The Best of Kass

Let me explain my rationale for selling Procter & Gamble(PG) on the Pershing Square news and the share price run-up.

With a market cap of $175 billion, P&G is a whale.

It is almost too big to restructure, and while the CEO is under some pressure for poor performance, many of the company's problems are structural.

The company also faces a huge foreign-exchange headwind that will likely further weigh down earnings.

Finally, the history of this company is that the shareholders and its directors are more patient than with most other companies (e.g., Yahoo!(YHOO) ).

Bill Ackman is one of the most brilliant hedge-hoggers I know of, but he has a lot on his plate with J.C. Penney(JCP) -- he owns 40 million shares, which is not going swimmingly. (Ratings are being cut, and its merchandising gambit seems to be foundering. Cash flow pressures and even capital pressures at J.C. Penney are mounting.)

Position: None

Confident in Oils
Originally published on Thursday, July 12 at 11:53 a.m. EDT.

Check out the intraday price action on Ensco(ESV) shares -- after being up $1.50-plus yesterday and down by nearly a bean earlier today, they are now approaching breakeven.

This is exactly what happened in July, 2011. The market got beaten up, but oils outperformed.

Market Vectors Oil Services ETF(OIH) is substantially my largest long position.

Position: Long ESV and OIH