Doug Kass fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- How his trade of the week went.
- How Penney caught an upgrade.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
A Shopping List
Originally published Dec. 2 at 2:17 p.m. EDT
While I see many stocks with attractive reward vs. risk, they reside mostly on the short side.
Some stocks I plan to short on any strength include: Citigroup (C) - Get Citigroup Inc. Report , Bank of America (BAC) - Get Bank of America Corp Report , JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. Report , Caterpillar (CAT) - Get Caterpillar Inc. Report , Metlife (MET) - Get MetLife, Inc. Report , Lincoln National (LNC) - Get Lincoln National Corporation Report , Ford Motor (F) - Get Ford Motor Company Report , General Motors (GM) - Get General Motors Company Report , Apple (AAPL) - Get Apple Inc. Report and REITs, like iShares Dow Jones US Real Estate ETF (IYR) - Get iShares U.S. Real Estate ETF Report . I am also considering new short positions in Morgan Stanley (MS) - Get Morgan Stanley Report and Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. Report .
I am intrigued with gold (on price), but frankly I don't have a near-term catalyst.
Long CPB large, OAK, GLD small
Short C, BAC, JPM, CAT small, MET small, LNC small, F small, GM small, AAPL large, IYR small
Position: See above.
Trade of the Week Update
Originally published Dec. 2 at 1:54 p.m. EDT
This week's Trade of the Week was to short the weekly (expiring Friday afternoon) iShares Russell 2000 Index ETF (IWM) - Get iShares Russell 2000 ETF Report $131 calls and buy the weekly (expiring this afternoon) IWM $132 puts.
I closed out the positions profitably Thursday.
We shorted the calls at about $2.60 and they are currently $0.12 bid.
We purchased the puts at about $0.60 and they are currently $1.20 bid.
For emphasis, I spend a lot of time thinking about my Trades of the Week, trying to identify near-term catalysts that may make a trade profitable.
This one worked like a charm, others not so much, but a lot of thought goes into this determination every week.
Position: Short IWM.
Penney Catches an Upgrade
Originally published Dec. 2 at 8:33 a.m. EDT
JCP is my only retail long (and a member of my Best Ideas List).
The shares are trading up more than $0.25 in pre-market action.
Bank of America expects JCP to deliver strengthening comps primarily due to initiatives in non-apparel categories, thus providing the foundation for strong cash flow that will allow for more rapid debt repayment, deleveraging and stock appreciation.
Position: Long JCP large.
Originally published Dec. 1 at 3:03 p.m. EDT
I am back with a trading short rental in three banks, Citigroup (C) - Get Citigroup Inc. Report , Bank of America (BAC) - Get Bank of America Corp Report and JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. Report .
Here is my rationale:
- I remain negative on the overall market.
- Bank stocks are substantially overbought. Like other market leadership groups, I expect some mean reversion lower in price.
- The banking sector faces the fundamental challenge of peak housing and peak autos over the very near term and into 2017. I don't expect much of a change in EPS expectations next year.
- Optimism on a quick repudiation of Dodd-Frank seems premature. There is much between cup and lip--as the opposition will be vocal.
- The 10-year U.S. note hit 2.5% early Thursday afternoon. I think this was an exhaustion move. Ergo, I am with Jeff Gundlach. Like Jeff Gundlach, I expect bond yields to decline and bond prices to rise in the next one to three months--contrary to the growing consensus that rates will continue to ramp higher.
Position: Short TLT small, C small, JPM small BAC small
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long C and AAPL.
At the time of publication, Kass and/or his funds were long/short XXX, although holdings can change at any time.
Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.