Thursday, May 15, 2014

Mixed Signals

Mixed Signals

As my regular readers know, I have been moving to more and more cash. Using my multiplier, I had about $400,000 in cash for trading at the end of April.  That is now standing at $750,000.  David Tepper last night pretty much summed up the way I feel saying

"I think we're OK. But, listen, there's times to make money and there's times not to lose money. This is probably you're supposed to think about preserving some of your money...I think you can still be long, but I think you're supposed to have some cash now."
"It's funny people think we're always bullish."
He said he's positioned low enough in exposure where he can bring it back up or down.
"I am nervous. I think it's nervous time."
He said the market is probably OK. "But it's getting dangerous."
The mixed signal for me is that M&A activity seems to be barreling along. MFI fav, GTIV was the latest to attract a very nice bid (Kindred Makes $533 Million Bid for Gentiva Public).  It seems like every two or three days, you are seeing this sort of activity.  And the investors are eating it up (it is different this time) as historically the purchasing company goes down at the time an acquisition is announced.  Now, it seems regardless of the deal, the price goes up - CEO are viewed as being visionary, findings ways to cut common costs etc.  While the M&A activity will be lucrative (if you own the right stock), I am going to predict it will not end well for some of those over-paying of late.

Today is a tough day. I did sell some more LMNS (not much left thankfully) and I bought a small stake in KERX at 12.55 (getting a 14% better price than Seth Klarman (Baupost's Seth Klarman Takes 10% Stake in Keryx Biopharmaceuticals)).

Year to date, I am still up 4%, helped today by very good CSCO earnings (Cisco Surges 7%: Targets, Estimates Rise on Rebound). So no panic here, though I do echo the nervousness.

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