Portfolio Adds PCU and PNCL, Drops ORH and PBR

In yet another reminder that this type of portfolio is not aimed at the buy and hold investor, Portfolio A1 has decided to drop Odyssey Re Holdings (ORH) and Petroleo Brasileiro (PBR) and replace them with high flying Southern Copper (PCU) and Pinnacle Airlines (PNCL), a regional airline whose traffic is up 11.2% so far this year.

Technical and fundamental factors were both in play for this particular portfolio reshuffling. It was the technical performance (down 8.7% in the four weeks it was in the portfolio) of Odyssey that was its undoing, while PBR suffered from a slight downtick in some fundamental metrics that more than offset a 6.2% gain in the two weeks it has been in the portfolio.

These two changes bump the annual turnover rate in this portfolio up to 415% and send us back to the drawing board to find three stocks that can match the performance and continued promise of stalwarts Terex (TEX) and Amkor Technology (AMKR).

There are no other changes to the portfolio for the coming week.

A snapshot of the portfolio is as follows:

Portfolio A1 Now 4.1% Ahead of SPX for Year

With four of the Portfolio A1’s five holdings – all except Odyssey Re Holdings (ORH) –

posting solid gains this week, the portfolio is now up 10.8% in the five months since the February 16 inception. This compares favorably with the 6.7% return by the benchmark S&P 500 index during the same period.

I do not have much else to say about the portfolio at this juncture, other than to note that when we pass the six month mark in another five weeks, I will start rolling out some statistics and analysis with respect to trading, risk, performance of holdings after they have been sold, etc.

There are no changes to the portfolio for the coming week.

A snapshot of the portfolio is as follows:

Portfolio A1 Adds ORH and MBT; Drops IT and RKT

After a dreadful week that saw Gartner (IT) stock give up 10%, I was not surprised to see the company dropped from the Portfolio A1 holdings. On the other hand, I was surprised to see Rock-Tenn (RKT) dropped as well.

It turns out that the sale of IT was triggered by a significant drop in my stock ranking system, which was largely due to technical weakness. Even with last week’s disaster, we are still able to book a 6.5% profit in the stock over the course of our three month holding period. For RKT, the stock continues to be ranked very high in my stock ranking system, but it is sold because it has now dropped 20% from the post-purchase high, which automatically triggers a selling rule, one that kicks in now that RKT's gains have slipped to 2.8%.

By way of explanation, the 20% rule is designed to get me out of high fliers that may now be in the early stages of a large pullback; during a downturn, it will often also shift the portfolio from high beta stocks to more defensive holdings.

On that theme, I welcome Odyssey Re Holdings (ORH) a reinsurance company, to the portfolio, along with Mobile TeleSystems OJSC (MBT), an ADR for the Moscow-based cellular company.

There are no other changes to the portfolio for the coming week.

A snapshot of the portfolio is as follows: