Winding down 2009

Portfolio Breakdown:
APP - 9.2%
BAC - 14.0%
PRGN - 5.5%
TBT - 15.2%
ITUB - 13.3%
AOB - 10.2%
COIN - 1.8%
COINU - 1.3%
TAMB - 23.5%
RIMM - 9.4%
HOGS - 15.2%
SDX - 5.5%
OCNF - 2.1%
BP - 7.1%
MBI - 10.8%
TRLG - 7.8%
ITUB Dec, $25, sell call - (0.3%)
CAD Cash - 5.1%
USD Cash - (56.5%)

USD/CAD - 1.0595

Portfolio Performance:
Return Since Last Update - 4.84%
Return Since Inception - 193.21%
S&P 500 - 1106.41
S&P 500 Return (June 30) - 20.41%

The Prior Week of Trading:
It has been a few weeks since I have updated this section of my blog, so please forgive some of the broad explanations as I will attempt to discuss the entire portfolio.

The thesis of an improving economy that I started with when I launched the tracking of my own portfolio in June of 2009 has continued to be confirmed by the relevant economic data; to this end, my portfolio is highly tilted towards global economic and consumer recovery plays. I continue to consider the core holding of my portfolio to be TBT; as previously explained, a variety of factors are coming together (US dollar, budget deficit, improving economy, future inflation) that make the long term prospects of the TBT to be the safest and most effective way to capitalize on higher long term interest rates. I continue to emphasize the financial sector in my portfolio, as the improvement in lending conditions as well as the steep shape of the US treasury yield curve makes stable banks a great investment. BAC is the most undervalued bank in the US; I hold ITUB both because of confidence in the banking sector as well as a desire for exposure to Brazil; MBI as an insurer could be considered the most undervalued in my portfolio if the economy continues to recover; TAMB, a California based community bank is currently priced so low it could be conisdered an option on bankruptcy. A fairly new addition to my portfolio, TAMB carries a relatively high weight due to the substantial increase in it's market value since I took my original position; my price target continues to be $5 although for the sake of allocation I will re-evaluate a portion of the position at $2-3.

Because of my belief in a recovery in the US economy, consumer cyclical stocks carry a substantial weight in my portfolio. My two favorite consumer discretionary stocks are APP and TRLG; both are attractive based on fundamental valuation, but also when taking into account historical and projected growth rates. RIMM would also fall into this category, although it is more a mix of technology and consumer discretionary. RIMM became attractive to me after it's latest small earnings miss put it out of favour with the market; I believe in the viability of this company over the long term and am very excited to buy it at this low level. HOGS is my bet on the Chinese consumer and follows a very simply premise; a growing population and middle class in China will require more food, and in particular: protein. HOGS supplies pork products to one of the fastest growing protein consuming populations in the world and surprisingly trades at a discount to its North American peers. AOB is a pharmaceutical company who manufactures and supplies traditional Chinese medicines within China; it currently trades at very attractive valuation levels and should outperform in the future if revenue growth begins to exceed expectations.

I continue to be bullish on global commerce and hence, have had a preference for dry bulk and container shippers since my portfolio's inception. I have begun to scale back on PRGN because of the market value gains I have experienced, and now am beginning to look once again at OCNF. I believe the market is unfairly punishing OCNF for it's dilutive share issuance without paying attention to how it is using the funds. At its current level, OCNF trades at roughly 1/3 book value and is poised to earn upwards of 0.30-0.50 for the next full fiscal year (in my opinion). Both metrics would put OCNF at a considerable valuation discount to its peers. On a similar subject, I use an investment in commodities as a partial hedge to my exposure to the US dollar. BP has a large dividend and would logically due very well if oil prices move higher over the long term. SDX is a Canadian based oil exploration company, who is in the process of drilling on promising sites in parts of Egypt. The company also boasts a very experienced management team, which is the primary factor for my investment. COIN is an small organic fertilizer supplier who has received very positive reviews from customers; as consumers continue to be more health conscious and fertilizer demand continues COIN should be a beneficiary; COINU is a unit which is comprised of one common share and one common share warrant exercisable at $1.30 in 2014.