‘The Tweed Update’ by Roger Tweed

Guest Author Roger Tweed

Guest Author Roger Tweed

Tranquil Waters- Our 2014 portfolio took advantage of the very calm trading environment of the past three weeks to post a gain of 3.16%. More significantly, when stocks came under pressure on June 11 and 12, our positions weathered the storm and held on to most of their gains. In contrast, the S&P 500 gained 1.87% in the same period. Since its January 9 inception, our portfolio has risen 7.1%, while the S&P 500 has gained 5.4%.

Our biggest gainer since May 23 was JetBlue Airways (JBLU) which rose 12.3%. The end of winter weather problems, and the carrier’s introduction of its Mint premium service, combined to pique traders’ interest in this laggard of the airline sector. Linn Co., LLC (LNCO), picked up 9% as oil prices rose and the company took steps to shore up its 10% payout.

Anadarko Petroleum (APC) gained 7.9% as rumors surfaced about Exxon Mobil (XOM) being interested in acquiring this energy producer now that Anadarko’s Tronox litigation has been settled. I feel that this takeover is very unlikely, but that oil and gas producers are going to see their values increase as world demand increases and oil and gas supplies become less stable. Bank of America (BAC) climbed 4.9% as the shares snapped back from the accounting error reported last month. Higher interest rates also helped bank shares. Facebook (FB) gained 5.1% as the shares found a footing above $62. Facebook also hired former PayPal President David Marcus away from that company, in a move seen as bolstering Facebook’s efforts to further monetize its user base. Hewlett-Packard (HPQ) gained 4.3% as Intel (INTC) pre-announced that enterprise PC sales have been stronger than anticipated, and as “old tech” names continue to outperform.

Our only losing positions were Hertz Global (HTZ), which lost 9.3%, and Ventas (VTR), which fell 5.1%. On June 9, Hertz’ audit committee announced that the company’s 2011 financial statement was no longer reliable, and that financial results for 2011 through 2013 would have to be reviewed due to various errors, and PricewaterhouseCoopers, LLP determined that the company’s disclosure controls and procedures were “ineffective” at the end of 2013. Don’t buy Hertz. If you own it, then sell it, and don’t consider buying it until the accounting issues are resolved. Ventas recently announced the purchase of rival American Realty Capital Healthcare Trust (HCT) and the purchase of 29 independent senior living communities in Canada from Holiday Retirement. Although these acquisitions will immediately add to Ventas’ funds from operations, acquiring company shares typically fall when deals are announced.

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