First Quarter Portfolio Changes

With all of the furor over the past quarter, I did not update my actions on my portfolio. Today I do so.

New Buys

• Archer Daniels Midland (ADM)
• Chevron Texaco (CVX)
• General Dynamics (GD)
• Mosaic (MOS)
• Noble Energy (NBL)
• Oracle (ORCL) (can you believe it?)
• iShares Brazil ETF (EWZ)

New Sells

• Charlotte Russe (CHIC)
• Cimarex Energy (XEC)
• Kapstone (KPPC)
• CRH plc (CRH)
• Devon Energy (DVN)
• Tsakos Energy Navigation (TNP)
• Japan Smaller Capitalization Fund (JOF)

Rebalancing Buys

• AIZ (2)
• CHIC
• CRH
• DVN
• IBA (3)
• LNT
• NTE
• NUE
• RGA (2)
• SAFT
• SBS
• SCVL (2)
• VLO
• VSH
• XEC

Rebalancing Sells

• AIZ
• CHIC (3)
• CRH
• IBA
• NUE
• RGA (2)
• SCVL
• VLO
• VSH
• XEC (2)

Candidates List

My candidates list was smaller than usual, as I strictly limited candidates to be solvent in severe scenarios, such as we are facing now. Nonetheless, here was my list of replacement candidates:

• ABT
• ADM
• COL
• COV
• CVX
• FLR
• FMX
• GD
• INFY
• JNJ
• MCK
• MHP
• MOS
• MSFT
• NE
• ORCL
• PCP
• RTN
• SFG
• VAR

My favorite of those I did not buy was Stancorp (SFG). If I could add more insurers, I would add them. Stancorp is a very well run firm.

I traded Brazil for Japan, and cleaned up my portfolio, trading away names with weaker balance sheets for those with stronger balance sheets, and aimed for industries that were not heading into reverse.

Full disclosure: long ADM, CVX, GD, MOS, NE, ORCL, EWZ, AIZ, IBA, LNT, NUE, NTE, RGA, SAFT, SBS, SCVL, VLO, and VSH.

Comments

[Larrysyr:]

I'd like to submit for your consideration Corning (GLW), which sports a very strong balance sheet, a track record of innovation in a specialty field (glass and ceramics), conservative management, and the staying power to survive the dot-com crash. At a current P/E in the 3 to 4 range and actual profits coming in, this is one of my favorites at the moment.

Apr 02 01:43 PM

[Mark Bern:]

My personal favorite from your list is VLO. They sometimes get caught a little off guard by the narrowing of the crack spread but ususally have hedged enough of their positions to stay profitable. Since their primary competition is imported refined products, which are basically used to make up the difference between demand and capacity, they don't see the same levels of slack capacity utilizations found in other industries.

VLO was a screaming buy around last Thanksgiving. It is still one of the few safe long-term holds for appreciation, IMHO.

Apr 02 04:55 PM