Saturday, November 28, 2009

Dubai Crisis=World Systemic Crisis?

Is this really a problem or just an excuse to sell? So Dubai is looking to postpone principle and/or interest payments on it's $60 billion in loans. How does this translate into some major crisis through out the world? It doesn't. In a few months this will just be another blip on the map. It certainly didn't warrant the sell off we saw in every major world market.

Let's get on with the bull market and put this nonsense behind us. Remember, if you're not leveraged, you can ride times like this out and actually find bargains. DOW and some of the insurers look good in here.

On another note, the FDA says they'll give DNDN an answer by May 1st. In my humber opinion, that answer comes much sooner.

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Monday, November 23, 2009

Don't Fall For The Hustle!

I keep hearing the 'talking heads' say that the volume isn't there on the big up days. That's probably why they're big up days because those big program traders aren't in the market. It should come as no surprise that most of the hedge funds and program traders tend to lean to the short side.

Low volume is good these days. Anyway, most of the volume is a result of flash trading anyway which isn't real buying and selling, just churning.

Also, have you noticed that every time you turn on the tv or get on the net someone is trying to get you to trade options or currencies. Wall St gangsters are having a harder time hustling you out of your money in the stock market, as more of you have become savvy, so they're moving it to the options and currency market. Don't be fooled. If you think you were robbed in the 'pump and dump' wait until you buy a bunch of call options just out of the money only to watch the stock fall for no apparent reason just long enough for your options to expire worthless then rise shortly afterward. Watch this happen a few times and you'll know the game hasn't changed, just the playing field.

Some of the trader/hedge fund favorites - GNW, HIG, DNDN, VVUS... Feel free to add your own.

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Sunday, November 22, 2009

A Few Random Notes On A Few Random Companies

In case you haven't been paying attention, many of the material stocks have lifted off. See Cliffs (CLF), Petrobras (PBR), and Freeport (FCX). While analyst after analyst comes on the tube and say the market is overdone and the economy is weak, they continue to buy these names which says a whole lot more about what they think, or at least what the market thinks. CLF actually doubled the dividend!

Look at the insurance names, Genworth (GNW), Hartford (HIG), and Aflac (AFL). They've taken off too. They're among the most volatile stocks, but they continue to climb and GNW and HIG are still trading at a discount to book value! Historically, this makes them cheap.

Finally, look at some of the tech names, Apple (AAPL), Microsoft (MSFT), and Intel (INTC). AAPL is at an all time high and MSFT is near a 2 year high and INTC raised its dividend!

I'm not letting anyone tell me this market isn't going higher or that the economy is due for a double dip because aside from the volatility caused by professionals, this market looks pretty healthy. Waiting for unemployment to straighten out is usually a loosing strategy, as by then the market will be topping out.

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Tuesday, November 17, 2009

Tee Up Vivus

So Vivus is out with Phase 3 results for their erectile drug Avanafil. The stock has been beaten down lately and I think this news caught a lot of people off guard, as the stock shot up after hours. Phase 2 results were good to go and many expect the same for Wednesday morning's results.

We're long VVUS over here and are hoping they knock it out of the park. There's a lot of potential over at that little company and my money says big pharma is paying attention.

Pg

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Monday, November 9, 2009

A Few Good Names To Consider

Okay readers, here are a few bones to chew on. Besides the usual suspects we looking at Energy Conversion Devices (ENER) under 12, Verizon (VZ) under 30, Bank of America (BAC) under 18, Cliffs Natural (CLF) under 35, and Nasdaq (NDAQ) under 20.

These names are in addition to the other names we've talked about. Remember, this isn't advice, but rather opinions that the stocks of these companies represent good value.

I won't get in to the reasons, because for most of them except VZ, it's the same story - economic rebound and these stocks have been beaten up to the point where much of the risk has been taken out. Do your research and let us know what you think or comment with questions on specific names.

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Sunday, November 8, 2009

GE and DOW Opportunity Or Trap?

GE and Dow Chemical have had pretty big pull backs, even though GE was upgraded Friday. What to do, what to do? We like them both. As you know DOW is a '2011 Model Portfolio' member and GE was strongly considered for the list. The recent drop has created a great buying opportunity. Why?

Let's see DOW only defied all critics by digesting Rohm Haas a lot quicker and more efficiently than all the critics thought and the company continues to blow away estimates. We expect the dividend to be increased at some point late next year when the company feels the coast is clear in the economy. Also, as economic activity picks up this company is basically on the ground floor.

As far as GE goes, the company was priced to go out of business a few months back and critics still talk like the company might be in trouble. Not sure what they're thinking. Look at how much cash this company generates. Look at the diverse product offering. And oh yes, the stock is still yielding over 2.5%. Enough said

When GE is trading over $30 and DOW over $40, then everyone will jump on the bandwagon, but then it's too late.

PG2

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Friday, November 6, 2009

Actual Hedging Or Speculation

It's clear the big programs that buy and sell mass quantities are back. Coincides with the return of hedge funds. You can't tell me the intra day swings of 2-5% in commodities is normal or healthy. I'm tired of traders saying it's good for the market and it provides liquidity. It's not good and it increases volatility which hurts retail investors.

I think there should be a limit on how large your position can be if you're not actually in a business that necessitates hedging. I mean you should actually be dealing in the physical commodity. The limit should be daily and overall.

It's risky buying stocks tied to commodities like the fertilizer stocks, metal stocks, energy, and others because so many traders/hedge funds trade this stuff back and forth. You know it's the case when stocks like Petrobras or Freeport move 5-10% because the underlying commodity moved. The fundamentals of the company didn't change over night. It's just someone's computer program buying or selling large amounts because one of the model inputs changed. Ridiculous.

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Tuesday, November 3, 2009

Things Are Playing Out Like We Thought

The insurers we wrote about are in with their numbers for the 3rd quarter and things look great. Aflac (AFL), Genworth (GNW), and Hartford (HIG) had outstanding quarters. What a great buying opportunity the insurers represented over the past few months and we still like them. GNW's book value is 25 and HIG's is 38. Both stocks are trading at a significant discount to book and both stocks increased guidance. AFL is still paying a 2.7% dividend. HIG's unrealized losses decreased by 50%! The upgrades should be on the way, in fact GNW was upgraded yesterday.

That's not the only news. Human Genome (HGSI) is on fire after great Phase 3 results. Earlier in the year this stock traded at .45. Yes, 45 cents, now it's at 28.

The recent pull back has created an opportunity to still get in to some of these names. By the way, AFL and HIG are 2011 Model Portfolio members. Good going.

Disclosure: long all.

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Sunday, November 1, 2009

Human Genome In The Batter's Box Again UPDATED

So on Monday we get the final word on Human Genome's (HGSI) Phase 3 trial for it's Lupus drug, Benlysta. The stock is trading around $19 and looking at the November straddle, the market is factoring in a move of about $9 up or down. So it should be a wild day.

The news will probably be out just after midnight PST, as GSK, Human Genome's 50/50 partner is a European company and this is how they did it last time.

Some put the market value on this drug between $3-$5 billion. Given HGSI's pipeline, this could be the start of a beautiful thing.

UPDATE - The news is out. I give it a B and the July result an A+. While the 10 mg dose was effective, the 1 mg dose wasn't. Also, there were more side effects and 3 deaths, but remember, the trial size was twice as large as the placebo size. We'll have to wait on the rest of the data. Also, we don't know the details around the deaths. They could have nothing to do with the drug. With that typed, the drug seems to work.

Expect a wild ride on Monday, as results like this can be spun either way. It'll most likely depend on which side of the trade an analyst is on.

Disclosure: long HGSI

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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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