As I expected, global markets bounced strongly after last week’s pullback. The Dow Jones rose 2.14%, hitting a four-year high. The S&P 500 was up 2.47%. The MSCI Emerging Markets index also found its footing, matching the Dow’s rise of 2.14%.
Almost all of your positions in your Alpha Investor Letter portfolio were up for the week. Your position in The TJX Companies (TJX) was the week’s top performer, leaping 4.47%. Freeport McMoRan Copper & Gold Inc. (FCX) jumped 3.97% and Visa Inc. (V) soared 3.50%.
Las Vegas Sands (LVS) (down 1.10%) and Ford (F) (down 1.40%) fell, despite both companies reporting better-than-expected earnings.
As a result of the rally, several of your positions moved back to a BUY. These include WisdomTree Japan SmallCap Dividend Fund (DFJ), MSCI South Korea Index (EWY), Market Vectors Indonesia Index ETF (IDX), Listed Private Equity ETF (PSP) and Berkshire Hathaway (BRK-B).
Taking a step back, a couple of themes are emerging from your current Alpha Investor Letter portfolio.
First, after a strong start to the year, most of your positions have been locked in a relatively narrow trading range since the start of March. And many have been trading right near their 50-day moving averages — which is why you’ve seen a number of your positions oscillate between being a BUY or a HOLD.
Second, your commodities-linked positions — Statoil ASA (STO), Market Vectors Russia ETF (RSX) and Freeport McMoRan Copper & Gold Inc. (FCX) — continue to be among the weakest performers. Whether or not this is the start of a long-term trend is unclear. Despite their short-term weakness, these positions tend to do best when market sentiment turns positive.
I continue to believe that the markets’ next move will be up. And at that point, a rising tide will lift all boats, and you will see considerable upside in your Asian holdings, as well.
Until then, I expect U.S.-based multinationals like Yum! Brands, Inc. (YUM), Visa Inc. (V), Las Vegas Sands Corp. (LVS) and The TJX Companies (TJX) to continue to be your best, short-term bets.
Finally, The Money Show has asked me to do a personal-record seven presentations at the upcoming
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edge Fund Secrets Revealed: How to Manage Your Own Money Like a Hedge Fund Manager” on Wednesday, May 16, 2012, 9:00 am – 11:00 am. To register for my health fund seminar,
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Portfolio Update
WisdomTree Japan SmallCap Dividend Fund (DFJ) rose 0.54% over the past week. As the Bank of Japan cheapens money and drives down interest rates, income investors will search for yield in funds like DFJ. This may serve as a catalyst for DFJ over the coming weeks. DFJ is a BUY.
Las Vegas Sands Corp. (LVS) dipped 1.10% last week. LVS reported a blowout quarter last Wednesday with $0.70 earnings-per-share handily beating the $0.60 estimate. Revenue was $2.76 billion vs. a $2.60 billion analyst estimate. First quarter earnings rose an incredible 72% year-over-year, driven primarily by their Asian casinos operations. Several analysts reiterated their “Buy” ratings. LVS is a HOLD.
MSCI South Korea Index (EWY) rose another 3.10% last week as the bad news out of North Korea continued to wane. Investors tend to over-react to negative news cycles which often lead to a profitable bounce-back rally. EWY is a BUY.
MSCI Malaysia Index (EWM) added 0.76% last week. Malaysia, Singapore and Thailand are working diligently to form their own currency and equity coalition. Malaysia and Singapore will link together in June via a cross-border equity exchange, and open trading for EWM and iShares Singapore ETF (EWS). Thailand will connect later in 2012. EWM is a HOLD.
Market Vectors Russia ETF (RSX) gained 1.66%. The Rosneft Oil Company, Russia’s largest oil company and the third-largest holding in the RSX fund, will raise its dividend by 25% year-over-year to $1.2 billion. Rosneft also reported a 19.7% jump in net profit and a 45.9% increase in revenue, back in February. RSX is a HOLD.
iShares JPMorgan USD Emerg Markets Bond (EMB) rose 0.38%. EMB continued its weekly gains for a third week in a row and is moving to test its $114.50 all-time high, set back in early March. A bullish move above $114.50 could signal smooth sailing ahead. Yielding 4.72%, EMB is a BUY.
Market Vectors Indonesia Index ETF (IDX) gained 1.67% over the past five trading days. The Van Eck Associates Corporation announced Tuesday that it would be lowering the expense cap on IDX by three basis points. This gives IDX the lowest net expense ratio among the Indonesia-based exchange-traded funds. IDX is a BUY.
Listed Private Equity ETF (PSP) added 2.65% for the week. PSP closed at $9.31 on Tuesday, breaking the 50-day moving average. If momentum holds, PSP will challenge its stubborn $9.50 level once again and attempt to break this nine-month high. PSP is a BUY.
iShares Singapore ETF (EWS) rose 1.72% over the past five trading days. EWS traders have been in an epic struggle to break the $13 resistance level for three months now, and the bulls finally managed to breech this line last Friday. Traders continued the battle Tuesday by pushing volume levels to the 7.5-million mark — nearly four times the normal volume level. The future of EWS should become clearer very soon. EWS is a BUY.
Berkshire Hathaway (BRK-B) rose 2.09%. As is the case with your South Korean position, investors seem to have gotten over the bad news of Mr. Buffett’s prostate cancer rather quickly. Those who bought the news-induced dip have earned a quick profit over the past two weeks. Keep an eye on BRK-B as it makes another strong run at $82.50 — its 52-week high and current resistance level. BRK-B is a BUY.
iShares MSCI Hong Kong Index (EWH) gained 1.72% last week. Hong Kong had a great month and managed to close the month of April up 2.6% — even as the S&P 500 dipped 0.4%, powerhouse Germany lost 2.4% and Spain plummeted 11.6%. EWH is a HOLD.
Freeport McMoRan Copper & Gold Inc. (FCX) jumped 3.97% over the past five trading days. Investors did take FCX back down to its nearly impenetrable $36 price level right after its recent earnings report, but FCX has rallied ever since. If momentum continues, FCX should break through the 50-day moving average this week and become a BUY. FCX is a HOLD for now.
Visa Inc. (V) soared 3.50% over the week. Visa will report earnings today. Analysts expect a 22% increase in earnings per share to $1.50, and revenue up 10% to $2.48 billion. JP Morgan raised its price target 21% to $149 this morning. That’s 21% above its closing price yesterday. V is a BUY.
Ford Motor Co. (F) dipped 1.40% over the past week. Although Ford paid you a $0.05 dividend Monday (a 1.72% yield), F’s quarterly earnings report failed to excite investors. Ford reported $0.39 earnings per share vs. an estimated $0.35, as well as strong U. S. sales and weaker overseas demand. Although Ford is considered cheap from a valuation standpoint, and a great long-term buy, the 200-day moving average may present a challenge in the coming weeks. F is a HOLD.
Yum! Brands, Inc. (YUM) gained 1.81% recently. YUM! promoted its chief financial officer to the position of president today. Shares were up slightly in pre-market trading this morning and YUM! appears poised to make another run at its 52-week high. YUM! is a BUY.
Statoil ASA (STO) rose 2.24% last week. STO is testing the 50-day moving average on news that it acquired a 35% interest in a deepwater drilling license for a new oil-rich territory in Ghana. Analysts predict that the region has a production value of 120,000 barrels of oil per day. STO is scheduled to report earnings on May 8. STO is a HOLD.
The TJX Companies (TJX) jumped 4.47%. TJX powered higher last week to make another 52-week high. Retail analysts are forecasting a slight dip in combined March/April retail sales figures due to Easter arriving two weeks early, and Mother’s Day falling a week later than normal. Reduced expectations such as these can be a positive thing when TJX reports earnings on May 15. TJX will pay you a $0.115 dividend on May 8. TJX is a BUY.
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