Monday, November 28, 2011

A few thoughts on a few things

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.

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Sunday, November 13, 2011

Picking fruit from our trees UPDATED 13 Nov

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.

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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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