In October the U.S. stock market showed some weakness, and until this trend reverses my Trend Following model will tread cautiously. There may be special situations where a specific stock shows unusual power, so we will remain open to new trends and new leadership. Some emerging markets like China are showing indications of an uptrend beginning and we are carefully testing positions.
Two stocks we are watching and trading are Qihoo 360 Technology Co (QIHU) and Xinyuan Real Estate Company Limited (XIN). XIN is a small real estate company in China that has started and demonstrated potential for growth. QIHU is a software company in China that develops anti-virus software, web browsers and various other software products. QIHU also has a search engine that competes with Baidu (BIDU). If QIHU can take a significant amount of market share from BIDU it very well could command a much higher market cap than its current. As of 11/12, BIDU’s market cap is about $36.5 billion while QIHU’s market cap is about $2.8 billion dollars.
Another stock we are watching is OPKO Health Incorporated (OPK). OPK is potentially at the bottom of a long term uptrend channel. Insider and billionaire Phillip Frost has been buying up shares for months now, which is very encouraging.
With the election behind us and given the recent pullback we will look for clear leaders that may emerge. We also may consider some of the ETFs to capture market movement when specific stocks are not at an appropriate buy point.
With oil and energy stocks retreating, we need to see if that’s due to abundant newly found energy or due to recessionary conditions returning to world markets. We think the market’s trend will tell us what is happening long before the media does, and we will attempt to capitalize on these trends.
The investments discussed are held in client accounts as of 11/12/12. 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.
Certain information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. The manager believes that such statements, information and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
