selling CDU + 11%, shorting SYX again.

We purchased Cardero Resources, CDU in early March of 2007 and after quickly moving in our favor the stock slid away to significant paper losses. We kept the faith, and with the recent rally in the stock of over 100% in the past month we are fortunate to realize an 11% profit on this position by selling into this strength.

Modest as the gain may be, it's far better than most stocks can claim over the past year. Certainly the stock could continue higher on this momentum, but on average selling when a position comes back from a potential loss is the correct move. In this regard we reference our similar sale of PGR, Paragon Minerals, to beak even this past November after which the stock went much higher over the following few days but within a week was at the same level at which we'd sold and is today over 60% lower.

Another example is our sale of SNO, Snowfield Resources, this February for a 47% profit after it too had shown us a potentially material loss. The stock went slightly higher later that month but today it is 80% lower.


With this sale thus far in 2008 we've closed 12 positions, all winners, for an average 24% gain on an average holding period of 7.5 months which implies an annualized gain of 38%


One of those gains this year was booked after shorting Systemax, SYX for 5 weeks. We again short it today, after it jumped 17% to close at $19.30 in light of the company's 1st Quarter earnings. The stock is up 100% in the past month, and we feel it is now due for a correction.

The major down-trend begun in February of 2006 suggests we should cover for a loss if the stock posts closings above approximately $22.50

A more conservative play would be to wait and see if the stock rallies further on possible short covering or perhaps a market bounce early next week, however we wished to be short today and if such a move towards $22 transpires we may add to the short position.



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