Sunday, January 22, 2012

MMM Position Closed

With MMM trading over $85, the portfolio's final lot of MMM shares were assigned at options expiration this weekend.  Overall, this lot of shares returned 5.9%.  in about 5 months.  Not bad,  but "just" buying and holding this equity over the same time frame would have resulted in about a 7.8% gain.   Of course, if the stock would have tanked, the option positions would have served to reduce the losses on the position.  So this under performance can be viewed as reasonable opportunity cost of hedging.

Going forward, MMM reports earnings on Thursday 1/26.   CCI's thesis is that MMM very often does everything it can to mange down expectations.  "If" that happens this earnings report, and "if" the stock pulls back toward $80 after earnings,  we might consider re-entering this position.

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