STI Hedge Fund April Results.

April was a sub par month for performance due to the fund having less positions available for trading. May will present about 35% more positions for trading and should improve results. This situation is to be expected and are nothing more than the normal flow of hedge fund trading. May I would expect will bring the year to date results up significantly. We traded 17 positions this month and will likely trade 23 to 25 in May.

Results for April were 12.7% annualized. Still an excellent gain for most, but below the about 15% for this year and below the expected 18% plus for the hedge fund. These numbers include adjusted expenses and losses for the month. One loss taken during the month, RGC was sold at a loss. However the loss from RGC as noted in my first quarter report was due to a trade made in December 2010 to gain a large special dividend. The loss was more than offset from the dividend. That is how trading works sometime. The loss cost us about 3% for the month.

Looking forward to the next two months performance should improve as noted above. Due to the upcoming ending of QE2 I will likely limit expirations to June as we move forward to limit exposure to possible losses until the Federal Reserve monetary situation is more in focus. As noted earlier I will be dropping NYB and FTR from trading as soon as possible. I now also have concerned about HCN due to the upward movement in the security and making the risk there abovet $55 of concern. HCN might be dropped as well shortly. I added LLY and PBI to the fund trading earlier, but now have concerns with PBI as well, despite the low PE. PBI reported less than desirable results last week.

There still are excellent trading opportunities in ARCC, AEP, BCE, CTL, RAI, JNK, PFF, O. and others in the portfolio. The normal narrowing of trading securities is normal in a market that has moved upward significantly. SO and LO remain solid performers despite their higher valuations. Oil related securities ERF, DO, and SRDL, remain three of the best investment producers due to the continued restrictive political decisions by the Obama administration that limits oil production. However these actions despite being bad for consumers offer excellent opportunities for investment gains as noted in previous postings.

I remain cautiously optimistic, but know the ending of QE2 is a hurdle to cross. Once this policy is better known the volatility that could result might make the second half of the year most promising.