Thursday, September 23, 2010

9/24/10 REDF

3-month average volume=about 200k. Today's volume=2.8m.
Price has doubled since tof mentioned it.

Here's the entire text of Eric Savitz's take in Barron's (from last Friday):

Alas, with this post I have more questions than answers.

Nonetheless, I’d note that there’s been a sharp, sudden rally in the shares of Rediff (REDF) and Sify (SIFY), both players in the Internet content business in India.

REDF shares are up 36 cents, or 10.1%, to $3.93; the stock is now up 30% in two days, and 97% for the month to date.
SIFY shares are up 10 cents, or 6.1%, to $1.73; the stock is up 14% in two days, and 41% so far this month.

So…any theories?


What are we looking at here? A 100-bagger over the next 5 years? Or a penny stock?

61 comments:

  1. David - once in a while it makes sense to take those risks. i'm inherently a risk taker, though, when it comes to the markets. but in my mind the markets are no riskier than putting your money into a business.

    i have 3 reasons for why now i should be taking the most risks i can in my life, as long as they're calculated ones:

    first, i'm still really young, relatively speaking. second, i don't have a family to support yet. third, i don't make investment banker money so i need to take risks to get ahead of the game.

    the last two times in my life i made a decent amount of money in the markets, i took a year off from work both times and worked on my internet startups. both times my businesses grew but not enough to support me and i ended up spending a good deal of the money i saved up. so now i'm waiting until i have more money in the bank before buying an existing business (or two). i like business a lot and want to get out of the tax accounting world as soon as possible. this crap is so boring it kills me.

    regardless, i think there are still plenty of small caps that are very undervalued. if you time it right there's no reason why you can't make 25-50% in a month or two, assuming the markets are trending up and you have found a "low risk" small cap (i.e., either one that is trading below book value or near cash/no debt or one that is in the midst of a turnaround and is so far from it's highs that it is bound to bounce back some). i've done this a few times in the past 12-15 months. i've taken some lumps along the way but the big gains more than make up for it.

    when we were coming out of the crash and the recession, i suspected there would be values out there in the small caps for a while because people would be so fearful of the next shoe to drop that they would ignore value in the markets and it has pretty much turned out that way. i took my limited experience from the 2001-2003 recession and just thought it would be even more severe than that. people can't forget the feeling of losing so much money so quickly and they're afraid to put money at risk. that provides unbelievable opportunities if you're willing to take calculated risks.

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  2. Stories like REDF are the reason a few investors end up enormously wealthy. And why a large number of investors get burned. Everyone now knows that 1000 shares of AAPL, MSFT or INTC purchased 20 years ago would be game changers for holders. What about someone who bet it all on of those companies? He would have to pick the right company.

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  3. REDF
    Submitted by 2nd_ave (4628 comments) on Thu, 09/23/2010 - 20:29 #69979
    3-month average volume=about 200k. Today's volume=2.8m.
    Price has doubled since tof mentioned it.

    Here's the entire text of Eric Savitz's take in Barron's (from last Friday):

    "Alas, with this post I have more questions than answers.

    Nonetheless, I’d note that there’s been a sharp, sudden rally in the shares of Rediff (REDF) and Sify (SIFY), both players in the Internet content business in India.

    REDF shares are up 36 cents, or 10.1%, to $3.93; the stock is now up 30% in two days, and 97% for the month to date.
    SIFY shares are up 10 cents, or 6.1%, to $1.73; the stock is up 14% in two days, and 41% so far this month.

    So…any theories?"

    What are we looking at here? A 100-bagger over the next 5 years? Or a penny stock?

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  4. Let's try to be objective. To the best of my recollection, tof has yet to be wrong when it comes to stock picks. Maybe he's a future newsletter genius and we just don't recognize it yet.

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  5. 2nd - I totally agree. Everyone plays the should have could have game. That's why I almost always cash in early. I mean, yeah sure REDF could be a lotto ticket. But it could easily go back down to where it started from. How are we to know which is the most likely outcome? Probably the smartest way to play something like REDF is to sell 1/4 at a double and 1/4 at a quadruple and let the rest ride. Investors that caught the bottom on REDF in 2002 and thought it was the next YHOO were left holding the bag in 2009.

    So more likely than not it makes sense to just sell early and take the money and run and forget about the should have could have game.

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  6. ha! 2nd, i wish. I've had my share of bad picks just in the couple of months alone...WATG RAS, CREE, C come to mind. But thanks for the generosity.

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  7. tof- OK, thanks for reminding me about the dogs ;)

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  8. I think i've posted a few times about IMMR but I'd recommend taking a look at this company again if you get a chance. They make technology that goes into touch screen devices, particularly force feedback (haptics) technology that allows you to "feel" the surface of a touch screen through feedback. They are trading at about $140 Million market cap but they have $64 Million in cash and no debt, are operating at positive free cash flow, and have had pretty significant revenue growth recently. They moved away from selling products and now only license their technology. Samsung, Nokia, Sony, and LG are their big customers and they have recently signed deals with Cypress Semi, Toshiba and Atmel to put their technology on more touch screen devices. Samsung just introduced their Galaxy tablet, which will compete with the iPad and which has haptics on it.

    I think the company has the potential to be a multi bagger over several years and if it ever got on the Apple products it would skyrocket. There was some speculation that it would back in 2007, which is why the stock spiked over $20 briefly. Those rumors were ultimately not true.

    This is an example of a small cap with a great balance sheet and cheap valuation that is worth taking a flyer on. If it gets a little momentum it could easily double.

    FD: No position but looking to take one soon.

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  9. Here's a gem from normzyx (last paragraph):

    Inflation/Deflation
    Submitted by normzyx (63 comments) on Thu, 09/23/2010 - 19:22 #69978
    FWIW— Chas. Nenner says deflation until mid-year 2011; inflation thereafter. About that time (early to mid-2011: Spring?), stocks should bottom at around 2009 lows, then recover to prior highs peaking in 2012. Then begins a longer term downtrend from 2013 for many years.

    Nenner has called the period a 'lost decade' similar to that experienced by Japan. His cycles regarding military conflicts point to a big one in 2013.

    Within these time frames there will be, as always, shorter term counter trends, and some indices will of course perform relatively better, but will still follow the larger trend.

    Also, one should not forget that the "Presidential cycle"— which has averaged +50% for each rally from the second year low to the third year high of each Presidential term (going back to 1917) is due kick in about now (assuming that the July low was not THE low and that the rally is not already underway).

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  10. Hey, no one gets them all right. Didn't Bill just cop to opening EDZ (60% portfolio weighting) on 9/9, and closing the position yesterday when his 'proprietary model' signaled "Bull"? Based on EOD prices for each date, that's a hit of approximately -11%.

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  11. by the way, go to the weekly chart for IMMR:
    http://stockcharts.com/h-sc/ui

    Does that not look like something on an uptrend...something just getting ready to bust out?

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  12. And TK? It's all black or all red, not many shades in between.

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  13. Craig- Check out the typo in the spelling of the CCO's name- IMMR's got your name on it-

    http://finance.yahoo.com/q/pr?s=IMMR+Profile

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  14. Long day here...I make not of a few things:
    1- My port held up really well today. Down .21%

    2- I also remember back in Jan. last year the same thing happened when the market was selling off.

    3- Bottom line. If we are going down the rat hole again, nothing will be safe, as money managers try to lock in what ever measly gains they have for the quarter.

    4- I'm not a huge volume guy, but the lack of institutional money seems obvious.

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  15. IMMR - Looks like it's headed to ~$5.70?

    EDZ - There are several problems with trying to follow Bill's trades:

    1) His posts are inconsistent and therefore unreliable,
    2) Seems like more than 50% go against him,
    3) He's one of the most arrogant men I've ever known, he has no regard for anyone other than himself.
    4) He thinks of others as "freeloaders".

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  16. Good to see you Mr. Wizard. I was afraid you were in the back of a white van with a sniper rifle. :)

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  17. I don't know for sure but I'd have to say Larry King's got this guy beat by a country mile:

    "Scientists Uncover Skull From Horniest Dinosaur Ever

    Posted on: Wednesday, 22 September 2010, 15:15 CDT | Related Video

    Scientists have unearthed a dinosaur in Utah that now holds the record for bearing the most horns on its head.

    Paleontologists have uncovered the remains of an ancient beast that lived 76 million years ago in the warm, wet swamps of what is now southern Utah.

    The animal, named Kosmoceratops richardsoni, stood 16 feet tall with a 6-foot skull equipped with 15 horns. The scientists speculate that the animal weighed 5,511 pounds. "

    http://www.redorbit.com/news/science/1921350/scientists_uncover_skull_from_horniest_dinosaur_ever/index.html

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  18. Volcker comments from yesterday...

    Former Federal Reserve Chairman Paul Volcker, an adviser to President Barack Obama, said he doesn’t expect a broad-based decline in prices.

    “I’m not worried about deflation,” Volcker said today to reporters after a speech at a banking conference in Chicago. “I think we’re on a path to price stability.”

    “I do not think we should be worried about and consumed by the problem of a potential deflation that doesn’t exist,” he said.

    The Federal Open Market Committee said Sept. 21 that inflation is “somewhat below” levels consistent with the Fed’s congressional mandate for stable prices. The central bank said it’s “prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

    Volcker didn’t comment on the appropriateness of the Fed’s stance. When asked whether the central bank should purchase longer-term Treasuries, Volcker said, “ordinarily we wouldn’t want to rely on that too heavily but under existing conditions I think it’s understandable.”

    “Given present conditions I have no feeling this violates some Federal Reserve doctrine or ethic or whatever,” he said.

    “We’re in a situation right now where we’ve got a sluggish economy, a lot of excess resources, a lot of unemployment,” he said. “This is not an atmosphere that’s inclined to produce inflation. I think we ought to be sure that we don’t take actions that down the road might lead to an inflationary situation.”

    Before talking to reporters, Volcker said in a speech about financial regulation that the U.S. mortgage market is “absolutely broken” and the government’s role must be changed.

    The use of derivatives has “far exceeded any pressing need for hedging in real markets or financial markets and has become a kind of speculative instrument,” the 83-year-old former central banker said.

    Volcker is chairman of the president’s Economic Recovery Advisory Board. As chairman of the Fed from 1979 to 1987, he raised interest rates to as high as 20 percent to tame inflation, triggering a recession.

    Earlier this month at a separate conference in Calgary, Volcker said the U.S. and European economies may take years to rebound from the recession, while emerging countries such as China are undergoing “remarkable” growth.

    “It’s going to take a long time to repair the basic disequilibrium in the economy,” Volcker said today.

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  19. Useless POS blog...

    "too long"

    I wasted 15 min pasting volcker comments worth noting together to post. When you press the back button you find its all gone.

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  20. Obviously I'm not willing to waste my time playing that game... Very frustrating... JERKS!!!

    http://www.bloomberg.com/news/2010-09-23/former-fed-chief-volcker-doesn-t-expect-emergence-of-deflation.html

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  21. Anyway, if *EVEN* VOLCKER condones this lunatic money printing adventure, you *KNOW* they have to be TOTALLY DESPERATE trying to turn the economy around. Keep in mind he has to know that Japan has been trying what we are currently doing for the past 20 years trying to get out of the depression caused initially by the Nik bubble and crash (just like our Nasdaq bubble and crash). Ok, yes, we tried blowing some more bubbles since then, but basically the Nasdaq bubble and crash are where the depression started. By blowing more bubbles we avoided the pain short term, but now we are faced with a problem about 4 times the size, and thus I would expect 4 times the pain to get out of it.

    You can tell he thinks its going to be a very long time to recover, too. My rule of thumb is to take whatever optimistic number they give you, and multiply by 2 or 3 for what they really were thinking, but weren't willing to say. So that would easily put us at 10 to 15 years to recover, ONCE we start going in the right direction (we are still going the wrong way, just printing/borrowing/handing out more money).

    As I see it, they will try to gradually decrease the value of the dollar till we get to normally balanced trade. Of course they can't SAY that, or anyone holding dollars would dump them summarily, ending reserve currency status and causing hyperinflation instead of some inflation.

    That's just my 2 cent opinion/interpretation of Volcker's attempt to tell us the truth, as much of which we can handle.

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  22. video of speech found

    http://insider.thomsonreuters.com/link.html?ctype=groupchannel&chid=3&cid=146696&shareToken=Mzo5NTI2NzE2ZS1kYTU5LTQ0ZGQtYjU0Ny1mOTIyZDdmNDdhYmQ%3D

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  23. sold TZA for 28.42, up $430 for the day so far

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  24. "As I see it, they will try to gradually decrease the value of the dollar till we get to normally balanced trade."

    Yes, I agree. There's no earthly reason I can think of that makes sense for the U#D to gain in popularity except that if you consider the case of Japan's 0% rate, which made the Yen fairly popular for a carry trade (that obviously benefited someone, but who, Japan?), didn't it?

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  25. in TZA at 28.04 out at 28.14 (bad click), now up $850 on the day

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  26. "Strong dollar policy"

    What does that mean, exactly? Aren't we really to interpret that one backwards? What characteristics does the American economy have that support this thesis?

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  27. Entered a stop order by mistake with bad click, so mm's to price down to collect the shares faster than I could cancel.

    You'd need to be a total idiot to enter a stop order on purpose...

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  28. played TZA again from high 27's to low 28's, now at $1040 profit for the day

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  29. Another TZA play from 27.80 to 27.89, now at $1310 profit for the day.

    One of these days I'll figure out how to make money going the way the market is going. I have no idea why this works and that never does...

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  30. CB - Maybe you've got something there... I couldn't do it that way with my tool set.

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  31. Silver approaching all-time record high...

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  32. Bought TZA again at 27.71, sold at 27.76, now at $1460 for the day

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  33. Sold my wife's DGP again. she made $850 on a 700 share position, so she did real well. I'm ashamed to say I'd have sold it sooner and lower to lock in the profit.

    Oh well. BTW, I don't include her account gains/losses in my daily totals since she decides, not me.

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  34. again TZA at 27.63-64 to 27.72, now at $1800 profit for the day

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  35. Standing here looking at a 4th Gen F-body, it looks like the best way to do head gaskets would be to drop the engine out of the bottom...?

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  36. again TZA, 27.60's to 27.70? , now at $2000 profit for the day

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  37. they sell a "hooker" to pull it out the top. I have 2 extra sets of LT1 heads, btw

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  38. I think I'll quit while I'm ahead. LOL, one of these times they will get my timing and pull out the rug before I sell.

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  39. So, let me get this straight... We should all buy stocks because they will rise as more currency/credit is created because with rates at zero, there is noplace else to put the money and come out even, let alone ahead....

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  40. Do you actually need to pull the engine to replace head gaskets? I'm no mechanic, BTW. I just do basic maint stuff usually.

    From a trading standpoint, it looks like nobdy else is even here today. Being up almost $2000, and not even lunchtime, I think I should quit while ahead.

    You'd never think there is that much bounce in a dead cat, but there it is.

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  41. Does the "hooker" pull tranny and all in one shot?

    They're so far back in there, it's all under the windshield. I don't see how anyone could remove the heads without extracting the block, or even remove the valve covers for that matter. Changing plugs would be about it maybe but even then you're gonna skin a few knuckles getting to 'em.

    And this one's just the Series II v6.

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  42. Loans for small businesses that don't want or need loans sounds like a great plan to me, why not promise the moon if you know you won't have to deliver?

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  43. 2 more TZA plays later, both small winners, now at $2250 profit for the day

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  44. I never pulled one of the V6's, although I had 2 of them.

    You might ask at www.mfba.org forum if you don't find it anywhere. I do have GM shop manuals for 95 and 98.

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  45. I bought the hooker for the mechanic, but didn't pull the engine myself, btw, that's why I don't know.

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  46. Yea, might be able to rent a hooker, but I doubt this motor will be going back in anyway b/c I think we're gonna part this car out due to body damage from a previous accident. I'll be using the motor for another project, somebody else might want the chassis but I'll be taking the wiring harness and fuel system as well so all that will be left over is a pretty decent interior, t-tops, and mostly good sheetmetal aside from the hood and drivers fender.

    Unfortunately I can't use the wheels b/c they're pretty nice but way too much offset for a g-body.

    Do you want any little odds or bits off this car before I haul it off to the yard?

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  47. It's Hugger Orange with gray interior BTW. Kinda like the orange, fits the car well.

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  48. Actually a fairly rare color, I bet.

    No, I don't need anything, I don't think. I have 2 complete cars + a basement full of parts + spares.

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  49. bought some UNG.

    Lucky to escape with my skin on TZA, me thinks.

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  50. Yea, I think it would look good with 2 parallel white stripes from front to rear over the hood and roof. Actually it's in good condition aside from the body/frame damage.

    The motor will fit nicely into my g-body.

    I've heard complaints about series II v6 intakes being plastic and leaking coolant but this one looks to be made of aluminum, both upper and lower. Maybe the problem is specific to front wheel drive applications.

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  51. Sorry, can't help you with that. Its been 10 yrs since I had a V6 fbody.

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  52. The biggest problem I can see with popping this SII in my g-body will probably be my 2.41 rear won't work too well with the overdrive tranny, I'll probably have to switch to a higher ratio ring and pinion.

    That, and winter's coming fast.

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  53. 2nd started a new post earlier this morning...

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