Tuesday, July 19, 2011
07/19/11 Night divides the day
Tried to run
Tried to hide
Break on through to the other side
Buy-and-hold wins this round. WFC, for instance- up +5.69%. Traders not already holding would not have caught this move.
Hulbert checks in with a contrarian take on CSCO:
http://www.marketwatch.com/video/asset/why-cisco-is-better-than-apple-value-vs-growth-2011-07-19/7962E125-E6C8-4907-8E10-031189952CD9?dist=afterbell#!7962E125-E6C8-4907-8E10-031189952CD9
AAPL hits new highs after hours.
I can't get too excited from my isolated perch- but I can hope for new highs by the end of the week.
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CSCO/AAPL - Good to hear someone like MH talking up CSCO as value growth. I still hold a position but not the original position which I sold for a loss after I bought in at $14.91 where I have a profit and intend to hold ad infinitum.
ReplyDelete2nd > For what it's worth I remember people trashing MCD back in 2003....same deal...the stock didn't do anything for 10 years and was down big from is recent highs a couple of years before. It's up 7 fold from then over 8 years, an annualized return of 28%. Also, the current dividend yield on MCD today equates to an almost 20% dividend on the shares bought in 2003. Granted MCD wasn't a $86 Billion company like CSCO is now, but it just goes to show how the masses get it wrong. My suspicion is a lot of these beaten big cap companies will reward patient investors getting in now.
ReplyDeleteSTEC was my best performer today. Broke it's down trend line (barely), and has a little dbl top here to deal with, but RSI has turned up and I still expect it to fill the gap.
ReplyDeleteDavid-
ReplyDeleteStill have all my MITK. I think I added about 4K shares when you were gone. 24,316 shares.
Opened STEC in two lots, 4K shares total, basis is 17.49
Opened SSO in 2 lots 1,200 shares total,basis is 51.90.
Opened GMO on the news, 6K shares at 4.32.
Rest is in cashola.
That's it! Not too exciting is it? :(
It is exciting since I only hold 500 shares of MITK. Not a big gambler but did trade it a couple of rounds for a profit. Now holding long term on the measly position at $6.02. One of my smaller positions.
ReplyDeleteTHE PLAN - How S**t Happens:
ReplyDeleteIn the beginning, there was the Plan. And then came the Assumptions. And the Assumptions were without form, And the Plan was without substance. And darkness was upon the face of the Workers. And they spoke among themselves, saying, “It is a crock of shit and it stinketh.”
And the Workers went into their Supervisors and said, “It is a pail of dung and none may abide the odor thereof.” And the Supervisors went unto their Managers, saying, “It is a container of excrement and it is very strong, such that none may abide by it.”
And the Managers went unto their Directors, saying, “It is a vessel of fertilizer and none may abide it’s strength.” And the Directors spoke amongst themselves, saying one to another, “It contains that which aids plant growth and it is very strong.”
And the Directors went unto the Vice President, saying, “It promotes growth and it is very powerful.” And the Vice Presidents went unto the President, saying, “This new Plan will actively promote the growth and vigor of the company with powerful effects.”
And the President looked upon the Plan and saw that it was good. And the Plan became Policy. This is how S**t Happens.
some excellent earnings this a.m., esp in tech with UTX and EMC coming in strong. the round number on the ES (30) may cause a bit of a pause but then we could have a shot at 50.
ReplyDeletestill 67% long, 80% cash in my trading account (still holding TRX, USMO, XHB and MITK)
RVBD in play. Working on it.
ReplyDeleteUSG - Housing recovery - We mentioned lumber as a potential issue, how about drywall as well?
ReplyDeleteI had played USG a couple years ago on an earlier housing rebound, a quick glance and it appears their ttm earnings remain negative.
CP > I've followed USG casually for a while now but I can't get the past that they rarely post profits. I think they're are better longer term plays. FAS comes to mind.
ReplyDeleteby the way, if you guys want earnings plays, take a look at CAKE and PENN. Both should do well.
Selling UTX.
ReplyDeleteOn the other hand, buying RVBD at the open.
ReplyDeleteMark, do I understand you do not hold BEXP anymore? Why?
ReplyDeleteWFC, baby. This is the kind of move that's just impossible to predict- the kind of move that buy-and-hold seeks to capture.
ReplyDeleteThis is either one nasty shake down, or we sell off hear.
ReplyDeleteIllini- Yeah, no position right now. :(
ReplyDeleteJust traded it a little too tight and am waiting on a pull back to enter. The HK news came when I was out.
Mark- What are you referring to?
ReplyDeleteSomeone just bought 30K shares of MITK at the ask here. 8.98.
ReplyDeleteMITK - Some good volume going into this one now and it moved above $9.
ReplyDelete2nd- BEXP.
ReplyDeleteExisting home sales weak...however, I see banking stocks rising on the back of this and housing stocks flat. I think the market is anticipating better news from the housing sector soon. If this is true then FAS could be a huge gainer for the rest of the year.
ReplyDeleteSVM - Back in at $10.98, willing and able to add.
ReplyDeleteCOF- Nice little bounce of a dbl btm.
ReplyDeleteillini - Mark sold BEXP too soon, not for any other reason except for being too cute with his trading. It happens! ;)
ReplyDeleteAnyway, there's an open gap up from $28.07 on June 28th, perhaps he intended to repurchase there? I'm not so sure that gap will fill...
Which is why I rebought SVM BTW, the remaining gaps up may not fill either?
Same deal with C.
ReplyDeleteBAC - Roaring back to life?
ReplyDeleteNice touch with SVM cutie.
ReplyDeleteThe news on existing home sales is not good.
ReplyDelete"The news on existing home sales is not good."
ReplyDeleteAnd I think it's not gonna get better before it gets a bit worse, unfortunately.
At some point, the vandalized vacant properties are gonna get dozed, and others fixed back up, which is why I had been into USG. Yeah, a bit early, LOL!
Anyone playing the Zillow or Skullcandy IPOs?
ReplyDeleteSRS - Will that thing ever turn green on disappointing housing data?
ReplyDeleteI guess someone's throwing a lot of money at the banks to cover their real estate losses, else they'd be sunk.
With all this wealth being handed to them, you'd think the banks would now belong to the people.
2nd- Not me!
ReplyDeleteLater players.
"And I think it's not gonna get better before it gets a bit worse, unfortunately."
ReplyDeleteI'll take my cue from housing and banks stocks...it is crazy how stocks move so much before news confirms the move.
Speaking of moves...MITK. Wow. After selling my shares because of "other opportunities" I'm not falling behind pretty badly...I think I'm 7% behind where I would be with my MITK...arghhh
2nd - I have no idea what Skullcandy is...Zillow I would consider at a good valuation. I love their site.
ReplyDeleteTC - Back above $10
ReplyDeleteShale Oil - Domestic oil production has been declining for years but the prospects are looking up now with the shale fields in S.D/Montana and Texas. Smaller companies got into it first and have the best acreage at low prices. There are so many of them it is hard to choose. BEXP is one but they do have a lot of debt. Shale gas is there too but too much gas is being produced for now. You will never be able to say that for domestic oil.
ReplyDeleteGMO - Wonder how today's meeting will go?
ReplyDelete"Meeting Dates: The Board of County Commissioners meet the 6th and 20th of the month unless those dates fall on a weekend or a holiday. Meeting schedules are listed below."
"NOTICE IS HEREBY GIVEN that the Board of Eureka County Commissioners will meet pursuant to law on July 20, 2011, at 9:30 a.m. in the Commissioners’ meeting room at the County Courthouse located at 10 South Main Street, Eureka, Nevada."
MITK - That one has definitely been a great play, I couldn't quite get my arms around the attraction of the concept, best I can tell this is for business owners.
ReplyDeleteReal estate - I wouldn't bet against it even though I think it's still got some major head winds. There are just a few factors that if resolved, could really breath life into that sector.
They can get the job but can they do the job?
GMO - More info on the Environmental Impact Statement process, and the responsibilities assigned federal agencies involving the process of generating a Record Of Decision:
ReplyDeletehttp://ceq.hss.doe.gov/nepa/Citizens_Guide_Dec07.pdf
MITK, great call, TOF, you are absolutely the best trader on this blog.
ReplyDeleteI thought I'd share this with you guys as I think we can all learn from it.
http://www.marketfolly.com/2011/07/east-coast-asset-management-sees.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarketFolly+%28Market+Folly%29
GMO - Specifically, Eureka County commissioners are scheduled to discuss the Mt. Hope project at 10:25 hours, according to the meeting agenda:
ReplyDelete"5. Discuss, approve, or deny whether to pursue the water protest, and provide direction to staff, after reviewing the answer filed by Ruby Hill Ranch, LLC. (Action)"
http://www.co.eureka.nv.us/comish/agendas/07-20-11%20Commissioner%20Agenda.pdf
T3d - Heightened period of inflation = rise in all asset prices, including real estate. Any whiff of a turnaround in housing prices will crush shorts in financials. It's so obvious that financials are bad and good shorts that they're not.
ReplyDeleteCopper - $DJUBSHG Looks red to me, due to some pressure in housing?
ReplyDeleteSRS - Remains red as well, LOL
TOF, I think your going to be right about fina's. There is no way the system will let the main one's go and if they do we imploded.
ReplyDeleteScarmucci was saying that an old timer said to just buy GS at 1x book and sell at 2x book and you will make a fortune over your life. I do not know if GS is the same GS of folklore, but its currently at .92 book.
USB breaks 200 dma
WFC 200 dma right above
FAS, I'll leave that for you young guys.
GS long day befor earnings (don't usually do this) will add more today and maybe some GMO too.
Brave Warrior Holdings:
ReplyDeleteVRX Valeant Pharmaceuticals International Inc.
AON AON Corp.
JW.A John Wiley & Sons Inc. Cl A
MA MasterCard Cl A
ACGL Arch Capital Group Ltd.
HPQ HewlettPackard Co.
FISV Fiserv Inc.
CMCSK Comcast Corp. Special
LH Laboratory Corp. of America Holdings
RYAAY Ryanair Holdings plc
USB U.S. Bancorp
GOOG Google Inc.
BR Broadridge Financial Solutions
Boy, if RBY breaks below this congestion area, it good get ugly.
t3d > it's a sentiment thing man...all of these companies that are trading below tangible book values...you know that at some point they will be back to well above book values. it's how the business cycle works and how sentiment works. just like my post last night about MCD...people sold that thing off for 10 years and when the sentiment got so bad it was just an amazing buying opportunity. think about it. if you bought $100k worth in 2003 at $12 per share, you would be looking at $700k in stock and dividends of $20k per year. that's insane.
ReplyDelete2nd will be right with his picks in CSCO, WFC, etc over time. no doubt about it. can they go lower? absolutely. sentiment is a funny thing. people say to just wait for sentiment to change but it takes a rare breed to be able to wait that long, recognize the turn, and avoid the trap of thinking they can go lower when it does turn.
CAKE down nicely before earnings...short interest is high, YUM and CMG disappointed earnings. I say they beat. As such I bought a whopping 3 x $33 August Calls at $1.15 just to see if my theory holds up. If I'm wrong I lose a whopping $150 or so.
ReplyDeleteCOOL > I played their Parking Wars II game on Facebook...man talk about a lame game. I was expecting a lot more from them than that. The game on A&E's website is far more entertaining than the one they made.
ReplyDeleteMark, congratulations on your large MITK position! It is rocking! I only have 1K shares at the cost of $5.90, but it is still nice to see it bring me a few K already... Great pick, TOF!
ReplyDeleteT3d -- I see your point regarding ECUXF. I do have to clarify, however, that ECU is not getting bought it. It decided to *merge* with AUMN so as to access their $100M in cash. In their March statement to shareholders ECU mentioned that it was looking at potential mergers to speed up its production, and I think it found a great deal here. It is merging with a company of the same market cap, which still leaves a lot of upside for the shares of the combined company and greatly reduces the chance of ECU being bought out by a large senior producer (which would have significantly reduced the upside leverage to rising gold/silver prices).
ReplyDeleteThe merger plan specifically mentions that this cash will be used to speed up production at the Velardena property of ECU. Also, it will be used to pay off the $15M debt ECU has. So we can look at this merger as ECU obtaining a $100M cash financing and some great exploration properties in Argentina (El Quevar) that are nearing production in exchange for a 50% dilution of its stock.
However, ECU did decide to change its name as a result of this merger, and so if the "ECU-centric" point of view I described above does not seem fully convincing to you, then let me propose a "toned down" bet: if the merger goes through but AUMN fails to reach $45 before the end of 2012, then I send you a bottle of Nadurra; but if it does reach $45, then we are "even" and we don't own anything to each other. How does that sound?
I see that GMO is making a new one-week high, but it's Sept. $5 calls are not moving. Maybe their price rose in advance of today's events... In any case, I decided to lower my limit to $0.3 for the 10 September $5 I wanted to sell, and the order got executed. So I will either lower the cost basis for the 1K shares I picked up during the July OpEx to $4.50 or will sell at $5.30 the 1K shares I purchased at $4.80, giving me a $500 gain, which is also OK.
ReplyDeleteBoy this market is trading almost identically to the market back in mid 1999. Take a look at the parallel. If the parallel holds we're looking for a big drop down to 1,230 which would market a low for the year.
ReplyDeleteI will be on guard if we stall out here for a few days. I would have to think that we need 3 days of sideways movement. The down trendline from the April 30 closing high through May 31st highs is still intact. If we do get a sideways move I would just use a break below the lows of the sideways move as a call to action point (i.e, stop out of longs and/or get shorty).
ReplyDeleteIf we trend higher then this parallel is done. So if we get over and close over 1,330 ES then I think this is done.
ReplyDeleteHey David, I have to say, I like your style and always enjoy your logic.
ReplyDeleteJust to let you know my thinking, we made a bet on an x chromosome. X decided that they could not build out the mine on their own and would have to give up to much of the company for the money. X agreed to a merger with a Y chromosome for a price of .92 per share. The outcome of this is that x and y are now xy and both will cease to exist in their current form and have morphed into something else.
Anyway that’s how I think, I know I’m weird.
But as I said, I like your style. In truth if I won, big if, I always intended to have you meet with the guys and gals over there at a BYOB place and have a drink on T3D with my Nadurra winnings. I was just worried with a crowd like this who was going to be the designated driver.
So my counter offer is this, let’s call it a draw.
Now, what I’m I going to do with that bottle of Nadurra I have here?
I finally got a chance to talk to someone from AUMN today (by luck, I got a hold of an Executive VP), who explained the AUMN plan for expanding production at ECU's Velardena property. He said that they plan to use their $100M to build a new sulphide plant at Velardena with a total throughput of 2000 tpd and a total annual production of around 10M AgEqOz. They can have the new sulphide plant working in 3 years from now.
ReplyDeleteI like this plan. ECU does not have the cash and hence did not plan to build any new mills at the Velardena property, and the AUMN EVP confirmed that only with their help will such a plant be built. 10M AgEqOz production per year at Velardena with a profit margin of $30/oz should result in an annual profit of $300M, which is 1/2 of the market cap of the merged company. Slap on a P/E of 40 onto that (which is a conservative P/E for small mining companies that keep growing their production) and there is an amazing potential for the share price.
After they get the Velardena production to 2000 tpd, AUMN plans to build a mine at their own El Quevar property and produce about 5M AgEqOz annually (this fact will ensure a high P/E for the company when only the Velardena property will be producing).
So I think ECU is getting a great deal in this merger -- a large capital infusion and a large potential increase in production in exchange for only a 50% dilution of the stock! I am definitely voting for this merger now.
T3d -- OK, let's call it a draw. :) If AUMN rises to $45 before the end of 2012, then we'll raise a toast to your good health and investment success during the next meeting of the TT traders.
ReplyDeleteDavid - "Slap on a P/E of 40 onto that (which is a conservative P/E for small mining companies that keep growing their production)"
ReplyDeleteI'm not challenging this, but do you happen to have any examples of this?
CP -- have you seen P/E of your favorite GPL? 45!
ReplyDeleteFVI.TO -- P/E of 53...
SVM -- P/E of 30.
So let's say the average P/E is 40. :)
So are equities underpriced?
ReplyDelete"Schiff points out that the DOW is lower today priced in gold than it was in the March 2009 lows near 6,500"...
Wonder which way this goes, more of the same? Some time after the 2008 bottom I switched from PM's to equities when I perceived equities were pulling away from PM's, I guess that correlation changed at some point while I was preoccupied with CADC and GMO.
David - Fair enough, I suppose it depends on where your P/E data comes from.
ReplyDeleteFinviz reports GPL's P/E as 28ttm, and I think their earnings have grown over the period, so in opposition to conventional wisdom but in anticipation of a continued trend, would anticipate an even lower quarterly P/E (15, maybe?).
http://www.finviz.com/quote.ashx?t=gpl&ty=c&ta=1&p=d
Perhaps your P/E figure is based on earnings average over a longer period?
Okay, maybe I need to look into this a bit closer and not trust Finviz data quite so much...
GPL - Okay, my broker reports their earnings as -0.27, with a P/E of 0.0 and it appears they don't cover this company well if at all, so I'd have to conclude the Finviz data is somewhat more reliable than that from my broker.
ReplyDeleteSVM - There's a little more data here, my broker reports the P/E as 27.45, 25.9ttm, which is reasonably close to Finviz' report of P/E of 28. It also reports the 2011 P/E as 33.8, and comments on SVM's P/E as among the highest in the industry. Hmm...
ReplyDeleteNot sure which of these is most accurate, Finviz's or my broker's, but they're somewhere in someone's ballpark in a neighborhood theater, LOL.
SVM - Then, my broker goes on to report the fundamentals, one of which compares SVM to the industry, where the P/Ettm metric is Price/Earnings (TTM) 25.9x vs industry average of 29.3x
ReplyDeleteBAC - Okay, so I'm looking at this chart expecting to see a huge earnings gap down b/c after all, they were just hit with multi-billions of charges, approx 1/10 of market cap, so I thought maybe it would look something like one of CSCO's post earnings gaps, but no, it's just been a slow and steady bleed, almost daily, haircut for shareholders. They could've held SRS and done as well.
ReplyDeleteI recall last time BAC was under $10, it seemed to take an eternity for it to break up through that level as I patiently waited.
PRU - Looking over this chart, $58 seems like a logical target...
ReplyDeletePRU - Then again, the 200SMA has held three times before, so maybe it will again this time?
ReplyDeleteKCLI - My broker reports this P/E as 0.0, LOL, I know that's not the case.
ReplyDeletehttp://www.reuters.com/article/2011/07/20/foreclosure-banks-immunity-idUSL3E7IK4EN20110720
ReplyDeleteThis could be a major benefit to banks if only in being a major sentiment changer. If sentiment changes people will realize that banks traded at below tangible book value (not just book value but tangible book value) is ridiculous. That's the equivalent of someone looking at your cash and your debts, taking the net and willing to buy you for less than the net. Just silliness.