May 2011 Trading

May has been the best month ever!  I established several new high water marks, best gains for a month, best gains for a quarter and highest rolling 6 month average gain.  And I also passed 6% earnings for the 2011 calendar year.  So even if I don't earn another penny this year, I cleared the bar at over 6%.

May has been the worst month ever!  Unrealized losses have reach near record heights and for a long period of time, seven of my nine holdings were in the hole.  While I have been this far underwater before, this seems a bit more dire than in the past.  Most of the losses are attributed to a single stock (Life Partner Holdings, Inc.) and it seems quite possible that it could go to zero and I could lose my entire investment.  Realizing such losses could put a significant dent in my 2011 gains. 

After selling some stocks, I'm now down to about 59% invested.  I only collected one dividend this month although several holdings went ex-div.

Sales this month:

• FirstEnergy - 13% gain, some shares have been held for over a year, so it's nice to finally close out this position with a nice profit.  In fact, In absolute term, this was one of my largest gains to date.
•  Intel Corp - 15% gain,  rather large holding acquired over two months, dipped on bad news allowing multiple buy ins, then nice run-up based on improving analyst reports culminating with announcement about new 3-D chip and I sold the next day.
• SYSCO Corp, 12% gain, sold on good earnings news.  Held for only two months but also collected on dividend.

Current holdings and unrealized gains/losses are as follows.  As noted above, LPHI represents a significant risk to the portfolio.  Nokia also delivered a bad earnings report, so this is perhaps also a bit risky.  Although there are other stocks in the red, I'm general confident that they will recover and/or hold their dividend payout.

The following dividends were collected:

• General Mills, Inc - went ex-div immediately before I sold near the end of April.

Two Years of Trading

I've been actively trading for two years as of today. As noted in previous posts, the trend has been upward in recent months with the 6 month moving average being at an all time high.  I'll be very happy if I can maintain this pace.

Another Best!

Sale of my remaining Intel holdings make May the best month ever in terms of realized gains. Two record months in a row! However, all this recent profit taking make it unlikely that this trend will continue. I'm now 53% invested, so I feel pretty good, still plenty of profits to take if the market rises and I have plenty of money to invest if the market goes down. So I feel pretty good about the current position.

Best Quarter to Date!

A sale for FirstEnergy today makes Q2 2011 the best quarter to date in terms of realized gain surpassing Q4 2010 with Q3 2009 holding a close third. 

Nice accomplishment considering the quarter is just over a month old.  Hope this bodes well for the rest of the quarter and year!

Overinvested in Small Cap?

Although it was not premeditated, I find myself more heavily invested in small cap stocks that usual.  I've held two stocks (TSYS-Telecommunications Systems and LPHI-Life Partners Holdings) for a while and have about 6% of my funds in each of these.  I've also recently purchased HHS-Harte-Hanks (6% of funds) and HGIC-Harleysville Group (2% of funds). 

Each of these individual purchases were sound and met my standard criteria.  However, I'm not sure that I'm comfortable with about 20% of my funds in small cap.  I've already had experience with TSYS and LPHI being underwater for long period of time.

I've always had the normal resistance to small cap stocks as they presumably have greater risk than large cap by virtue of their size.  But I've discovered a more practical concern in recent years.  There is simply less trading activity and it's sometimes challenging to buy/sell at your desired price due to this low volume.  But even this has a positive side as there is sometimes a quick run-up during periods of high demand and low supply. 

So I think it's time to be even more diligent in early profit taking should the opportunity avail itself.  Also, I think I'll avoid taking the plunge into additional small caps until I liquidate some of these holdings.