Hedge Fund LIVE - An Interactive Trading Community
New to Hedge Fund LIVE?

Monthly Archives: August 2010

Apple Event Preview

Everyone in the Tech World is waiting for one thing tomorrow and that’s the Apple fall event tomorrow in San Francisco.  The event is scheduled to take place 1 PM ET and will be able via live stream if you are a MAC user, if you’re a Window’s user check out Engadget’s link,  Click Here.

The rumors have been have been being tossed around throughout the week so let’s start with the most likely and work our way down the list.   First, item to discuss is the iPod which you will be seeing tomorrow.  Apple always rolls out new iPod’s so this is basically a guarantee.  The nano and shuffle could both be updated tomorrow, possibly with a touchscreen.  We will most likely see updated versions of the iPod touch with more memory and also an updated version of the iPod classic, but Apple could easily stop producing the classic and move directly to the touch.  Finally, we could see a completely new iPod which could be to the touch what the nano is to the shuffle.

The rumor mill is swirling with a new version of iTunes which will introduce the $0.99 cent TV show rentals which will be available within 24 hours of the showing.  I don’t really understand this concept considering TV shows are very easy to obtain for free.  The other iTunes rumor is a new cloud based iTunes.  The cloud based iTunes would include streaming music and video directly to the devices and possibly offer a subscription based model.  The last iTunes rumor is that iTunes goes to a web based model.  Theweb based model would be lightweight and put an emphasis on social aspects, allowing users to share their music and tastes with one another.  Also there is a rumor Apple may be doubling song preview length.

The final rumor topic is iTV, formerly known as Apple TV.  The noise is will see a smaller 4GB device with a focus on streaming and a switch to iOS.  People are also expecting the arrival of Apps.  Finally, there was news out today that NFLX will be available on Apple TV with 99 cent movie rentals from ABC and FOX.  So who really cares if it’s coming out tomorrow, it’s doesn’t sound like anything new, just another box with the Apple logo to put in the living room.

Overall , it should be interesting to have what Apple has to say tomorrow.  New iPod’s will be released tomorrow and I could really careless about iTV, but, what they decide to do with iTunes is exciting.  I don’t think they’ll go to the internet because that Google’s turf and I think the move to the cloud is the logical next step.

Tune in to HedgeFundLive tomorrow and we’ll bring you through the event step by step.

Go Shopping This Labor Day Weekend

So comp sales are creeping up on us again with the numbers for August out this Thursday.  The average expectation is for an increase of 2.4%.  The issue at the forefront for retailers is discounting.  Although when we as consumers think “SALE”, “Buy 1 Get 1 FREE” are great news, clearly the retail companies that are employing this method are not as excited.  Discounting of course is used to attract customers, and given the weak economy that we’re in, it comes as no surprise that retailers are relying heavily on discounts and promotions to help boost sales.  Hence, Thursday’s numbers might show weakness in the sector from all of this discounting.

Furthermore, retailers are now struggling to clear merchandise after a slow summer.  In light of the “head fake” in February and March when sales and demand appeared to be picking up (along with the economy), retailers built up their inventories, and now given the shift in the economy and consumer spending, they have to deal with these increased inventories: another reason for more discounting.

Also important to note in regards to comp sales is that August marks the end of “easy” comps.  Monthly comp sales are a YoY figure and August 2009 was the end of a series of monthly declines in sales; September 2009 showed an uptick.  So a weak outcome this Thursday will not be promising for the upcoming month(s).  Another cloud over the comp sales that will come out next month is that discounting may accelerate into September, especially if Labor Day weekend sales come in weak.  So in conclusion, please go shopping this Labor Day weekend!

HFL Portfolio Recap: 8-31-2010

A tough day for the Hedge Fund Live portfolio closing the day down 31 basis points underperforming both the S&P 500 which closed up 4 basis points and the Russell 2000 which closed the day down 20 basis points.  We took the majority of our exposure down today as we make the transition to our new fund.

The top five winners on the day were IMAX, BKS, JPM, ATHN, and AXP.  IMAX was strong today on a theater singing in Israel which helped the stock close up 2.39%.  BKS was up 73 basis points on now direct news while JPM rallied 1.42%.  ATHN continues to be a great short closed the day down 92 basis points.  Rounding out the top five winners was AXP which we sold at 40 the figure right before it sold off 50 cents.  AXP closed the day flat at 39.89.

The top losers were CREE, MA, ESU0, BA, and BBY.  CREE got absolutely hammered today on more negative news concerning slowing LCD TV sales.  CREE closed the day down 4.41% just off the lows of the day.  MA was weak along with V today closing down 2.14% below $200 on no direct news.  We sold out of our position in V today but held onto MA, the last time MA traded down to 197 we saw a nice pop.  Our futures hedge was the third biggest loser costing about five basis points in PNL.  BA was down 1.55% and BBY was down 22 basis points on no direct news.

We took the gross exposure down to 12.8% today leaving us slightly net short.  The next few days should be extremely slow as we prepare for the new fund.

Weakness Across All Equity Markets, Nikkei Hits 15-Month Low


Morning Notes

-       S&P futures down about 8 handles from FV this morning

-       Weakness in overseas mkts as well

-       In particular, Nikkei dropped sharply, -3.6%, following yesterday’s expanded credit easing measures set forth by the BOJ in response to yen’s strength

-       Yen is pushing back higher towards its 15-yr highs

-       Nikkei hit a 15-month low today

-       European mkts down as well

-       German Bund yields are down to record lows in the o/n session

-       Germany’s unemployment rate was out this morning: remained unch’d m/m at 7.6%

-       UK Consumer Confidence better than expected: -18, prior month: -22

-       Eurozone CPI: 1.6%; prior month: 1.7%

-       Eurozone’s unemployment rate: unch’d m/m at 10%

-       Economic data releases out today: Case Shiller Home Price Index at 9a, Chicago PMI at 9:45a, Consumer Confidence at 10a

Widening Your Field of Vision

Today the Industrials book closed down $3,249 and went out with an absolute value of $210,680.  GE was the sole winner brining in a P&L of $380 as the stock closed down 1.3%.  This short position has been consistently profitable as the stock has sold off two points in the month of August.  The stock is down from all major levels of moving average support and only has $1.50 to go in order to put in a new 52-week low.  On the losing end was FDX, which cost us $1,472.  We added to the stock as it pulled into support; however, FDX struggled against the ebbing tide of the market and closed down over 2 percent.  Much of Friday’s gains in BA and ATI were given back today as those names closed down $1.06 and $0.99 respectively.

From a personal trading standpoint, I closed the day in the red, but I was able to control my losses and believe I exercised proper discipline.  Unlike other days when I have kicked myself for holding losing positions for too long, today I accepted the fact that the market proved me incorrect and moved on to the next idea.  Furthermore, my strategy of focusing on the movements in the overall market allowed me to control losses and know when to book profits.  Myopically focusing on each tick in an individual name has led me to stubbornly hold onto losing positions believing that a particular stock is showing relative strength or weakness.  Instead, I have been widened my focus and asked myself these questions: “Do I want to own stock at this level in the market?  What is the risk to reward at these levels in the Spooz?  What do I believe the market will do today?”


The Technology/Telecom book managed to outperform the NASDAQ and the XLK (Select Sector Technology ETF) closing the day down 46 basis points versus the NASDAQ Composite down 1.56% and the XLK down 1.33%.  The top winners on the day were AAPL up 36 basis points and ELNK, a stock we are short was down 1.27%.  AAPL managed to show strength today after a bullish article in Barron’s discussing their event scheduled for September 1.

The top five losers on the day were MA, V, GOOG, CREE, and Q.  MA and V showed weakness today closing down 2.03% and 2.18% on no direct news.  GOOG opened up strong but could not hold gains and closed the day down 1.34%.  CREE managed to give up some of Friday’s gains after rallying into the weekend on takeover speculation.   CREE closed the day down 92 basis points at 56.01 below the $56.15 level.  Last is Q which closed the day down a smidge 5.62.

Today was an extremely quiet trading day, actually the lightest volume we’ve had all year.  I think it’s important to discuss how important it is to sit on your hands and understand what market we’re trading in.  When the volume gets this light the moves will be volatile and if you don’t respect that you will be shaken out of the majority of the trades you enter.  Make sure you get in with smaller size than normal and have your trade completely planned out before you enter.  Make sure you give your trades more room and take profits when they are given to you, don’t get greedy.

HFL Portfolio Recap: 8-30-2010

It was a tough day for the market as we gave back the majority of Friday’s gains with the S&P 500 closing down 1.47% and the Russell 2000 closing down 2.19%.  While the market got beaten up the Hedge Fund Live portfolio managed to have great day relative to the broad indices closing down 23 basis points.  We continue to keep increasing our gross exposure and net exposure as we pull back to the 1050/1045 level, adding $80,000 in value today.

The top five winners on the day were: SMRT, KR, ATHN, BG, and AAPL.  SMRT took a beating today closing down 5.37% making it our best performing short and top performer overall.  KR, ATHN, and BG are also short positions and closed the day down 2%, 2.4%, and 1.5%, respectively.  Apple was the only long to make the top five winners list closing the day up 36 basis points.  AAPL was very strong off the open but pulled in later with the market.  The strength in AAPL should be contributed to the conference Wednesday.

The top five losers on the day were MA, AXP, V, FDX, and GOOG.  MA and V closed the day down 2.03% and 2.18% on no direct news.  AXP gave back the majority of the gains from Friday closing down 2.4% at 39.89.  FDX looked strong off the open but couldn’t hold its gains closed the day down 2.09% at 78.78.  Rounding out the losers was GOOG which closed the day down 1.71% at 452.69.

It was a very quiet illiquid trading day and we kept it light as we tried not to get whipped around.  The market should remain thinly traded until mid-September when traders get back from vacation and step into the market place.

Boring, But Unusual Day in the Market

Although today proved to be yet another slow summer day (I can only imagine what Friday will be like as it is the day before Labor Day weekend), the trading session was interesting in that the market slowly bled lower for the entire day.  Why is that interesting?  We have not seen this type of consistent action in the market intra day in a long time.  Today the market picked a direction and stuck with it.  Usually we see larger fake outs in the market and much more irrational moves.  I had gotten long in two names today-COST and TWC-where I lost money in one and was flat on the other.  I made these trades based off relative strength.  However, the market’s continual grind did not help my longs.  I was about to call it a day, blaming my inability to read the market today.  But I decided to make one more trade, and this time, I had to take a short position.  Clearly, going long was not working for me so I wanted to see whether I would see green PnL  from the short side.  I did (on KSS), although I only ended up small in the name.  I acknowledge that flipping sides when one is not working for you is an important skill to have.  At the same time, however, it seems that lately this strategy has not proven to be as useful as it could have been, namely because of the whipsaw patterns in the market as of late.  In a choppy market, both long and short can work equally well on an intra day basis.  But again, today was an unusual day for the summer in that the market stuck to one direction.  So on days like today, I’ll be sure to see whether my longs or shorts are working and stick to that side of the trade.

We Should Learn to Trust Athletes. It’s Not Their Fault.

Another Merger Monday Moving Stocks Pre-Market


Morning Notes

-       S&P futures flattish this morning

-       Asian markets showed strength o/n- attributed to credit easing measures in Japan

-       Japan whose central bank held an emergency meeting and voted to keep the key lending rate at 0.1% and to expand credit to banks by 10-30TR yen

-       Japan’s central bank vote pushed yen lower

-       European markets down small along with euro being down

-       FTSE closed today for holiday

-       Weakness in Europe attributed to weaker than expected eurozone business climate indicator

-       USD down small this morning

-       Another Merger Monday:

  • PAR accepted HPQ’s offer for $30/share over DELL’s offer for $27/share
  • INTC to acquire wireless unit of Infineon Technologies for $1.4B; recall, INTC announced weak rev. guidance on Friday
  • SNY offered to pay $69/share for GENZ, which GENZ has rejected as they believe the offer undervalues the company
  • MMM to acquire COGT

-       July Personal Income: 0.2% vs. 0.2%

-       July Personal Spending: 0.4% vs. 0.3%

-       July PCE Core Prices m/m: 0.1% vs. 0.1%

-       Futures up slightly after above economic data release, although they are now sliding as of 8:52a