Friday, January 30, 2015

1/30/15 Get Shorty?

Less than an hour into the regular session, it's already (IMO) been an extraordinary 12 hours.  DJIA futures traded as low as -170 points overnight.  The DJIA opened well off those lows, quickly climbed into the green, only to reverse and plunge -100 points.

(a) OIH/XLE are diverging from the broader indexes, both well in positive territory (no doubt helped by a +2% rally in crude).
(b) Miners also in the green, despite a flat dollar.
(c) EEM (Emerging Markets) off -2% as Brazil's Ibovespa declines -2% (EWZ off -4%).


My take?  Shorts will drive the market to a close near the day's highs.  Note the question mark in the title, however.

220 comments:

  1. CP, no way Buffet is selling. That's not his style. He is a smart buyer and seller and would never sell into a one-off event driving a stock price down, but, given his large holding, he likes the company long term and may be buying weakness

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  2. If you're a shorter term trader this volatility must be awesome if you can time it right. Otherwise, it's been a tough year no doubt about it. The indexes mask what's going on underneath the surface. The question is: is this a consolidation phase or the beginning of a mini bear? Even if its the latter, I suspect we rally back to the 2,060 area again at some point.

    ReplyDelete
    Replies
    1. Europe having a great month:

      http://www.reuters.com/article/2015/01/30/markets-stocks-europe-idUSL6N0V93J420150130

      So the stocks are up, but the currency is down. Net it out and most Euro-markets are up slightly in US$. Definitely a tricky situation. Another way of looking at it is the US market is down a couple percent YTD, but up 5% in Euro terms. So maybe it isn't that the US stock market is so bad , as that the US$ is so good and pushing everything down in US$ terms.

      Delete
    2. My portfolio is up in Euro Terms, so I've got that going for me.

      Delete
    3. LOL, just pick some African currency and use that as a benchmark, LOLOLOL....

      Delete
  3. Go some running around to do today, so put in a buy order for CBI under the market - about half of the remaining 1/3 position I want to buy. If we get a swoosh I get filled, otherwise I'm waiting till next week. If I do get filled, I still have some room for a final add.

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  4. Go some running around to do today, so put in a buy order for CBI under the market - about half of the remaining 1/3 position I want to buy. If we get a swoosh I get filled, otherwise I'm waiting till next week. If I do get filled, I still have some room for a final add.

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  5. CTCT - These guys have been advertising on DC radio a lot lately, must be they want to distribute stock.

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  6. SCON - Weekly BB's are getting very tight, must be a big move coming? ema13 is below ema34 though, so currently not bullish. Wm% is in neggie territory, at 83 and falling.

    I guess there will be some BIG NEWS coming soon on this one, it could be a very big move?

    ReplyDelete
    Replies
    1. http://stockcharts.com/h-sc/ui?s=SCON&p=W&b=5&g=0&id=p53102332001

      Delete
  7. CBI - Ah, the test of $32.20 makes perfect sense, it agrees perfectly with the 80/20 rule.

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  8. GEVO still crashing, guess the subsidies need to be renewed. Perhaps, quadruple subsidies might hook some new longs.

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  9. Measles outbreak - Okay weasels, so what's the play, LAKE? Arizonia is one area.

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  10. Always remember to wash your third rail.

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  11. The conundrum is there aren't that many low wages jobs out with buying power to purchase a home, and to create employment homes need to be constructed. China has this issue, with jump starting consumption (an anti-green policy, FWIW).

    Banks seem to be weakening, utilities are on a mad rally along with Treasuries, energy consumption falling. Weren't many of the higher wage jobs created in the energy industry?

    I'm pretty sure any Millenial will work for peanuts, as long as he can get a new iphone each model revision and a couple of solar cells add on the roof to power it he's happy as a piggy in poop?

    ARMH is my proof.

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  12. URI - Okay, so this one represents growth.

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  13. HOG vs ZGNX - Legalizing Marijuana is the shiz. Ignoring debate over illegal vapor huffing and tobacco use, can we assume the DEA no longer receives enough revenue by trafficking MJ thus is willing to let that business go in pursuit of trafficking heroine? Naturally, this means all competing prescription medications will need to be discouraged. Pain management professionals can no longer operate pharmaceutical dealers, this function is being replaced by tattooed dudes riding Harley's. who know how to tailor these products prior to distribution.

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  14. COH - Okay, so what happened to the consumer spending data?

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  15. Looks like a good few stocks are up, must be another distribution afternoon.

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  16. DECK vs CBI - Umm, anybody have that scanner script, the algorithm must be broken, perhaps a comment comma or return statement is missing or something.......?

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  17. ALDW - Okay, we still don't like this one, right? Yes I know, the electric car and TA is gonna rake it in selling coffee to families travling to Florida but this company sits right on the pipeline in the middle of the oil field. I doubt it's even possible to build a refinery in the US anymore, just like the Naval shipyards (HII) are one of a kind thus can defined as theoretically invaluable. Sure, it's possible to cause bankruptcy, there's usually either a plan contrived or the thing isn't worth squat to begin with.

    Mitt Romney - Man, will I EVER get to stop hearing s__t about this TOTAL JERK????

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  18. BERY - This company makes stuff out of plastic. Feedstock is cheap, given the glut that exists. This glut is a result of the O&G wells that have begun production.

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  19. MITK- Thought that had run up too much.

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  20. The 'backstop' inherent in buying panic is clear in today's divergences:

    (a) The DJIA/SPX currently -0.8%.
    (b) In comparison, OIH (Oil Services) and XLE (Energy) are up +3% and +1.5%. USO (crude) +7%!
    (c) GDX (miners) +2.8%.
    (d) EEM still off -2%, but we can place the blame on EWZ (Brazil), which is underperforming @ -4%.

    I plan to be out of all positions end of day (I prefer to forget about GREK [Greece], which is down -6% at a new 52-wk low of 10.51), and may reopen HDGE as well.

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  21. TA: Ha. Yeah so much for my theories. What a disaster.

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    Replies
    1. The theory is intact, timing is the question in my mind.

      Delete
  22. Too funny, everyone's so impressed by today's O&G trading..., doesn't seem remarkable to me.

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  23. There is no "i" in Seahawk but there is an "i" in Patriot.

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  24. Well, I ended up down 0.5% for the month, but that is in Cdn$. If I measured in US$, would have been down around 9% as the Cdn $ collapsed this month. Over the past 15 years, measuring in Canadian dollars has hurt my returns by 1% a year (I started investing when it was $1.52 Cdn to US$ and it's now $1.27). But a huge swing in a month like this is so unusual, the currency effect dwarfed by stock returns.

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  25. (a) RYEIX closed +1.63% for a 2-day gain of +1.63% (the fund closed flat yesterday).
    (b) RYVIX closed +2.5% for a 2-day gain of +1.7%.
    (c) RYPMX closed +3.12% for a 2-day gain of +1.23%.
    (d) RYWVX closed -4.65% for a 2-day loss of -6.2%.

    At the last minute (literally, just prior to the 355 pm est closing window), I canceled my order to close RYWVX. Why? EEM was selling hard into the close on extremely high volume, circumstantial evidence (if you will) of capitulation. I'm as human as the next guy, and couldn't bring myself to exit a position at the point of capitulation. We'll find out Monday whether discipline should be adhered to at all costs, or whether the occasional 'overruling' of discipline pays dividends.

    Total gain for the portfolio (including intraday trades in RSX and PBR) was +0.38%. Given today's brutal selling in most sectors, I'll take it.

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  26. CP - Yeah regarding TA I definitely should have waited for a day or two like today to enter. The story of my year so far...as far as my $20 target goes, here's what I'm getting it from:



    Market Cap / TTM EBITDA
    MUSA 8.22
    PTRY 4.03
    IMKTA 3.84
    CST 9.03
    CASY 9.24
    AVERAGE 6.87

    TA 4.20

    EV/TTM EBITDA
    MUSA 8.76
    PTRY 7.72
    IMKTA 8.00
    CST 10.65
    CASY 11.28
    AVERAGE 9.28

    TA 6.86

    Based on Mkt Cap to EBITDA, TA is 39% undervalued vs its peers. Based on EV to EBITDA it is 26% undervalued. Blended its 33% undervalued which requires a 50% upside move from today's close to close the gap. That equates to a $20 price target. (Note I didn't include ANCUF in this group because its multiples are significantly higher and would make the discount seem more. Also there are others that are MLP's like CAPL and MPLX that have really high multiples presumably because of their tax structure).

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  27. Time to give credit to Michael and Charlie for a fantastic month. ATACX +8.5% in January playing defense (they were 'all in' on the long bond). Michael published an article in Marketwatch several weeks ago arguing that 'false positives' (based on his methodology) were the very reason his strategy has survived publication. He was promptly attacked for his poor performance in 2013 and 2014. Since his detractors made it personal, let's point out that ATACX is more appropriately +11.5% year-to-date versus the SPX!

    ReplyDelete
    Replies
    1. Broken clock is right twice a day

      Delete
    2. Is he beating $US, you suggested cash at one point....

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    3. Sure beats being down near 80% though, don't it?

      Delete
  28. BABA - So let me get this straight..... Jack Ma is making good on his promise of hosing YHOO on their stake? Did I get it right?

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  29. ALDW - Switched back to sour:
    http://www.argusmedia.com/News/Article?id=984145

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  30. TGLS - How about this one, if you can sit tight and remain patient?

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  31. YELP - Consistent insider selling in a big way?

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  32. Markets in positive territory to start the day.

    (a) EEM (Emerging Markets) opens up +1.4%. Anything can happen in the next hour, but either way I'll be closing RYWVX (Rydex 2x Emerging Markets) @ the 1030 est window.
    (b) GREK (Greece) +7%. I've been watching my core position ricochet off the upper/lower boundaries of a trading range. Based on news reports over the weekend, Greek equities will be highly volatile. I'm taking off the core position @ 11.20, and think I'll sleep better for it. Having traded around the position, my overall return on the asset is positive.
    (c) OIH (Oil Services) + XLE (Energy) continue to rally another +2%. Unfortunately, I have no positions.

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  33. BXE - $1.90, seriously, was that the bottom? I read somewhere they hedged natty at $3

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  34. Potomac Phil saw his shadow, 6 more months of political gridlock.

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  35. "Weakness in overseas markets restraining US manufacturing"

    Nice call, Europe is growth central.

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  36. Looks like CBI is getting away from my add order, now up 10% off the panic selling a couple of days ago.

    Oh well, I'll keep watching.

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    Replies
    1. CBI: Southern announced further delays to the Vogtle project
      CB&I stock was under pressure Friday after Southern announced a further 18 month delay to Units 3 and
      4 of the Vogtle project. It is our understanding that the delay is the result of ongoing design changes,
      either stemming from NRC regulatory requests or fine tuning at Westinghouse (the reactor designer). In
      either case, CBI notes that the work falls within the scope of CB&I's contract and we believe CB&I will be
      made whole by Westinghouse, Toshiba or Southern (project owner). The main concern is the possibility
      of a dispute within the consortium that could end up being litigated.

      Delete
    2. Yeah, that's the news that caused the big pullback. I thought it was a buying opp and put an order in, but tried for too low a price. Was thinking we'd see some follow through selling today, but it looks like the buyers are coming in now.

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    3. REXX is up by almost that amount today too.

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    4. So in the case of REXX vs BXE not only has the CAD fallen 15% in a month but also the shares have been pummeled, where REXX hasn't handed shareholders the double whammy of a weaker currency?

      Delete
    5. Don't know anything about REXX, but BXE sure has been hammered. I'm still holding and think that when the market starts looking for growth oriented energy companies, BXE will do well, but in the current environment, people will be looking for safer energy companies.

      Delete
    6. REXX is in the Marcellus/Utica, the geology is basically where oil was first discovered (Pennsylvania), the nearby structure has produced lots of coal and is high in organic content (rotting plant mass).

      I'm not sure b/c my memory isn't all the great but I think the prehistoric forest contained redwood trees.

      Delete
    7. This 300 million year old forest is part of the region:
      http://www.sciencebuzz.org/blog/huge-underground-fossil-rainforests-discovered-illinois

      Delete
  37. SRS/TBT - I guess if the FED should be tightening as promised, these might be worth considering?

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  38. Almost bought Canadian Energy company PGH (PGHF.TO) today, but it is up 15% in the last 2 days, so I think the odds are pretty good we get some sort of a pullback. Oil looks like it may have bottomed, so I want to get some more exposure for the upcoming rebound, but not being aggressive as, of course, we may still see another leg downwards.

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    Replies
    1. I almost bought that 2 weeks ago.

      Delete
  39. So what has changed today, US based manufacturing and GDP growth have slowed. Short covering?

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  40. Making subsidies for wind and solar permanent?

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  41. If $WTIC is more expensive to produce, then why is it consistently priced less than $BRENT
    SSYS - Another one down the tubes, they're dropping like flies. This is one I've noticed has been marketed heavily lately.

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  42. GREK - Do you guys have some idea why this one was up again today? Seems to me Greece is at best going to renegotiate (most likely I guess) or leave the eurozone (would wipe out NBG is euros, no?).

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  43. WM - The market seems to like this one, huh?

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  44. You guys are so chatty....... WUWT?

    I agree that a small portable nuclear reactor would make a great power source for converting gas to liquids.

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  45. Famous last words but I get a feeling that we will zoom to test the all time highs again, only to fail and come back. This just "feels" like the choppiness from 1999 all over again.

    GREK - Yeah I like this one down here for the longer term. I have no idea what the hell happens in the short term though. NBG is a friggin crapshoot.

    TBT - Looking tempting here. Some negative divergences on RSI...would need MACD to turn down for confirmation first in my opinion.

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    Replies
    1. for TBT > I was referring to TLT when I said "Some negative divergences on RSI...would need MACD to turn down for confirmation first in my opinion."

      Delete
    2. Yeah, I was thinking the same thing, it hasn't confirmed yet. Knew what you meant. Last I owned TBT was @$60, barely made it out before the trend resumed.

      Delete
    3. Check out TSM. I think I mentioned this maybe 6 months ago or more but Taiwan is ready to break out in a big way. If you can pull up the 30 year chart of the TSEC you'll see what I'm talking about. Then look at TSM. Revenues and earnings have exploded the past 3 years:
      http://www.gurufocus.com/financials.php?symbol=tsm&Submit=Go

      Stock trades at 12x CY EPS.

      Delete
    4. Check out EWT too. Trades at a 13 p/e. You can confirm it by looking at the components on GuruFocus. The top holdings are big caps and almost all of them trade at 12 or 13 p/e's.

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    5. I've been seeming to find more things to possibly buy the last week. Still doing research, but usually that is a sign there are still good opps in the market. In 2000, there was quite a lot of very cheap stocks and you did well if you avoided US mega cap and especially tech. In 2007, it got hard to find anything to buy and then everything crashed. Perhaps we do get a big pullback in the markets like 2000, but my guess would be it would not be an all-encompasing crash like 2007, but there will still be good stocks to own that will do well regardless of the broad market.

      Delete
  46. REDF - Umm, is that a double bottom?

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  47. AFK - Is Africa the last frontier? VNM is beat up a bit as well on 1 year chart

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  48. BXE - I've never seen this one move up. Well, almost never. On the rare occasion it has, it has always quickly reversed.

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  49. I picked up some calls in Z that expire in 2 weeks. Its a total crap shoot and the first options trade I've done in years. However, they have been beaten down and they are expected to get a go/no go on the merger with TRLA. I figure if it goes through then the stock jumps $30 to $40. If not I lose my bet.

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  50. PGH up 17% today. Guess it was worth paying up yesterday

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  51. Here are the top TSX stocks today - energy rocking:

    Pacific Rubiales Energy CorpPRE 4.79 +35.69%
    Lightstream Resources LtdLTS 1.27 +33.68%
    Penn West Petroleum LtdPWT 2.71 +26.64%
    Legacy Oil + Gas IncLEG 2.08 +18.86%
    Trinidad Drilling LtdTDG 4.94 +18.47%
    Canadian Oil Sands LtdCOS 11.16 +18.10%
    Paramount Resources LtdPOU 35.50 +16.70%
    Surge Energy IncSGY 3.27 +15.96%
    Capstone Mining CorpCS 1.34 +15.52%
    Pengrowth Energy CorpPGF 4.26 +15.45%

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  52. Traders launched an early morning blitz on shorts, with the violence only intensifying as the session comes to a close. DJIA +280 (+1.6%). EEM (Emerging Markets) up an additional +1.9%. OIH (Oil Services)/XLE (Energy) up an additional +4%/+3%. GREK (Greece) +12%! In other words, had I held my positions another day, it would have made my year.

    We're headed down (in my opinion), but of course the fiercest rallies occur during bear markets.

    Gaming the downside is challenging due to the exact scenario playing out today, and my experiences with shorting have rarely been profitable.

    No positions, no trades, and no plans to initiate any in the foreseeable future.

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  53. February sure turning out to be a better month than January!

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  54. Looks like today was the sell signal for TLT. Probably wise to buy TBT on the next dip if you like that trade.

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  55. I'm probably going to end up holding my Z calls which were up 130% today. They expire after their earnings call and my guess is the deadline for the merger with TRLA, which is supposed to be announced by the FTC by 2/15, will be known before then. Hopefully its a good outcome. This is my first option trade in a long, long time. I hate options in general and will probably turn my options trading off on my account after this one.

    ReplyDelete
    Replies
    1. I find with options you can win for a while, but if you don't hit a big one, you always end of losing (kind of like Vegas).

      There are worth keeping as an option, but I agree with you in hating them

      Delete
    2. Yeah I hate them. Just wanted to come out of retirement once to play what I think is a pretty binary type setup going into Feb 15 for Z with earnings + merger news coming out.

      Delete
    3. I still think bigger picture with Z, though, is this will be another one of those big winners in the internet space like PCLN or BIDU...give it 5-7 years and you could see a 4-digit price.

      Delete
  56. I think the best play off this isn't SPF / HOV / LEN / TOL, although those should do well over the longer term. My bet is on Z. If we enter a big housing boom over the next decade and we continue to see a shift toward online/mobile then the biggest network that captures the largest audience is going to be the biggest beneficiary of ad spending by agents. This is a $12 Billion a year industry and Z currently only has a 2% share. Longer term, I think Z has the power to capture 30 to 40% of this market and I think they could develop their own brokerage business many years down the road. I envision this business, if all goes the way it seems to be going, being a 10 bagger.

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  57. I agree they are very well positioned in the real estate market and have the potential to grow, both the services they provide and with what should be an improving and strong real estate market for many years, but at 13 times sales and fwd p/e over 100, too expensive for me. But I certainly can see why people would be willing to pay up for it.

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  58. Nice beat on earnings and a dividend bump rom GM and stock up pre-market. Maybe it finally starts to make a serious move upwards

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  59. This comment has been removed by the author.

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  60. It doesn't matter what their revenues and income are like right now. They are focused on getting everyone on their network first and enhancing their experience then they will make the brokers pay the piper. If they wanted to now they could focus on profits and drop a substantial portion of their revenues to the bottom line (right now they have 91% margins which are higher than pcln which sports like 30% net margins). Compare their valuation to loopnet which was purchased at 10x their revenue run rate and was only growing at 10% and it was in a much worse stock market and they are operating in a smaller potential market.

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  61. FYI I'm teamonfuego. I can't post under that name on my iphone for some reason but this works

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  62. Some of you guys may like this interview with Akerman.

    http://www.marketfolly.com/2015/02/graham-doddsville-interview-with-bill.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarketFolly+%28Market+Folly%29

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  63. FYI zillow is trading at less than 10x cy revs which is less than what loop was trading at when it was bought out. Margins are about 10% higher than loop if memory serves me right plus they're growing at 50%+ vs loop 10%.

    If you look at history of fast growth companies in Internet space the majority of them reach near term bubbles when they get up to 25 to 30 times. Look back in the mid to late 90s before the big bubble in te nasdaq so when the nasd was at like 1500 to 2000 and u will see those valuations. Csco yhoo and a variety of others traded at 20 times revs regularly before things got really out of control in 99/2000.

    Look also at a company like bidu. It was at 40x revs in the near term peak in 06/07 and it's up 6x from there

    ReplyDelete
  64. Nice report from afl which I am holding.

    ReplyDelete
    Replies
    1. Hard to see how you go wrong with a stock like that.

      Almost 20% ROE, p/e under 10 and p/b under 1.5, good yield, with a solid business.

      I still think financials, (insurers and large banks, small banks, not so much) are quite undervalued and will be a good investment over the next couple of years. Will be interesting to see what happens to these stocks when they fed raises rates, probably later this year.

      Delete
    2. AFL has had a double whammy: lower rates, higher dollar...meanwhile valuation is ridiculously low relative to its historical ranges. Could go up 75% over next couple of years and boost dividend by 50%.

      Delete
    3. I think a lot of buy and hold type investors got burned by the financials in 2008, so are staying away due to perception of heightened risk (even though it is lower now with better oversight) and the more active traders see financials as stodgy and stay away, so you don't have anyone actively buying them.

      People are notorious for being afraid of what happened last time, but it almost never repeats and they should be worried about what will be different next cycle. I'm pretty confident the people who get burned in the next few years are bond holders and utility stock owners, both of which are very overvalued, but overowned due to yield chasers and the perception of safety

      Delete
  65. Check out a 3 yr. chart of DIS. freaking boner.

    ReplyDelete
    Replies
    1. Dude seriously. Want another one? Look at SHW. F'ng paint man.

      Delete
    2. $755 condom pack, now there is a reason to go naked.

      http://www.bloomberg.com/news/articles/2015-02-04/the-755-condom-is-the-latest-indignity-in-venezuela

      Delete
    3. wanted to buy SHW years ago, but never pulled the trigger. Also failed to buy TJX in 2009....

      Delete
    4. Yeah, I was also serious about buying DIS back in 2010 I think it was when it was under $30 for a while, but heard something bad on CNBC and decided to wait and it never looked back.

      Delete
  66. Wow - oil, up 20% from the bottom this morning (on TV, calling it technically a bull market), now down 8% today on bad inventory numbers.

    Going to be an interesting year for energy

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    Replies
    1. I'm watching CBI. It got down to $32 on it's bad day, so I'm looking to buy back in that area, A retest wouldn't be uncommon.

      Delete
    2. Would love it at 32 but not sure it gets there without another leg down in oil. I bought some at 34 the other day and sold around 37.50. Thanks for the heads up BB!

      Delete
  67. I'm not partaking in the energy industry shenanigans. Too many unknowns for me to quantify my risk.

    ReplyDelete
  68. Replies
    1. I own some YNDX. Took a beating on shares bought in December when YNDX basically crashed along with Russia. I like it longer term, but it's certainly not without risk.

      Delete
    2. I agree its an interesting one. I almost bought back at $17 or $18 but chose to trade GOOGL at the time because they had the same multiple and GOOGL was growing just as fast without the risk.

      Delete
  69. Long some AAPL pre-market. Let's see if it can get over that 120 hump today. Tight leash.

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  70. TOF- http://www.bloomberg.com/news/articles/2015-02-05/twitter-said-to-reach-deal-for-tweets-in-google-search-results

    ReplyDelete
    Replies
    1. Yeah...love TWTR. The added search function on their site is a game changer. Valuation is high but I bet they grow into it.

      Delete
  71. Took YRCW off the table. Should rally 50% now.

    ReplyDelete
  72. I agree with Saut on this:
    http://www.raymondjames.com/multimedia2.htm?url=Saut_Daily.wma&player=wmp&target=int&width=300&height=0

    It sounds like he see this rally as meaningful. With the components making up this latest rally (companies like GM, F, FCAU, BA, WHR, etc) it seems to me that it is tied to strong economies and not just short covering as the bears would like people to believe.

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  73. Nice buy on the CBI Brad. Oil now bouncing over 5% today, but still less than where it was 2 days ago. So volatile - usually a sign that it's getting for a move and it's hard to see it would be another move downwards, so more likely the bottom is in, but we'll only know in hindsight.

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  74. Bought some TWTR at $39 after hours. Killer earnings.

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    Replies
    1. Averaged up to $40. Those #'s seem really good to me. Focus is on monthly active users but that's a worthless thing to look at. The search feature they added should really help boost revenues over time.

      Delete
    2. Wow, you nailed that one. I wasn't around, otherwise I'd have bought some also. Good work man!

      Delete
    3. That was quick. Sold it at $45.

      Delete
    4. Unfortunately I didn't have a very big stake in it. Only 10%.

      Delete
  75. YRCW also had solid earnings. Stock is up to $19.3 after hours.

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    Replies
    1. OUTR with a nice beat and implementing a dividend

      Delete
    2. Was wondering when they would institute a dividend. That's one great trading stock.

      Delete
  76. Things have had a nice turnaround for me in February and I'm now up 3.1% for the year. The US$ has also come back against the Cdn$, in in US$ terms, am down labout 3%%.

    Hopefully the currency markets stabalize around here. Would be great for Canadian exporters with $1 CDN at $0.80 US and a number of my CDN stocks should get an earnings boost because of this.

    ReplyDelete
  77. I ended up getting back into TWTR around where I sold. I was doing the math more on this and it's valued currently at slightly less than FB relative to revenues (12 vs 11.5) yet they're growing twice as fast (should be about 70% rev growth this year) and I don't think we have seen even close to the full impact of the search feature that was added to their site/app. I think when people start getting more comfortable using that function it will draw in a ton of ad $$. I think TWTR could grow to a $75B or so sized company.

    ReplyDelete
  78. good video from Michael Messara from Caledonia which is the largest shareholder in Z:
    http://www.bloomberg.com/news/videos/2014-11-19/zillow-set-for-substantial-profit-growth-messara-says-video

    I completely agree with him regarding Zillow. Right now there's risk that the deal with Trulia falls through which is, in my opinion, entirely the reason for the fall from $165 to $103 today. I think it doesn't matter one way or the other for Z as they have a 73% market share of mobile and are essentially a monopoly right now in that space, which is the future of real estate. When you look at Rightmove out the UK or REA out of Australia, you can see just how profitable this business can be if you're a market leader. Some realtors are threatening or have pulled listings off Z but consumers have spoken loud and clear that Zillow is the best one out there. Right now they do 91% gross margins and my bet is if they wanted to they could do 40% net margins and make what looks like a tremendously expensive stock actually look cheap.


    This is more on the merger:
    "There is a likelihood of the Zillow-Trulia merger deal to fail on account of Federal Trade Commission’s (FTC) anti-trust laws (Kosman 2014). In other words, FTC could terminate the deal if they feel that the deal reduces competition in the marketplace thus exposing c
    ustomers to risks of higher prices or reduced choices. Zillow is primarily responsible to obtain clearances required to close the deal (
    Solomon 2014). There is a high probability of the Zillow-Trulia deal to get the clearance from FTC because FTC views online real-estate advertisements not in isolation but as part of the entire suite of advertising media. The combined revenues of Zillow and Trulia in 2013 was $340.7 million which is around 4% of the estimated $12 billion spent in average on real-estate advertising in the USA every year (Zillow 2014c).

    If the transactions fail to close, Trulia could lose market share and lose its position as the primary competitor in the market. This is because, even if the deal fails to close, the conditions mentioned in the deal would be in effect till January 28, 2016, which is a fairly long time range for online-based businesses. In that time frame, Trulia is limited in its business operations by what it can do without Zillow’s approval. For instance, Trulia can make no acquisitions, no capital expenditures or borrow money (Securities and Exchange Commission 2014c, p. 37). Trulia also cannot employ anyone by paying a salary of over $275,000, except to fill an empty position. These restrictions could severely limit Trulia’s ability to maintain its competitive advantage and if it has to comeback as an independent company after 18 months, it could find it very hard to recover and regain its market position."

    ReplyDelete
  79. YELP - My broker says "buy, thesis remains intact" I dunno man, not making money?

    ReplyDelete
    Replies
    1. My concern over Google taking over small business search kept me out of that thing, thank god.

      Delete
  80. Anyone have any thoughts about YRCW's earnings? Looked really good to me.

    ReplyDelete
    Replies
    1. I'm never very impressed when insiders dump 90% of their stock, that seems to be a buy signal for some traders but not for me.

      Delete
  81. I cleared out of all of my longs. I need a break. Been a really hard year and every time I do something right I get hit right away after that. I don't want to press things out of frustration and give back all of my gains from last year.

    ReplyDelete
    Replies
    1. Yep. And it's Friday. Need a clear head for drinking later.

      Delete
    2. I'm still underwater on everything except FCAU which has given up a lot today alone, looks like I should've gone with other choices such as ALDW/WOR/WNC/KRE as opposed to basket case stocks.

      Delete
    3. Seems like people are taking profits before the weekend after a good week. Euro stocks seem down more, so probably people don't want to wake up to bad Greece news on Monday.

      But smart to not press until you get back on track. Sometimes the market works with your style and sometimes it doesn't. Remember people saying Buffet had lost it in the late 90's before the tech crash.

      I also liked how the financials did this week. Maybe signs rates are rising and things are normalizing. Improving job market and especially wages, while will hurt some margins, will drive more consumer activity which also helps financials.

      Delete
  82. ENPH reports the 17th.

    I was driving by a new mall here in town that was finished about a year ago. I was shocked to see maybe 10 TSLA charging stations there last night. It was kinda foggy and the bright red Telsa name was shining brightly. I have to admit it looks really fing cool.

    ReplyDelete
    Replies
    1. Anything can happen in 10 days, might be another euro-crash scheduled for that day. Are there many electric cars on the road in the area? I always though that would make sense for short commutes, tiny little electric cars like golf cars. Not sure about those dry cell batteries though, I've never been impressed by any although I do have an Li-Ion that still works after about 15 years so that is impressive.

      Delete
  83. REXX - Up 90% from the bottom, BXE has managed 20%

    ReplyDelete
  84. Late post (drafted around 1230 pm yesterday):

    Following today's NFP (Non-farm Payrolls) report, we have an interesting mix of volatility:

    (a) The long bond (TLT) is selling off -1.63%. Added to similar declines on Tuesday and Thursday, TLT is on track to close -5% for the week! (Michael and Charlie were up +8% in January? Well, they won't be high-fiving each other tonight.)
    (b) Gold has sold off $30, or about -2%. GDX (majors) and GDXJ (juniors) both off -5%.
    (c) EEM (Emerging Markets) -2%. EWZ (Brazil) -3.3%. PBR (Petrobras) -8.4%.
    (d) DJIA off a relatively modest -75 points.

    I like the selling in categories (a) through (c), and plan to open positions in RYGBX (Rydex 1.2x Government Long Bond), RYPMX (Rydex Precious Metals) and RYWVX (Rydex 2x Emerging Markets).

    ReplyDelete
    Replies
    1. I also opened positions in CAF, ASHR, EWZ, GDX, and PBR.

      Delete
  85. If you have access to NFLX and want to watch a well-written 'slice of life' drama starring Nicolas Cage-> 'Joe.' I was blown away by the acting, and later discovered much of the cast consisted of non-actors. The casting team literally picked the boy's Dad off the streets of Austin: http://gawker.com/the-tragedy-of-gary-poulter-nic-cages-homeless-co-sta-1562031788. A few of the characters (and much of the dialogue) took me back to 1973/74, when I spent two years hitch-hiking around the US. Reality TV? Reality is passing around a can of beans and a bag of Fritos in a parking lot for dinner.

    ReplyDelete
  86. Marky Mark - What are your thoughts on MITK? Have you taken a closer look lately? Good progress but not sure it's really a huge market opportunity.

    ReplyDelete
  87. Redbox (OUTR) shutting down in Canada. http://globalnews.ca/news/1814440/redbox-shutting-down-canadian-operation/

    Couldn't get enough business up here. I know a few people who used it a lot and liked the pricing, but not enough I guess.

    ReplyDelete
    Replies
    1. We use streaming more and more now. It is actually cheaper than Redbox. We only watch it on our laptop, though, and don't do it through our TV. From time to time we have some freezing issues and you never get that with the DVD. I still think a large swath of people will never switch to streaming because the setup is too complicated...there are a lot of lazy/dumb people out there! We're also paring down our costs significantly and switched to streaming for cost savings so we may be in the minority.

      Delete
    2. We got one of those ROKU devices for the TV and it works great. We use it for Netflix, plus occasionally I will download a newer movie and we watch it using the Plex software, which also works great. Even my non-techie wife has no problems with it.

      Also just found out our local, small town video store is shutting down too. We haven't had a DVD player even hooked up to our TV for probably 6 or 7 years, so haven't been supporting that business. Will be interesting to see what OUTR does. Seem like smart guys and they see these trends too.

      Delete
  88. BKJ looks interesting again down here.

    ReplyDelete
    Replies
    1. A lot of the value guys, including some really successful ones, like these smaller bank stocks, but I just don't understand the appeal. Why buy a banks at book value and a 13 p/e when there are load of life insurers that are sub-10 p/e's and much lower discount to book value. Even big guys, like MET and PRU, let alone my NWLI.

      Oh well, I'm sure I'm missing something, but you can't own them all, and I understand and am happy with financials I do own, so better just to stick with what works for me.

      Delete
    2. But I do agree, the chart looks good and the valuation relative to their history is cheap, so probably a good time to look at buying.

      Delete
  89. PCP is also looking interesting now. They are down 25% from last year's highs and took a big hit a couple of weeks ago on lower guidance, but they mainly build aerospace parts, and that business is doing really well, they have high ROE's, strong management and now trade at a reasonable valuation. Not super cheap, but definitely inexpensive if you believe the airplane upgrade cycle continues, which the big guys (boeing and Airbus) say is happening.

    ReplyDelete
  90. "Why buy a banks at book value and a 13 p/e when there are load of life insurers that are sub-10 p/e's and much lower discount to book value. Even big guys, like MET and PRU, let alone my NWLI."

    It's a good question...maybe if its a bank that's operating in a good market tethered to strong economic growth with the upside coming from rising rates, if they ever do rise? Not really sure. If I look at a company with a similar size of NWLI like FRME, I see that they have grown Net Income and Equity much faster than NWLI. So while NWLI looks really cheap, they haven't been able to grow nearly as fast as a company like that. Same with another regional bank I follow, IBKC. Maybe that's the thinking?

    ReplyDelete
  91. Looked closer at YELP. Valuation is still really high. However, two things come to mind:
    (1) To a company like GOOGL that is competing with them head to head, the valuation would be very cheap. Reason being they could cut out a ton of overhead costs and make it very profitable. They expect to do about $550 Million in revenues this year. At 93% margins, I think they would be able to do 30% net margins as they mature. This number actually matches up pretty closely with what the company guided as long term targets for EBITDA of 35%. That would yield $165 Million in net profits. So the company right now is only trading at 20 times that and they are expected to grow over 35% this year in a market that is enormous.
    (2) There's a gap up from 2013 around $42.5. This seems like a good spot to try a short term trade.

    The stock trades at 6.58 p/s this year, the P/E is really high, EV/EBITDA ("normalized" EBITDA) is over 50...lots of numbers just don't make sense from a value perspective. The biggest risk to this company is that GOOGL squeezes them out of their search results in favor of their own local search, a worry I've had for a while. YELP has worked to minimize this risk by getting YELP apps installed in as many phones as possible. To this end, mobile traffic makes up over 60% of total traffic now.

    Momentum is clearly gone with this stock, but I think there's at least a trade here around $42.5 if it gets there. Part of me thinks some of the bigger players might make a move on the company so the downside could be somewhat limited. If they see this becoming a $1 Billion revenue company within 3 years operating at a 30% net margin, then I could see they buying it for $5.5 to $6 Billion or 18 to 20x earnings a few years out. But they would have to be comfortable with the growth and the margins. Growth seems reasonable...not sure about margins.

    ReplyDelete
  92. Isn't it nice knowing after you position loses you might discover why?

    ReplyDelete
  93. TOF- Yep. Was actually just thinking about it. Here's the thing though. Maybe the model is broken like Jimmy said a few years ago and the obviously have ZERO pricing with the big banks which probably drive 90% of deposits. I also don't seen any of these different revenue streams playing out.

    ReplyDelete
    Replies
    1. Yeah I agree. That's my gut instinct.

      What are you in right now? Only thing I've found that looks reasonably priced is insurers, autos, banks, and Taiwan stocks. Looking at PRU, NWLI, MET, JPM, TSM, FCAU...mostly big caps. I have a few others I'm looking into but nothing that compelling.

      Delete
    2. Insurers do look cheap as hell. Just to get to a 12 pe here's the upside in these:
      PRU: 56.8% (get 3% div on top)
      MET: 42.4% (2.8% div on top)
      NWLI: 61%

      The megacenter banks look cheap too. To get to WFC and USBs average P/B and P/E, JPM would need to rise 53%.

      Delete
    3. I know you don't like them, but you could add energy stocks to the cheap list. If I think long term, hard to see oil doesn't rebound back to say $80 in order to generate capital investment required to keep oil flowing. The question is whether this happens this year or maybe it takes 5 years, so getting the timing right on buying energy stocks is key.

      Delete
  94. bought a little YELP. will buy more down to $42.8. looking for bounce to $49. If it drops below $40 I’m out

    ReplyDelete
    Replies
    1. That one didn't work out...sold that for a 2% hit.

      Delete
  95. Boston's buried in snow, it's 60*F here both today and yesterday, and not even raining (yet).

    ReplyDelete
    Replies
    1. My brother said they have over 60 inches of snow.

      Delete
  96. GDX off @ 21.79 (+2%). ASHR closed at the open @ 34.26 for a +1.7% gain. PBR off flat (not sure why I waited on that one). CAF off @ 29.52 for a +0.4% gain. EWZ off @ 34.65 for a +1% gain.

    ReplyDelete
    Replies
    1. All Rydex funds will be closed end of day. Bonds and Emerging Markets set to close slightly in the red, but miners should close +2%. All positions were opened at low-risk entry points (due to Friday's brutal selling)- the fact that neither bonds nor EEM caught sustained bids today is worrisome.

      Delete
  97. Long UGAZ into the close at $2.51. Long BIS into the close at 42.3. Long FAZ into the close at 13.07. Small positions for trades.

    ReplyDelete
  98. Reasons I think financials are cheap:

    1. This is probably the big one - he last bear market was a financial crisis, so people are afraid they'll get burned again, even though this is very unlikely as better controls, etc. are in place now.

    2. People are worried that previous levels of profitability will not be achieved in this cycle due to increased regulation, less leverage, etc. If you look at the ROE's for BAC, MET, etc., they have not come close to their pre-2007 levels since the financial crisis.

    3. I think broadly, people may be concerned that the US has too many financial companies and financials will be a smaller share of GDP and the market going forward than they have been in the past.

    4. Re the life insurers, people MAY be worried we see a 1970's type scenario, which kill the lifeco's, but I don't see a lot of people calling for a huge ramp in inflation and interest rates, and I also think the lifeco's are better prepared for this (I know MET has been hedging against rate increases).

    5. In the specific case of NWLI, it is small, poor dividend, controlling shareholder, and people are looking for yield, which is not here.


    I personally think this all gradually gets better as the economy improves, interest rates and spreads normalize, the housing and mortgage market grows and companies move from managing their business to planning for growth. I'm not willing to say it will be this year, but I feel pretty good about it in the next few years and this year does have a lot of good things going for it with the rates riase planned and job market and overall ecopnomy improving. I definitely want to maintain some financial stock exposure in 2015 and it is still my largest market sector holding.

    ReplyDelete
  99. From Tweedy Brown annual:

    As we mentioned in our last quarterly update, with declining oil prices driving oil shares lower, it is easy to
    lose sight of the longer term fundamental case for oil and gas. While we have no idea where oil prices will
    settle in the short run, it remains our view that oil prices cannot stay down at today’s depressed prices for too
    long, largely due to what we believe to be the relatively modest current level of excess capacity, our
    expectations of continued growth in demand over time, and the high marginal costs for finding and
    developing new sources of supply.

    http://www.tweedy.com/resources/library_docs/quarterly/FundCommentaryQ4_2014.pdf

    ReplyDelete
    Replies
    1. Also, in line with TOF's previous comment:

      While equity market volatility certainly increased around year-end and has carried over into the New Year,
      global equity markets aside from a few market segments (oil & gas, mining, certain emerging markets) remain
      fairly to fully valued, and in some instances overvalued from our perspective. The increase in volatility 4
      th Quarter 2014 frequently results in investment opportunities for us; however, it has not yet resulted in enough new idea flow
      to allow us to put meaningful amounts of our cash reserves to work.

      Delete
  100. http://www.bloomberg.com/news/articles/2015-02-09/shipping-index-matches-record-low-as-coal-slump-heightens-glut

    Bulk shipping down and I read Wilbur Ross sold some of his Navigator holdings (energy shipping)

    ReplyDelete
  101. "I personally think this all gradually gets better as the economy improves, interest rates and spreads normalize, the housing and mortgage market grows and companies move from managing their business to planning for growth. I'm not willing to say it will be this year, but I feel pretty good about it in the next few years and this year does have a lot of good things going for it with the rates riase planned and job market and overall ecopnomy improving. I definitely want to maintain some financial stock exposure in 2015 and it is still my largest market sector holding."

    I think you're right in doing this given your time horizon. If people don't reward you for these picks via higher valuations, the companies can continue to improve their operations and increase dividends and when the time comes that they do pay up for these stocks you will get a double benefit.

    I really like the auto makers the more I think about them. I think the majority of investors aren't excited by them and think the cycle has peaked just because it is back to 2007 levels. I can envision a similar scenario to the airlines setting up with a multi year run in them.

    ReplyDelete
  102. Oil hit $54, that's strong resistance. I guess it turns back down and airlines rally.

    ReplyDelete
    Replies
    1. I hope you are right. I own airline TRZ.B in Canada and it's be trending slightly lower for the past year and now at 52 week lows. If the analysts are right it is trading at around 5 times 2016 earnings, so it seems like it just needs a catalyst to get going. Better quarterly results would certainly help, but because they had hedged a lot of their fuel, they haven't seen the benefits of lower prices yet.

      Delete
  103. I bought back into fcau pre market at 13.68. I've been dragging my feet too long on this one.

    Looks like I'll take a lump on faz and bis but ugaz perking up a little. Hoping for a bounce on that into the cold spell this next week

    ReplyDelete
  104. A lot of good"demographics" type data behind autos too:

    1. cars are oldest they've ever been on average (over 11)
    2. Even though production is back to highs, we had many years of under-production
    3. Many young people are starting to find jobs with the better economy and are looking to buy a car. Previously, economists thought it was because they wanted a car-free lifestyle, but it is now looking like they just couldn't afford a car and now they can
    4. New technology in cars is driving demand

    The big risk to car production is if we get the Uber everywhere driverless car pickup world and the total number of cars required is less than now, but I think that is a long time away and not investable now.

    ReplyDelete
    Replies
    1. I don't buy into that theory that some people have been writing about (Uber). Having a car means having freedom to go where you want to go and do what you want to do. I remember the feeling of freedom I had when I first got my license and I didn't even own a car.

      Delete
  105. AMZN - Not bad, eh? I noticed Christmas came via packages from AMZN this year.

    ReplyDelete
  106. FLWS - $20 coming? What's going on with this sector? Urbanstems receives venture capital investment.....
    http://www.bizjournals.com/washington/blog/techflash/2015/02/district-based-urbanstems-lands-1-5-million-seed.html

    ReplyDelete
  107. AKS - Wow, we absolutely hate steel for some reason. Too much capacity?

    ReplyDelete
  108. I picked up a small stake in WTT today. Sold off FAZ and BIS for small losses. Holding UGAZ, FCAU and WTT right now. Been looking closer at TWTR. Man I'm telling you guys that stock is going to new all time highs again. Those earnings are going to explode as they begin to figure out a good revenue model for their search business.

    ReplyDelete
    Replies
    1. WTT is growing about 25% to 30% top line, has a good balance sheet, steadily improving margins, rising ROE / ROIC, good free cash flow. Their bottom line showed marginal improvement due to tax refunds from prior year but if you back those out there is massive leverage in their business.

      Delete
    2. I really like TWTR. Google will come to regret not buying them.

      Delete
    3. If I take a position the crash will begin immediately, guaranteed.

      Delete
    4. I hear ya man...it's been a tough tough year.

      Delete
    5. My thinking on Twitter is they are masking the potential of the company b/c unless you have an account you don't see anything other than a stupid login page on the home page. That's the most preposterous thing I've ever seen. And this is for the 8th most visited site in the world. If they open up their home page to be viewable by all visitors, if they categorize their content better and make it more searchable, then I think you will see a massive jump in revenues and users. I also think if they start hosting videos on their own network then people will use Youtube a lot less for video hosting and that will drive traffic and ad spending to Twitter. I think there's just massive potential now that they have added search to their site and are going to embed video ads on it. When I see a company like FB getting a $200+ Billion valuation and I've seen estimates of $60+ Billion valuations for Youtube, it makes TWTR seem very undervalued to me. I think their reach and potential for advertising and entertainment consumption makes it worth a lot more than $29 Billion. Obviously tougher to buy here after a big move up but that earnings report showed the potential it has and that was before they started rolling out the search feature throughout their site.

      Delete
    6. "If they open up their home page to be viewable by all visitors, if they categorize their content better and make it more searchable, then I think you will see a massive jump in revenues and users."

      Yeah, no shit. Software engineers suck when it comes to making slick user interfaces that are useful and work well. Christ, the internet is frickin' ancient and remained practically broken for most of the time b/c none of the potential was being exploited.

      Delete
    7. The #1 rule for all websites is:
      Don't make people's first action be to go to another page

      When they arrive at your home page you need to engage them immediately. Twitter is lucky they have become as big as they are. They're so big they could probably cut marketing costs to $0 and do fine given all of the free promotion they get throughout the world.

      Delete
  109. Booked the gains in UGAZ...hard to pass up on a 10% move.

    ReplyDelete
  110. Wicked tired of the snow up north....

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  111. Starting a position in TWTR

    ReplyDelete
  112. Why are airlines so beat up, crap earnings? AAL looks cheap assuming oil producers plan on paying off their immense debt by producing oil below cost.

    ReplyDelete
    Replies
    1. all about oil. i agree though that they're cheap. the entire industry woke up and realized they could charge for bags and extra stuff and it wouldn't affect traffic. I think their cyclicality will lessen over the long term b/c of this move.

      Delete
  113. KRAFT - This company has finally seen the light, people are sick of choking on fake diabetes high fructose corn syrup sweetener? About time another government plan is rejected for what it is....

    ReplyDelete
  114. USCR - This damn thing opened red, despite the MLM results.

    ReplyDelete
  115. The new smart televisions spy on you, eh? Third party makes a buck off listening to your private conversations?

    ReplyDelete
  116. Another thing about TWTR just from the chart: looks like they have a big island bottom. I don't pay a ton of attention to chart patterns but I've seen some success with those island reversals.

    ReplyDelete
  117. Spray sulfur dust in high atmosphere to cool the earth. Why not, considering man evolves externally and seeks to control everything?

    ReplyDelete