Gaining Ground
Today was a slow day in the markets even as most accounts showed gains. This type of outperformance is important as it shows that the companies we have been focused on -- in healthcare, media, energy -- provide downside protection from an uncertain world of rising interest rates and political instability. Also today, many of our REIT and financial positions rose slightly, perhaps signaling a rebound has begin from the recent harsh sell-off. We continue to tread lightly into the current market as even the best companies experience trader skepticism. Nobody feels good about establishing positions and then seeing prices decline sharply. Opportunities must really cry out at times like this, or the price paid must so cheap that a margin of safety is there. We continue to believe this is true for Comcast, Viacom, and other media stocks. Fast growing healthcare (SFCC) also looks like a sound proposition. For many other sectors, we continue to watchfully wait for exceptional value to make itself clear, all the while learning and re-learning the stories, performance, and outlooks of the most intriguing investment opportunities.
- posted by Jay @ 6:40 PM

 
May Flowers
April was a turbulent month for investors as interest rate fears savaged many financial, utility, and REIT shares, sometimes unfairly. There has been a slight bounce as of late, particularly in the bigger banks (Wells Fargo and WM) as well as certain strategically well-placed REITs in the healthcare (HCN) and retail space (RSE). We trimmed but did not eliminate exposure to rising interest rates because (1) these types of firms often provide good dividends and represent necessary diversity (and, in the case of REITs, low correlation to the stock market as a whole); and (2) we are not fortune tellers, so there is no telling when interest rates may turn back down, providing new gains for those who stay the course.

Financially sensitive companies aside, healthcare (PFE, SFCC et. al.) continues to outperform. Same with energy (we particularly like the coming turnaround in Royal Dutch). Media has been choppy (Viacom, Comcast), but we continue to like the cash generation of these firms, which should only increase as advertising heats up (Viacom) and new services are rolled out such as DVR, Voice over Internet Protocol, and video on demand (Comcast).

It certainly has been a challenging year thus far, but most positions remain poised to more than hold their own, and our disappointments (STX) appear to have bottomed. We continue to search for promising opportunities with relatively low risk, and thank you for your confidence.
- posted by Jay @ 7:50 PM