Portfolio Aug/Sept

Below is commentary for the portfolio I manage at

http://covestor.com/ben-wong/tactical-and-opportunistic


In the month of August, I sold AGNC at 29.62 as it was trading between the range of 27 to 30. It dropped later in the month along with IVR following the SEC announcing that is it was seeking comments on whether it should change rules in regarding REITS exemption to taxes or the amount of leverage they can use. However it seems that the SEC is just trying to clarify on the mREITS current exclusions. Quoting the SEC Chairman:

“As a result, we are taking this opportunity to seek public input on whether Commission guidance, and the few staff interpretations regarding the status of mortgage-related pools under the Investment Company Act, should be updated or made more clear and comprehensive.”

I don’t foresee any big changes coming from the SEC regarding our REIT holding. In the meantime the Fed announced in August that it will keep rates low for the next 2 years another good thing for our REIT holdings. I will look to rebuild my position in AGNC as it drops closer to 27 and possibly averaging down on IVR.

Looking forward in September there is still some risks involved when investing in our REITs. The Fed might announce Operation Twist instead of QE3 which narrows the spread between the long and short term interest rates by selling short term bonds and buying long term on the same day. Not good for businesses that make money on the spread. Up ahead is Obama’s job plan speech on Sept 8 and I’m interested to see if he will also include a mortgage relief plan.

Looking at the other portion of our portfolio, I covered the DELL short too early at 16.32. Also added MSFT at 25. Both trades could have been executed with better timing. As we continue into September, we await government policy and interventions that are currently directing market direction.

Sources:

http://www.sec.gov/news/press/2011/2011-176.htm
http://www.sec.gov/news/speech/2011/spch083111mls-item2.htm
http://online.wsj.com/article/SB10001424053111904140604576498380497149042.html
http://www.reuters.com/article/2011/09/03/us-markets-bonds-outlook-idUSTRE78146D20110903
http://www.reuters.com/article/2011/08/31/us-usa-obama-housing-idUSTRE77T6DV20110831