Kelly: A Few Portfolio Moves

I made a few smaller trades Tuesday to adjust the mix of the portfolio, and I will go down the list and detail my thought process.

Sells

(MCD)–I sold MCD at $53.82. Basically, I view this one as potentially $3 down if the market continues to weaken, and probably only $3 upside if we find a bottom. I don’t like even odds, so I’d rather raise some funds and sell.

(VGZ)–I sold half my shares at $4.59. I doubled the holding just last week down at $4.40, and my strategy here is just to continue to average down and then sell the pop to lower my basis. VGZ is still a development phase company, I don’t want too big of a position and I want to sell pops.

Buys

(SGR)–I bought back the shares I sold above $58, doubling the position at $54.90. A little early in buying it back, but I continue to like SGR longer term.

(BX)–I know a lot of you are scratching your heads at this one. I understand this is risky, so I bought a very small position at $18.51. Here’s my line of thought. Blackstone has been much maligned in the last 6 months, but they are still the best of breed in private equity and they are sporting a 6.5% yield based on a 30 cent quarterly dividend. Additionally, Blackstone is in the process of diversifying its business by advising on strategic mergers and acquisitions, and the fact that it is advising Microsoft in the Yahoo deal shows me that they are having success moving into the investment banking space. They are also actively diversifying into trading as well, having recently bought a hedge fund. Given the fact that Blackstone can attract superior talent (on par with Goldman), I think they have a good chance of gaining more traction in the advisory space, and that over time, they are going to begin to encroach on the entire investment banking space. There is still substantial risk here so my position is very small and I plan to average in if the stock goes lower.

Comments

[cranmer]

whoops on that MCD sale!