I found this random news for Perini (PCR) [not a fund holding], as I saw the stock down 10% today.
- Construction company Perini Corp (PCR) said Deutsche Bank on Wednesday delivered a notice of loan default to the developer of the Cosmopolitan Resort and Casino project under construction in Las Vegas, Nevada.
- Perini said it is unable to determine financial impact of the action at this time, pending discussions with the developer and lender, and that all current amounts due to Perini have been paid.
My main strike against it was, while it is technically an infrastructure stock it is not like the others I own in that it is (mostly) based on domestic and non energy projects (i.e. casinos, schools and the like) so a slowing US economy could hurt it more... versus say a Foster Wheeler (FWLT) or Chicago Bridge & Iron (NYSE:CBI).
And here is proof positive. Now in a panic market as we have now, they are selling anything and everything and no distinction is being made. However, the customer base of the infrastructure stocks I am focusing on are rich Middle Easterners, flush with cash Asians, and the US government. Can all those customer bases slow down as well? Surely. But that would be a world where Asian exports dried up, oil went back down to $40 due to worldwide depression, and the US government stopped printing dollars to inflate the economy (haha). Surely we can build a scenario where this would happen but again if we go down this road, you are talking the D word, not the R word.
But "perception is reality" and for now, perception is infrastructure projects could be canceled since the world is slowing and two year backlogs with rich customers mean nothing. This is why it is hard to invest on the other side of perception. You can be correct, but will only be proven correct once every 3 months (during earnings season), the other 12 of the 13 weeks of a quarter you have to deal with constant hand wringing. We've seen this with Blue Coat Systems (NASDAQ:BCSI) a networking company that has done nothing but beat numbers, raise future numbers, talk about the rosy future [A Damn Shame - Blue Coat Systems (BCSI)] yet the stock is down 40% because of "future worries". Can't win for losing once perception turns against you - ask the dry bulk shipping fans.
The other thing I wrote in that piece was:
I'm a big believer in the stock action telling us a lot - as small investors we have no information advantage - the only thing we have is stock action. A stock acting weak for no apparent reason and especially in the fact of "good fundamentals" is probably telling us something stinks in the back kitchen.
And once again, this is why I try to sell most stocks when they break down below key moving averages - "someone knows something" behind the scenes and "big boys" usually will know before the small fry. So once again, a very weak stock was signaling to us "get out" before news begins to actually hit. Perini in fact just signed a slew of contracts Monday, showing you how treacherous this market is. Suck you in with contracts; than spit you out 3 days later.
But bigger picture, this is the type of fallout with Perini (PCR) that is only beginning and makes investing so much more difficult - anything tied to the US economy that isn't tied to drugs or cigarettes is open to perception or fear of slowing. (as an aside - isn't that ironic, 2 things that are diametrically exposes - smoking and health care - are both immune and 'safe havens')
Disclosure: Long Blue Coat Sytems, Foster Wheeler, Chicago Bridge & Iron in fund; long Foster Wheeler in personal account