Tuesday, June 30, 2009

Model Portfolio Update


Time to check in on our model portfolio started on 26 March. The market has been good to us longs over the past few months, so the benchmark was a tough benchmark to beat. I can say that unlike the so called 'smart money' I actually jumped in back in March!.

A few things to note:
1) The S&P had a return of 10.4% from 26 Mar - 30 Jun.
2) MOS was purchased on 20 Apr when it hit our $40 target.
3) Dividends were not factored in.
4) See my March post for background.

Drum roll please dadadadadada. The model portfolio returned 34% from 26 Mar - 30 Jun which is about 10% over the S&P!

Overall, I'm happy with the portfolio, but I confess to being concerned about ACI. Other coal companies have done quite well, but ACI seems to lag. We'll watch it this next quarter.

I received a bit of mail saying the portfolio was too risky. My response is this - you were made to believe that many stocks were much riskier than they were. The talking heads had us believe half the companies in the S&P were going out of business. I also have a confession to make. I sold NYSE and bought GE recently. GE was just too enticing, but we'll work with NYSE.

By the way, many of these names have traded a lot higher recently than today's price, such as AFL, MOS, and HIG!

m

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Friday, June 26, 2009

Previous Housing Poll 22May-26May

When asked "Has the median price of US homes bottomed" 42% said yes, 42% said no and 16% said maybe.

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Wednesday, June 24, 2009

Vanda

I'm not sure if there's something going on behind the curtain that I'm unaware of, or if the market is missing something with Vanda Pharmaceuticals (VNDA). The company's schizophrenia drug was approved by the FDA weeks ago, the stock price jumped from a buck to trade around 12 now, but the stock has stalled. Why? The current laggard drug in the space has about $1 bil in annual sales, so one has to assume Vanda's Lloperidone will do at least that well, yet the company has a market cap of just $300 mil.

Valuing the company on an acquisition basis would suggest at least four to five times sales, as seems to be the case in the biotech area for small, fledgling companies. The valuation the market has on the company is crazy. Assuming they bring the drug to market later in the year, as they state and there are no bombshells between now and then, I expect the stock to double or triple easy.

Before that I kind of suspect they may be taken out. At these levels, why wouldn't a large drug company just buy them and pay a billion dollars for the expected cash flow over the next decade or so.

Disclosure: long VNDA

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Sunday, June 21, 2009

Market Assessment

So the market has moved up nicely over the past few months, the VIX is under 30 and JP Morgan (JPM) is over 30, people are actually buying houses in California (despite 11.5% unemployment), and companies are actually issuing stock (and people are buying). Sounds like we've seen the bottom and if you haven't bought, maybe you should.

By the way, GE is still around 12 bucks and Citi is around 3 bucks.

I still believe there's a lot of cash on the sidelines, as every day I have to listen to so called experts say "...the market has gotten ahead of itself...". Translation, "I'm not in yet, so sell some so I can buy". This is why the down days are short. The shorts can't get three routs in a row, so the short story is dead as far as I'm concerned.

Disclosure: long C, GE

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Friday, June 19, 2009

Update

So I've been in the Caribbean for 10 days and I get back and find that nothing exciting has gone one. Same story in place. I like biotechs and the economic rebound/infrastructure play. More to come.

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Sunday, June 7, 2009

The New Bull (bubble) Market

For those that aren't paying attention biotech happens to be the new big thing. I believe we're in the early innings and most small biotechs are fair game. Over the past month I've watched more than a few small company stocks triple or more in a few days. Surprisingly, most seem to have staying power. It seems many are betting that this new FDA is going to be open minded about approving drugs and devices.

If you're still not a believer, watch the ticker and about a third of the symbols going across on the NASDAQ and AMEX are biotechs. Here's a list of just a few that have had crazy moves, HEB, CTIC, KERX, NEPH.OB, NVAX, XOMA, XTNT, HGSI, ARNA, and on and on.

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Wednesday, June 3, 2009

Talking Heads/Talking Nonsense

I think I need to say this one again, STOP PUTTING YOUR FAITH IN REPORTERS AND OTHER TALKING HEADS!. I listen to one or the other of the two main business networks every day (which ever is the least offensive that hour). I won't mention them by name, but you know the two and I'm just amazed by how many viewers think these people reporting the news are experts.

For the most part, the experts are the people they interview and they interview people they know will put whatever spin they want to put on a story that day. Have any of you ever looked at the backgrounds of some of these reporters? Most of them have no financial market experience at all. They give their opinions and prognosticate anyway, and the general public seems to think they actually know what they're talking about.

By the way, one of the networks is incredibly bearish and the other sounds more like a political show than a business network. Anyway, the best research is your own research.

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The Vix

About This Blog

Where we rant and rave about the market and of course give our opinions on stocks we love or hate. We're not advisors and urge you to conduct your own due diligence.

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