Assorted Tidbits

On the drive back from Phoenix today I heard the first 20 minutes of Cramer on Sirius. He hit on two things that I thought I would touch on.

One was the First Israel Fund (ISL). I wrote about this fund on August 7. I bought it thinking it would be an intermediate term hold but I was lucky enough to catch a big move (relative to the time I held it). Despite what I what wrote about the trade I was really buying Benjamin Netanyahu, the recently departed finance minister and one time prime minister. Now that he is gone I am not sure how the situation has changed, if at all.

One point he pounded on was that ISL is trading at a discount to NAV. He warned not to buy it at a premium. I have written about this a few times. If a fund has traded at a premium of 5% or less for an extended period I don't think I would be turned off from buying it. A big change in the discount/premium picture might make me hold off however. A premium of more than 5% and I would wait but if a fund I already owned grew to large premium it would not be an automatic sell. ETFconnect has a chart that shows the historical relationship between the NAV and the market price. I was really surprised that Cramer picked this fund. I heard him on why and it makes sense but I am glad I'm out of the position now.

The other nugget was about energy stocks. If I heard him right he is suggesting lightening up on the group ( not zero exposure, I think). He thinks a top as been put in on oil. Maybe but I think earnings could go up dramatically for a couple of quarters as the oil companies sell more and more oil above $50. He said the sector's weight has doubled in the SPX and that is his exit strategy. He said energy has gone from 5% to 10%. I thought it started at 6% but that is splitting hairs on my part.

I have taken some defensive action in the sector a while back. I sold one of the tanker stocks and a more volatile E&P name. At this point most clients own two big foreign integrated oil companies, one oil company with a little refining exposure and one of the Chinese oils. The total weight is in the neighborhood of 11%.