Portable Alpha Daily

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Wednesday, January 31, 2007

Model Stock Portfolio Activity

Our Model Stock Portfolio initiated sell recommendations after yesterday’s close on three holdings and subsequent buy recommendations for five new securities. The sell recommendations were triggered by a profit protection rule designed to protect 80% of a position’s profits when that position has increased by greater than 25% of its average cost. The following were sold:

As I mentioned, the model selected five new securities for purchase, bringing the allocation percentages to 57% long and 43% cash. This is indeed a conservative allocation, but remember that this model portfolio is designed as the alpha component of an overall portable alpha portfolio. We remain bearish over the short-term and will likely wait until the long-term market model reverts to a bullish posture before increasing the long allocation percentages. There are alternatives to cash allocations, notably hedging the long positions with shorts. But our model portfolio does not initiate short coverage because we feel the risks outweigh the potential benefits for most investors. Inverse correlated funds, in our opinion, offer similar rewards with substantially less inherent risk.

Three selections came from the Mid Cap universe, which is one of our leading styles of late in terms of alpha generation. Precision Castparts Corp. (PCP 9/20/06) and MEMC Electronic Materials, Inc (WFR 1/8/07) came from the Mid-Cap All-Market category while Energizer Holdings Inc. (ENR 1/26/07) is from the Mid-Cap Growth category. The remaining two picks are Navistar International Corp. (NAV 9/12/06), which is from the Large-Cap Value universe and Rock-Tenn Co. (RKT 4/27/06) which is a Small-Cap Value holding.You’ll notice that all of the selected issues come from the Top Buy Recommended Stocks list that I publish daily.

Short-Term Technical Indicators

Investor Sentiment

Long-Term Market Model – Bearish since December 8th.

Asset Allocation – AAS Model Portfolios are between 56.25% and 75% long currently.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – No buy recommended major market investments

Top Rated Style-Box Derivative – No buy recommended style-box investments

Top Rated Sector Derivative – iShares Dow Jones U.S. Telecom (IYZ 1/26/07)

Today’s Top “Buy” Recommended Stocks

NBTY, Inc. (NTY 12/5/06)

CPI Corp. (CPY 1/23/07)

Precision Castparts Corp. (PCP 9/20/06)

MEMC Electronic Materials, Inc (WFR 1/8/07)

Rock-Tenn Co. (RKT 4/27/06)

Navistar International Corp. (NAV 9/12/06)

Energizer Holdings Inc. (ENR 1/26/07)

Savient Pharmaceuticals Inc. (SVNT 8/9/06)

Martin Marietta Materials, Inc. (MLM 11/6/06)

Par Pharmaceutical Companies, Inc. (PRX 12/20/06)

Today’s Top “Sell” Recommended Stocks

Plexus Corp. (PLXS 12/29/06)

Advanced Micro Devices Inc. (AMD 9/27/06)

Brightpoint Inc. (CELL 9/19/06)

Rogers Corp. (ROG 12/6/06)

Harman International Ind. (HAR 12/18/06)



  • why not use Stockalicious.com
    to display and keep track
    of your portfolio? It's a lot
    easier than the Yahoo widget.

    By Blogger bob, at 6:37 AM  

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