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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1671  
Subject: HoHum's Q4 wrap-up Date: 12/21/2012 8:35 PM
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Since I am the ringmaster for that METAR 2013 Contest circus, I might get a little busy at the
end of the year. So I thought I would start my Q4 2012 wrap-up. If the Mayans are right, it will
be quite timely, but also quite moot :) Actually, I will focus on some of the items that are not
likely to change much between now, and the end of a normal 2012.

So here's where I left off--
http://boards.fool.com/hohums-q3-wrap-up-30299130.aspx

October thru early November 2012 were not very nice for the accounts, especially the Trading ac.
Where do I start? Shipping, of course. I had significant lightened my shipping position by the
end of Q3. First I nibbled on Nordic American Tankers (NAT). Too early, it fell further. I could
deal with this one, it was only a nibble. Next came Overseas Shipping Group (OSG then, OSGIQ on
the Pink Sheets now). OSG was the largest US-based tanker company, what I like to refer to as a
"tanker biggie". Um, ... that was early Oct 2012, before things went horribly wrong.

Q3 is normally an ugly quarter for tanker companies, so I had exited OSG in mid-Sept 2012 about
15-16% higher at a small loss. While I didn't think I was getting the very bottom, I figured I
could live with a 15% discount to my previous exit. Ten days later, an OSG director resigns, and
that begins OSG rapid descent down the drain. I knew their management was bad, I just didn't
realize how bad. Company management were in denial initially, but then quickly declared BK.
The extent of their rot is only now coming to light.

I was taking a walk a few nights ago, and a really nice concept became a fitting analogy.
Remember Donald Rumsfeld memorable quote?
"There are known knowns. These are things we know that we know. There are known unknowns. That is
to say, there are things that we know we don't know. But there are also unknown unknowns. There are
things we don't know we don't know.

I had treated OSG as a risky idea with a lot of "known unknowns". In reality, this was
a company with a boatload of "unknown unknowns". It rapidly descended from a $5-$6/sh stock
to a sub $1/sh stock. Very ugly! ... But I'm out, and I can take the lessons from this one
and apply it going forward.

Some of the new ideas initiated in Q3- Gabelli Utility Trust (GUT) and Excelon (EXC) exited.
Lost some capital in both trades. But holding GUT after a dilutive rights offering would have
cost more. EXC has the new risk of a dividend cut. Sometimes losing a little now is better
than losing more than a little later. One replacement has been Omega Healthcare Investors (OHI),
a healthcare facilities REIT.

Enough of the minus side. How about something positive? Well, Knight Capital Group (KCG)
became a holding, then bounced about 37% on recent takeover rumors. I think it is more than
a rumor now. Nice idea panning out earlier than expected. I patiently waited for another
tanker idea to announce its Q3 results. As expected, bad results for Teekay Tankers. Bad
enough for a major dividend slash- down to 2c/sh, from 11c/sh in Q2. Shrugged off the bad
taste from the OSG tanker event, and jumped back into TNK. It had been an early Sept exit
at much higher levels. I also closed out my Aberdeen Asia-Pacific Fund (FAX) position, an idea
that had worked out quite well for me over the last 3-4 years. A monthly dividend payer
with a healthy payout- keeping an eye on it for a future re-entry.

The DRIP ac is supposed to be the steadying account. I set the bar lower- an annual 7.5%
return. It has spent most of the year above 5%, and is about 10% YTD. The Trading ac started a
recovery in mid-November, now ahead of the S&P, I think. This one will be bouncier than the
DRIP ac, so more discussion in part 2.
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