Its been a while since the Raven felt in need of posting, however yesterday's market action reminded him of the need for the discipline that marshalling of thoughts in a daily post brings.
He's increased his MCO short position, technically it appears the stock is bouncing off the 23's level for the third time, but rallying by smaller amounts, usually this is a good indicator that the stock will break that resistance level. He's felt a bit of pain from being too agressive too early and fighting the trend, which he's been really trying to avoid with his other trades. He's also a bit annoyed at that mistake with MCO, hence the public confession for making that stupid mistake and a resolve to correct it and be more rational going forward.
On the long side of the book he put on a new position in CYCL, which is being aquired by AT&T. It appears that the stock has sold off on the belief that this deal takes even longer to complete or that T decides it wants to renegociate for a lower deal price - which he doesn't think they'd get away with doing. He bought the stock down ~10% from its deal price, which would give a 20% IRR in a 6month deal completion (which he'd wager will happen, or it'll at least have broken).
He's added a couple of UK small caps to the watch list but is pretty far away from being able to pull the trigger.
Other longs in the book are some of the catastrophy reinsurers, they look to be pretty cheaply priced vs other financials, they've also been looking to consolidate as an added kicker, hence the Raven adding IPCR. (small positions in PTP and Aspen as well). He's also looking at some of the emerging market banks - specifically Turkey, although he's done a comp. with SA banks, which are pretty tightly priced given all their risks.
Macro thoughts otherwise remain limited, FX momentum continues to be a weak trade. He still thinks we'll see deflationary forces for a long time to come due to the huge excess capacity that is left in the system and the rebuilding of the consumer balance sheet constraining any bounce back in consumption - hence the feeling that the huge bounce in China is perhaps a little overdone. He's placing a small bet that libor spreads rise in the UK while remaining in the long US 10yr treasuries, although thats a micro sized trade.
L: 150% S:145% G: 295% N: 5% ~ $D 25% $G -7% $V 0% $P -1.09%
He's also sold some short term downside puts, the 1000 level seems to be a magnet for the market, he doesn't expect it to go anywhere for a while and is happy to try and make some money collecting theta, he also thinks that his longs will have very little beta on the downside whereas the beta on his shorts could very well explode if there is a sell off.
Thursday, 20 August 2009
Tuesday, 4 August 2009
taking some profit
L: 24% S:99% G: 124% N: -75% ~ $D -4% $P 0.35%
The Raven sold out of most of his long positions yesterday, it was just too tempting and too much of an easy trade to take profits. NRG has had a great little run and its sitting at the top of its channel, he still thinks its massively undervalued but it runs a much larger risk of a pull back from the 28.6 level he sold at.
He increased his short substantially in MCO during the day, only to have to cover that increased size at a higher price unfortunately, even after that its now the biggest position in the portfolio.
The Raven's still in catch-up mode but also trying to open his eyes to some new ideas, themes and trends. He also looked backed at his 10 predictions from the start of the year, well lets just say he's pleased he doesn't have to trade on a 6 monthly time frame as 3.5/10 is something he'd almost bet against.
The Raven sold out of most of his long positions yesterday, it was just too tempting and too much of an easy trade to take profits. NRG has had a great little run and its sitting at the top of its channel, he still thinks its massively undervalued but it runs a much larger risk of a pull back from the 28.6 level he sold at.
He increased his short substantially in MCO during the day, only to have to cover that increased size at a higher price unfortunately, even after that its now the biggest position in the portfolio.
The Raven's still in catch-up mode but also trying to open his eyes to some new ideas, themes and trends. He also looked backed at his 10 predictions from the start of the year, well lets just say he's pleased he doesn't have to trade on a 6 monthly time frame as 3.5/10 is something he'd almost bet against.
Monday, 3 August 2009
3% well spent
well not really, the Raven's 'oliday was relaxed and profitable even after spunking 3% of the portfolio on insurance. Good moves in NRG and a nice drop in MCO meant another good week. He closed his MCO position on Thursday night to lock in a gain until he was back in the office to do some proper work, he'd also broken a fundamental rule earlier in the week increasing that short position.
He's rejigged a few positions today and is busy updating models with last weeks data, plenty of reading and looking at a few results, its been a good first day back even if he feels he's not achieved too much.
L: 134% S:129% G: 263% N: 6% ~ $D -3% $G xx% $V xx% $P 0.04%
He's rejigged a few positions today and is busy updating models with last weeks data, plenty of reading and looking at a few results, its been a good first day back even if he feels he's not achieved too much.
L: 134% S:129% G: 263% N: 6% ~ $D -3% $G xx% $V xx% $P 0.04%
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