Monday, November 30, 2009

Position Update/Market Thoughts

I wanted to take some time to update where I'm at with a few positions and what I'm looking for in this market:

We've now sustained a rally that many (myself included) doubted would last this long. I'm still not bullish on what I call "just buying stocks", but there are pockets of value out there and that's what we need to focus on now. The Dubai factor provided some fear last week, but the market appears poised to shrug it off. There will be more "shocks" that the market will undoubtedly have to deal with, and they will likely be larger that that. But those will be awfully difficult to account for.

Many people I follow whose opinions I value continue to be cautious at these levels, and although I've been cautious as well, I have waded into a few small positions.

-The Wyeth-Pfizer transaction closed and I received 33.00 per share cash, as well as some Pfizer shares. In this market, I do like the safety of a name like Pfizer, and although their dividend is lower, they picked up a great business in Wyeth. At this point, I'm holding my PFE shares and may actually add to them.

-I bought a small position in small cap Tii Network Technologies (TIII). Small cap, pure value play. 16M market cap, and 12M in cash, with almost no debt. Being lightly traded is the only reason I haven't taken too large of a position. This one could take some time.

-I bought a small position in RHI Entertainment (RHIE), on their earnings sell-off. The stock has continue to drop even much below my purchase price. I do feel its important to at least see how they come out during the current quarter, when the bulk of their revenue is expected to come in. Just looking to a return to it more normally, but still undervalued valuation as opposed to its current, dirt cheap levels. Things aren't perfect here, but I think they'll hold it together.

-I finally bit the bullet and bought some Compass Diversified Holdings (CODI) on the holiday shortened Friday sell-off. I've been writing about and following this name for far too long without actually having a position. And even though I couldn't buy it at prices I've tracked it at, its still an undervalued company at less that 1x book value. At this point, I know they are going to make their next acquisition soon and that will likely lift shares further. If it sells off from here, great, because I'd like more shares. Great management at this company.

Like I said earlier, strategy wise, I'm looking at value almost exclusively. There are some growth names out there I like (FISV, FSYS, CFN, TDC are a few examples), but I'm in no rush to buy them with the market at these levels. I see more safety in companies that aren't relying on the economy to grow at highly anticipated levels to advance further. As an aside, I do still own ABB and a few various mutal funds.

Disclosure: Long PFE, CODI, RHIE, TIII, ABB

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