Sunday, June 21, 2015

6/21/15 Dylan's Guide to Trading

(a) 'Just Like Tom Thumb's Blues.'  https://www.youtube.com/watch?v=JKrpDLJB_38

'When you’re lost in the rain in Juarez
And it’s Eastertime too
And your gravity fails
And negativity won’t pull you through'

When even contrarians (including you!) give up and sell-> sleep on it, and reopen all positions the next morning.

(b) 'Desolation Row.'  https://www.youtube.com/watch?v=AL1HUsJJCzU

'And the only sound that’s left
After the ambulances go
Is Cinderella sweeping up
On Desolation Row'

Begin scaling in.

(c) 'Silvio.'  https://www.youtube.com/watch?v=_2tCGRdZ5d8

'I can snap my fingers and require the rain
From a clear blue sky and turn it off again
I can stroke your body and relieve your pain
And charm the whistle off an evening train'

Sell.

'Silvio, I gotta go
Find out something only dead men know'

Trap.

'I can tell you fancy, I can tell you plain
You give something up for everything you gain
Since every pleasure's got an edge of pain
Pay for your ticket and don't complain'

Respect and manage your losses.

(d) 'All Along the Watchtower.'  https://www.youtube.com/watch?v=TLV4_xaYynY

'Outside in the cold distance
A wild cat did growl
Two riders were approaching
And the wind began to howl'

Move to cash.

164 comments:

  1. I always thought that Bob Dylan was nothing but Crap anyway ... BUT Hendrix is pure sweetness!!!
    Seem to recall 'All Along the Watchtower' being scored to a Napalm bombing run in VNM???
    https://www.youtube.com/watch?v=k26hmRbDQFw
    whereas Euphoria / Capitulation seem to be more like ...
    https://www.youtube.com/watch?v=pEOVNmSR7_c

    ReplyDelete
    Replies
    1. https://www.youtube.com/watch?v=PgIOsJViUaQ

      Delete
    2. Notice how our soldiers were geared compared to our local police force today.

      Delete
  2. FLY Leasing selling 33 planes for close to $1 billion and also negotiating a reduction in management fee. Good move as increases metrics shareholders care about and reduces leverage as they do have one of the highest debt/equity ratios of the airplane leasors.

    Stock has had a good run since last fall, but still pays the highest dividend of its peers, so if the market perceives risk is going down, the stock price could continue higher.

    EPS up 7%
    BV up $35 million
    Free cash fo $425 million
    Debt down $560 million (assume purchase price - free cash is going to pay debt)

    ReplyDelete
    Replies
    1. Those leveraged plays work well in an improving economy. I was afraid given the debt. I suspect if we do get a 10-15% correction between the fall/winter then we will have another shot at that in the sub teens. Good job though with that one. On earnings basis it's cheap and has a nice div

      Delete
  3. Optimism re Greece fueling an overnight rally in global markets.

    (a) EEM (Emerging Markets) changing hands pre-market @ 40.71 (+1.62%). FXI (China 'H' Shares) +1.34%.
    (b) USO (Crude) +0.7%. XLE (Energy) +1%.
    (c) DJIA futures +126 points.
    (d) TLT (long bond) giving back almost all of Friday's gains.
    (e) GDX -0.6%, with an unusual divergence in prices of gold (-0.6%) and silver (+0.4%).
    (f) CHK (Chesapeake) bidding higher despite a -2.5% drop in NGas futures, which hints a short-term low was set last week.

    No one really knows the implications of a Grexit (from the Eurozone). Personally, I think it's a valid concern. I also think this morning's optimism is misplaced.

    (a) I plan to sell RYWVX (Rydex 2x Emerging Markets) into this morning's rally @ the 1030 est window.
    (b) RYGBX (Rydex 1.2x Government Long Bond) on a short list of positions I may reopen in the next day or two.

    ReplyDelete
  4. Closing CAF (China 'A' Shares) for a minor gain. The Shanghai Exchange was closed Monday night for a holiday. Even so, I would have expected more than a fractional percentage rally in CAF today. There were reports that many of the listed shares declined on Friday by their -10% daily limit. Today's relative weakness suggests further declines tonight, and I'm not interested in that kind of risk.

    ReplyDelete
  5. Replies
    1. WPZ - High level of insider ownership, thus hard to see them taking a big one to the drawers.... the implications are beyond my scope of comprehension I think.

      Delete
  6. (a) RYWVX closed the 1030 window up +3.05%. Taking gains when I have them.
    (b) XLE (Energy) + OIH (Oil Services) both currently up >+1%, and accordingly I plan to close RYEIX + RYVIX end of day.
    (c) GDX (miners) currently off -1.07%. In line with taking losses immediately, I will be closing RYPMX end of day, UNLESS miners close strong.
    (d) Reopening a position in RYGBX end of day given a -1.7% decline in TLT + the sine-wave pattern in bonds. Sizing down, however, as the pattern can end at any time.
    (e) CHK (Chesapeake) now +1% despite a -3% decline in NGas prices. I have every reason to stick with the position.

    ReplyDelete
    Replies
    1. Two plays I continue to eye up heading into August: long NGas, short Biotechs. I think we may have some fat pitches soon.

      Delete
  7. Started slowly buying BIS. Only 1% position so far. I plan on adding over the next few weeks.

    Here are the returns:

    Year Returns
    2015 YTD (thru 6/22/15) 26.40%
    2014 33.60%
    2013 65.47%
    2012 31.42%
    2011 11.18%
    2010 14.93%
    2009 15.00%

    Cumulative 439.68%
    Return from Bottom (3/9/09) 523.73%

    ReplyDelete
  8. TLT now down over 15% since early February. If this really is the normalization of rates time, should be another 25% down (back to the 2006 - 2011 levels)

    Can you imagine being a government treasury bond holder and losing 40% of the value of it. It doesn't matter so much if you are a long term holder (like a life insurer) and holding it to maturity, but I bet a lot of bond fund holders are going to be very dissapointed this year.

    ReplyDelete
  9. High grade corp bonds (LQD) only down just over 6%, so I guess this mitigates the pain as most smart bond fund managers would have been out of treasuries, but still going to be tough for the "safe" part of people's portfolio.

    ReplyDelete
  10. Sold 15-20% of my ENOC off in 10.80's. Added to WMT at $72.75.

    ReplyDelete
  11. Up to 3% position in BIS. I'm thinking of adding about 3% per day for the next two-three weeks. I'd like to get it up to a 50% position (with other 50% being in WMT). May go to 100%. I think it's worth the risk here for sure. Could be a home run trade.

    ReplyDelete
  12. I sold off some more of ENOC into the close. Still have about a 25% position in that. Was at 1/3.

    Holding my 10% position in PBMD and am getting clobbered on that, down about 12% (about 1.2% for the port). Given the run in biotechs so soon I'm basically just hoping for a miracle at this point as I'm beginning to think the biotech top may be within a week or two.

    Have a 2.5% position in BIS, no 3%.

    Have a 59% position in WMT.

    ReplyDelete
    Replies
    1. That's a big WMT position - expecting something soon?

      Delete
    2. Just basing it on historical returns:
      http://charts.stocktwits.com/production/original_38545070.jpg?1434747134

      It also outperforms during rough patches, in case we get into one.

      Plus, it pays a nice dividend.

      Delete
    3. Sorry, for clarification, that link above shows the returns for WMT over the past 20 years after the weekly RSI reading drops below 35. As you can see, every instance resulted in positive returns 3 months out and had an average gain of 18.7% within 6 months.

      Plus, the valuation is on the lower end of the range over the past 10 years. In a market that has less and less cheap stocks, it makes WMT even cheaper. And I'd argue that Wal-mart has a pretty wide moat business, worthy of at least a market multiple.

      Delete
  13. Bought a Canadian small cap:

    HMM.A - Seems to be being pushed down as Q1 earnings were weak, but this was due to an US$ exchange loss and will help the company to be more competitive going forward. Selling seems to be done now and starting to rise back up. Been profitable every year since 2006, p/b under 0.6 p/e under 7, low debt. Don;t have regular dividend but have done at least $0.02 each of the last 4 years as a special dividend.

    I also like this because it is in Canada and leveraged to the US economy, can buy with CDN $ and get CDN dividends

    “Hammond Manufacturing Company Limited manufactures electronic and electrical enclosures, outlet strips and electronic transformers that are used by manufacturers of a wide range of electronic and electrical products. Products are sold both to OEM-direct and through a global network of distributors and agents.”

    ReplyDelete
  14. Contra the Heard guy bought AEG last Dec. I'm still holding. From the Globe:

    We occasionally get asked for our opinion on Canadian life insurance companies such as Manulife Financial Corp., Sun Life Financial Inc. and Great-West Lifeco Inc. After all, these are very well established brands with solid earnings power and decent dividend yields. The industry has recovered nicely from the financial crisis and is enjoying the tailwinds from rising equity markets and all those baby boomers topping up their retirement nest eggs.

    The problem for contrarian investors is that although none of these are as expensive as they were in 2007, they are not cheap either. Instead, we looked further afield for a candidate in this sector with deeper value credentials. Last December, we settled on Amsterdam-based Aegon NV by purchasing the American depositary receipts (ADRs) at $7.64-$7.76 (U.S.).

    The Dutch insurance giant posted pretty good numbers in 2014. Revenue was up 20 per cent to €8.8-billion ($12.2-billion (Canadian)) and net income rose 38 per cent to €1.2-billion. The main engine of growth was their retirement products, which now boast 9.4 million customers. Aegon scrapped their dividend when they accepted a government bailout during the financial crisis, but with those funds repaid in full, shareholders received 23 euro cents per share last year.

    In euro terms, the stock is up 4 per cent year to date in Amsterdam, but that translates to a slight loss for the ADRs in New York. The euro has been in a long downtrend against the U.S. dollar and the latest episode of the Greek saga has driven the currency to 10-year lows.

    In theory, Aegon should be shielded from the weak euro as the majority of its earnings come from its U.S. Transamerica subsidiary. Unfortunately, that division experienced higher claims than normal in the first quarter, holding net income down to €316-million ($441-million). Sales continued to be very strong, up 32 per cent over the corresponding quarter last year.

    So why is the stock price mired at less than half book value, far below industry peers? Partly this can be blamed on the possibility of a Greek default. Though the company has very little direct exposure to the country, there are fears that a “Grexit” could destabilize an EU economy that is already less than robust. Meanwhile, restructuring has made for erratic results, with a series of large strategic moves including the recent sale of its Canadian operations to Wilton Re for $600-million (Canadian).

    The other culprit here is a new regulatory regime called Solvency II, scheduled to take effect at the end of the year. This is somewhat similar to the Basel accords governing banks, which have tightened rules on capital requirements, governance and risk management.

    However, there is also an important difference between these regulatory regimes. Basel III, which is currently slated for implementation in March, 2019, is a global effort, while Solvency II is limited to European firms. This is a major headache for corporations like Aegon that derive the lion’s share of their revenue outside of the continent. Transamerica has to compete in a crowded field of American insurers that are not held to the same standards that Solvency II entails.

    Stronger regulations are expensive and technically difficult to implement, but in our view reforms to reduce leverage and limit systemic risk are ultimately good for both consumers and the enterprises that provide financial services. True, holding large capital reserves in an era of low interest rates reduces profits, but eventually this cycle will end and insurers will earn more from their non-equity holdings. We also reckon that the euro will not stay low forever. Along with our investment in French telecom operator Orange SA, AEG provides a welcome European contribution to portfolio diversification.

    ReplyDelete
  15. Re BXE, the 2nd post here contains a spreadsheet which shows BXE substantially undervalued on several ways of measuring. You can disagree with the production growth or future commodity prices, but worth a look through:

    http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/bxe-bellatrix-explorations/msg225701/#msg225701

    ReplyDelete
  16. TOF,

    sure is an interesting chart in WMT. Tried going back through the news to see why it bounced from October, then fell so hard from January, but doesn't seem to be earnings related or anything on the SEC site. When I look at the monthly chart, I can't see any other time it has fallen for as many months in a row.

    I may join you in this one. It is at 2 year lows and, even though the expected growth isn't as strong as it used to be, the fundamentals are still very good as is the dividend. Makes sense as a place to bounce.

    ReplyDelete
    Replies
    1. I'm not sure why it dropped so hard or went up so fast. I think the going up part was more of a technical thing than anything else. The stock is at the lower range of its valuation over the past 10 years and technically its quite beaten down. If the market does roll over, which I think is highly likely given what I see as excessive risk with biotechs, then WMT should be a nice place for safety.

      Delete
  17. WMT- Is wanting 67.50 too much?

    ReplyDelete
  18. EXAS - Cologuard - Radio advert on now. This one could be impressive, assuming there's an IP moat?

    ReplyDelete
  19. Sold more ENOC today at $10.9 and $10.85. Down to 20% position. Added to BIS at $26.8. Praying for a miracle on PBMD :)

    ReplyDelete
  20. I sold my BIS at $27.1 and am hoping to buy back in the mid $26's. Just trading this as I expect to have a position on regardless

    ReplyDelete
  21. Cashed in all of my ENOC and PBMD today...moved it all into WMT.

    ReplyDelete
  22. Started buying back into BIS again. $26.8x. Trying to figure out what ratio of BIS to WMT I should have. I really like these trades heading into the 2nd half of the year.

    ReplyDelete
    Replies
    1. Some interesting stats:

      Biotechs are up 5.4x since 12/31/2008; up 6.2x since 3/9/9
      Biotechs were up 31.4% in 2012, +65.5% in 2013, +33.6% in 2014, +26.4% so far in 2015. In total they are up 267% since 12/31/2011.

      Delete
  23. 71 million square feet of DC Capitol area office space is empty.

    ReplyDelete
    Replies
    1. Yet they continue to build large complexes out near the NRO in Chantilly ... all very interesting
      https://www.google.com/maps/place/Chantilly,+VA/@38.877729,-77.4552085,1318m/data=!3m1!1e3!4m2!3m1!1s0x89b6415619677219:0x4041f0fc4316ad83!6m1!1e1

      Delete
  24. Pope Francis has left me totally confused, am I supposed to father as many more children as I can, or not?

    ReplyDelete
  25. Top Performers of entire market in past week:
    20 of top 40 are biotechs

    Top Performers of entire market in past month:
    23 of top 40 are biotechs

    The question is: when does it top?

    ReplyDelete
    Replies
    1. That is the hard part. If it is like the NASDAQ in 1999, it can go along a lot longer than you think.

      But i have to think it is close.

      Delete
  26. Still searching for a condo to rent in San Diego, but can't figure out the airbnb valuation. Homeaway, which is public, has probably 10 times more and trade at a quarter of the private valuation of airbnb.

    ReplyDelete
    Replies
    1. AWAY - So you're trading, renting maybe both? I like the way you think.

      Delete
  27. EYES - Gap up just closed. Not sure why I didn't sell for a reload....

    ReplyDelete
  28. WMT - Sorry but this action just seems silly. I have a feeling someone wants a big position and their broker is sacrificing their other customers to accommodate.

    ReplyDelete
  29. JONE - Seems like the big guy(s) are still there?

    ReplyDelete
  30. YANG - This looks like support...

    ReplyDelete
  31. I think WMT will turn as soon as this market starts trading down. It's pretty clear to me that the market is chasing the hot stocks like FEYE, DATA, CYBR, SHAK, AMBA, FIT, XON, HZNP, etc...and ignoring the value stocks. Take a look at the performance of the biggest stocks in the market through yesterday:

    http://charts.stocktwits.com/production/original_38652202.?1435066317

    ReplyDelete
  32. PSEC - Gap up closed - Today is gap close day.

    ReplyDelete
  33. CENX - Hit my $11.34 stink bid....

    ReplyDelete
    Replies
    1. It's a bet aluminum demand is increasing b/c autos need aluminum to reduce weight for MPGs.

      Delete
    2. And it seems to have trouble going further down, so it needs my assistance.

      Delete
  34. ANTM "A.M. Best Places Ratings of Anthem, Inc. and Its Subsidiaries Under Review with Negative Implications
    27 minutes agoBusiness Wire"

    ReplyDelete
  35. Started selling my position in BIS. It was way too large and got lucky with today's move. I still am eyeing a drop in the fall.

    Bought some Z at $90.9, FSLR at $51.5 and FIT at $35.7

    ReplyDelete
  36. Sold the rest of my BIS. Have to take the gains off the table.

    ReplyDelete
  37. The DJIA is currently off -150 points (-0.8%). EEM (Emerging Markets) -0.6%.

    (a) Closing HDGE @ 10.48 for a minor gain.
    (b) TLT closed down -0.6% yesterday, but up +0.9% today. Closing RYGBX (Rydex 1.2x Government Long Bond) end of day for a minor gain.
    (c) CHK (Chesapeake Energy) was closed this morning @ 11.91. Considering another play here @ 11.61.
    (d) Both gold and oil selling off despite a decline in the $USD.

    It's been tough (for me, at least) to game the markets lately.

    ReplyDelete
  38. WYNN - Cheaper by the day.... Bottomless pit?

    ReplyDelete
  39. Sold the FIT into the close and just added to FSLR. I think we could see another day or two of weakness but I'd rather be long heading into July/August with what I think are lower risk stocks and then try the BIS trade again if IBB can move up to $400 or so

    ReplyDelete
  40. Quote of the day.

    ChickenpookieJune 24, 2015 at 1:01 PM

    And it seems to have trouble going further down, so it needs my assistance.

    ReplyDelete
    Replies
    1. ENPH is coming to us bro...and Happy Birthday!

      Delete
    2. Thanks man!

      U like enph still? I still don't have a level of comfort with it

      Delete
  41. The only asset worth going long this morning is volatility. Opening VXX @ 17.22.

    ReplyDelete
  42. RUSL - Tomorrow might provide some relief as accumulation occurs in anticipation of the regularly scheduled Monday rally.

    ReplyDelete
  43. EYES- That's a lot of changes at the top.

    ReplyDelete
  44. CENX - Notice once my bid was filled, the price took on a parabolic slope.

    ReplyDelete
    Replies
    1. That does look like a cheap stock. Interesting one. I got burnt with AA earlier this year and have a bad taste in my mouth because of it

      Delete
    2. That taste is aluminum chloride maybe and very chalky. :) I dunno if it's cheap, me no good at determining that but sure is a scary huge short float, super size.

      EVBS - This one looks cheap to me, but I don't know the fate of microbanks, how can they compete when large banks stomp everything into the mud?

      Delete
    3. I've been keeping an eye on AA. The thing that concerns me is aluminum production in China still seems strong and you may have non-economic producers there who are pumping out the stuff, even if it doesn't make sense, as the government has other agendas (eg. jobs).

      Delete
    4. I think you're right BB, too early to get back in and these guys could really get pummeled, looks like. Expecting steel to react similarly.

      Delete
  45. I dunno if you guys know what's going on but I'm not happy with the red in my port AGAIN today, this sucks.

    ReplyDelete
  46. PSEC - If I thought they were gonna take this one back down, I would've kept more cash ready in preparation.

    ReplyDelete
  47. UNH - A good example of legislated success.

    ReplyDelete
  48. FCAU continues to sell well - may soon pass Toyota in US market share:

    http://seekingalpha.com/news/2600395-u-s-june-auto-sales-forecast-to-rise-over-6-percent

    The new Astin Martin was released yesterday too. Trying to find some reviews, but the specs for the car ar impressive. Marchionne sent this back to the engineers several times to get it right, so hopefully they did so and it is successful as some of the latest Jeep rollouts. Macchione continues to impress me and seems to be one of the unique guys in the car business who makes good things happen.

    ReplyDelete
    Replies
    1. I agree with the impressive turnaround, not sure why Macchione is pursuing merger other than it's some kind of negotiation tactic with municipalities? Assuming he's confident. Maybe FCA has better development tools than F or GM but GM doesn't seem to be as innovative.

      Delete
  49. USAP - Don't forget this one, might follow HAYN?

    ReplyDelete
  50. CENX - 1/2 off hit my stop so now it can do whatever.... I did my part.

    ReplyDelete
  51. Bought more Z here in the low $89’s. Bought some yesterday at $90.9. I think this setup is similar to the setup in LNKD last May/June.

    Back in May 2014, LNKD dropped 45% from closing high on 9/11/13 to closing low on 5/6/14. It had a small bounce over the next week, then gave back most of those gains, then rallied 91% to new highs within 9 months.

    I’m betting the same type trade occurs with Z, assuming it can hold recent closing lows of $85.7

    ReplyDelete
  52. GBX - Wow, also getting pummeled. Last one out turn off the lights.

    ReplyDelete
  53. OSK - Broken down, headed for the sewer as well. What breaks down next?

    ReplyDelete
  54. All I have to say is, good luck to banks if the rest of what I think I see is indicative.

    ReplyDelete
    Replies
    1. Why? The interest rate spread is increasing which drive better profits and the economy is improving which reduceds writeoffs. For the large banks, the legal overhang is almost over.

      If I was to pick 1 area for 2016, I would have time choosing between the banks and financials are European stocks.

      Delete
  55. I still have a tough time seeing a significant correction unfolding here, given the strength in housing and the strong jobs market. Would most likely be a sharp down move followed by a big rebound if anything happens. Would probably take a big external event to force a move down.

    ReplyDelete
    Replies
    1. There's a significant correction unfolding in my portfolio, not sure how to play the improving jobs market but whatever I'm doing isn't working, seems like.

      Delete
    2. The improving jobs market will drive increased consumer demand. The winners should be consumer discretionary as this, be definition, is what people buy when they have extra money. In my opinion, the easy ones here are travel, cars, restaurants, probably things like luxury goods, Starbucks, etc but I don't have enough knowledge there.

      Given how many of these have moved up already, I am holding these types of stocks but not adding currently. The next set of companies which should do well is the home building complex which includes the builders, Home Depot's, etc. as well as the banks which fund these. There should be huge pent up demand or homes and I think the best way to play these is through regional banks.

      Delete
  56. Here's an example of having a trading plan, certainly there were some traders prepared?: "Health Care Facilities: Positive SCOTUS ruling removes overhang
    June 25, 2015 11:53 AM ET"

    ReplyDelete
  57. BWEN - Okay, are we finally gonna see some wind installations or just a little spurt?

    ReplyDelete
  58. David Rosenberg with a good summary of the bull case:

    http://www.newsmax.com/Finance/StreetTalk/David-Rosenberg-Gluskin-Sheff-stocks-market/2015/06/23/id/651806/

    ReplyDelete
  59. OT

    Watch Robert Plant Refigure Led Zeppelin Songs at Bonnaroo

    http://www.rollingstone.com/music/news/watch-robert-plant-refigure-led-zeppelin-songs-at-bonnaroo-20150625

    I like the 2nd and 4th best. Glad the youth of today are getting these kinds of events. Yeah!!!

    ReplyDelete
  60. Current mix

    RJA
    BXMT
    AAPL seems like they may be hiding here
    FSLR
    ENOC last two today, read an article that solar just passed 1% penetration today going to 4% globally by 2020.

    http://dailyreckoning.com/solar-just-crossed-a-major-threshold-get-in-while-theres-still-time/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+dailyreckoning+%28The+Daily+Reckoning%29

    will see

    ReplyDelete
  61. http://www.marketwatch.com/story/stop-freaking-out-about-stocks-says-bubble-savant-2015-06-25?page=2

    ReplyDelete
  62. Reopening a small position in EXAS (Exact Sciences) @ 29.4x. The short squeeze is on, with an intraday high of 32.85.

    ReplyDelete
  63. Closing VXX @ 17.46 for a +1.4% gain. The asset itself is highly volatile (it attempts to track fear, an inherently turbulent emotion), and a difficult overnight hold.

    ReplyDelete
  64. GREK - Seems odd this gained, assuming Greece chooses default. Maybe there's a compromise in store.

    ReplyDelete
  65. I agree with BB on housing. The demographics for housing demand, coupled with really low supply being produced over the past almost 10 years now, is going to make for quite a prolonged housing boom in the US in my opinion. I could be wrong but lack of supply is a major support for the housing market and this (low supply) seems to be the case in most major markets.

    The most obvious beneficiary over the long term, to me, seems like it should be Z. I think the best comparisons are Rightmove in England and REA Group in Australia. Take a look at both of those:

    Rightmove TTM Sales: $261 Million; 14% growth; 20% annualized top line growth for past 5 years
    Market Cap: $5.2 Billion
    Price to sales: 19.90
    **Their p/s is prob high due to 57% net profit margins


    REA TTM Sales: $409 Million; 29% growth; 24% annualized top line growth for past 5 years
    Market Cap: $4.1 Billion
    Price to sales: 10.03
    **Net margins are 34.2%

    By comparison, Z's stats are:
    Market Cap: $5.3 Billion
    Projected 2015 Sales (includes Trulia): $670 Million; 45-50% growth; 100% annualized top line growth for past 5 years
    P/S: 7.9

    Zillow isn't profitable yet due to much higher advertising spending. They spent 51% of their revenues on advertising vs 9% at REA and an estimated 5% at Rightmove.

    If I look at the market sizes each company operates in:
    England had about 1 Million residential sales last year; 562,000 real estate agents
    Australia had about 350,000 annual sales last year; 70,000 real estate agents
    US had about 5 Million residential sales last year; 2,000,000 real estate agents

    So you're looking at a market that is about 14 times larger than Australia and 5 times larger than the UK. Granted, the Australian market is far different, with few agents and the commission structure being far different. But it is a good idea of how large the US market is...and in my opinion, the US market overall is set to grow substantially over time. Zillow hasn't Coupled with this is the trend toward mobile/internet so the biggest player should garner the largest amount of ad spending by brokers.

    ReplyDelete
    Replies
    1. Lumber, cement, plumbing fittings, dry wall, bank loans as well.

      Delete
  66. WRLD - A financial crack showing?
    CREE - Too much competition from Aisa, perhaps?
    MU - Oops.... F'in potato farmers....

    ReplyDelete
  67. ITB - Just noticed this broke out about a week ago. I guess I'm the only one to note that here.

    ReplyDelete
  68. Vehicle sharing services - What are the implications for the insurance industry, and the s/w applications development, etc.?

    AMT - Does anyone use these towers anymore? Seems to be moving up, maybe.

    ReplyDelete
  69. WAC - Wow, now that was quite a move. Does it still have legs?

    ReplyDelete
  70. FNMA - What's up with the GSE's, BB's have tightened on FNMA like a big move is coming?

    ReplyDelete
  71. MCHP - Another breakout pullback.

    ReplyDelete
  72. Gazprom is up 46% off the bottom, so where's the fear of Russian companies, eh?

    ReplyDelete
  73. BB CanadaJune 25, 2015 at 11:42 AM

    "The improving jobs market will drive increased consumer demand. The winners should be consumer discretionary as this, be definition, is what people buy when they have extra money.

    Given how many of these have moved up already, I am holding these types of stocks but not adding currently.

    Perhaps you're referring to the XLY but it's unclear. Clearly, companies like Home Depot, Disney, Amazon, McDonald’s, Starbucks, Nike and Ford earn huge amounts of their sales and profits in currencies other than the USD.

    The next set of companies which should do well is the home building complex which includes the builders, Home Depot's, etc. as well as the banks which fund these. There should be huge pent up demand or homes and I think the best way to play these is through regional banks."

    Oh, you mentioned Home Depot, the XLY consumer discretionary includes that, seems like?

    Regional banks is a broad term, they come in many flavors due to they're regional. For instance, inside the capitol beltway there's 71 million sq feet of unoccupied office space....... Meanwhile, construction is going gangbusters outside the beltway area. So which region, inside or outside?

    You have a real knack for being vague, wonder why that is?

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    1. Sorry CP, didn't think I was being vague. Just trying to provide some ideas to your comment "not sure how to play the improving jobs market but whatever I'm doing isn't working, seems like." Let me know if there's something more specific you are looking for.

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  74. TOF, re the housing market, I've read several reports over the years from good economists that show how the US business cycle is strongly correlated with the housing investment cycle. This is one of the things I keep thinking about as a reason why we cannot go back into recession anytime soon until the housing market gets rebuilt. Of course, the market cycle does not always line up with the business cycle, but I would also see any major market sell-off as a buying opportunity until this happens (maybe 10 years).

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  75. Replies
    1. All right. I'm in at 8.00.

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    2. If I can flip it at 8.20 Im out. Otherwise I'll hold.

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    3. ...and I'm out at 8.20.

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  76. Shares listed on the Shanghai Composite roiled overnight, dropping as much as -8.54% before closing down -7.4%. Hong Kong's Hang Seng lower by -1.78%.

    I think Emerging Markets are a buy here. Reopening VALE @ 6.1x. Reopening CAF (China 'A' Shares) @ 31.8x.

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  77. EXAS (Exact Sciences) off @ 30.21 for a one-day gain of +2.5%.

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  78. (a) Small position in RYWVX (Rydex 2x Emerging Markets) at the 1030 est window. I haven't a clue (from a sentiment perspective) whether Shanghai investors buy the dip on Monday or continue to take profits. Sizing down accordingly.

    (b) TLT (long bond) selling off hard, -0.9%. Another concern.

    (c) Miners slightly in the red. I would be a buyer into a sharp plunge.

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  79. Replies
    1. Are talks with Iran back on the table? Saudi Arabia doesn't seem to want Iran to have influence thus is supplying/supporting ISIS, SA is a US ally.

      SD got a big huge giant downgrade a few days ago, too.

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    2. Good thing we weren't buying from the great Leon Cooperman, eh?

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  80. 20 nuclear reactors planned for Saudi Arabia - True?
    Contract awarded for constructing 500 MW natural gas-fired simple cycle power plant north of San Diego, CA.

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  81. AKS - Wonder why my broker has a buy assigned, considering this company seems to be hemorrhaging cash?

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  82. QCOM - I don't understand why this company has sold off, unless maybe WIFI has hit a wall and some other standard is necessary?

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  83. Regional Banks - So, if the US oil industry is about to be beheaded, does it make sense to own a regional bank in the Huston or perhaps West Tx., area?

    Or let's say the US does cut the military budget (Effectively allowing ISIS to do the dirty work seems to be the trend), what happens to banks that serve in areas with high concentrations of military contractors?

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  84. 3 day weekend next week, short weeks are typically bullish.

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  85. Marijuana is federally illegal, law goes unenforced. Same sex marriage is a federally mandated right and the law will go strictly enforced?

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  86. FNMA - What would be the upside potential, assuming the housing market continues to improve?

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    1. I think it all comes down to what your opinion is of the government letting them run like a private business. Right now it's really cheap relative to earnings but they have a legal overhang with respect to common shareholders. There was a ton of dilution so the upside isn't as huge as some people think, but getting back to a $7 or so price seems feasible if the govt doesn't mess with common shareholders. That's the key and I honestly don't know enough about it to feel comfortable taking a position. Otherwise I would.

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    2. I'm pretty sure the government doesn't want to own this b/c it's too controversial and should go back to the way it was b/c it's still needed. First though, they have to suck out the gains for awhile so they can claim no taxpayer money was lost and they did the right thing.

      Supreme court upheld the AIG thing in favor of shareholders I think, right?

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  87. PCP - That was a rough week, man.... Sheesh guys, wuwt?

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  88. OVBC - Here's a bank in a place I don't recall laying my eyes on (Ohio), does it seem to be overpriced?

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  89. TOF - When do you take the kid saltwater fishing, or have you?

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    1. We actually went for the first time last week just off the coast. It was pretty sunny/hot and we didn't catch anything so I think my son thought it was boring. He's only 3 1/2 so he still has a pretty limited attention span. But we got to scale up and down a cliff which he really liked. I think I'm realizing I'm not a very good fisherman, though!

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    2. Boat fishing? We used to buy the ticket and take the boat out to a large barge sitting over some kind of structure ~1.5 to 2 miles out.

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  90. FYI - R now Z trades at a 7.67 p/s on CY estimates and 5.9x next years estimates. I’ve typically found that longer term winners in the internet/tech space (which I’m quite sure Z will be one) rarely trade below 8x sales. I've looked at dozens of winners in this sector and its pretty much the case across the board.

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  91. IBB is a buy right here if the 1987 analogy holds true. Right at the 20 Day EMA for a bounce / stabilization, then rally into July/August and then a big fall. Let's see how it holds here over the next few trading days.

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  92. BB - Are you still holding NAT? Just looked at that. Helluva run. Congrats if you are.

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  93. DAVE - "Dave's not here man", going up?

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  94. Interesting that IYT is up today.

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    1. ITB produced a lower low, might not mean much.

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  95. CBI - Heck of a short float.... gave up gains right away.

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  96. APD - Almost looks like someone knew something?

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  97. BABA - Came back.... That's surprising.

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  98. Shoot looks like my sell order for Z at $130 won't get filled today. Oh well, have a great weekend fellas

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  99. (a) I like the fact that EEM successfully tested 39.89. Doubling down on RYWVX at the close. Still a relatively modest position.
    (b) Reopening a position in RYGBX (Rydex 1.2x Government Long Bond) at the close. TLT printing a 114-handle, short-term oversold in my opinion.
    (c) Opening a small position in RYVIX (Rydex Energy Services) at the close. Nice 'tail' on today's candle for OIH.
    (d) Adding a small position in FXI (China 'H' Shares) @ 46.3x.
    (e) EXAS (Exact Sciences) trading back above 30.

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  100. CENX - Back to near where I bought, minus having puked half my position....

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  101. DDR - Large insider buy.
    NAV - Also a few days ago, insider bought...

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  102. TOF, sold NAT at about $13.70. Missed the last $1 up, but still made a good profit, so no complaints. Not super confident in the fundamentals, so hard to hold after such a fast run.

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  103. IMH - That was a lot of frickin' volume.

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  104. Google internet service?
    http://www.google.com/tisp/install.html

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    1. I don't see how it could be true, it makes no sense from a technical point of view.

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  105. BB - I meant to tell you. I have a good friend whose boss owns 2 condos in La Jolla (one 1 bedroom and one 2 bedroom) and rents them out. They're supposedly very nice. I asked him what he rents them out for and he said "The rates for a week in Nov would be $1320 for the 1 br and $1825 for the 2 br."

    Figured I'd pass it on if you're interested.

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    1. This is their location: https://www.google.com/maps/place/366+Forward+St,+La+Jolla,+CA+92037/@32.8206496,-117.2696858,15z/data=!4m2!3m1!1s0x80dc022ad079b3a1:0x5e5ced8fb51c4557

      I know the area well; I lived about 10 blocks south of there for 5 years. It's a really great location to just walk out, go window shopping, grab a coffee, eat at a restaurant. And you can rent bikes and go from there down to the boardwalk in Pacific Beach (PB) or go up to downtown La Jolla, both easy, low stress 10 minute bike rides

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  106. Looks like Greece is gonna default. I'm assuming we get our first 2% move of the year tomorrow

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