Market Playground

By Chris Rees

After more than a year sitting heavily in cash waiting for better pricing, August finally brought us that opportunity. We have been busy in the last month building out the portfolio. As of 9/1/11, we are now fully invested.

During the month we added to our Accuride (NYSE:ACW) position and took a first bite at Total (NYSE:TOT), an energy company based in France. We also added an initial position in Archer Daniels Midland (NYSE:ADM), the global food processor. Another new buy in August was Aveo Pharmaceuticals (NASDAQ:AVEO), a company with a very interesting cancer drug in trials.

As readers of my monthly commentary know, we also have a sizable investment in troubled Bank of America (NYSE:BAC) (http://blog.covestor.com/?p=11497). As of 9/1/11 we are underwater on this position, but still maintain that BAC has a bright and solid future and is a good investment here. Mr. Warren Buffett apparently agrees, although he got a much better deal on his investment than we ever could. (Company press release, 8/25/11). 

Mr Buffett’s $5 billion investment in BAC is a super deal for shareholders of Berkshire Hathaway (NYSE:BRK.A). It is less of a super deal for Bank of America shareholders. The magic in this deal are the warrants to purchase 700 million shares of BAC common at $7.14 at any point over the next ten years. If we are right that BAC will be a $20+ stock within three years, Berkshire Hathaway shareholders will make out like bandits.

And that’s fine with us, as we also added Berkshire Hathaway (NYSE:BRK.B) to the portfolio in August.

For the first time, the full intended composition and shape of the portfolio can now be seen. It’s diversified across different sectors and geographies, and it’s rich in solid tangible assets and future earnings power.

Now we get to see how it will perform.

Disclosure: Long BAC, BRK.B, ACW, TOT, AVEO

The above article comes from Covestor. For more information on Chris Rees, TenStocks and to view their Covestor Model, visit Covestor.com. 

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.