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Sold Level 3 Communications (LVLT) and Reduced position in MFC Industrial (MIL)

April 18, 2012

I’ve been a bit leery of the equity markets for the past few months as it seems to me there is a growing divergence between the market’s optimism and the sorry state of the world’s economy. How many times in recent posts have I written that I wanted to raise my cash position yet never did anything about it? Well, today, against my general rule never to sell in a down market (nor buy in an up one), I actually began to reduce my equity exposure. I’m not sure whether it was Wexboy’s exhortation to do some Spring cleaning (very amusing post, by the way) or watching Genworth Financial sink 20% this morning on the delay of its Australian IPO. Whatever it was, I got my selling digits in gear. First I sold off another 10% of my MFC Industrial (MIL) position (I had already sold 10% just after they announced the divestitures were on permanent hold). Then I sold my position in Level 3 Communications. Why LVLT? After all it was one of the ’10 Best’ picks in my recent portfolio review. While I think there is a lot of long-term value in the company, it continues to use, rather than generate, cash and thus I’m not so eager to hold it if we enter a down market phase (or, ‘risk off’ period, as they like to call it nowadays). Plus I’m trying to refocus on smaller companies where I have more of an edge, where I’m not competing with institutional investors or hedge funds.

What’s next for Spring cleaning? I’m not sure yet but I hope that Premier Exhibitions will wrap up its auction (or non-auction) soon so I can liquidate my remaining shares. After that I’d like to sell off another one or two positions. We’ll see.

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