David Kern's  Instablog

Actually this is a tale of portfolio balancing.  Back in mid September, I was feeling really great about another one of my holdings – FTR – and decided to double down on it.  Normally, I try to use position sizing to keep my risk equal throughout my portfolio… but this one just looked really great and was really working for me.  Plus the 10% dividend was very attractive.  Three weeks passed, and then sanity took over.  I found myself looking at this double sized position with a very nice gain, and thought, “what am I doing?”  So I sold half to bring it back to the proportions of sanity (and booked 7.5% gain on that move in the process).

Instead, I put the money into a boring little company named Mercer that makes probably the worlds’ most boring product:  wood pulp.  What caught my attention was the substantial insider buying over time – by a rather successful and big name investor (by the name of Peter Kellogg).  Over the last year, the man has purchased $7.5 million of this company’s stock.  Fundamentals look good, the chart looks good, so I bought.  The 4% gain since that time looks to be more than doubled just by the aftermarket pop.  This could just be due to a short squeeze due to earnings, but the last time earnings were this good MERC was in the $12 to $13 range.