Blog

It is always tempting to take profits when BHP spikes to a new high, but I don’t want to take the risk of not owning the world’s largest mining company. I am a technical trader in many respects, but own BHP for the fundamentals. Global demand for basic resources is high and likely to remain high even if the world economy “slows down.” High quality mining companies like BHP are best bought on setbacks. I will probably buy options on more shares if price falls significantly.

Trex manufactures materials for the construction of outdoor decks from recycled plastic grocery bags, reclaimed pallet wrap, and waste wood. The company made some mistakes and the stock fell off a cliff. However, the company resolved its problems and now is a high quality, low cost manufacturer with an attractive and desirable product line. I don't normally go bottom fishing, but this opportunity looked too good to miss.

ProLogis is a real estate investment trust that owns industrial distribution facilities in 20 countries. In addition, about half of the company's operating income comes from the fees it earns from managing a variety of property funds. ProLogis is a strong player who appears likely to become more dominant over the coming years. PLD fell back to its early 2006 levels in January, which looked like a good opportunity to take a position.

3M manufactures a broad array of products. Sixty-one percent of the company's revenues came from outside of the United States in 2006, up from 53-percent in 2000. After falling 25-percent from its 2007, the stock began to look like a good recovery candidate in late January.

Focus Media Holding Limited enjoys some dominance in advertising in China where it is buying other players, growing fast, and making a profit. The recent fall may not be over, but it is probably close to its end.

I have been holding most of my funds in short-term US treasury obligations. I will move more fully into stocks when I see signs of a bottom.

AES operates electricity generation and distribution businesses in 26 countries on five continents. The company is purposefully in markets where the Gross Domestic Product is growing rapidly, reasoning that these areas should sustain the strongest growth in demand for electricity. In addition, AES has a strong focus on alternative energy production. AES offers exposure to emerging markets, utilities, and alternative energy in one package. I took a position when I did because AES was at its 200-day moving average and it has risen from this level repeatedly in recent weeks.

Legacy Reserves Limited Partnership buys and manages oil and natural gas properties in the Permian Basin of West Texas and southeast New Mexico. The current dividend yield of the company is 8.3 percent and price is at what appears to be important support. I am likely to increase the size of this position from time to time.

I made a decision recently to diversify the managment of some of my funds to other hands than mine. Ken Heebner's CGM Focus Fund includes many companies from my watch list. He goes long and short with concentrated positions in a way that makes sense to me. Therefore, I decided to let him manage a piece of my money.

The Matthews Asia Pacific Fund offers good exposure to an important region with an all-cap reach and growth bias. I expect growth in Asia to eclipse the U.S. economy before I retire, so I think it is important to build substantial investments there. I will add to this position from time to time.