Many thought the nail was in the VVUS coffin, but of course we said otherwise and we hope our readers benefitted. One more hurdle to jump for VVUS then tee up ARNA. To think, VVUS has their ED drug due up too. If both drugs get approved someone is going to make a hostel bid. Big pharma can't stand theses little companies running around with loaded weapons. From a sunny, very hot vacation destination looking forward to seeing the little Guy win one today.
Read more...So many eyes will be on Frontier (FTR) after the market close on Thursday. No matter what happens I think a year from now the stock is higher. Of course the biggest question will be the dividend, then revenues. I would just love to hear a strong statement by the board about the dividend staying. Either way, I'm holding through the storm. I'd have to hear something pretty crazy not to hold, as FTR has become part of my core holdings. It won't be long now.
Read more...Frontier (NASDAQ: FTR) is keeping people up and night I'm sure. Here's the recent news, it took a beating the past couple of weeks, the talking heads keep saying dividend cut imminent, FTR is the 5th most shorted stock on the NASDAQ, volume has been through the ceiling, the company moved up it's earnings release, and I bought more.
Here's why I'm still a believer, even if the dividend were cut by a quarter, it would still yield about 12% down here, the board said about 30 days ago they are committed to paying the dividend, they're diversifying the business, when they digest the Verizon assets the financials will stabilize, this is all speculator driven and something we have to be willing to tolerate in today's market. That's why we have to be willing to hold a couple of years.
I don't think we're sitting on a bomb. I do think that much rests with the dividend decision, because when you're short, you have to pay that dividend and that's a lot to pay to keep the short on. I'm holding and have no problem sleeping, as it's part of the portfolio and not the whole thing, and because I believe the company will come through. BTW, it's usually a good sign when the company moves up the reporting date.
Sorry for the absence. Looks like the sun wants to shine on the market again. Some of our MP losers have come to life. People realize solar isn't dead, but we've still got a suicide watch on Frontier (FTR) and Novatel (NVTL).
Our side bet on BofA (BAC) at around $5 has paid off, but we're not ready to sell yet. We still have to get our MP picks together in a table. One more note, look at Vivus (VVUS). More to come
Have you noticed how stocks go round and round, then sometimes rally for a few months then sometimes sell off for a few months, but most stocks seem to have no intermediate or long term direction? Well, get used to it. I've written about this in the past and here it is again. Our markets are dominated by algorithms and people sitting in back rooms next to computers.
If you need proof, read this article if you haven't already, HFT. The article discusses how a high freq trading firm was fined (peanuts) for sending the market into a tailspin down, more than once. So what I take from that is, regulators know they can do it, we saw it on May 6th 2010 with an exclamation point, but regulators say please don't do it. You know what ends up happening, they just do it so it isn't as noticeable. Think about it, if you could move the market at will and as long as you didn't get too greedy you wouldn't get into trouble, wouldn't you do it? It's sort of like the shorting stock, but not borrowing it. Traders do it all the time and regulators say don't do it, but do nothing to them.
I asked over a year ago if you thought it was market manipulation to buy and sell stocks, not to take part in future movement, but to cause movement in those stocks. You overwhelmingly voted 'yes'. We agree here. In case you don't know, the real money is made in the derivatives markets - take positions in the derivatives, then move the underlying stocks, then make a fortune. It's called leverage. Why make $1 when you can make $5 risking the same amount of capital. Dubious people are making a fortune there. This is why dividends are so important to us regular people, as well as being able to stay with it and not be forced out by being on margin.
I thought I'd throw a few ideas your way. This market is tricky and not to be trusted. We're in that type of market where trading can be dangerous. Volatility is all over the place, rumors are rampant, and that can also create opportunities for the patient investor.
Remember SQNM, we picked up a little. Couldn't resist down just under $4. If their Down Syndrome test works as advertised, it should be a real bread winner. Let's not go to sleep on ARNA, yeah, we said it. VVUS has already taken off in anticipation of next year. At $1.40, a little ARNA seems cheap. Here's one more little biotech, ASTM, which we've held for well over a year and will probably hold for years. We don't have a lot, but a little (stem cells and such). In a few years it might turn out to be a huge deal. Finally, drum roll please, couldn't resist adding BAC to the mixing bowl. With a market cap of $50 billion, which is less than Citi, half of JPM, and less than half of Wells, and still being the second largest bank (or maybe the largest) in the country, it's a risk we'll take.
By the way, these are side bets and we could change our minds at any second, or might hold them for a year or longer. Just a few thoughts. Also, still working on summarizing the 2013 MP.
13 Nov - We added, NutriSystem (NYSE: NTRI) to the MP at a hair over $11, so cal it $11. This one is a little different, as revenues are off from a year ago and it's another small cap. The good is it's got that 6% yield and obesity is such a huge deal that I think there's enough to go around between NTRI and WTW. NTRI needs to get their marketing machine working and hire some celebs that need to lose weight. This also adds some good diversity to the MP. Some of you may notice a trend, as we have many stocks that boast hefty dividends and some that offer high potential growth and some that offer both. We didn't want anything in between. We expect to get paid in some way and if you're not paying a nice dividend, then you better have big upside. We'll summarize this and find a good way to track against the S&P on a risk adjusted basis.
23 Oct - We added Freeport (NYSE: FCX) to the MP at $34. We thought long and hard about CLF or FCX, but opted for the exposure to gold rather than iron ore. Also, the 3% yield is nice. Wish we had pulled the trigger under $30, but we'll live. There may be a bumpy road ahead, as the economy is on shaky ground which means copper demand will be uneven, but things will be up and down over the next 2 years and when they're up, this stock will take off. So one more spot left and I've got an idea.
2 Oct - We added MetroPCS (NYSE: PCS) to the MP at $8.70. I gotta believe this ATT/T Mobile potential deal is a positive for this company. If the deal goes through, Verizon, Sprint, or some unforeseen entity will be pressured to step up and buy them. If the deal doesn't go through, then great for PCS. In addition,wireless is just where everything is going, land line are dead. The wireless companies are the new mob, joining the cable companies. Getting online is critical and these two industries rule that. The stock is beaten up, but over the next couple of years they should emerge as the number 3 player in this space if they aren't acquired.
That's 8 spots taken. By the way, we know the portfolio has been beaten up lately and the fall has been dramatic in both the market and our portfolio, but none of these companies are going out of business and knowing we plan to hold into 2013 gives us comfort. Some of the sectors like solar and China Internet have been killed to the point where it's become ridiculous. This is when you buy.
10 Sep - I know we were reluctant to touch the insurers 30 days ago, because of European exposure concerns, but one of our old friends Hartford (NYSE: HIG) doesn't have much of that, so we're adding HIG to the list at $16.75 it's a bargain. We don't believe it or most of the other insurers fully recovered from the beating they took over the past few years. It's a solid name and has a 2.3% yield in here with book value over 40, we like it. While we looked at Genworth, there's still that uncertainty over the mortgage business and the potential restructuring down the line and no dividend to keep us warm at night.
We're adding another combo play, Renesola (NYSE: SOL) at $2.90 and Trina Solar (NYSE: TSL) at $10.50. These two stocks will hold one position. This sector has been beaten down to the point of absurdity. I think the real problem is there are too many solar companies and many need to go away. There's tremendous upside here and very little risk over the next couple of years. It's dangerous picking just one, as who knows who's going to survive, so we pick two of the bigger, better run companies. These companies are running out of cash and they have the scale and management to outlast and out do the competition. Also, both these names are heavily shorted which could provide some lift on good news.
That's 7 down and 3 to go.
22 Aug - So DANG appears to have been targeted by short sellers. Got hammered today and I didn't notice it was on the Reg SHO/Threshold list until today (been there for a while). For those of us who can wait it out, we should see a nice pop, eventually.
20 Aug - Adding a combo play Dangdang (NYSE: DANG) at $7.90 and Renren (NYSE: RENN) at $7. This position will hold one spot in the portfolio, so it's a split. This is our speculative play and gets ups good exposure to the Chinese consumer and both companies increased revenues by over 50%. Some of the negative news around these names doesn't bother me as I heard the same stuff about Baidu and Ctrip and Sina.
14 Aug - Adding Frontier Communications (NYSE: FTR) at $6.95 and that fat 10.8% yield.
So Cisco (NASDAQ: CSCO) had a good quarter so in to the bag it goes. At this price, why wait. We're adding it tomorrow, say we pick it up at $14.50 given where it'll probably trade. We're also adding Petrobras (NYSE: PBR) to the portfolio at $26.50. This is the oil company of the future and this is a dynamite price.
Remember, we're going to pick 10 names and spend equal amounts on each. So far we have NVTL, CSCO, PBR, FTR, DANG/RENN, HIG, SOL/TSL, PCS, FCX. We'll summarize them when the list is complete.
23 Oct - We added Freeport (NYSE: FCX) to the MP at $34. We thought long and hard about CLF or FCX, but opted for the exposure to gold rather than iron ore. Also, the 3% yield is nice. Wish we had pulled the trigger under $30, but we'll live. There may be a bumpy road ahead, as the economy is on shaky ground which means copper demand will be uneven, but things will be up and down over the next 2 years and when they're up, this stock will take off. So one more spot left and I've got an idea.
2 Oct - We added MetroPCS (NYSE: PCS) to the MP at $8.70. I gotta believe this ATT/T Mobile potential deal is a positive for this company. If the deal goes through, Verizon, Sprint, or some unforeseen entity will be pressured to step up and buy them. If the deal doesn't go through, then great for PCS. In addition, wireless is just where everything is going, land line are dead. The wireless companies are the new mob, joining the cable companies. Getting online is critical and these two industries rule that. The stock is beaten up, but over the next couple of years they should emerge as the number 3 player in this space if they aren't acquired.
That's 8 spots taken. By the way, we know the portfolio has been beaten up lately and the fall has been dramatic in both the market and our portfolio, but none of these companies are going out of business and knowing we plan to hold into 2013 gives us comfort. Some of the sectors like solar and China Internet have been killed to the point where it's become ridiculous. This is when you buy.
10 Sep - I know we were reluctant to touch the insurers 30 days ago, because of European exposure concerns, but one of our old friends Hartford (NYSE: HIG) doesn't have much of that, so we're adding HIG to the list at $16.75 it's a bargain. We don't believe it or most of the other insurers fully recovered from the beating they took over the past few years. It's a solid name and has a 2.3% yield in here with book value over 40, we like it. While we looked at Genworth, there's still that uncertainty over the mortgage business and the potential restructuring down the line and no dividend to keep us warm at night.
We're adding another combo play, Renesola (NYSE: SOL) at $2.90 and Trina Solar (NYSE: TSL) at $10.50. These two stocks will hold one position. This sector has been beaten down to the point of absurdity. I think the real problem is there are too many solar companies and many need to go away. There's tremendous upside here and very little risk over the next couple of years. It's dangerous picking just one, as who knows who's going to survive, so we pick two of the bigger, better run companies. These companies are running out of cash and they have the scale and management to outlast and out do the competition. Also, both these names are heavily shorted which could provide some lift on good news.
That's 7 down and 3 to go.
22 Aug - So DANG appears to have been targeted by short sellers. Got hammered today and I didn't notice it was on the Reg SHO/Threshold list until today (been there for a while). For those of us who can wait it out, we should see a nice pop, eventually.
20 Aug - Adding a combo play Dangdang (NYSE: DANG) at $7.90 and Renren (NYSE: RENN) at $7. This position will hold one spot in the portfolio, so it's a split. This is our speculative play and gets ups good exposure to the Chinese consumer and both companies increased revenues by over 50%. Some of the negative news around these names doesn't bother me as I heard the same stuff about Baidu and Ctrip and Sina.
14 Aug - Adding Frontier Communications (NYSE: FTR) at $6.95 and that fat 10.8% yield.
So Cisco (NASDAQ: CSCO) had a good quarter so in to the bag it goes. At this price, why wait. We're adding it tomorrow, say we pick it up at $14.50 given where it'll probably trade. We're also adding Petrobras (NYSE: PBR) to the portfolio at $26.50. This is the oil company of the future and this is a dynamite price.
Remember, we're going to pick 10 names and spend equal amounts on each. So far we have NVTL, CSCO, PBR, FTR, DANG/RENN, HIG, SOL/TSL, PCS, FCX. We'll summarize them when the list is complete.
Frontier (FTR) paid the usual dividend today and the Board said they intend to keep paying the say dividend. What more do people need? Shorts are trying to force a dividend cut, but I don't see it happening. The yield is over 12% now and the stock is around 5.5. Oddly enough, the Jan 13 calls look expensive at $5 and $7.5. I'd add more in here and reap the rewards of a failed short attack and a fat dividend.
Still looking to finish out the MP. Later this week we may get the chance to do that.
The Solar industry is so beaten up, it looks like it's almost over. I hope it's the 'rope a dope' and not the real thing! That's why I gotta believe we gotta be buying them. I think we're going to see some M&A activity in that space, but who has the money to buy? Definitely not another solar name. Maybe a big company like GE or Dow Chemical. Either way, I think the downside risk is so small and when people figure out they're not all going out of business, some of these are going to be up 5 to 10 times.
I'm not sure which is beaten down worse, solar or Chinese Internet stocks? This much gloom and doom must be a good thing for those of us who can wait.
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