Much has happened in the markets since my last post: we have seen a new multi-year high in the (NYSEARCA:SPY) and (NYSEARCA: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 (NYSE:PPL), (NASDAQ:WIN), (NYSE:ETP), (NYSE:RGP) and (NYSE:CTL). In addition, I doubled my position in (NASDAQ:CSCO), closed my position in (NYSE:FE) and halved my position in (NYSE: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 (NYSE:CMI), (CSCO) and (NYSE:TIF). In addition, hedges on (NYSE:K), (NYSE:AFL) and (NYSE: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:
- iShares High Yield Corporate Bond (NYSEARCA:HYG)- 15.4%
- Apple (NASDAQ:AAPL)- 5.8%
- Microsoft (NASDAQ:MSFT)- 4.7%
- Omega Healthcare Investors (NYSE:OHI)- 3.3%
- SPDR Barclays High Yield Bond (NYSEARCA:JNK)- 3.0%
Disclosure: I am long HYG, AAPL, MSFT, T, OHI, PPL, WIN, ETP, RGP, CTL, CSCO, CMI, TIF, K, AFL, CSX