By David Levine
During the month of January, our large cash position in the Aspect Large Cap Value Investment portfolio helped to lessen the blow of a market that in my opinion has started to correct. As I had stated in numerous previous posts, I was having a hard time finding stocks to buy at decent prices, and actually, as of February 4, I still am.
That said, I was able to make two trades in the portfolio which I feel very good about. In my opinion, I do not think that the market has peaked and I believe that we are in the midst of a pullback within a bull market. However, I do not buy for the sake of buying.
With that in mind, I sold Bank of America (BAC), which I feel is fully valued at this time. Maybe some other investor believes that the bank will make a massive comeback, but I believe that the huge run from the bottom of the 2008 recession is due to a turnaround in the assets they hold and a sort of streamlining of their operations.
In other words, for me it was just an asset play and I feel that the assets are fully valued; so I sold. I took the proceeds and eventually bought Ford (F) with the money. While Ford is not dirt cheap, I bought it when they announced its dividend increase.
With a dividend yield now above 3%, and a very compelling product line, in my opinion Ford will continue to benefit from an improving economy. I really like the new F series pickup trucks, and applaud Ford for taking the risk of building the truck with an aluminum body and smaller turbocharged engines. This sort of approach will win the respect of the buying public and automotive journalists.
Microsoft recently announced that Satya Nadella will be the new CEO. Since Mr. Nadella's strength is in cloud computing, Microsoft finally seems to be focusing its huge franchise in the right place.
Still, I am so annoyed with their slow decision making process and incredibly bureaucratic style of management. Microsoft seems unable to come up with anything compelling to run on newer desktop and laptop computers.
It should be noted that I could be wrong on this trade in the short term. But in the long term, in my opinion, I believe that Microsoft's franchise will erode. If I had to guess, at some point Google (GOOG) is going to figure out a way to eat their lunch.
Hopefully, this pullback will create some bargains so that I can deploy some cash, but I am happy to wait until it does.DISCLAIMER: The investments discussed are held in client accounts as of January 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
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