‘The Tweed Update’ by Guest Author Roger Tweed

Guest Author Roger Tweed

Guest Author Roger Tweed

Continuing to Climb – Our 2014 portfolio, along with the major averages, overcame the Middle East turmoil and continued to post gains over the past three weeks. Riding a snap back in shares of Hertz Global (HTZ), along with gains in JetBlue Airways (JBLU), Goodyear (GT), Linn Co., LLC (LNCO), and International Paper (IP), the portfolio rose 2.78% since June 13. The S&P 500 gained 2.54% in the same period. Since its January 9 inception, our portfolio has risen 10.07%, while the S&P 500 has gained 8.05%.

Hertz was our best performer with a gain of 9.2%. To me, Hertz’ gain was simply a bounce back from the early June plunge suffered when Hertz announced its unreliable accounting issues and need to restate previous yearly results. Since the company has not commented on its financial issues since early June, this move is not based on any real information. I would continue to stay away from Hertz. JetBlue rose 6.5% as fiscal 2014 earnings estimates were raised and Zack’s Equity Research upgraded the stock to a buy.

Goodyear gained 6.4% after an article in Barron’s in mid-June pointed out that Goodyear’s earnings stand to benefit from the worldwide recovery in auto sales, something that has also been pointed out here over the past year. But Barron’s also noted that David Tepper’s Appaloosa Management is a significant investor in the tire maker, and that is a ringing endorsement for the stock. Linn Co., LLC gained 4.3% as Linn Energy (LINE) purchased domestic oil and gas properties from Devon Energy (DVN), and the price of oil remained in the $104-106 per barrel range.

Our only stock positions to lose ground were Hewlett-Packard (HPQ) and Anadarko Petroleum (APC). Hewlett shares fell 3.3% on little news other than the announcement that the company will settle shareholder lawsuits related to the $11.1 billion acquisition, and subsequent multibillion dollar write-off, of software company Autonomy. Anadarko shares lost 1.6% after speculation dried up about a takeover of the company by Exxon Mobil (XOM). As I wrote last month, even though this “deal” was unlikely, Anadarko shares should continue to gain in value.

I am very pleased that our portfolio has passed the halfway point of the year and continues to lead the S&P 500. At present we have only two losing positions—Bank of America (BAC, -5.2%) and Linn Co., LLC (-2.9%)—and in both cases I believe that economic trends will bring their stock prices into positive territory before year’s end.


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