This posting follows our earlier announcement of "New Content for Soos Global Market Musings". Please read the announcement which explains the intent and purpose of this new content style. Postings will vary in size and depth of analysis, but collectively should provide interesting points over which to muse about markets!
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In a recent note sent to our investors, we updated two portfolio moves from Dec. 31, 2013 that fit our overall global strategic positioning.
AEO…decided to add to position, taking it from 1.5% to 2.5%. This leaves room to take it up should it settle back meaningfully. With all the negative press about retailers over Christmas, lots of the bad news ought to be priced in. Retailers are expected to have strong sales, though narrow margins are expected due to heavy discounting. AEO's stock is one of the few that is trading near the 52-week low, and with the plans to turn around earnings through more operating efficiencies at the stores and by increasing sales from factory stores and overseas partnerships, the upside ought to be good, especially as the emerging market countries' middle classes start to spend more aggressively. The technicals had looked quite bad until recently when momentum shifted up and the 10dma turned up.
TAN….In the context of the global energy theme, I've focused increasingly on solar. The solar stocks had a good 2013, but have come off since Nov highs. In this sector, I believe it's better risk/reward tradeoff to enter via an ETF. Many of the companies have struggled to be profitable and have relied on government programs and tax breaks, which is understandable given the enormous upfront capital requirements and the long-term payback period, the public sector has to 'partner' with the private sector if they want this societal good to advance. The opportunities are quite global, but I've even noted NYC launching a major 47-acre site on the former Freshkills dumping grounds and land fill that should break ground in '15. Also, Japan's liberalization of their electricity industry could lead to more solar. China, where many solar companies reside, should continue to support solar as a way to fight their dirty coal pollution problem. I like the improving technicals as momentum shifts up and support held in recent days. Took a starter position of 1.5% (See 2 charts below. The first is TAN. The second compares TAN to oil ($WTIC).)
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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
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Additional Disclaimer: currently long many stocks/ETFs incl AEO and TAN. Positions may change at any time without notice.
Disclosure: I am long AEO, TAN, .
Additional disclosure: Positions may change at any time without notice.