Lemley Yarling Management Co
309 W Johnson St
Madison, WI 53703
Comments on activity in client accounts
5 March 2021
Interesting weeks are becoming old hat. The NASDAQ has been under pressure all week and the S&P 500 And DJ IA were weak although they rallied Friday after an up and down and up day. The computer boys and girls and option market makers are minting money.
The ten-year is now priced at 1.5% up from 0.6% late last year. The rise in interest rates represents a 7% drop in value of ten-year Treasuries and over 15% drop in price for the thirty-year high to low.
The move higher in interest rates is the proximate cause of the selloff (don't ask why?) but the fact that the gurus now talk about price to sales rather than price to earnings as measures of value in the marketplace also has something to do with the pull back
There is a family of ETFs managed by Catherine Wood that has done extraordinarily well over the past several years. She has concentrated on the high-flying names and assets managed has grown from $1 billion to $20 billion in assets coming into this week. All her purchases are of the price to sales variety and in more than a few cases her positions are greater than 10% of the outstanding shares. As money has flowed in, she has continued to purchase shares in her favorite companies and with tag along purchases by camp followers her stocks have moved to nosebleed levels.
Beginning in mid-February her largest fund ARKK has dropped from $160 per share to $114 (down 30% in 30 days and 10% for the year). See: https://finance.yahoo.com/news/ark-innovation-etf-flood-inflows-230737809.html
Wood posts all her holdings on line daily and all her trades. In an up market with folks and the big boys and girls making follow on purchases that makes for extra juice for the stocks she is buying. Unfortunately, in a down market with no uptick rule for short sales her positions are the perfect target for the big boys and girls to have fun shorting.
We bought a bunch of stocks on Monday sold Tuesday did the same thing Thursday and sold Friday morning. All our trading left us with slight gain for the week. Time to stop trying and be happy we are up 3% to 6% in larger accounts and 10% to 20% in smaller ones.
Entering the weekend, we own Macy's and Verizon.
Beware the Ides of March.
Comments on activity archives
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