Cashing Out

Client Talking Points

A Time To Cover

Dark and stormy skies are forming and the bulls are beginning to wonder if the party will soon be over for stocks. Brent crude oil ticked up higher this morning past $117.40 a barrel. As we know, higher oil prices can stop #GrowthStabilizing right in its tracks and put us back in the #GrowthSlowing camp. High gas prices put a damper on consumption which puts the brakes on growth. Wouldn’t be a bad idea to start covering Treasury shorts and taking profits on equity positions. With the S&P 500 up 5%+ for the year thus far, it’s easy to understand why a pullback could occur sooner than later.

Asset Allocation

CASH 50% US EQUITIES 15%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 20%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“Anyone else chuckling at thought of Einhorn trying to pitch his preferred stock idea 2 Steve Jobs?#wishyouwerehere $AAPL” -@ActAccordingly

QUOTE OF THE DAY

“What some people mistake for the high cost of living is really the cost of high living.” -Doug Larson

STAT OF THE DAY

U.S. jobless claims drop by 5000 to 366,000 on a seasonally adjusted basis for the week ending February 2nd. Estimate was 360,000.