As many of our readers know, we primarily make our living here at Sand Spring Advisors managing a "fund of funds" that allocates to hedge fund and commodity managers. Many of these managers run long-short portfolios, seeking out under-valued securities in a given industry versus selling over-valued ones. Their goal is to create positive returns without absolute exposure to an equity market decline.

It was only this evening however that we realized that in our own recommendations here at Sandspring.com, we have implicitly recommended a paired long-short trade ourselves, never quite linking them together. We have previously recommended selling Coca-Cola and since that time the stock has plunged over 15%. We have also previously recommended buying Cadburry-Schweppes, and that stock has held firm even as the broader market has been under stress. Coke trades at 59 times earnings, and has a horrible looking technical chart pattern. Cadburry-Schweppes trades at a more modest 19.5 times earnings, and has a constructive looking chart pattern that could easily lead to new highs. Cadburry-Schweppes also now controls a wide variety of brand beverage names including 7-Up, Dr. Pepper, and now Snapple, and is achieving cost-savings in its distribution network. Earnings have been steadily growing and free cash flow ballooning.

Maybe we will get our interpretation of one of these stocks wrong, but as a paired trade, and as the market as a whole slowly gropes for a trading bottom, we think short KO and long CSG holds continued great appeal.

It also may be of interest to some as well that because so much time (and thus timeliness) has now transpired, we recently released today three of our 2000 subscriber-only articles. These now appear under the public Earlier Articles section of the website. Perusing through them may give one a sense of the added premium level of analysis we provide to subscribers.

For immediate web-based access to our latest subscriber-only February 25th analysis, please support Sand Spring Advisors and purchase a quarterly subscription below. Our latest work will be accessible on the final page of the order process. A user-id and password for web access to all past and future articles will follow by e-mail.

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Disclosure Statement

Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.