PNC’s stock has fallen over 37% since the first time I wrote it up in this blog as an exception to the downward market trend. The company has remained primarily the same, the major differences being that it has taken a few hits on anticipated loan defaults and it has acquired National City. I believe that given the sweetheart deal PNC was given, the National City merger will be a successful one. Furthermore, I believe that PNC will continue to be viewed as one of the few banks to have fairly low impact from the sub-prime mess. With that in mind, I want to add PNC to the portfolio.
The problem is, I’m not sure when to do it. The stock took a huge hit yesterday, and I think it will recover some today, but I’m not sure it has hit its floor. For this reason I’m going to take a conservative position, only buying 40 shares. I’ll complete the position with another 40 when I’m more confident that the stock is rebounding.
Also this morning, I’m selling roughly a third of the position in US Steel. I’m doing this for three reasons, all three have to do with the stock’s 64% return since we purchased it. First, because of the large return, the stock now occupies a higher percentage of the portfolio then I’d like any one investment to occupy (a full 10% more then Heinz, the second largest position). Second, I’m not sure how much short term growth the stock will bring. I still think it’s a hold, but I don’t want a large portion of the portfolio tied up in a stock without much short term upside, not when there are so many bargains in the market. Third, as I have mentioned, I want to maintain a large cash position to hedge any huge market drops (which I think are still possible).
There are your moves for the morning. In case you’re keeping track at home, that leaves us with the following positions (weird that three of the four positions currently have a value with no change following the decimal):
PPG (NYSE: PPG) – 40 Shares – $1780.00 – 10.3% of Portfolio
US Steel (NYSE: X) – 75 Shares – $3159.00 – 18.2% of Portfolio
HJ Heinz (NYSE: HNZ) – 75 Shares – $2946.00 – 17.0% of Portfolio
PNC Financial Services (NYSE: PNC) – $1839.20 – 10.6% of Portfolio
Cash – $7597.50 – 43.9% of Portfolio
Investing Pittsburgh is a regular part of this blog. It details the ins and outs of a mock portfolio of Pittsburgh Stocks invested and managed by me. For a list of all of the previous “Investing Pittsburgh” posts, click here.