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Week 15 Portfolio Update: Scratching Back to Even (again…)

My portfolio gained along with the rest of the market last week.  The rollercoast on either side of par continues.  The good news is, as the relative performance chart below shows, I have been outperforming the major indexes since inception.

Unfortunately the bad news is that I am still down 1% since I started the portfolio on July 1st.  I’ve said on a number of occasions in the past couple of months that the best position to have in this market may be a cash one.  Thus far that has turned out to be the case.  Even though I have picked stocks and sectors that have generally outperformed the market, the fact remains that it is very hard to make money in a bear market without being short.

Speaking of shorts, I do want to point out once again that while I am not allowed to short stocks in the practice account that I post on this blog, I am short a number of stocks in my actual account.  These stocks are entirely in the banking sector.  Right now I am short BAC (Bank of America), UBS, and HBC (HSBC).  I have been short (Home Capital Group) but covered that recently on the suspicion that the market was going to rally.  These banking shorts amount to about 1/3 of my longs, and they are there entirely as a hedge against the possibility of a systemic collapse brought on by some European catastrophe.

Also of note is that while I mentioned that I had began to buy Newmont this week, exchanging some of my gold junior shares for the shares of the gold senior, you will note there are no Newmont shares in the account displayed.  I’m not entirely sure what happened here; I think I may have put the USD limit price for Newmont on the CDN dollar share order.  At any rate, I didn’t get the shares I thought I got, and I didn’t realize that until I checked my portfolio this weekend.  I’m not entirely sure what I am going to do about this now, as Newmont is a good 5% higher than when I had anticipated buying the shares. I think I will just sit in cash until the opportunity arises to buy the stock at the price where I actually bought it in my real accounts.

For the upcoming week, I would like to pare back some of my positions further if given the chance.  D-day in Europe is coming up quickly, and god only knows what that day has in store for us.  I have seen the market turn downwards on a dime too many times in the past couple of months to have any faith in the sustainability of this rally.  If Europe actually comes to a workable solution, I will buy back stocks with a vengence, but until that time has clearly arisen, I will continue to exercise extreme caution.

The one stock that I might look at adding to is Atna Resources.  I did a lot of work this weekend with another, more familiar, gold producer called San Gold.  San Gold is an interesting story and I will try to write up a short piece on the company some time soon.  I don’t anticipate buying and SanGold in the near term though; while the production and exploration potential of the company is interesting, it seems to be that a lot of this upside is already in the stock.  Which brings me to Atna.  What Atna has at Pinson seems fairly analogous to what SanGold had at Rice Lake before they began to ramp up production.  Lots of high grade underground gold and a  mill that was mostly commissioned and ready to go.  The difference between the two companies is that Atna has a market capitalization of less than $100M, whereas Sangold at one time was a $1B company, and even now with recent production disappointments (which I have to say are not as disappointing as the share price performance would suggest) is a $600M company.  There are differences to be sure, but nevertheless $500M is a lot of wiggle room to play with.

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