalyst is obviously unknown. While Tottenham has a lot of potential as a buyout target, there are other factors to consider. As always, do your due diligence before investing and see our disclaimer at the bottom of the site.

Investing in an Alternative Sector: Publicly Traded Professional Sports Teams

As investors, we're always looking to diversify across various industries and markets, especially internationally. And, this post is a result of combining two of my passions: investing and sports. In particular, I'm talking about investing in publicly traded football (soccer) teams. Now, I've probably lost my audience already haha, seeing how soccer is not exactly the most popular sport in America. But bear with me! Its the most popular sport practically everywhere else in the world. And, especially in the UK. So, we can capitalize on that.

First, let me address the rising secular trend in this segment that I have noticed over the years: increasing foreign ownership. Specifically, in the Barclays English Premier League (England's top football/soccer division), numerous American and various other foreign owners have taken clubs private. Previously, many of these teams were actually traded on public exchanges. Today, there are only a handful left that trade on exchanges. Football clubs that have been taken private by American owners include: Manchester United by Malcolm Glazer (he also owns the Tampa Bay Buccaneers), Aston Villa by Randy Lerner (he also owns the Cleveland Browns), Liverpool by Tom Hicks & George Gillett (Hicks is the American and he owns the Texas Rangers and Dallas Stars). Additionally, you've got Stan Kroenke who has slowly but surely been building up a stake in already privately held Arsenal (he also owns the Denver Nuggets, Colorado Avalanche, and US soccer team Colorado Rapids, among other things). And, this is just covering the American owners side of things. Recent developments have seen numerous other nations trying to get involved, including Dubai International Capital (DIC), who are trying to acquire Liverpool from either Hicks or Gillett. And, a few years back, billionaire Roman Abramovich bought out Chelsea and took them private. There are even more, but those are the major ones I wanted to touch on. The point is that there are only 20 teams allowed to compete in this prestigious league, and I'm fairly confident all the rest of them will be bought out over the years.

Basically, the trend here is increasing foreign ownership of English Premier League teams. And, with only a few publicly traded teams left, now is the time to act. The main investment thesis here would be to buy a stake in a successful Premier League team on public exchanges and hope it receives a bid to be taken private, thus allowing your shares to appreciate in anticipation of this bid, or outright selling your shares to the new hopeful private owners. Now, this presents a problem in that you don't want to be investing in something *solely* with the hope of a buyout. So, there's got to be another reason to own the stock. And, luckily we've found one: team performance. These club's shares typically trade on team performance and club happenings (signings, player transfers, etc). While financials obviously still matter, these stocks trade differently than typical equities. So, the investment thesis here is more macro in nature as you seek to capitalize on increasing interest in the Barclays Premier League by investors wishing to take sole ownership of the club. But, at the same time, you will need to invest in a team who realistically has a shot of performing well in the league. And, this is where my sports passion/knowledge comes in.

By following the Premier League for years now, I've been able to really get a feel for the league in terms of successful clubs vs unsuccessful clubs. I've used this knowledge as my research in order to highlight potential investing opportunities. Again, this is mainly an event driven pick based on a rising secular trend. The caveat here is that you could be waiting a long while for the catalyst to occur. However, the trend seems to be slowly building up as investors realize the investment potential in the English Premier League. Tune in tomorrow morning for the follow-up post presenting an investment idea. Click here for the follow up post.

Fundamentals / My Quick Value Scan

One thing that's bothered is me is I've come across blogs that post up "Oh I ran my scan yesterday..." but they fail to tell us what the scan actually is, as if its some huge protected secret. So, thought I would go over one of the main scans I run to get a quick glance at possibly undervalued equities.

This is a quick fundamental scan I run on yahoo finance, just to keep up to date weekly on what equities are nearing tempting levels. This is a value based scan, but I am NOT a deep value investor. So, the various banks or retailers that come up in this scan I'll take a quick look at, but I rarely invest in or trade those names. You have to weed through the garbage, because more often than not, there's some garbage that shows up. I'll call this scan "QuickValue". This scan has provided me with past beauties such as Ensco drilling (ESV) and more. Let's get to it, here's what you want to run in your scan:

PE < 15 (<25 if you want to loosen up the restrictions)
Return on Equity > 20%
PEG ratio < 1 (< 0.5 for extremely undervalued companies)
Price to book < 2.5 (< 1.2 if you wish to be like Benjamin Graham)
CurrentRatio > 1.5
Price to sales < 5

A few additional categories you can add:
Strong dividend growth
Low debt to equity
EPS growth of 3.3% of more year over year for a 5 year period
Strong Insider Ownership
Strong Institutional/Hedge Fund Presence

Now, as you can see, you can tweak a whole bunch of different things within that scan (omit a few categories, add a few categories, etc). I run the loose scan first and then fiddle around a little bit. Please note that I do NOT find all my companies through this scan. Companies like Apple (AAPL) and some of the fertilizer plays Potash (POT) and Mosaic (MOS) would never show up on these scans, and yet I'm invested in them. This is just one of the starting places I look for ideas in terms of value. Remember, this is a quick, loose VALUE scan.

Typically, the main things I look for in my companies not necessarily found in this scan are operating margins between 15-20%, a return on equity greater than 15%, strong (accelerating) quarterly revenue growth on a year over year basis, strong (accelerating) quarterly earnings growth on a year over year basis, a PEG ratio of under 1, a price to sales of under 5, insider/institutional/hedge fund ownership.

This is just an idea of fundamental things to look at when you're starting your research on any stock. This is literally just the tip of the iceberg in terms of fundamentals. But, I've found it to be a good starting place to generate some ideas and find some value for the value side of the portfolio. Fiddle around with some of the constraints and see what you come up with. Anyone have any other favorite scans they use pretty often?

Thermo Fisher (TMO): Critical Juncture

As you can see from the chart above, Thermo Fisher Scientific (TMO) has been forming a beauty of a triangle over the past few months. Triangles of this size usually imply consolidation before a big breakout/breakdown. And, this one certainly looks like it will breakout to the upside, given the number of times it has tested overhead resistance at around $59. But, at the same time, it very well could breakdown below its triangle given the shoddy market conditions we've been seeing. I'm in this name and have been for a while. This is not a trade for me, its an investment. TMO and MIL make up my "life sciences" basket in my portfolio. And, an added bonus is that numerous very smart hedge funds have been accumulating positions in TMO over the past few quarters. (Most notably, Blue Ridge Capital, as detailed here).

So, even though I'm personally not trading this name but rather investing in it, I'm definitely keeping my eye on the overhead $59 resistance and the trendline that is established on the bottom side. If we break below this trendline and make a lower low, I will most likely exit this name and look for a better entry point to get long this as an investment again. This is why technicals are so important and can be a great weapon to add to your investment arsenal. Even though I think TMO is a great name to own, this chart is implying a big move soon, most likely to the upside. I believe this is the case because the formation has been building for months and accumulation/distribution is showing slow and steady accumulation over the months. So, keep an eye on it, and get in it for a trade or an investment, whichever you prefer. Momentum traders would like to play this name on a move upwards of $59 on some solid volume. Whereas others might like to play it right now on todays bounce off the 50 day moving average.

All I know is that TMO is making higher lows and has consolidated beautifully over the months. Look for a move with conviction in either direction. Just let the break of the triangle dictate whether to get long or short. I know I'll be monitoring my position intently due to the nature of this market and the nature of this big formation.

Starting a position in Millipore (MIL)

I had written back in my 13f hedge fund analysis of Blue Ridge Capital here that I thought it was interesting that they started a new position in MIL last quarter and brought it up all the way to the #4 fund holding. I was intrigued, so I started my research on the company. And, what do you know, we might have found a winner. Jeffrey McLarty had actually written about MIL here in his breakdown of the water etf PHO. And, although he didn't necessarily like MIL as a play on water, he said he was intrigued by the company itself and decided to revisit the name later.

I really wanted in this name, but it has had a big run over the past few months. So, now coming up on close to a 50% retracement of that move, its time to dip my toe in the water with 1/4th of my total position in MIL that i'll be assembling. I'm flagging this as a buying opportunity mainly because the chart sets up wonderfully here and as I said, its retraced some of its move. (Click the chart to enlarge it). But, besides that, if you look at the blue circles I have drawn on the chart you will see some commonalities. First, at the very top in the RSI. The RSI is in a current uptrend, making higher lows and higher highs, obviously bullish. Additionally, each drop of size in the RSI has signaled a buying opportunity. Secondly, looking at the second set of circles on the stock chart itself, we see that MIL has dipped to support and buying support is always a wise move. The first dip was obviously a double bottom, as signaled by the neon green line I've drawn in there around $65. This double bottom is also significant as it signals the place at which I would really like to load up on shares. And, it gives us a clean stop if we put it below that double bottom. Thirdly, moving down to the blue circles within the stochastics. You will see that each time the stochastics have crossed below 20 into oversold territory, it represents a buying opportunity. Combine all the above with the fact that MIL has completed almost a 50% retracement of its last major run, and you've got the combination for a great entry point.

So, with that said, I'm beginning my position in MIL with 1/4th of my position size here maybe slightly prematurely at $69.34. I'll be back with another post later as to why MIL makes a great investment in the first place. But, just wanted to get this on people's screens as I know some were interested in this name due to the fact that Blue Ridge Capital added it as a new holding, and added it with conviction. When Griffin brings a holding all the way up to the fund's 4th largest holding all in 1 quarter, you know he's up to something.

Oil... $120 is the make or break point. I expect a bounce

Wanted to touch on oil here since its such a big part of the markets these days. Currently, its pulling back and expectedly so. It was due for a pullback, but now we are approaching a very important make or break point: $120. As you can see in the chart above, every dip in oil has been a buying opportunity. And, interestingly enough, each dip has dipped all the way to the most recent peak and then bounced off that peak. Because, after all, that peak used to be past resistance. But, once we blasted through it, it became future support. For some reason I can't get my graphics to show up on the chart but do me a favor and just mentally draw a line horizontally across the $120 mark. There you will see where the pullback is headed. And, if look at the peak in the end of April, where does it sit? Yep, right at $120. Here's the deal, I'm short-term bearish on oil simply because it needs to pullback even more. All you hear about now is consumers complaining about $4 gasoline. So, with demand in the US (one of the biggest consumers of crude) decreasing, oil needs to pullback in price. Pure supply and demand economics. But, here's the catch. You can't expect that to happen because markets can remain irrational longer than you can remain solvent. So, I am *fully* expecting a bounce at $120 if we even get that low. Traders, speculators, you name it, they will all be rushing into this name on a beautiful technical bounce off of past resistance/now future support, as well as the moving averages. I've drawn the exponential moving average in red and the simple moving average in blue, since I know various people use various averages. But, this shows that both are right around $120. It's an imperative level and just wanted to make sure everyone had seen it. Not to mention, stochastics are oversold at current levels, implying a bounce. I don't usually look at stochastics on commodities in general, I typically use them just for stocks. But, its worth mentioning as it also backs up the argument for a bounce at $120.

So, buy oil on the dip to $120 for a trade at the very least. Place your stops below that and call it good. If it breaks below your stop then it's time to get short because then oil is heading lower and will have made a technical breakdown. You can play oil with ticker USO which is the US Oil Trust (think GLD but for Oil). Or, you could play it through the deep sea drillers like RIG, DO, ATW, etc. I'd recommend USO simply because the chart is identical to $WTIC (crude), so you've got clear entry/exit points. Whereas on RIG etc you've got to monitor the price of oil yourself and then set conditional buy/sell orders on those stocks once oil hits a certain price, triggering your order to buy/sell RIG or whatever oil company you choose to play it with.

Also, just wanted to throw in some commentary from oil greats Richard Rainwater and T. Boone Pickens. If you're unfamiliar with Rainwater, he's down in Texas and was famous for striking it big on heavy bets on Disney as well as heavy bets on the appreciation of the price of oil. He and Boone share the Peak Oil Theory belief. At any rate, Rainwater says he's short-term bearish on oil, and he makes the right case in this Time article here.

Boone Pickens also spent some time talking to Time magazine about oil (and his odd position in Yahoo YHOO). You can check out that video here.

Hedge Fund Tracking: Atticus Capital's 13F (Timothy Barakett)

(Note: Before reading this update, make sure you check out the preface to the series I'm doing on Hedge Fund 13F's here)

Atticus Capital is a $13 billion hedge fund ran by Timothy Barakett. In 2005, Atticus' funds were up a combined 45%. And, they finished well over 30% for 2006. Barakett founded the firm at age 26 in 1995 and focuses on taking large, concentrated positions in companies. One of Atticus' most famous investments was Phelps Dodge, a miner which was bought out by Freeport McMoran (FCX). At one point, Atticus owned more than 9% of Phelps. And, they continue to hold their position in what is now the combined FCX. Barakett received his BA in Economics from Harvard and his MBA from Harvard as well. Its very evident that Barakett employs macro based investment theses. Once he has decided on what the trend is, he will find the best company within that trend and he will place a big bet. And, when needed, he will step in and take an activist role, ensuring the company is performing to his liking. And, much more often than not, he wins.

I love covering Atticus simply because their investment style is the most similar to mine that I have found thus far, in terms of hedge funds. (Well, minus the activist part since I'm a measly retail investor haha.) I will be detailing the changes to Atticus' portfolio as referenced in their latest 13F filing, which shows the portfolio changes they made last quarter. I won't be going into as much detail on Atticus as I have on the ex-Tiger Management funds (Lone Pine, Blue Ridge, Maverick) simply because Atticus has fewer, more concentrated positions. So, I'll cover the major moves and give the jist of what's going on in their portfolio. Just remember that this is by no means all their positions; they have some more, but they are literally tiny positions. With Atticus, you want to be placing your money with their big bets. These are just the bigger/notable moves that they made.

New Positions:
AngloGold Ashanti (AU) 918,000 shares
Newmont Mining (NEM) 1,022,400 shares
Visa (V) 7,799,500 ipo shares

Added to:
Genomic Health (GHDX) increased by
Goldfields (GFI) increased by

Reduced Positions:
CSX Corp (CSX): sold out of all their CSX shares, and sold half of their CSX calls.
Freeport McMoran (FCX) Shares: reduced from 16,393,273 shares to 11,523,563 shares
Freeport McMoran (FCX) Calls: reduced Calls position from 10,014,400 shares through calls to 2,214,900 shares through calls
Mastercard (MA) Shares: reduced from from 4,093,290 shares to 3,621,683 shares
Mastercard (MA) Calls: reduced Calls position from 1,594,600 shares through calls to 194,600 shares through calls
Norfolk Southern (NSC) Shares: reduced from 5,634,016 shares to 1,921,900 shares
Norfolk Southern (NSC) Calls: reduced Calls position from 203,600 shares though calls to 0 shares through calls
NYSE (NYX) Shares: reduced from 15,261,911 shares to 13,955,540 shares
NYSE (NYX) Calls: reduced Calls position from 7,251,400 shares though calls to 0 shares through calls
Occidental Petroleum (OXY): reduced from 9,428,982 shares to 7,414,900 shares

Removed Positions:
Inverness Medical (IMA)
Monsanto (MON)
Moody's (MCO)
Praxair (PX)
Research in Motion (RIMM)
Verisign (VRSN)

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Breakdown: Alright, so after checking out the major moves from Atticus' portfolio, its very clear to see that Barakett is putting big bets on gold through the miners themselves. It appears as if they were taking profits from their long held Phelps Dodge (now FCX) and applying that cash to pick up and add to other miners. The weird thing here is that FCX, although their name has "Gold" in it, is mainly a copper producer. These other miners they added are mainly gold miners. So, since we cannot see commodity holdings through the 13f's, I would bet that Barakett owns some gold. Because otherwise, his choice to play this thesis through the miners baffles me, because he is exposed to the company specific risk. He has protected himself somewhat by diversifying amongst the miners, spreading his risk around. But still, a puzzling move to me. While I agree that the US faces heavier inflation fears than construed by many, his bet on the miners is taking some time for me to digest. I do not see the Gold etf GLD in his portfolio, so I would guess that he owns some of the actual commodity. That is, unless, he sees something completely different in the miners themselves. Clearly though, he was buying the dip in gold. And, although he takes some profits in FCX, it still continues to be the fund's #1 holding. Note though, that his position size in these miners pales in comparison to his various other top fund holdings, ie: the gold miners are not massive holdings in his portfolio, save for FCX, which is a copper play anyways, so there's a difference.

They got their hands on a massive allocation of Visa (V) ipo shares, and so that has undoubtedly paid off. I'm sure they will sell a little bit to take some profits, but hold the vast majority, as they have done with Mastercard (MA). It is very apparent that Barakett is a big believer in MA's global presence and expansion. He sold a little MA, but again, not substantial enough to be more than profit taking. After all, MA is up huge. V fits right in there with that same thesis so it makes sense for him to add in mass on the ipo where he got the shares dirt cheap (damn you!). His position in MA is worth twice as much as his position in V (in $ value). Look for him to possibly even add even more V on any dips.

What I haven't necessarily detailed here is Atticus' massive position in the rails. Although they sold out of most of their CSX, they have absolutely HUGE positions in BNI and UNP (in fact, they are the fund's #4 and #1 holdings respectively). So, they have slowly but surely traded out of CSX over the past few quarters in favor of BNI and UNP. No surprise here, as almost every smart guy on wall street is in big on the rails.

Ahh NYSE (NYX), good ole NYX. This is a pretty massive position for Atticus, still in the top 10 of holdings even though they've been selling some off. As a recent shareholder myself, I know the pain they must be feeling. The thesis behind investing in NYX makes perfect sense and I'm right with Barakett on it. But, it seems as if this is going to take much longer to play out than he has imagined. He's been reducing his position size a little bit to reduce his risk, considering he must have been taking quite a big hit from this position. We'll see if he has dwindled it down even further next quarter. If that's the case, it might be time to re-evaluate NYX as there might be fundamental problems with this name.

Barakett continues to play oil through Conoco Philips (COP) and Occidental Petroleum (OXY). Although he sold off some OXY, he still has a pretty large position. I would guess he was just taking profits in that name, as it is up pretty significantly. His position in COP is larger anyhow.

Other odds and ends worth pointing out is Atticus' tiny position in Clean Energy Fuels (CLNE). Sound familiar? Yep, this is Boone Pickens' company. And, Boone Pickens' BP Capital has a pretty hefty position in his own company too. Just thought that was interesting. Also worth noting is that Atticus has a pretty sizable stake in Crown Castle (CCI). I was puzzled as to why Maverick Capital had sold out of their CCI last quarter, but its reassuring to see Atticus still holding a large position in it. Having done more research on it over the past week, it really makes sense to me as an investment and I really am dumbstruck as to why Maverick sold it off. Also, just like practically every other well known hedge fund, Atticus holds decent positions in all 3 of the major Brazilian banks: Unibanco (UBB), Banco Bradesco (BBD) and Banco Itau (BBD). Typically, it seems that most hedgers have bigger bets on ITU and BBD. But, Atticus is the inverse in that their position in UBB is the size of their position in BBD and ITU combined. These are three of the staples for any Brazilian index fund. And, with good reason. These names are very compelling due to their positioning in a blossoming Brazilian financial scene. I haven't been in these names ever since I sold out to take profits, but am definitely at looking to get back in. I'm invested in a Brazilian index fund for my retirement account, but I need more Brazil exposure in my macro investment account.

The main thing that strikes me overall about Atticus' portfolio is the conviction with which Barakett invests in the trends he really believes in. His portfolio has either a tiny stake in the stock, or a massive stake in the stock, hardly much in between. There are only a handful of names in his portfolio that fall in the "in between" category. And, this is after the fact that I've taken into account that the sectors he's bet big on have appreciated a lot in value. Even after subtracting what I gauge to be "fair profit" in those names, his original positions in those names are still among the largest in his portfolio. So, the argument that they are his largest holdings due to their large appreciation is a non-factor. He's got massive bets on in payment processing, precious metals/mining (FCX), oil, and the rails. I'll be keeping a close eye on which of the "smaller" holdings suddenly become elevated into a large holding. Because when that happens, Barakett has come to his next macro conclusion and will have acted swiftly.

Personal Favorites out of Atticus' Portfolio: MA, V, OXY, FCX, (NYX - even though its a death trap), UBB, ITU, BBD, CCI

Most interesting moves: Using some profits from FCX to load up on various gold/precious metal miners. I've never thought the gold miners themselves to be that great of investments. I only like FCX so much because its not really a gold company, they're much more of a copper and molybdenum story. Selling completely out of RIMM was also interesting... I'm sure he'll be back once those shares come crashing down again. But, he still has a decent sized position in Baidu (BIDU) for 'tech' exposure.

Note, of their positions, I'm long: MA, V, OXY, FCX, NYX, BNI

Names I want to research further: CCI, BBD, ITU, UBB, PAC

Look out in the coming days as I wrap up the hedge fund coverage with a few last 'notorious' funds and whales.

Wow...

So, fresh off my post about owning MA and V as your play on financials, I receive this chart... what timing! Barry Ritholtz over at Big Picture has a nice graph (seen above) of banks that have accessed the fed's discount window. As you can see, this year has been record setting to say the least in terms of banks needing help. So, what's next? Implosion? Just another reminder as to why I want to avoid the financials in general and stick to best of breed in the space if you really feel the need to be in there. Some of these companies' balance sheets are giant mysteries, and Lehman (LEH) scares the crap out of me right now with all their level 3 assets or whatever. Click on the graph to enlarge it and get an up close and personal view of how "well-run" our banks are at the moment.

Why the only "financials" you need to own are Mastercard (MA) and Visa (V)

I love it when the media (especially those yaks on cnbc) always ask "Is now the time to buy the financials?!?!" Personally, I steer clear from most of them, except for a revered few. And, they don't even really count as true 'financials.' I'm talking about Mastercard (MA) and Visa (V). I want to preface this by saying that by no means do I recommend jumping into these names right now at these levels. They've had massive runs and undoubtedly are due for pullbacks. But, I just want to put it on your radar for when they eventually do pull back. I've been selling into the strength and only have a little bit of each left and am dying for a pullback to load up on these names. I'm starting to feel empty inside because I can't have full positions in these dominant companies haha.

(Side Note: Now, don't get me wrong, there are 2 ACTUAL financials that I like, US Bank (USB) and Goldman Sachs (GS). USB because of the strong 5% dividend and solid dividend growth, as well as a pretty cautious management team. They seem to have weathered the majority of the storm in terms of the credit crisis/housing woes, and the stock mainly trades sideways. So, I just pocket the dividend and write some covered calls on that badboy to create some nice cashflow. Treat this name almost like a CD or a high yield savings account (but higher yielding). GS, on the other hand, is by far the best of breed investment bank and they get dragged through the mud with the other banks due to guilt by association. In the long run, look for them to distance themselves from the pack and truly outperform. Look to really load up on shares around $160 or even $150 if it trades that low. GS and USB are the only "true" financials I touch with a ten foot pole.)

The main thing that prompted me to post about MA and V has been SunTrust's analyst coverage of the names. Normally, I don't pay much attention to analyst estimates because half the time the analysts are wrong. But, I pay attention to these calls solely because time and time again, SunTrust has been ahead of the pack (and rightly so) in terms of realizing the true revenue that MA and V can grow. Notable Calls has been right on the money by flagging this for their readers. SunTrust now has a street high estimate for MA 2008 and 2009 EPS. Last week, SunTrust raised fical 2008, 2009, and 2010 EPS estimates for V. For V, they raise 2008 estimates from $2.04 to $2.11, 2009 estimates from $2.69 to $2.96, and 2010 estimates from $3.55 to $3.82. As you can see, these are pretty substantial boosts. Then they come right back this week and raise MA's estimates even higher. They boosted MA's 2008 estimates from $8.68 to $8.94 and 2009 estimates from $11.08 to $12.17. Once again, a pretty notable increase. SunTrust suggests that MA could see sustainable EPS growth of at least 20%, which is huge. The overall belief is that MA and V are seeing pricing power in their industry niche of payment processing with no credit risk. They have operating leverage (and are continuing to reduce operating costs) and are seeing massive volume growth. Voila - my investment thesis all along. Suntrust has an argument for those who say MA and V are rich in valuation now: They believe that this is due to the fact that analyst estimates are simply too low and flat out unrealistic.

This reminds me of the exact situation that has been occurring in the fertilizer segment of the agriculture trade. Analysts simply have too low of estimates and these companies are actually trading at much cheaper multiples than we think. 6 months later in the fertilizer game and analysts are STILL playing catch-up. Now, I don't think MA and V are seeing the kind of secular growth explosion that MOS or POT are obviously; but, at the same time, I definitely agree that analyst estimates are too low on MA and V and there is a secular trend building. SunTrust is the only analyst I'll follow on this group simply because they are leading the pack of analysts right now and until the others play catch-up, SunTrust is the only bank out there who "gets it." Through my time in the markets, I've found that certain analysts in each sector are just flat out better than others (surprise, surprise), and you've got to find those analysts and only listen to them. Listening to the others is just a truckload of garbage and noise. So, SunTrust is way ahead of the game here and look for others to follow suit once they crunch the numbers and take a look at what is really happening in the world of global payment processing and realize that their estimates are way too low.

The phrase "global payment processing" is all you really need to know about these companies. They are global stories and most of the growth is occurring away from American shores. Despite an economic slowdown/recession in America, MA and V continue to see huge revenue growth due to international consumers' willingness to use plastic rather than cash. The slowdown in spending from American consumers is not even a chink in the armor of these guys. Think of the rest of the globe as Americans 10 years ago. Eventually, everyone gets used to using debit/credit cards and starts carrying less cash. I can't underscore this point enough. The international opportunity for these names is huge. If they can get consumers in other countries to use their cards even HALF as much as American consumers, they will see record numbers.

Plain and simple, MA and V are payment processors who bear ZERO credit risk. If you want some credit risk, you can always go with some American Express (AXP), if that's your cup of tea. I can see the appeal there, and so does Blue Ridge Capital (seeing as they really loaded up on shares of AXP last quarter). But, I prefer MA and V due to the sheer volume of cards they have in consumers' hands worldwide. I want to stress again that I usually do not pay a ton of attention to individual analyst estimates. But, when you see a firm come out with street-high estimates, constantly leading the pack of analysts, it gets your attention. I think these guys are right on the money and that's why I wanted to point it out. They've been talking my investment thesis in these processors all along. Oh, and did I mention that Lone Pine Capital has a pretty hefty position in MA and V, as detailed here.

Disclosure - long MA and V at the time of writing, but have been selling into strength lately. Looking for a pullback of any size to really begin to add. Keep these names on your radar.

Maverick Capital's 13F (Lee Ainslie)

(Note: Before reading this update, make sure you check out the preface to the series I'm doing on Hedge Fund 13F's here )

Lee Ainslie started Maverick Capital back in 1993 with $38 million. Nowadays, the fund is worth $10 billion, so you can already see the track record he's established. Ainslie, like many of the other fund managers I've profiled, has a background rooted in learning from legendary great Julian Robertson at Tiger Management. So, due to the fact that these proteges learned from the best and have had great success running their own funds, I continually try to find a reason NOT to follow these funds. And, needless to say I'm never successful. Time to learn from the greats! Some of my contacts over at Maverick have explained to me that their strategy is straight up stock picking, both long and short. They made it clear though, that they do not employ pairs trades. Although, some of their long/short setups might be in the same sector. They try to hedge their positions like a true hedge fund by picking out the shining stars in certain sectors, as well as identifying the pieces of garbage. Now, of course, this presents us with a problem in that the 13F filings only show long positions (unless they're holding puts on a name, we can see those). So, a good amount of Maverick's portfolio (the entire short side) is unbeknownst to us, because they have reported zero put positions. But, let's look on the bright side in that we can see all their long positions. Maverick uses a value approach (obviously learned from Julian) and one of their most popular metrics is finding companies and comparing their enterprise value to sustainable free cash flow. So, now that we've got a little background on Maverick, let's see what they were up to. Rumor has it that they had a poor start to the year, and they were definitely out switching things up in mass in their portfolio.

New Positions: (in no particular order)
American Capital Strategies (ACAS) 581,590 shares
Bankrate (RATE) 100,100 shares
BonTon Stores (BONT) 57,000 shares
BPW Acquisitions (BPW) 2,000,000 shares
Citrix Systems (CTXS) 4,007,280 shares
Crocs (CROX) 515,389 shares
Discovery Holdings (DISCA) 6,063,297 shares
Dish Network (DISH) 5,977,630 shares
Infinera (INFN) 2,524,117 shares
JPMorgan Chase (JPM) 4,745,330 shares
Liberty Media Corp (LMDIA) 5,726,736 shares
Loews (LTR) 2,297,358 shares
Nordstrom (JWN) 4,386,874 shares
Sears (SHLD) 848,724 shares
Starbucks (SBUX) 12,512,559 shares
Wyeth (WYE) 4,282,850 shares

Added to:
Advanced Micro Devices (AMD) increased by 12% (3,956,220 more shares)
Amylin (AMLN) increased by 28% (544,550 more shares)
Apple (AAPL) increased by 3.6% (80,965 more shares)
Autozone (AZO) increased by 99.8% (1,005,200 more shares)
Avon Products (AVP) increased by 82% (2,863,320 more shares)
Bank NY Mellon (BK) increased by 24% (1,174,155 more shares)
Baxter (BAX) increased by 38.5% (930,840 more shares)
Burlington Northern (BNI) increased by 151% (1,007,490 more shares)
Cardinal Health (CAH) increased by 12% (350,230 more shares)
China Nepstar Chain Drugstores (NPD) increased by 68.5% (960,605 more shares)
Cognizant (CTSH) increased by 3.6% (181,168 more shares)
Covidien (COV) increased by 57% (1,483,210 more shares)
Cypress Bioscience (CYPB) increased by 123% (1,458,064 more shares)
Direct TV (DTV) increased by 25% (1,438,140 more shares)
Fidelity National Info (FIS) increased by 41% (1,286,091 more shares)
Google (GOOG) increased by 49% (98,722 more shares)
Hanes Brands (HBI) increased by 37% (896,563 more shares)
Home Inns & Hotel Mgmt (HMIN) increased by 28% (633,753 more shares)
Leap Wireless (LEAP) increased by 19.5% (217,011 more shares)
Lumber Liquidators (LL) increased by 7% (147,720 more shares)
Marsh & McLennan (MMC) increased by 13.6% (888,850 more shares)
MetroPCS (PCS) increased by 32% (1,032,857 more shares)
Mylan (MYL) increased by 52% (3,463,006 more shares)
Nucor (NUE) increased by 19% (307,337 more shares)
Research in Motion (RIMM) increased by 179% (2,174,226 more shares)
Resmed (RMD) increased by 11% (186,168 more shares)
Salesforce (CRM) increased by 63% (818,010 more shares)
Sandisk (SNDK) increased by 7% (399,180 more shares)
Textron (TXT) increased by 31% (988,240 more shares)
UnderArmour (UA) increased by 81% (1,622,662 more shares)
United Health (UNH) increased by 31% (832,673 more shares)
VMWare (VMW) increased by 5% (60,000 more shares)
Zimmer Holdings (ZMH) increased by 36% (623,610 more shares)


Reduced Positions:
America Movil (AMX) reduced by 34.5% (1,907,040 less shares)
Berkshire Hathaway A (BRK.A) reduced by 43.5% (635 less shares)
Berkshire Hathaway B (BRK.B) reduced by 22.8% (3,687 less shares)
Corcept (CORT) reduced by 8.5% (128,480 less shares)
Cumulus Media (CMLS) reduced by 21% (526,311 less shares)
Gamestop (GME) reduced by 14.6% (676,378 less shares)
Genentech (DNA) reduced by 9% (150,290 less shares)
Gmarket (GMKT) reduced by 56% (308,037 less shares)
Harmonic (HLIT) reduced by 10% (574,361 less shares)
Lexmark (LXK) reduced by 49% (2,161,513 less shares)
Marvell Tech (MRVL) reduced by 3% (551,916 less shares)
Monsanto (MON) reduced by 11% (190,570 less shares)
Office Max (OMX) reduced by 22% (1,464,249 less shares)
Potash (POT) reduced by 11% (123,790 less shares)
Qualcomm (QCOM) reduced by 37% (3,851,237 less shares)
Raytheon (RTN) reduced by 19% (861,290 less shares)
Suntrust (STI) reduced by 54% (1,194,028 less shares)
ThermoFisher Scientific (TMO) reduced by 33% (1,782,100 less shares)


Removed Positions:
Positions Maverick sold out of completely
Altria (MO)
Atheros Comm (ATHR)
Biogen Idec (BIIB)
Burger King (BKC)
Crown Castle (CCI)
CVS Caremark (CVS)
Digital River (DRIV)
Echostar (SATS)
Five Star Quality Care (FVE)
Guess (GES)
Healthnet (HNT)
Macys (M)
Men's Warehouse (MW)
Merck (MRK)
Omnicare (OCR)
Wellpoint (WLP)
Wyndham (WYN)
Yahoo (YHOO)


Positions with no change:
Bluefly (BFLY)
Cnet (CNET)
First Advantage Corp (FADV)
First Marblehead (FMD)
Gilead (GILD)
Move Inc (MOVE)
Newstar Financial (NEWS)
Palm (PALM)
Trubion Pharma (TRBN)
Ultra Clean Holdings (UCTT)
Vivus (VVUS)
Western Union (WU)


Top 10 Holdings by % of Portfolio:
1. RIMM (Top holding)
2. AAPL
3. QCOM
4. AVP
5. BK
6. GILD
7. GME
8. RTN
9. AMX
10. TXT



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Breakdown: Alright, so right out of the gate the first thing I noticed was Maverick's heavy tech weighting, much like fellow Tiger Cub funds Lone Pine and Blue Ridge. Maverick's top 3 holdings are all tech in RIMM AAPL and QCOM. And, Maverick even reduced their QCOM position by almost 40% and its still the #3 holding. I'm sure given the big run tech has had lately (especially AAPL), that Maverick will show some profit taking next quarter in the next round of 13Fs. They just clearly loaded up on tech on the big dips, and they've profited quite handsomely from that play it seems. Ainslie added to Avon Products (AVP) by 82% and brought it up to the #4 fund holding, which is a strong move. Ainslie also added heavily to Autozone, increasing it by almost 100%, and bringing it to a notable 11th largest fund holding. Also, he added Bank New York Mellon by 24% and it sits at the fund's 5th largest holding. Maverick clearly wants to play the financial space through BK and then also JPM, which they also added as a brand new holding this go round. And, they added in mass too, with a whopping 4.7 million shares. Take a closer look at those two if you want financials exposure. Ainslie also started a pretty decent sized position in Citrix, who specialize in IT and the such. I would say they were trying to play the VMWare trade through the backdoor, but they already have VMW in the fund as well. Another new addition to the portfolio this go round was Wyeth, which they added a strong 4.2 million shares of. Also, it seems like Ainslie added SBUX as well, buying on the dip when Schulz came back. We'll see if they still hold those shares in the next quarter.

In terms of further adding to positions they already owned, Maverick really loaded up on BNI, a whopping 151%. And, keep in mind, that stock has already made a monster move, so they weren't exactly getting those shares on the cheap. They clearly believe the move in the rails has more juice. They also added in mass to Cypres Bioscience by 123%, showing conviction in that buy as well. One play that they continue to quietly amass is satellite plays. DTV they increased by 25% and they've been building a position over time. They also started a brand new position in Dish Network, so they've got all their bases covered. I'll definitely be checking into that theme further as Maverick seems to firmly believe in it, despite a recession. They also added GOOG to their tech basket by 41%, but its still *not* a top 10 holding in the fund. Ainslie clearly prefers hardware in tech. They also continue to add to Mylan quarter after quarter (increased 52% this quarter), so that's one I'm keeping my eye on as well. One move I'm not so sure of is them adding to UA by 81%. I think this stock has real issues as they've lost their "mojo" after first storming onto the scene. We'll see how that plays out and see if they add even more shares in the quarters to come. Half the point in tracking these 13f's is to see where these funds are accumulating shares on a quarterly basis, so we can play catch-up with them and load up on positions ourselves that these funds strongly believe in. Some stocks they buy and sell and they are in and out. Others though, you can see them slowly adding each quarter, building core positions. Those are the ones you want to look for. Also, keep an eye out for sector trends (such as satellite tv in Maverick's case). They are clearly buying up all satellite players and must believe strongly in that space.

Turning to the reduced positions, I noticed that they've reduced their stakes in both BRK.A and BRK.B. Clearly they aren't seeing as much value in Buffett anymore. Or, maybe they were just freeing up cash. As, after all, if the rumors of Maverick's poor start to the year were true, then they needed to free up some cash to re-tool their portfolio. I mentioned earlier that they reduced their QCOM position by 37%, and yet it is still the 3rd largest fund holding. That amazed me; they've really bet big on this name. I attribute this sell to some profit taking and some freeing up cash to re-work the portfolio. After all, its still a massive holding and they've sold off more than a 3rd of the position. Raytheon (RTN) was also reduced by 19% and yet it is the fund's 8th largest holding. So, not a whole lot to worry about there either.

Maverick sold completely out of some of their bigger and longer term holdings in that of CVS Caremark and Burger King. They also sold out of Echostar (SATS) and it seems they prefer DTV and DISH in the satellite space. Actually, it looks like they swapped completely out of SATS and into DISH. Another semi-big holding they sold out of was Guess. Then some smaller holdings of fellow retailers Macys and Men's Warehouse were sold off as well. It seems that Maverick must have taken a real beating with all of these retailers and that probably played a large part in their rumored weak start to 2008. They've clearly admitted they were wrong on those and sold them off completely in search of better sectors. One removal I was confused about was Crown Castle, as their investment in the wireless tower industry seemed to be a smart one. But, now that they've sold out, its time to revisit that name and make sure nothing is fundamentally wrong with it. Maybe Maverick needed the cash after their bad beginning of the year, maybe they were taking profits in the name, who knows. But, I strongly believe that the wireless tower play was a smart one and I'm going to look into it deeper, as the future is obviously in wireless technology.

Not a whole lot to look at in terms of positions with no change. They kept their GILD position unchanged as the fund's 6th largest holding. They held their CNET as well, and I'm sure they've actually sold it off now that the stock has popped immensely on its takeover news. Like fellow Tiger Cub manager John Griffin at Blue Ridge, Ainslie and Maverick have a position in First Marblehead. Maverick didn't quite add in mass like Blue Ridge did... but then again maybe Blue Ridge was playing catch-up. As I've said earlier, there are usually some commonalities between the portfolios of all the ex-Tiger Management gang. They undoubtedly still keep in touch and share their good ideas and then swarm them in mass. So, identifying the names that all of the funds hold collectively could create quite a killer portfolio. I'll actually be developing a model portfolio later based on the consensus ex-Tiger Management funds (ie: a portfolio of stocks that appear in all 3 funds' portfolios: Maverick, Lone Pine, and Blue Ridge). Now that I've covered the 3 major proteges of Julian Robertson, I can sift through the data to find all the commonalities and create a mock modern day Julian Robertson-esque Tiger Management portfolio to track.

Personal Favorites out of Maverick's portfolio: AAPL QCOM GILD AMX BNI TMO POT AMLN MYL DTV RMD

Most interesting move(s): 1. Bringing Avon Products up to the #4 fund holding 2. Doubling down on Autozone and making it the #11 fund holding 3. Substituting DISH in place of SATS 4. Seemingly shifting out of most of their retail plays (including selling off their entire huge chunk of CVS) 5. Continuing to slowly build positions in RMD, DTV, and MYL

Note/ Of their positions, I'm long: AAPL QCOM GILD AMX TMO POT

Names I want to research further: CCI DTV DISH MYL RMD

Keep an eye out for continued hedge fund 13f tracking when I cover Greenlight Capital (David Einhorn), Atticus Capital (Timothy Barakett), and a few other big funds/whales.

Some Portfolio Updates

*Before I get to the portfolio updates, just wanted to let everyone know that the hedge fund 13f tracking series is by no means finished. I was just on vacation for the long weekend and haven't had time to finish up the research. Sorting through those 13F's and comparing them line by line is quite tedious haha. Look for posts covering Maverick Capital (Lee Ainslie), Greenlight Capital (David Einhorn), Atticus Capital (Timothy Barakett), and more in the coming days. Just need to get this portfolio update out of the way first.*



Long overdue for a Portfolio update. First, let's start with Mosaic (MOS). I've been a big fan of the fertilizers due to their global pricing power (ideal short supply and huge demand conditions). I've been scaling in and out of them ever since August 2007, taking profits and buying the dips along the way, revolving around a core position. I usually play the space through both Potash (POT) and Mosaic (MOS) because POT is best of breed, and MOS is the up and comer with better valuation. I usually enter investments in fourths so I buy 25% of my overall position in one round, then another 25% and so on. Currently, I've got 1/2 a position in POT right now but I only had 1/4th a position in MOS, that is until yesterday when my limit order at $115 hit and now i've got 1/2 a position in MOS. Now, this was a limit order set from a while ago that I lined up to coincide with the 50 day simple moving average. But, let me go over why entering MOS here would be a good idea, even with its dip below the 50 day ma. First, looking at the chart we see that of course it has touched the 50 day ma and this has been an excellent buying opportunity in the ferts whenever they pullback this far. If you look at the chart you'll see that each touch to the 50day ma has been a buying opportunity. And, notably, each touch has actually broken below the 50 day, only to sharply rebound right back above it and begin its trend higher. So, this is why the fact that it broke the 50 does not bother me: MOS seems to always do that and the buyers always come in. Secondly, look at the Full Stochastics at the very bottom of the chart. You will see that we are now in oversold territory and the stochastics have turned back up, indicating a bullish future. Look at all the other times that the stochastics have entered oversold territory (reading 20 or below). Every single time the stochastics point to oversold, MOS has rebounded for a trade at the very least, if not continuing its run higher. Lastly, looking at the RSI at the top of the chart shows us that everytime MOS sees an RSI reading of 50 or below, buyers have come in. And, yet again, buyers dipped into MOS. So, the chart really tells the story in MOS. Watch the moving averages for support, watch the full stochastics for oversold conditions (20 or below) and watch the rsi for a buying signal (50 or below). As long as MOS hits some of these conditions without massive volume, step in and pick up part of your position. If it shows heavy volume on the decline though, stay away as it probably indicates distribution and further downside.



Next up, just wanted to mention that I added Walmart (WMT) on the pullback to the 50 day moving average as well. I've been VERY patient on this one, waiting for a pullback for a nice entry. Obviously waiting for a pullback to the 50 day moving average is always a smart idea, as this level typically serves as a support level for uptrending stocks. You'll notice on the chart that smaller pullbacks have occurred along the way the past few months, but we finally got a pullback of real size and so I pulled the trigger. Notice also how the stochastics on the very bottom of the chart point to oversold. Look to other times that the stochastics crossed down around the 20 level and you will see they pointed to excellent buying opportunities in this name. This is the primary oversold indicator I use and it has served me well. Not to mention, WMT has been so strong lately that it has rarely dipped below 50 on the RSI. And, every time it has, its been a buying opportunity. We just got one, so that was yet another buy signal screaming at me. So, both the RSI and stochastics were at the lower end of their ranges and started to turn up, signaling bullish future. Combine that with the touch of the 50 day moving average and I'm more than happy to add some WMT.

Its obvious that in a recession/tough times/era of high gas prices, that consumers will hit the discount retailers more frequently. And, WMT is a one stop shop for all their needs (including gas at some Sam's club locations). So, the thesis for this play is really simple. People are living cheaper due to tough times and the only places for them to go are COST or WMT and WMT to me simply has greater exposure and offers you both the pure discount shop in its Walmart stores, as well as the bulk item membership version Sam's Club. So, I chose WMT over COST mainly for this reason, and also because just chart-wise its much healthier looking than COST. And, believe it or not, the final decision maker was just stepping into Walmarts over the past few months. They are ALWAYS packed, no joke. I even stepped inside there on a Friday night at 11:00pm to pick up some mixers before heading out and the place was absolutely packed. My jaw practically dropped. I knew it was a busy place, but even at 11pm on a friday night?! That sealed the deal for me. Target (TGT) wasn't even an option for me simply because I've been in a few Targets over the past few months as well and they are ghost towns compared to WMT. Not to mention, they aren't "cheap" in a sense like WMT and COST. TGT is a discount retailer sure, but I want the cheapest of the cheap in this kind of environment. I don't care how clean Target's stores may be, I'm focused on the pricing offered and the foot traffic. WMT ftw (for the win).




Lastly, I wanted to touch on DRYS. I "twittered" (see widget on upper right of the blog) that I sold the last of my DRYS off last week, as it had a monster run and started to see sellers coming in. However, yesterday I got right back in despite seeing heavy volume distribution in the name. Firstly, you'll notice on the chart that DRYS has had a monster run yes, but it has also had a monster pullback in the span of 1 week. Shares sat around $86 and were calling my name. Look at early February and see the recent peak of around $85 and then look at where DRYS is right now, sitting smack dab right on past resistance/now future support. So, knowing that DRYS had hit support on its pullback, I started a teaser position up in the name again because it had simply seen too much selling. The stochastics once again helped me in this decision as they had gone from overbought (around 80) to oversold (around 20) in the matter of a week's time. So, the stochastics signaled a buy, DRYS was sitting on support, and it had seen a massive sell off in only a week. I figured at the very least it was worth a trade, and I was right. DRYS popped 9% today (Wednesday 28th). But, don't get me wrong, I like DRYS as an investment here due to a few reasons. 1. They just reported great earnings a few weeks ago and the Baltic Dry Index wasn't even at all time highs. 2. Since that earnings report, the Baltic Dry Index has been screaming higher, meaning DRYS can charge higher rates on the spot market 3. DRYS operates a ton (practically all) of their rates on the spot market, so they will have an absolutely monster quarter to report next go-round. But, I must urge you to proceed with caution with this name. As you can see from the chart, its very volatile (just like the Baltic Dry Index) and you've got to keep a close eye on things to make sure you don't get shredded to bits. Keep an eye on the BDI to make sure DRYS is still cranking out high rates. Also, monitor the ships' availability, as there has been a shortage of ships lately. The heavy volume on the pullback showed signs of distribution I'm aware of that, but the sector has strong underlying fundamentals right now and saw a massive sell-off due to profit taking from the massive run-up in the first place. The strong volume today as DRYS ran right back up is positive as buyers returned with force. Look to trade this name at the very least, if not invest in it for the next quarter or so, as DRYS will really benefit from high spot rates.

Lastly, I just wanted to give a run-down of my overall portfolio. This blog details the occurrences within my main investment account, as well as my short term trading account. My investment account has anywhere from 15-20 stocks/etf's in it with a slightly longer investment time frame (anywhere from 3 months to years) and I scale in and out of positions, taking profits when I deem fit, and scaling back in on dips. My other account is for shorter term trades (1 day, 1 week, 1 month) and typically only holds 1-5 names at any given time. I set up this blog with the goal of providing complete portfolio transparency through Portfolio updates like these, and live trade updates with my Twitter widget in the upper right hand corner of this blog. That way I can outline my investment theses and get feedback from others. So, by all means feel free to bash my portfolio, make helpful suggestions, or just straight up question my decisions. Any and all comments are welcome, as I love outside input to make myself sure that I am in the right names for the right reasons.

Long Positions as of Weds May 28th in no particular order: AAPL (slowly taking profits as we near $200), QCOM, MA (been selling, waiting for a meaningful pullback to re-add), V, GS (just added), USB (writing covered calls on it & picking up the 5% dividend), RSX (Russia), ILF(Brazil/Mexico: AMX, FMX, BBD, ITU), TTEK (Water/Wind, courtesy of @jmclarty who initially brought this one to my attention), ETR, NLR (been taking profits), BIIB, GILD, ACI (wishing for a big pullback to really load up), POT, MOS (just added more on pullback), UNG, CHK, WMT (just added on the pullback), TMO, SDS (hedge: ultrashort s&p)

Short Positions: COF (covering the last of it though)

Watchlist: I've owned some of these names before, but waiting for pullbacks to get back into MEE, FLR, FWLT. Want to start a new position in MIL as well... waiting.

I've probably left out a few names but that should sum it up.