Wednesday, March 18, 2015
3/18/15 Killer Joe
Yellen rocks the markets.
EEM (Emerging Markets) +2.45%.
RYWVX (Rydex 2x Emerging Markets) +4.9%
EWZ (Brazil) +2.89%.
PBR (Petrobras) +5%.
FCX (Freeport McMoran) +4.65%.
Goldcorp +3.1%.
All-in on Tuesday for an aggressive bet on FOMC. Total one-day gain for the port +4.4%. Killer day.
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All positions closed end of day.
ReplyDeleteNicely done. Looks easy in hindsight, but was a very tough trade to make ahead of the fed. Great work!
ReplyDeleteThanks. I need just eight more of these to make my year.
DeleteWow very nice. I was tempted to buy some rusl yesterday but wussed out
Deletegood work 2nd
Delete2nd, you trade like my mentor, who his whole adult life traded all in or out using Rydex funds. He made over 20% consistently for years. Sadly he passed away in 2013.
DeleteNo worries, I've taken up his mantle! Recall that it's thanks to you that I'm trading Rydex funds.
DeleteBB, on BLL while I may try to hold things LT, if positions tend to move against me I cut my loss.
ReplyDeleteProblem for me is the years long run we had which makes so many stocks look extended. As long as the FED stays ultra loose we are most likely okay. In reality the FED could tighten 100 basis points and not much would change except psychology.
So my Long Terms should always be taken with a grain of salt.
Postpartum Blues. Now that Yellen has 'delivered,' markets are pulling back. The most worrisome? An overnight decline of -4% in Crude, giving back essentially all of its post-Yellen spike.
ReplyDeleteI think a lot of yesterday's moves were people being positioned too strongly the wrong way and making trades (or margin calls) without a lot of thought. The fact that things like the currency moves intensified as the day went along and is now reversing indicates this. The real effect of Yellen's decision will be seen over the next few days as people have time to think it through and make better decisions.
DeleteUCO - Wow, pummeled.
ReplyDeleteContract with Iran?
ReplyDeleteReopening a half-position in FCX (Freeport McMoran) @ 17.4x on its opening -4% gap down.
ReplyDeleteEWZ (Brazil) -1.6%, giving back >50% of Wednesday's gains. Also reversing: EEM (Emerging Markets) -1.2%, FXE (Euro) -1.7%, GDX (miners) 1.5%, and OIH (Oil Services) -2%.
ReplyDeleteBERY - Wonder if the low oil prices are helping plastics manufacturers?
ReplyDeleteDMND - Plugging right along, beating the shit outta energy producers.
ReplyDeleteI guess today some traders take gains, thus initial weakness.
ReplyDeleteRobot went long y-day FWIW, 2090
EYES - Just when I began thinking it's a POS pump and dump (still might be?)
ReplyDeleteYikes...T.Boone might be losing it:
ReplyDeletehttp://finance.yahoo.com/news/boone-pickens-see-70-oil-124837511.html
Texas has a lot of wind power, and several other states are generating 20% or so with wind, right?
DeleteThat's a bit scary. Recently read an article on how intelligence drops as we age, wish I posted it here.
DeleteMaybe he was drinking!
DeleteHere is the article
Deletehttp://www.sfgate.com/technology/businessinsider/article/Incredible-chart-shows-how-intelligence-changes-6141026.php
Goosing gambling
ReplyDeleteLas Vegas Sands Corp. (NYSE: LVS) was started as Buy at Brean Capital.
MGM Resorts International (NYSE: MGM) was started as Buy at Brean Capital
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) was started as Buy at Brean Capital.
Taking a minor gain on FCX @ 17.5x (following a dead cat bounce from its morning low of 17.09!). Sidelined for now, as I continue to see failed bids in all market sectors.
ReplyDeleteHey BB - What's your rationale for selling some FCAU?
ReplyDeleteJust more risk and less reward now than at $11.00 and position size has increased with stock price, so want to scale it back to more in line with the opportunity. Probably it goes to $20 next, but could go back to $10. I don't try and top and bottom tick things as it is too hard (for me) and like to scale in and out of purchases.
DeleteBased strictly on relative market caps to sales (vs pretty much every auto maker) it has a lot more potential upside. Do they expand margins is the question I guess. Seems to me that the Ferrari IPO will be enormous...potentially a $12-$14Billion IPO, leaving the rest of the company worth maybe $10 to $12 Billion. I could still see it going to $25 or higher on euphoria. I was actually contemplating adding to it yesterday but passed for some stupid reason.
DeleteSALT - No debt, but they're losing money just like all shippers, commodity producers, energy companies, (fill in the incomplete list here).
ReplyDeleteEPD - Does that seem like one hell of a lot of insider buying?
ReplyDeleteMany large corporations pledge to cut greenhouse gas emissions. Okay, I guess they're going to close down some operations....
ReplyDeleteXIN - This has kicked ass the past couple months, have to guess if I owned it I'd hold here. Wonder if Chinese realtor stocks followed...
ReplyDeleteCrude (USO) and copper (FCX) have reversed all of Wednesday's gains. EWZ (Brazil) and PBR (Petrobras) now trading below Tuesday's close. EEM (Emerging Markets) has given up 75% of Wednesday's spike and needs to hold here.
ReplyDeleteSomeone, somewhere, made an absolute killing on RUSS / RUSL the past two days. In my head I had that one nailed to a tee but didn't pull the trigger on either of them. Oh well.
DeleteRIC - Wow, here's a gold miner that actually has profits and sales, that's a lot more than can be said for RBY/MUX...... The best part is, I didn't hear about it from a great guy who knows a thing or two about the sector after lived/breathed it for decades and wants to help the little guys by sharing his great(stupid) ideas intended to mislead.
ReplyDeleteMM - $300 million of income, these guys should relocate to India next door to REDF
ReplyDeleteTDW - Oh, damn..... There must be something ugly going on? The only way of knowing is by watching prices move, not by listening or reading analyst reports? Consider, "nobody knew" oil would crash when all the new wells began producing, for some reason everyone imagined price would remain stable.....
ReplyDeleteGV - What's pushing this one up so consistently?
ReplyDeleteTOF, re FCAU, I do have a tendency to sell too early, especially on a stock which I have a large profit in, so it may be too early now. If I go back through my history, I know I've left more money on the table than I've saved by selling earlier, but I find, psychologically for me, it is easier to sell off in parts and know I will miss the ultimate top than to try and top tick things and hold on too long after the peak and lose money.
ReplyDeleteYou have to know yourself in trading and it works for me, but you are much more capable at going all-in and all-out quickly.
Yeah I just think there will be so much support for the stock price as the Ferrari IPO date nears. Look at the way it traded (under FIATY) before the CNH (industrial division) spinoff in 2011. And add about 10x the excitement surrounding the Ferrari IPO to it. I wish I held on to more but it is what it is. I wouldn't be surprised to see it at $25 before the IPO in a bout of euphoria.
DeleteGREK - New lower lows, as I was anticipating..... I guess Grexit will be the eventual reality, an expensive, painful long slow decline.
ReplyDeleteMCP - Got whacked 22% here today......
ReplyDeleteBought a starter position in NAT.
ReplyDeleteThis is a oil tanker company pointed out by the Reminiscences guy. If you are interested, read the letter from the chairman this week as well as their last quarterly (http://hugin.info/201/R/1892717/670486.pdf).
They have low debt, and pay out constant dividends that vary with shipping rates and the CEO is indicating to look for a payout raise. The whole buy oil now and store it on a tanker and sell it in a year for a guaranteed profits driving rates up.
I'm buying at 2 year highs, so not ideal, but prices are down 75% from before the financial crisis and there is a near term catalyst of rising tanker rates.
Reminiscences also like FRO and TNK, but I think NAT looked the best. FRO has the most upside if things do get a lot better as they are in the worst shape, but I don't want to go that far out the risk curve.
OK, I confess. MOG is Boone Pickens.
ReplyDeleteThat video made me want to grab a drink or two and sit down and watch the games. I wasted time looking for the ticker symbol of that Enron company he mentioned. Same with ITO.
DeleteNAT- That's a tough buy there BB. Good luck.
ReplyDeleteChart formations are pretty unreliable in my opinion but it sure does have a nice rounded Kardashian bottom on the monthly chart.
DeleteCharts is like a lot of women - much better looking from far away (the 10 year chart) than close up (the 2-year).
DeleteBut, rates for tankers are certainly firming and according to the chart in http://hugin.info/201/R/1892717/670486.pdf,
are getting back to the 2004 - 2008 levels when the stock traded in the $30's and $40's and had $4.00+ dividends.
from Gartman
DeleteWe could not help but note that despite the sharp weakness of
stocks generally last week, tanker shares closed on their highs for
the past several weeks, with one or two actually tracing our
“weekly reversals” to the upside. Further, it was stunning to us
how many stocks “reversed” to the upside yesterday following the
Fed’s “non-decision,” and how well the “tanker” stocks had been
acting even ahead of the Fed’s “decision.” As a result we are
going to double our position in “tankers” today upon the market’s
opening.
I guess oil could dive to $33, that should put big wind in the sails for tankers?
DeleteThe large Kardashian bottom is a useful trait in more ways than one.
DeleteAll respect to Gartman but I've noticed he generally is late with his calls. In this environment, I prefer buying stuff on pullbacks. I have had zero luck with the latter.
DeleteGartman equals contrary indicator!!!!
DeleteI almost titled it Oh No.
Gartman likes to add to his winners as a trading method.
Crap - don't want to be on the same side as Gartman.
DeleteEEM held at support. Reopening a partial position in RYWVX at the close.
ReplyDeleteBack in ROSE @ 16.47.
ReplyDeleteI added a little FCAU today at $16.2x heading into the close. I understand the run up, but there are a few ways to look at it:
ReplyDelete(1) The stock is "only" up about 33% from this time last year when the news of the Ferrari spinoff wasn't known and when fundamentals were not nearly as good. Maybe it was overvalued then but that gives me some comfort in looking at the most recent move.
(2) Pull up the chart of FIATY as it headed into the industrial unit spinoff. The stock doubled in about 5 months. I think this Ferrari spinoff will be the IPO of the year and will have massive hype. I see the stock potentially tripling from the October lows to as high as $25. That would still only be about a $36 Billion valuation which pales in comparison to the $60+ Billion valuations for GM/F. Obviously that's a tougher sell because of current earnings. But GM/F don't have a $10 to $15B asset they can extract like Ferrari.
So if I look at potential upside heading into the summer of 40 to 50%, I still find it hard to pick anything else that has that kind of upside.
So what's wrong with practicing your drunk driving skills, shouldn't the Secret Service be doing that?
ReplyDeleteI do. Every morning.
DeletePretty sure the guy managing my trading account has been too.....
DeleteBIIB - You guys getting long this one in AH?
ReplyDeleteFOLD was a 'retirement stock'.
Deletetof- If you're still holding GILD, there's a write-up in TSDC (free access over March Madness weekend):
ReplyDeleteGilead Set Up for a Breakout
By GARY MORROW FOLLOW | MAR 19, 2015 | 4:00 PM EDT
Back on Dec. 22, Gilead Sciences (GILD) took a major hit after a pharmacy benefit manager dropped the company's hepatitis C drug. The result was Gilead's biggest one-day loss since its IPO in 1992. The 14% flush attracted extremely heavy volume after GILD opened with a huge downside gap. This powerful momentum drove the shares lower the next day as well, piercing the 200-day moving average in the process. GILD began to rebound late on Dec. 23 and managed to close well above the $86.00 low. Investors continued to take advantage of the dip over the next few days, leaving behind a powerful spike low less than two days after a major breakdown.
The late December bounce lifted the stock comfortably back above the 200-day moving average. The rebound extended into January, allowing the shares to recover nearly all of the post Hep-C news collapse. With volume remaining very light it was obvious GILD had moved into consolidation mode as January came to a close. The range for the month remained inside the December range.
In February, the narrowing action continued, with another inside range month. As in January, the 200-day moving average held the February lows, while the string of lower monthly highs reached four straight months. This month, GILD is again trading inside the previous month's range and is working on a fifth straight lower monthly high to go along with a third straight higher monthly low.
The result of this three months of consolidation is a low-risk entry opportunity for Gilead bulls. The stock is currently trading just $2 above the March multi-week lows. The 200-day moving average, which held the February lows, is in the same position this month. A close below $98.00 would clip the 200-day and damage the set-up considerably. On the upside, a move past the early March high of $104.50 may provide the spark needed to push GILD into breakout mode.
I am now long the stock with a small starter position. I will remain positive on the basing action until a close below the 200-day.
For a fundamental view of Gilead, along with the biotech sector, don't miss Bret Jensen's post from March 17.
Yeah I'm still long GILD. Thanks for sharing.
DeleteBWEN - If wind is hot then why does BWEN blow cold?
ReplyDelete$USD down, miners and crude up. US indices gap above R1. EEM +1.1%, EWZ (Brazil) +3.25%. Will be closing RYWVX (Rydex 2x Emerging Markets) at the 1030 window.
ReplyDeleteHalf of my gains today have evaporated already.
ReplyDeleteBe grateful for the half you do have!
DeleteThat falls into the category of "better half", right?
DeleteDB - Could be breakaway gap, 1st target $37.5 or so. Long from $33 and should've added at $28 but was expecting a longer protracted deadness of buried money. Misjudged the sense of urgency but who wouldn't considering Greece remains top news 6 years later?
ReplyDeleteThe question in my mind is not where is oil going it's whether or not its going to $0 maybe on the back of Dennis Gartman's nucular fusion. Ahhh I miss the days when oil was going to $300
ReplyDeleteI will say, though, that Gartman nailed the oil call:
Deletehttp://www.cnbc.com/id/102125295
He was calling for much much lower oil when it was at $80.
If Gartman's bigger picture call from last October is accurate in that oil stays down for years, I can't think of a single industry that will benefit more than airlines...well, maybe truckers. They're already up big but I don't think they have hit that euphoria phase. The industry is still fairly rational with respect to capacity and they have become far less cyclical with all of their baggage fees and no more free meals. I'm long VA so I'm biased, but its definitely in my opinion the best way to play oil being lower for the longer term. The key in this industry is to watch for too much capacity coming on line. The industry is just starting to add some capacity but I wouldn't classify it as excessive given pricing is still rational.
DeleteYeah, just make 30 calls a month, eventually something sticks.
DeleteConcrete manufacturing requires tons of energy.
DeleteAnd, steel is the preferred material for producing these structures but it's not clear to me if some kind of fiber reinforced plastic is replacing the steel rebar.
DeleteThe steel stocks have been obliterated. Most likely because so much infrastructure buildout already occurred in China in the 2000s. Not that there won't be a ton at some point in the future there because there will be. But like Saut says its all about the direction of change, not the magnitude. And it's pretty obvious that China's rate of growth is slowing which impacts steel and other industries so reliant upon a booming China (like dry bulk, although the coal is dead thing is killing them as well).
DeleteMoving a little further up the food chain, surely TBTF banks have visibility into the future that we don't have, thus whether oil, solar, coal or some mystical form of energy such as cold fusion wins the race those financial institutions will be out in front?
DeleteIt's also fair to say that Brandt nailed the call as well, he's also bullish on GILD FWIW..... :)
DeleteHexcel Corporation, together with its subsidiaries, develops, manufactures, and markets structural materials for use in commercial aerospace, space and defense, and industrial markets in the United States and internationally. The company operates through two segments, Composite Materials and Engineered Products.
DeleteSurely steel can and is at least for the time being but can Chinese concrete be shipped to the US and be competitive, given there's new supplies of natty "overwhelming" demand which makes it much cheaper to manufacture concrete considering one of the largest costs involves heat?
U.S. Concrete, Inc., through its subsidiaries, produces and sells ready-mixed concrete, aggregates, and concrete-related products and services for the construction industry in the United States.
"It's also fair to say that Brandt nailed the call as well, he's also bullish on GILD FWIW..... :)"
DeleteI thought he only focused on indexes / futures / commodities?
But if you were familiar with and worked in the construction industry building homes and such(concrete foundations and driveways), would you be interested in rebar producers, concrete producers, or energy producers at this point?
Deletethat's beyond my paygrade CP! I'd stick to home builders if i liked the valuation of the housing industry. Anything beyond that gets too hairy for me.
DeleteBrandt trades stocks too, he doesn't listen (or pay attention?) to the news though and he definitely has personal opinions. He was following EXTR long back July/Aug looking for a breakout. Who knows, he might eventually be proved right on that hard to say but he saw something in the chart that didn't pan out.
DeleteIn the case of GILD, surely he sees the H&S but he's discounting it I think. Really I don't know if he's still in but he sounded convinced.
ING - Another one he got wrong, his target was $10.15 and obviously that didn't happen. He uses the charts with the understanding the setup could be false and thus doesn't work and in that case he takes the loss quickly when he's wrong. Not all of them work, probably not a majority, so maybe he's ignoring the GILD H&S expecting it to fail?
Maserati - Wonder if Maserati could manufacture an EV, or maybe an CFV?
ReplyDeleteI'm excited to see how the new SUV does. I bet they kill it.
DeleteThe Maserati's I saw in Italy (we rented one from Hertz) was a stunning luxury oriented vehicle I much preferred over the BMW we also rented.
DeleteWho's that bald headed secret service guy I always see walking in front of Obama, he seems so alert, looking around everywhere as he leads the way through the crowd?
ReplyDeleteHis nose does look a little red, like bloodshot sorta, is he the same guy who was caught on surveillance tape dragging the traffic cone across the whitehouse lawn under his bumper?
Never underestimate the power of the IPO: think about how well some of the bigger IPOs have done the past year or so: BABA HABT SHAK GPRO are just a few that come to mind. If you look at the initial pops from the IPO pricing, it tells you that there's massive demand for new IPOs maybe because there's so much money sloshing around? Who knows? But when I think of this and compare it to the upcoming Ferrari IPO, which allows people to get into it ahead of time by buying shares of FCAU, I can definitely see a scenario where FCAU goes apeshit to the upside.
ReplyDeleteMark, check this one out and see if you can detect the distortion:
ReplyDeletehttp://www.neitherland.com/hyperballad/candy/files/mp3/Rogue/Jefferson%20Airplane%20-%20White%20Rabbit.mp3
"When logic and proportion have fallen sloppy dead
And the white knight is talking backwards
And the red queen's off with her head
Remember what the dormouse said
Feed your head, feed your head"
I'm not sure what you mean bird boy.
DeleteTried watching the Oscar movie Bird Man and didn't understand that either!
DeleteReality distortion maybe? This chick was the one who tried to spike Nixon's punch bowl with LSD but somehow the Secret Service found her out b/c despite she had an invitation she was on the black list.
DeleteI sold all of the following:
ReplyDeletePBR
AXP
BAC
BLL
What was the reasoning? Worried about the market or just taking profits?
DeleteCombination of both basically BB.
DeleteI also having been thinking of stepping away from the market for six months or a year and just enjoy life more without watching all this up and down everyday. I have been at this since 1982 and personally have not been to thrilled with my results the last two years and am not really into it the way I use to be, so thinking taking an extended break may be the way to go.
Plus, whenever I have profits if I do not take them they seem to evaporate quickly.
Always good to take time to enjoy life! The nice thing about trading is you can do it or not do it on your own schedule and no worries about what you boss thinks or how your resume looks. Plus, the market move in different cycles and rhythms and sometimes those match our trading style and sometimes not.
DeleteWish I'd practiced that discipline when BXE was hovering ~$8 for about 5 minutes some months back.
DeleteFTD back at it's lows since it came public on weak Q4 earnings. Less than2 years till the potential 2017 buyout.
ReplyDeleteTOF's boy friend is calling an oily bottom.
ReplyDeleteI'm losing $100/minute now.
ReplyDeleteThat's called "leaking", BTW :)
DeleteI ended up selling GILD and KORS today. Now only holding VA and FCAU
ReplyDeleteVAR - Any thoughts about this chart?
ReplyDeleteSGG/PEIX - As cheap as sugar is, wouldn't it seem like PEIX should have a decent tailwind?
ReplyDeleteTwo buck Chuck?
ReplyDeletehttp://www.laweekly.com/restaurants/hold-the-franzia-and-two-buck-chuck-your-cheap-wine-may-be-filled-with-arsenic-5444149
The only Charles Shaw label that made the list is their White Zinfandel:
http://www.taintedwine.com/test-results
IBM - Looks like this one's taking off?
ReplyDeleteDos mas por favor
ReplyDeletehttp://vinepair.com/features/external/beer-world-map-3000-full-web.jpg
60 Minutes presented a segment about rare earths tonight, I didn't catch it though.
ReplyDeleteI'll be watching it in a bit.
DeleteGOGO - Did you guys notice the past couple months move?
ReplyDeleteREDF - A couple days of relief.
ReplyDeleteRBS - Worth a shot?
ReplyDelete60 Minutes pulled a LL on MCP. Look out belowwwww......
ReplyDeleteI never trusted that bullshit company
DeleteI traded it once and think I actually made some money but can't remeber for sure. I have a friend with kids looking tos end a long weekend in SD. They have some money. Where should they stay on the beach?
DeleteHow old are the kids and when are they looking to visit?
DeleteGOOG - They say we're screwed, too many super yachts.
ReplyDeletehttp://atom-ecology.russgeorge.net/2015/02/02/google-engineers-show-renewable-energy-little-help-real-world-co2/
MCP - Look what Mark did to this one! :)
ReplyDeleteKORS - Showing animalistic instinct.
ReplyDeleteSCBFF (Standard Chartered) caught an upgrade and up 7% today. Probably too late to buy now, but still holding and think we get over $20 pretty easily.
ReplyDeleteEurostocks continue to work - I've got 20% of my portfolio in Euro-stocks, but they have generated over half of my profits for the year. I still think this has legs and amd looking for other good ones.
TOF- 14 and 10. They just want to stay somewhere nice on the beach. Perhaps a good area for shops and resturants.
ReplyDeleteLa Jolla is the best spot, bar none. Very expensive. If they have the money then I'd recommend staying somewhere near Wind n Sea beach.
DeleteOtherwise, Delmar is really nice...nice beach and small center of town. Expensive too but a little more affordable.
Then Encinitas and Carlsbad are the next best as far as nice town / beach. I like Encinitas a lot but its more of a younger crowd...20's to 40's crowd with bars / restaurants and a nice beach.
Anywhere west of Rte 5 will be expensive no matter what. They could probably get a nice rental on AirBnB if they want a cottage/house.
Once, I stayed at a large hotel on the beach with pool in courtyard overlooking beach, there was a marina just on south side of hotel. Don't recall name, Wyndham maybe?
DeleteROSE- Took the 5%. Real money.
ReplyDeleteMCP- The only thing they said on 60M that was interesting was it was going BK.
ReplyDelete20% off the opening trade.
DeleteThe only potential source of RE ores outside of ore from communist countries is going BK? Hmm,,,,,,
DeleteMight be able to extract RE's from those cheap wine grapes? Could be more than just arsenic in them, beryllium and other stuff too? Or, how about fraq water, it's supposed to have an interesting mineral content as well.
DeleteTOF- OK. Thanks.
ReplyDeleteIt feels like they're sucking in buyers today. Then taking it down tomorrow. Just saying.
ReplyDeleteThey sucked me back in.
DeleteROSE back at 16.57.
Sounds good to me.
DeleteDon't laugh. I've developed a taste for Bud Light.
ReplyDeleteI actually drink Bud most of the time. On Sat. nights I mix it up with some of the better lagers.
DeleteI like Black and Tan or of course most other dark beers, the darker the better.
DeleteI like Czech beers like Pilsner Urquell, but my favourite right now is a local micro-brew called Mad Tom's IPA.
DeleteI'll also go to the Bud Light if it's hot and want something lighter and thirst-quenching.
For me it's guinness on a cool day or magic hat #9 on a hot day
DeleteMichelob ultra right after tennis on ice.
DeletePilsner from Czech Republic second.
Seriously thinking about selling my railway stock, CNI. It's been a great one and I really thought I could do the Warren Buffet "buy a great company at a good price and hold forever", but it's really hard to see with it trading at such a high valuation that it doesn't underperform the next few years. I bought it in May, 2009 and it's made a profit of 335% or 27% a year, but the only way this can continue is for the valuation to continue to get even higher, because earnings are only going to grow at 10% to 15% a year, assuming a strong economy. And I just don't see that or rather I should say I don't like to play that game.
ReplyDeleteHow's the pe relative to past 10 years?
DeleteFromt TD:
Delete"CN is trading at 19.7x our FTM EPS estimate (12 months ending December 31, 2015), which is above the high
end of the group’s historical P/FTM EPS range of 12.5x–16.1x (average of 14.3x plus/minus one standard
deviation)."
Take a 5 year period and assume 10% EPS growth per year, which is probably generous if volume growth is 3%, price increases of 3%, then 4% must come from productivity which is already at record highs. Assume fwd p/e comes down from current to traditional high end of range, you get an annual return of about 5%. If it comes down to average p/e, you get annual return of 3%.
So not much upside unless people are willing to pay higher and higher multiples, which they could as people love the rails like they did to KO (Coke) in the late 1990's when it got to a 40 p/e.
I remember Buffet saying he should have sold coke when it was priced very high and rode it down.
DeleteAlways tough in the moment and easy in hindsight.
You can always sell in fractions.
DeleteHopped back into KORS at $67.3
ReplyDeleteHopped back into AXP at $81.55
DeleteNice. I like AXP down here.
DeleteTWTR - On the boogie this morning folks................
ReplyDeletestrong chart
DeleteDinah Moe Humm
Java
ReplyDeletehttps://www.youtube.com/watch?v=Bi-dm1JU4no
TOF - Pick us another home-run man, we need to make a boatload of cash.
ReplyDeleteha.
Deleteyou're holding FCAU right? just keep holding that sucker. ain't gonna make you rich overnight but should continue up to $20+ before the Ferrari IPO.
I'm finding more value in the big cap stocks right now. One small cap I do like is WTT. Check that one out. I think it could double.
DeleteNeed to bring back the Plymouth Barracuda at some point.
DeleteMAT - These guys need a face lift, how about "Tramp Stamp Barbie" or something like that?
ReplyDeleteSold KORS at $67.93
ReplyDeleteStill finding it tough to pick a better one than FCAU, even after this run. FCAU will put on a roadshow for the Ferrari IPO to discuss potential growth opportunities, including:
ReplyDelete*the use of their engine technology in other manufacturers (right now the Maserati uses their engines and Maserati is a fast growing brand)
*launch/expand exclusive Ferrari clubs / hotels and other branding opportunities
*expand production from 7k cars annually to 10k
*develop a SUV
I think they did around $270M net profit last year. If they expand production by 40% I think its safe to say they could do $400M in net profit. And if they do a SUV and roll out those other opportunities above I think they could do double what they're doing in net income. I bet the market pays 40 to 50x last year's net profit because its such a premium brand and has a lot of potential growth opportunities. Look at a company like MANU (Manchester United soccer team). They trade at similar multiples.
So that leaves Ferrari with a $12B or so valuation. That means the rest of the company is worth like $10B. That piece of the company does 75% the revs of GM/F with 15% the valuation. If it gets up to a valuation of 1/2 GM/F then the combined entity is still worth double the current market cap. That could take some time to realize and I'm not sure the market would keep the stock price of the remaining entity (ex-Ferrari) up after the IPO. However, before the Ferrari IPO I bet the stock runs to $20-$24. So I think there's still 25 to 40% upside over the next 4 to 6 months. And I just can't find much else with a relatively high margin of safety that has that kind of upside. And a major tailwind (age of cars on road) for the auto sector isn't about to go away anytime soon.
I've been mainly sticking with larger stocks because of the point in the business cycle that we are in where I think its smarter to stick with more liquid bigger cap names unless there's something truly unique in the smaller cap sector. Other stocks that I like with decent upside have a good deal more risk in my opinion:
KORS - I think it could go up 20 to 25x EPS which would be $85 to $100 (25% to 45%upside) but they are subject to pretty quickly changing consumer tastes and based on FCF its not that cheap. This is one, though, that I might hold.
VA - I think this could go up 50% or so to get in line with other low cost carriers but its heavily dependent upon oil which is impossible to value.
RL - Beaten down, but not really dirt cheap
WYNN - Tough to assess risk to Macau properties; p/FCF is high if that piece of the business doesn't rebound. I bet it goes lower first.
QCOM/INTC - these both look cheap but I can't expect much more than 15 to 25% annual returns at best if I time it right
HABT - has the potential to be a big chain nationwide but a lot of the growth is priced in and I'm willing to bet that once the burger bubble pops I'll have a chance to buy this at $30 again sometime over the next two years.
Z - Essentially an online monopoly but have to take a big leap of faith on them being able to capture the majority of advertising spending and to strong arm the realtor industry into spending on their site. Real estate is the only industry that has been able to fend off the move to mobile / internet. I'd love to buy this again in the double digits.
AXP - beaten down and fairly cheap, I think I like this one but it's not incredibly cheap at ~ 15x PE vs 5% annual net income growth the past 7 years. I can't really expect more upside here than 7 to 15%.
I'm still looking at other opportunities but I added a bunch of FCAU last week and am just waiting to get better opportunities elsewhere.
I will add to my position in VA if it gets down to low $30s. I do think it has substantial upside over time. It's riskier so I have a small position in it, but the brand is very strong in my opinion and I think its getting punished because they have most of their oil exposure hedged through this quarter.
DeleteQCOM, been thinking about this one for LT growth and dividends. Some points:
DeleteGross profit margin has remained high at a hefty 60.1%,
though it has declined in recent years. The company has a
very attractive valuation with a price-earnings ratio of just
15.1. This ratio puts the stock in the bottom 25% of all S&P
500 members by valuation. The current P/E ratio is also below
the stock’s five-year average of 18.6 and the 20.6 median of
the semiconductor industry. We view the valuation as an opportunity
to buy growth on the cheap.
Qualcomm has paid a dividend every year since 2003 and
has hiked the quarterly payment every year since then. The
company’s most recent dividend increase, announced in April
2014, boosted the quarterly dividend by 20.0% to $0.42.
Qualcomm has significantly raised its dividend over recent
years, boosting the dividend by 16.3% in 2012, 40.0% in 2013
and 20.0% in 2014. The current yield of 2.4% is well above
the stock’s five-year average of 1.7%.
The mobile communications standards area is subject to
evolving technology standards. A major concern for Qualcomm
is that licensees may find a way to circumvent the company’s
patent portfolio. Samsung did just that with its recent
Galaxy S6 phone, which dropped Qualcomm’s Snapdragon
processor for an in-house chip. Also, since Qualcomm’s patent
strengths lie in more outdated 3G and 4G technology, advancing
standards may reduce demand for the company’s patents.
Recently, the company agreed to pay a significant fine to the
Chinese government of $975 million and to sharply cut royalty
rates (by 35%) for its third- and fourth-generation communications
systems. The Chinese investigation involved possible
anti-trust violations given Qualcomm’s market share. Other
governments, such as South Korea, have also begun looking
at Qualcomm’s business practices for possible anti-trust
concerns.
The nature of Qualcomm’s business operations, which are
spread across the world, means the company is exposed to
currency risk. The company has estimated a negative currency
impact of approximately $2.00 on the average selling price of
their products in 2015.
PS The points are from another source, obviously not me.
DeleteCrossing Wall Street guy owns QCOM. It's a very solid company.
DeleteWhen flying over the Swiss Alps, it's important to maintain altitude.
ReplyDeleteWTT - I own a tiny amount of this company (been buying shares past few days). They do a lot of shit I have no understanding of, but I think they're growing fast because of the building out of distributed antennae systems (DAS) which improves internet coverage in large buildings. I'm sure CP could speak to this technology more than I can. It's cheap, though. They have like 18% of market cap in cash, no debt, trade at about 15x EPS / FCF and they have pretty significant operating leverage (last quarter they improved operating income like 3x over prior year on a 29% increase in revs).
ReplyDeleteOh anyway, Horton Capital Partners owns like 9.5% of this company. They are the capital arm of the Horton brothers, founders of DR Horton. No idea what their track record is but I thought that was interesting.
DeleteFMR too
DeleteForm SC 13G/A WIRELESS TELECOM GROUP Filed by: FMR LLC
BY 10K Wizard
— 10:42 AM ET 02/13/2015
http://archive.fast-edgar.com/20150213/A5KF6222C222R9Z222222ZZWVUVCZ222P272
Yeah, I never read into the FMR holdings b/c they seem to own a piece of everything.
DeleteHere is a possible better link for owners, just sort shares for largest.
DeleteThe key for these small stocks is when you can catch a Wellington/Vanguard or FMR or a Blackrock when they first start to buy since they will generally build on a position especially Wellington/Vanguard.
Oh the link
Deletehttp://whalewisdom.com/stock/wtt
Nasdaq.com or Morningstar.com are good sources too for institutional holdings.
DeletePlymouth Barracuda: cool car, especially in lime green:
ReplyDeletehttps://www.google.com/search?q=Plymouth+Barracuda&safe=active&source=lnms&tbm=isch&sa=X&ei=3LARVZzyPMqkgwS-mICIDQ&ved=0CAcQ_AUoAQ&biw=1121&bih=534
ROSE off at 16.90 2%. Real money.
ReplyDeleteAs opposed to funny money?
Delete...as opposed to a few hundred bucks. :)
DeleteSold my CNI (CN Rail). Have to think I can do better than this with CNI's valuation so high.
ReplyDeleteDamn I just saw TWTR. Had a golden opportunity to get back in around $46.
ReplyDeleteInteresting that all of the major european auto companies are up today while everyone else is down:
ReplyDeleteFCAU
VLKAY
PUGOY
I've got Renault (RNLSY) on my watchlist as well. I would think if we get some mergers going on in the industry like Marchionne is suggesting, Renault will be near the top of the list as the have a strong partnership and own a good chunk of NIssan and also do a lot with Samsung.
DeleteMCP- Yep, gap up filled. Someone is down 40% on this sucker now.
ReplyDeleteYou're buying the gap close?
DeleteI also think that larger stocks are probably better at this time as well.
ReplyDeleteI still think financials are, by far, the best sector for investment, as they are generally cheap relative to their historical valuations and the market. Plus, I see them as having many headwinds (low rates, increased regulation, poor demand from housing, poor business loan demand) which should be turning into tailwinds over the next few years.
I also like the Euro-stocks as I've mentioned before.
QCOM is one that seems to be attracting the value guys as well, but I haven't looked into it.
CNI- Well done BB-lite.
DeleteI agree on the financials. I need a pullback first though. I snoozed on the entry in early February and regret it. Was very close to buying big positions in JPM / AFL
DeleteThink I'm going to sell RL tomorrow too. I'm up $1.00, so probably won't lose any money, but spent a couple hours today trying to figure out what the recovery will look like for this stock and it's going to be probably more work and longer than I thought, so better just to step back and watch for either better prices or signs things are improving quickly. Will probably just trade mainly with the market for a while, so no real advantage.
ReplyDeleteYeah. Based on current eps estimates its not that cheap. I mean I guess it could get to vfc valuation but that's probably an outlier. To get me interested Id like to see it at under 15x. Doubt that happens though
DeleteIt's often traded at a 20+ p/e, so under 15 would be nice. Forward p/e for 2015 is 17.5, so getting it to 20 is only 15% return. You need to hit the estimates for 2015 and then show 15% or better 20% growth in earnings in 2016 to get that 20 p/e back, so just seemed like a long time. I think when I bought it, the fwd p/e was under 15, but probably analysts had not reduced estimates at that time.
DeleteOh well, no damage done.
GuruFocus showing discounted cash flow value of $196 for RL...granted that's assuming 17% growth over next 10 years:
Deletehttp://www.gurufocus.com/fair_value_dcf.php?symbol=rl&Submit=Go
That's strong growth. If I put it down to 10%, i get a $120 value, lower than now.
DeleteGEVO - Starting to look like PEIX redux?
ReplyDeleteAGM - Here's a financial that has pulled back.
ReplyDelete"in 1996, FactSet’s first year as a public company, there were over 5,000 public companies with revenues of less than $50 million. FactSet is one of only 60 companies in that pool of 5,000 to have crossed the $1 billion mark in revenues." ($FDS)
ReplyDeleteCENX - Downgraded by MS today........... Umm, after the H&S nears completion.
ReplyDeleteThe charts predict $100 per share Twitter - Brandt
ReplyDeleteWow MDR got back to 2009 lows. Could be an interesting one, especially if you think oil rebounds.
ReplyDeleteTRADING WISDOM FROM JESSE LIVERMORE
ReplyDeleteThe speculator’s chief enemies are always boring from
within. It is inseparable from human nature to hope
and to fear. In speculation when the market goes
against you hope that every day will be the last day—
and you lose more than you should had you not
listened to hope—the same ally that is so potent a
success-bringer to empire builders and pioneers, big
and little. And when the market goes your way you
become fearful that the next day will take away your
profit and you get out—too soon. Fear keeps you from
making as much money as you ought to. The
successful trader has to feed these two deep-seated
instincts. He has to reverse what you might call his
natural impulses. Instead of hoping he must fear and
instead of fearing he must hope. He must fear that his
loss may develop into a much bigger loss and hope
that his profit may become a bigger profit.
WTIC - OMG, crude's $48, didn't think that was coming before $30's
ReplyDeleteSold RL - will probably keep on the watch list. Not Real money.
ReplyDeleteHave a look at EVEP, the divy has me concerned.
DeleteWOR - Earnings last night in AH, going for a new low or what?
ReplyDeleteFCAU - No more chance of Pontiac GTO or even Tempest (I'd like to have seen this one the most), it's about time for the Barracuda to return. Bring it!
ReplyDeleteWhat's the best oil play? I think there's a decent chance it has bottomed.
ReplyDelete