The Best of Kass

NEW YORK ( TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among his posts this week, Kass provided an update to his "stock of the decade," reiterated why he was short Treasury bonds and explained why some seemingly disappointing economic headlines concealed strength.

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More on Altisource
Originally published on Friday, Feb. 17 at 12:07 p.m. EST.

Speaking of Altisource Portfolio Solutions ( ASPS), my stock of the decade, I was not alone in suggesting the shares of the company.

Serious kudos go to Jim 'El Capitan' Cramer who also highlighted Altisource at $22 a share on CNBC's 'Mad Money' back in January 2010

> > Bull or Bear? Vote in Our Poll

Let's go to the tape of that 'Mad Money' segment back more than two years ago.

Altisource's shares are currently up by nearly $4, to an all-time high this morning, and it's the second-biggest gainer on any true volume.

At the time of original publication, Kass was long ASPS.

Why I'm Short Bonds
Originally published on Friday, Feb. 17 at 8:15 a.m. EST.
  • Let me count the ways.
  • On Twitter, the lynx-eyed Daryl Jones, director of research at "Keithy" Keith McCullough's Hedgeye organization, asked me what was my catalyst to the short bond trade?

    Here are three:
    1. a reallocation out of bonds and into stocks (after five years of the opposite trend!);
    2. improving high-frequency economic statistics in the U.S.; and
    3. A dissipation of the flight to safety premium in fixed income.

    At the time of original publication, Kass was long shares of ProShares UltraShort Lehman 20+ Treasury (TBT) and long TBT calls. He was also short iShares Barclays 20+ Treasury (TLT).

    Originally published on Thursday, Feb. 16 at 7:54 a.m. EST.
  • Don't get caught up in the headlines; look deeper.
  • The signs of economic strength continued yesterday despite some relatively weak headlines.

    And I have to admit that I didn't delve deep enough into the releases -- it was a busy day -- especially in the January Industrial Production report.

    While the unchanged headline January Industrial Production figure disappointed relative to consensus (plus 0.7% month over month), the shortfall was entirely a function of extremely warm weather -- utility output dropped by 2.5%; it usually increases in January -- and an unusual drop in mining activity.

    The year-over-year gain is well above trend line growth (up 4.5%). The fact was that manufacturing production rose by a very strong 0.7%, following an outsized 1.0% gain in December 2011. Moreover, there was a large upward revision to November and December growth from 0.4% to 1.0%. The adjusted Industrial Production (manufacturing strength) was consistent with the economy-wide ISM and other regional manufacturing indices.

    On an adjusted basis, January Industrial Production actually rose by 0.6% (more or less in line with consensus). On an annualized quarter-over-quarter basis, the January manufacturing output rose by 8%. The two-month gain in manufacturing production (the most representative indicator of economic activity) is at the speediest rate in over two and a half years, when the U.S. economy was coming off very depressed and recessionary conditions.

    Housing continues to show signs of recovery as the NAHB confidence index rose to 29 (consensus was 26), the best reading in four and a half years and substantially above the recent six-month average of only 20. This index has risen for six consecutive months, a feat not accomplished in 16 years.

    It is for the above reasons and others that I have continued to expand my short bond exposure, which is now substantially my largest position.

    Don't get caught up in the headlines (as I did yesterday); look deeper.

    Most observers are too negative on the prospects for domestic economic growth.

    At the time of original publication, Kass was long TBT shares and calls and short TLT shares.

    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.