Portfolio +0.8% Year-To-Date

THE ENLIGHTENED-AMERICAN PORTFOLIO SPREADSHEET

  • Enlightened-American Portfolio: +0.8% through Feb, 2010 (my actual IRR, including cash balance)
  • DJIA: -1.0%
  • Nasdaq: -1.4%
  • S&P 500: -1.0%
  • DJ Wilshire 5000: -0.4%
  • Russell 2000 (smallcap): -0.9%

February was a sedentary month for us here at Enlightened American. Sometimes, indeed most times when dealing with investing, doing nothing is the best course of action and for that, we are in positive territory for the year, a feat not managed by any of the major indices we track.

Most of our companies have reported year-end results. I must stress again that we strive to pick stocks which will induce the least hand-wringing possible. As a result, I do not wait with baited breath for each earnings release — if our investment is so tenuous as to require constant monitoring, an exit is most likely in order. There have been a few such stocks in our portfolio in the past and almost all of them affirm this sentiment.

I reserve much of my commentary for members of EA-Premium (find out more about it here) but will make some comments on a few key holdings. For our current core holdings, Chesapeake Energy (CHK-D), Brookfield Asset Management (BAM) and our gold positions, we retain bullish sentiments. While I await companies’ annual reports to make a full report to members, here are brief summaries:

  • Chesapeake Energy stands to be vindicated and validated by the Exxon Mobil (XOM) acquisition of XTO Energy (XTO). A short time after that deal was announced, CHK announced their own deal — the long-expected joint venture in the Barnett Shale, this time with Total (TOT). With a privileged position in the preferred shares, I continue to hold this stake.
  • Brookfield Asset Management (BAM) has been in the headlines recently with talk of a General Growth Properties deal. The primary tenet of our BAM investment thesis is delegating to superior capital allocators with access to markets off-limits to retail investors. As such, we will not second-guess any deal Bruce Flatt and his team strike. Management has been mum on the deal so far but on the face of it, I see no reason to object as BAM built a position in GGP debt at major discounts to par and are seeking to leverage this into long-term, cash-flowing assets. Sounds good to me.
  • The gold-mining stocks (AUY, MFN) have pulled back a little since the beginning of the year. As mentioned numerous times before, the global macro financial situation almost guarantees a meaningful role for gold for much of the foreseeable future. In conjunction, its high volatility offers good opportunity for investors to build positions and generate income from options. We will continue to pursue this strategy.

As for a market outlook, stocks still look overvalued to my eyes. However, one prospect, named for EA-Premium members only, has dropped near 52-week lows on bad earnings and I will investigate to discern whether the decline is based on cyclical or structural factors. As always, members will be the first to know what I find.

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