John Cofran's  Instablog

Much has happened in the markets since my last post: we have seen a new multi-year high in the (SPY) and (DIA), European uncertainty has again dominated the markets and Facebook announced its IPO. A recent 6.4% decline in the (SPY) has left the benchmark index up just 4.37% on the year. My flagship fund at Cofran Capital remains up 9.0% year to date.

While my top holding have not changed much, I have adjusted several sector allocations in recent days and weeks. Recent additions include (PPL), (WIN), (ETP), (RGP) and (CTL). In addition, I doubled my position in (CSCO), closed my position in (FE) and halved my position in (T).

I have taken hedges off several positions in which price declines in the underlying stock have led to significant profits in the options sold against them. These include (CMI), (CSCO) and (TIF). In addition, hedges on (K), (AFL) and (CSX) are set to expire this week. At present, the portfolio is hedged against a 4.5% market decline. I will continue to employ hedging strategies to minimize risk of further pullbacks in stocks who have experienced near-term strength.

For now, the market appears to be perched between 1,320 and 1,360. A significant catalyst in either direction could push us out of this range in the short-term. I see downside potential to 1,280 and upside to 1,440 over the next 3 - 4 months. Longer-term, I am growing slightly more cautious than I have been in the last 18 months.

Overall Sentiment: Near-term range bound.
Portfolio Yield: 5.75%
Projection: Consolidation (+/- 5%) around 1,365.

Top 5 Positions:

1. iShares High Yield Corporate Bond (HYG)- 15.4%
2. Apple (AAPL)- 5.8%
3. Microsoft (MSFT)- 4.7%
4. Omega Healthcare Investors (OHI)- 3.3%
5. SPDR Barclays High Yield Bond (JNK)- 3.0%

Disclosure: I am long HYG, AAPL, MSFT, T, OHI, PPL, WIN, ETP, RGP, CTL, CSCO, CMI, TIF, K, AFL, CSX