Biderman’s Market Picks 1/22/2013

Jan
21
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Stocks Are Acting Toppy, But Could Stay Up For a While Longer
 
Last week’s Biderman’s Market Picks highlighted that everyone now seems bullish, a sentiment that historically occurs at market tops. However, despite all the bullish feelings, the S&P 500 only rose a bit less then 1 percent, slightly outperforming our model portfolio, which rose 0.1 percent.
 
We are still seeing new money going into US equity funds, but at a much slower rate then at the start this January. On the other hand, we are now seeing outflows from US exchange traded funds. Last week, I opined that the new offering calendar would top $2 billion daily for quite some while. Well, I was wrong, as new offerings averaged a bit over $1 billion daily last week. This coming week the upfront calendar of deals already scheduled is not that large either. However, overnight deals could be large particularly starting next week as we leave earnings season. That said, I do expect new offerings to surge soon.
 
Remember, the only reason the underlying economy seems better right now is that about $100 billion in extra income was recognized before this year end, floating rich people’s checking accounts. That money is in the process of being spent, if it hasn’t already. That is why we are expecting to see, now that the Martin Luther King holiday is past, the start of a year over year slump in take home pay.
 
Therefore, my best guess is that stocks will trade in a narrow range for the near term until new offerings do top the $2 billion daily rate. At that point I will increase my bearish stance.
 
For now, gold is still our largest holding and should do well both medium and long term in this money printing world. Inflation protected securities should also outperform, but at a slower pace then gold, until of course inflation really surges.
 
Last week, while our Euro short ETF raised a fraction, our three other ETF shorts each lost a fraction. Apple dropped 3.9 percent last week and is down 6 percent for the month. Is Apple’s hey day over as a market leader? I do not think so. Yes, the Samsung smart phone is cheaper and more cost effective for third world users. But all of Apple’s products combined are still gaining market share and generating growing free cash flow. Indeed, if Apple’s next quarter is perceived as disappointing and as long as margins are not shrinking, I will add some Apple to the model portfolio.
 
Our other longs were mixed. TrimTabs Float Shrink ETF, TTFS, (remember I am the portfolio manager of TTFS and CEO of the sub advisor) is up 5.9 percent for the month, outperforming the S&P 500′s 4.3 percent gain, TTFS is up 16.7 percent since Biderman’s Market Picks began vs. a 13.2 percent gain for the S&P 500.

Charles Biderman
President & CEO, TrimTabs Investment Research
Portfolio Manager, TrimTabs Float Shrink ETF (TTFS)


Disclosure of Potential Conflicts of Interest & Trading Rules.
Biderman’s Market Picks (“BMP”) is a newsletter offered by TrimTabs Investment Research (“TTIR”). TTIR is not an investment adviser. Charles Biderman is the CEO of TTIR and the sole source of trading ideas and portfolio holdings of BMP. He offers his general market opinions as well as some of his own investment ideas and information on his actual personal investments. Mr. Biderman does not intend to, and has no obligation, to disclose his entire portfolio in BMP, or the performance of his portfolio.This arrangement may result in several potential conflicts of interest.TTIR also provides investment research to institutional investors on supply and demand for shares of stock, and data on money flows as well as economic trends. Some of the information in BMP will be available to other TTIR customers before BMP is published each week.

Mr. Biderman is also the CEO and portfolio manager of TrimTabs Asset Management (“TTAM”), a registered investment adviser and the sub-adviser to the TrimTabs Float Shrink ETF (“TTFS”). TTIR and TTAM are therefore under common control, and they share certain employees, but TTAM does not use TTIR data and research.

As the portfolio manager of TTFS Mr. Biderman personally makes portfolio decisions for the 100 portfolio holdings of TTFS, based upon a customized TTAM formula of float reduction, free cash flow generation, and leverage reduction, rather than fundamental analysis of a company’s shares. To mitigate any conflicts of interests, BMP will not include any stocks included in the TTFS portfolio. However, this means that users of BMP will not have the benefit of Mr. Biderman’s views on companies that are included in the TTFS portfolio.

While BMP may include suggestions for investment in specific securities, including TTFS, Mr. Charles Biderman may trade in any position held by the model portfolio in his personal and family accounts at any time. He may make recommendations for the model portfolio after or before purchasing or and selling the same positions from his personal and family accounts. Charles Biderman’s personal accounts differ in size and composition from the model portfolio.

The model portfolio will consist of ETFs, both leveraged and unleveraged, and liquid stocks.

The model portfolio assumes a starting date of May 29, 2012, of $100,000 in cash invested in securities at that day’s closing price. All future transactions are assumed to occur at the closing price. The model does not include deductions for advisory, brokerage, custody or other fees and expenses which typically apply to an actual portfolio. Such fees and expenses will reduce returns, and they will have a compounded negative effect on a portfolio’s performance over time. The performance of the model will be affected by market and economic events in addition to the investment and trading decisions of Charles Biderman. The model’s performance is not indicative of future results.

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