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Stocks I have bought and why I bought them. The portfolio will revolve around 5-8 holdings for the longer term plus a few stocks I will do shorter trades around. I do my own research and try not to "overanalyze" the companies. I'm looking for solid fundamentals with long-term viability that I am willing to wait out, as well as short-term overreactions or themes to try and capitalize on. In addition, I'll be holding at least 10% in cash to buy on individual or market weakness.

10/17: Bought some MO, finally, today at $70.85. It is now at an excessive 36% of stock holdings (not counting cash, which is still around 25% or so overall) but I'm very comfortable with the current risk/reward situation and my portfolio isn't exactly huge either. For the record, I wouldn't recommend having any more than 25% in any one holding in most situations. Eventually I will build up around it but I'm in no tremendous rush, and it was, and remains, core holding #1. No other planned buys or sells at the moment, and I don't anticipate a change there, barring a significant rise or fall in one of the stocks and/or the overall market.

10/11: Sold BA today at $99.00. I will absolutely be keeping my eye on it going forward. Waiting for the chance to redistribute the cash elsewhere, which will probably be in the not so distant future.

10/10: I will be selling BA in the very near future in light of today's announcement. While my long-term view of the company and stock is still very much intact, I believe that it will be stuck in the mud until the 787 is all ready to go, which is several months at the least. I don't think there will be any more hiccups in the program but if there is, it could get really ugly. This one was pretty much expected for a while and is now factored in to the stock. In the meantime, if you're look for a different stock in the sector, I recommend looking into LMT if you're more into purely defense, or GD/UTX, both of which have the defense as well as a commercial jets portion (GD w/ business jets, and in the case of UTX, engines as well as a whole bunch of other stuff). If you're a long-term investor, I'd hold, maybe trim the position in light of this, but don't bail unless you think it's headed to hell.

Additionally, this gives me an opportunity to exit at a very nice profit and redistribute gains (probably to MO, maybe COP or JNJ) in keeping with my continued defensive stance. The market's resilience, today withstanding, has been a combination of impressive and complacent in my eyes. I continue to like tobacco, staples, utilities, energy, defense, select healthcare and a few others.

One that caught my eye recently was Alcoa, who despite somewhat disappointing guidance upped their buyback to an absurd 25% of common stock. To me, this screams a few things: 1. We think our shares are undervalued (good) 2. "Best use" of capital as opposed to big CapEx, redistribute to shareholders and shake up the capital structure (fine), 3. We DON'T want to get bought by an FCX/CVRD/RIO/whoever (why not!). Either way, looks like shareholders win. If you believe in the ongoing metals bull market and demand, particularly from abroad, I'd buy some. At this point, I can't bring myself to it, but considering my change in sentiment these days, I'm not in the mood to buy much. But I still thought it was worth mentioning. Note: I HAVE NOT looked into this one in great detail, so if this sounds appetizing, do some further investigation (not that I should have to remind you...)

Otherwise, content with JNJ and COP, HCBK is overbought short-term unless you think a takeover is on the horizon (I wouldn't bet on that either way, but it has performed so well these past few months), and CXCHF hasn't given me a seizure yet, so all else is well. Be careful, be prudent, and hang in there.

9/20: The Fed cut by 50 bp, and certainly caught me by surprise. Based on all their feedback to this point, as well as Bernanke's inflation-targeting rhetoric, I thought they were probably good for 25, and a wait-and-see approach. Now, they cut 50 and may be biased to another couple of cuts. This has served to brighten my short-term outlook a bit. The market was overbought coming into today, so the pullback isn't a huge deal one way or another, I don't think. However, if you look at the slide in the dollar and $80+ oil, among other things, the idea of the Fed loosening credit looks a little different. I think the market will be in ok shape leading up to 3Q earnings season. The action in BA has been decent, and JNJ is finally creeping up slowly, which is nice to see. HCBK downgrade today is ok, it's had one hell of a run and I was vindicated for not caving when it dropped below $12. COP, with oil at these levels, almost has to work, despite the fact that refining margins (spot price of gasoline v crude) have not caught up yet. CXCHF is a roller coaster but I cope with the moves accordingly. MO is just biding its time, (fine by me), which is pretty much my stance on the market at this time. I still am in the defensive camp (more or less: tobacco, consumer staples, healthcare, utilities, some energy, a few others here and there) and think multinationals and foreign companies look better by the day as the dollar continues to weaken. I believe volatility will continue to rule the day. I doubt hedge fund redemptions have run their full course and we're not out of the woods of inflationary pressures and record home foreclosures. Be careful out there.

8/27: Reweighted the stocks considering the recent sales. Cash position, based on original cash position plus sales, is just short of 35% of the entire portfolio.
Also, thanks to whoever has rated the portfolio thus far, good, bad or otherwise. I'd like to think some people get something useful from my thoughts and analysis, just as I have gotten insight from other portfolios on the site.

8/24: Enjoy this week's rally? Me too. But there's no way this upside, especially today's pop on light volume, will change my opinion on the current situation. Defense remains the best offense. I will not be shorting, but a 4-5% cash return right now is fine with me.

8/15: Sold PHO today at $20.36, booking a solid gain. Here's why. I still like PHO as a solid, diversified long-term play on the need for water treatment, infrastructure, etc. around the globe. However, the current environment has me worried about the market, as I've said, and in particular ETFs. This is because, in addition to being useful securities for individuals, ETFs are traded in pairs or otherwise by hedge funds using quantitative and other models. Considering the volatility and trouble in the hedge fund community, I think the prices of some of these ETFs could be hit hard with the market. So I may look to reenter at a lower price, but I believe the risks are there. I don't currently plan on selling HCBK (for reasons I already mentioned) or CXCHF (institutional and insider ownership is huge here, around 80%, plus a very long-term outlook, despite the fact that there could be more weakness in the shares) at this time. BA, MO, JNJ, COP I have no intention to sell period, barring some serious change in their individual situations. Continue to be careful.

8/14: Sold SHLD this morning after its surge Monday on the heels of an addition to the share buyback. I may look to reenter at a lower price, but not too soon. I still am less than enthused about the market and think we have further to fall before things get better. I may sell PHO soon as well in an effort to preserve the gains there.

8/6: Finally sold USG this morning at $39.95. Took a loss, raised some cash and will live to fight another day. Can't say I'm happy about the loss but I believe it was the right move. I believe caution is still definitely the name of the game here and I will continue to be very defensive in any purchases I might make, as well as potentially unloading SHLD. Besides very oversold financials, I can't explain an up move of this magnitude. I think the times, they are a-changing.

7/31: I think the market is on very shaky ground, and believe anybody who sold into the strength of the past day and a half did themselves a service. I personally am looking to sell USG on strength, and possibly SHLD as well. Despite the carnage in the credit markets, I am standing behind HCBK, who reported decent numbers last week considering the macro environment, raised its dividend, is buying back nearly 10% of shares outstanding, is minimally effected by subprime (prudent lending policy), and operates in 9 of the top 50 median income counties in the country. I know all things financial have been beaten up badly of late but I am not bailing. I think macro events have made this much more of a "sell the strength" situation than "buy the dips," and I'd go defensive if you're looking to redeploy capital. MO looks GREAT at current levels, and if you have patience I think JNJ will reward it, though I seriously stress the patience element of that (might be worth waiting if you don't currently hold JNJ shares - if I sell USG/SHLD, MO will in all likelihood get the proceeds). Other noncyclicals, like an RAI, a PG/CL/CLX or DEO/BUD, I like as well. Be patient and be prudent in this type of environment.

Also, a quick praise of Ken Griffin and his Citadel Investments, who yet again has gone bargain shopping from the scrap heap and is likely to book some nice gains as a result. First it was Amaranth. Citadel was rumored to be the beneficiary of Amaranth's energy trades gone wrong even before they bought a substantial chunk of the Amaranth energy book at a significant discount. Then LEND after it plunged in the spring on subprime jitters (went below $4 in March, promptly spiked back above $11, still trades above $10 despite what has been going on), and now Sowood's remains. While hedge funds imploding is bad for the market, and will probably continue to happen after this past month, the smart guys in the room will be able to benefit from the carnage. Well done.

7/12: Mixed news for the portfolio this week. First, the bad news, which was SHLD's profit warning Tuesday. I wrote about the risks in SHLD two months ago (on 5/10, see below) and perhaps should have heeded my own advice a bit more. The stock got hit big and I tip my cap to Doug Kass, Bob Marcin and whoever else was right onto the deteriorating domestic situation in the past months. I think, in light of the profit warning, SHLD is at a very interesting bull/bear crossroads right now. The Lampert thesis remains intact. Jim Cramer did well to point out that in the press release regarding the earnings shortfall, there appeared the following statement: "The expected cash and cash equivalents balance indicated does not give effect to any share repurchase or property sale activities after July 7, 2007." Bulls have been looking for this kind of language as an indication that management will start to consolidate the Sears/Kmart portfolio to eliminate some poorly performing and/or overlapping stores while simultaneously unlocking the value of the lucrative underlying real estate. Especially in light of the profit warning, this needs to start happening in conjunction with a continued focus on improving the brand names and the stores that are retained. If these moves don’t start to occur in the near future, the Lampert thesis and its validity needs to be seriously questioned. The basic questions, in my opinion, are these: Will things get even worse for SHLD? (maybe, too early to tell I think), and can Lampert create shareholder value in a potentially challenging retail environment? (about the same) Long term,
I still think Lampert gets the job done, his track record is too good and he needs SHLD to work for the sake of his hedge fund. Short term, like I said about USG, if you have better trading ideas and aren’t too bullish on SHLD you should go in a different direction. However, if you’re bullish, it is worth looking to nibble here in the low 150s, now that the warning is public. It’s not breaking the “don’t try to catch a falling knife” credo if you just bought a little bit. For the record, I won’t be adding to my SHLD position just yet but I will not be selling a single share either. Although thinks are tough, I am still behind the SHLD case and the additional $1B buyback doesn’t hurt either.

Now, on to some good news. JNJ announced a nice $10B buyback Monday. I continue to like JNJ for the reasons I mention below as well as its pipeline, which I didn’t go into any great detail on. Meanwhile, I’ll collect my 2.6% and wait.
The COP $15B buyback was even better, not to mention word that there may be significant progress in the negotiations of COP/XOM with the Venezuelan government. CEO James Mulva stuck to his word as he had alluded to a buyback on the 1Q earnings call. The stock has surged over 20% in the past 2 months and may be due for a breather but I am pleased nonetheless.

7/5: Quick update. I've added more cash, so now I am sitting on a lot (approx 17.3%), and am content to continue to do so. It seems as if stocks may have hit a bit of a plateau here. The action in HCBK is atrocious but I am not panicking, it may be a bit pricey but it is fundamentally sound. The other stocks have held their own with the market, more or less. Judgment day (July 8) for BA and the 787 is rapidly approaching. COP has their Venezuela issues which I believe they will ultimately resolve. Patience.
I don't like that MO has declined to my third-largest holding and I would like to add shares in the near future. Should have done it around $68, hopefully I'll get another chance.

5/16: Added to cash position, which is now around 13%. NYX below 80 is very, very tempting.

5/10: I think you're in an interesting place if you're holding SHLD right now. On one hand, you have Lampert, whose track record speaks for itself and basically needs SHLD to work for the sake of his hedge fund. Everybody, myself included, is waiting to see what he will do with the $3B in cash that SHLD has on hand right now. However, there are legitimate and I believe increasingly dangerous headwinds facing the domestic economy that are reflected in the results of SHLD and other retailers as well as the broader economy (namely housing). The more I read Doug Kass's articles, the more I agree with his current assessment of the U.S. economy, albeit not quite to the extreme that he does. I'm holding SHLD still but am getting somewhat tenuous with the position because, unfortunately, Lampert can't stop an economic slowdown.
Getting closer to adding to my MO position.

4/29: I continue to believe the market is due for a pullback and don't feel like making any additional purchases just yet. With that said, I'm not selling anything at this point either. I continue to find, in particular, NYX AXP CHK, HAL and CBT as attractive names that I don't currently own any shares of. As far as what I do own, I will say I'm a little cautious on SHLD as well as USG in the short-term. So be it, they are long-term holdings, as the portfolio name says.

4/19: Sold my KFT shares today at $32.58 following a decent earnings report and after reading up and listening to the conference call. I liked some of what they had to say but am taking profits after this nice run from $30. The $5B share buyback is encouraging as well as their long-term strategy, but they're facing a ton of competition and will be spending heavily in enhancing their current brands and more than likely for acquisitions as well. This raises cash to 9.9% of the portfolio.

I'll be looking to redistribute the funds elsewhere as I see opportunity. I feel like the market is a little overextended considering it's up something like 13 of the last 15 days or so. I was pleased with JNJ's numbers and am hoping that MO's slightly weaker numbers and lack of commentary on a PMI spinoff will cause the shares to pull back to the mid-60s, where I'd look to add some more. Also keeping an eye on the names in my watch list, namely NYX AXP HAL CHK.

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