Thursday, July 06, 2006

Market Update and Mighty MOuse

So far today, individual portfolio holdings have made some strong moves... as a whole, the portfolio is fairly flat. Not really good to be flat when the market is up though.

Anyway, here are three of stocks that made large moves today... two to the downside, and one to the upside.

Debs Shops (DEBS) - The company is having some difficulties in growing their sales figures. They are now expecting small decreases in Same Store Sales for the rest of this year, and even with sales from new stores offsetting the decreases, they projected a sharply lower full-year earnings range of $1.40 - $1.50, compared to its previously guided range of $1.85 - $1.90. Shares are down sharply and are now trading at around the $22 level. I will not be adding to the position. If anything, I might dump it and take the loss. My timing was just bad on this one... should have waited for their monthly sales numbers to come out first before jumping in. Thankfully, it's not too large position.

First Marblehead (FMD) - Shares are off over 10% today after negative comments came out this morning from a brokerage house. From Briefing: Friedman Billings says they have confirmed that BofA is now outsourcing new private student loan products to a competitor of First Marblehead (FMD 55.59). While it is impossible to determine the impact to earnings, firm says the fact that one of FMD's long standing partners chose a competitor raises issues regarding the co's vulnerability to competitors and pricing.

Talk about jinxing myself after I sang a song of celebration after the stock became a quick double for me. The position has grown enough to represent roughly 5% of the portfolio, so this drop hurts. If it weren't for another big gainer in the portfolio, today would have really sucked.

Altria Group (MO) - Go Florida! Hip Hip Hooray! Just before 11AM EST, the Florida court ruled out a $145B award against cigarette makers. This was the biggest legal risk to Phillip Morris. Now, all the analysts are predicting that the expected company break-up, which includes the spin-off of Kraft Foods, will happen fairly soon... maybe early next year.

And, with this single ruling, my day went from quite bad to really flat. Even though percentage-wise the move was smaller than the two stocks highlighted above (~5% vs ~12%), the gain in MO today more than wiped out the losses. It's nice when the largest position in your portfolio comes in to save the day in a Mighty Mouse sort of way.

For those who play poker, but don't know what today's portfolio gyrations would feel like, here's my analogy. Okay, so you go and sit down at the card table, and immediately you are beat up. An ill-timed 3-barrel bluff fails miserably, and Debbie, the local seamstress and part-time hustler, scoops up a large pot that should never have gotten that large in the first place. The very next orbit, you lose with your Aces to Mr. Billings' Queens when he spikes his set on the river and forces you to pay him off. And, after a couple of hours your chip stack is fluctuating only slightly and so you're still significantly down, when you're dealt Jack-Ten suited. You flop an open-ended straight flush draw... you're gonna hit and win a decent pot, or you're going to lose a lot as you're tied to this super-draw. Well, you turn the nut straight and the river gives you a straight flush. Betting gets wild, and you are paid off handsomely when an ex-smoker from Florida turns over Ace-rag suited for the second best flush. Winning a single monster pot to get back to even. That's pretty much how this day's been.

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