Monday, September 19, 2011
09/19/11 With A Little Help From Our Friends
What would you think if I sang out of tune
Would you stand up and walk out on me
Lend me your ears and I'll sing you a song
And I'll try not to sing out of key
Italy downgraded. The usual suspects empty their magazines at the creaking door. What do I see when I turn off the noise- we'll get by with a little help from these friends.
The market plays like Garcia- it solos seemingly off key before resolving into high-decibel block chords. The bulls rocked today, and they'll rock again tomorrow.
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NFLX - I remember an article in IBD about 10 years ago. Said NFLX business model was "flawed". Completely panned Netflix. What a classic, how do you say in French, "faux pas".
ReplyDeleteEuro - It's not only Greece. Kyle Bass recently said the problems will be felt severely in 2012 and there will be a recession. He is a smart guy, IMHO, who manages $1 large in his hedge fund and even has polled the Germans who overwhelmingly were against supporting the PIIGS. Kyle was 90% short SPY as of 30 June with the rest mostly long in special situations such as possible leveraged buyouts.
What did Muddy Waters do to Orient Paper, and how?
ReplyDeletehttp://www.thestreet.com/story/10797742/1/orient-paper-story-behind-fraud-report.html
CP- I don't get it. That article was from the first of July. The stock is down 50% since then. I get the gist of the article, but are you thinking no one has been able to get this one right?
ReplyDeleteA major long term top is in for gold imo. There is a ton of money that should flow out of that asset class. It has started flowing into the dollar in a big way. Here's the big question: Is it possible for money to flow both into the dollar and into equities concurrently since they are inversely correlated? We'll find out very soon.
ReplyDeletePerhaps initial money flow into the dollar, stalled markets, then dollars trickling into stocks as risk is taken off?
Gotta say that my timing on getting ultra bullish on NFLX was impeccable. Down ANOTHER 2.55 after hours. Geez. On a positive note, the slide is so steep, it could see an oversold 25% bounce to 180 or so.
ReplyDeleteWhat do the Chinese know?
ReplyDeletehttp://www.reuters.com/article/2011/09/20/idUSB9E7K102K20110920
Mark, that article about ONP is from July 1 *2010*. I wonder if those folks from Muddy Water are still short that stock. It is amazing, though, how hard this stock was hit. We are witnessing a "once in a generation" decimation of the whole small cap sector in a country. Check out "key statistics" for ONP at Yahoo -- forward P/E of 2.14, even lower than 2.41 for CADC!
ReplyDeleteThis 5 minute market video is right out of 2nd's playbook. Good tunes as well:)
ReplyDeletehttp://chart.ly/ie7m89q
I just read through the corporate presentation for ONP and I actually like their growth potential. I believe at some point all the short sellers of Chinese small caps will "flip the pancake" and go long these stocks, and the stocks will enjoy the same growth phase as they had in 2H 2009 (ONP grew by ... 50 times between March 2009 until the end of 2009).
ReplyDeleteToday's announcement by their CEO that he is planning to buy $400K worth of their stock in the open market is a further proof of how undervalued the stock is right now.
I just placed a buy stop limit order at 3/3.03 for 1000 shares of ONP.
ReplyDeleteProbably the best Seeking Alpha article and follow-up dialogue I've ever read.
ReplyDeletehttp://seekingalpha.com/article/281509-why-frontline-s-a-10-bagger?source=kizur
I will re-enter TLT puts when TLT drops below the most recent low at $111.43, or when it establishes yet another higher low and then later on violates that higher low.
ReplyDeleteWatching these overnight futures is total insanity. Dow down to 11,225. CAC 40 just opened at 2910 and within minutes is close to 2970.
ReplyDeleteCraziness. I don't remember a time when overnight futures have been so unstable and volatile for such an extended period.
If this holds, what is it now, 5 or 6 -200 point overnight reversals in the past couple of weeks?
ReplyDeleteThat's about as bullish as it gets folks. Have you guys read yahoo message boards recently? Things are not just universally bearish, but downright apocalyptic in every sense- politics, market, race etc.
If we are not going down and in fact going up on this bad news, wait till we get some good news.
ReplyDeleteVery few warnings this month, so earnings will almost certainly be good (again) and sentiment is very negative (see blogger survey http://tickersense.typepad.com/ticker_sense/).
Hard to imagine would could be worse than people are thinking now which would be needed to drive the market down further.
Also, if the market does start to turn, I think the trashed small caps will outperform and the large dividend stocks that everyone has been hiding in will underperform.
We r going higher simple as that...I can say that now that im fully invested...ha
ReplyDeleteTZOO posters saying they are ramping deals to juice earnings.
ReplyDelete"checked a few days ago the number of outstanding local deals was 193 thought it would go down but now they upped it to 226!!!! considering the average last quarter per week was 61 this is a huge step up. hopefully this continues."
Picked some up pre-market 32.85
Sold FRO on opening spike.
ReplyDeleteHolding tiny amount of TZOO.
Semis red for the day. Not a good omen. Heading to bed...
Man, DB comes out and starts just about every energy play as a hold.
ReplyDeleteMight get some interesting pricing today in GMO through MCP.
ReplyDeleteJesse im merely trading too with 2% but just think like the shorts...u holding thru earnings with potential for big short covering pop on a beat? I say hell no...that's why we see 40 again soon
ReplyDeleteTzoo that is these droids piss me off with their spell check
ReplyDeleteRocket.
ReplyDeleteThis is from the Front Page of MarketWatch:
ReplyDelete'Stocks waver as investors mull potential Federal Reverse moves and Europe’s debt troubles.'
No spell checkers there either.
I hope today's up move is based on the fact that Europe seems to be coming close to and end of their financial troubles and not because people are expecting something spectacular from Bernanke.
ReplyDeletehttp://www.marketwatch.com/story/30-of-netflix-users-consider-leaving-study-2011-09-20?siteid=yhoof2
ReplyDeleteJust buy it already guys. This is the next big American brand that will make you wealthy.
To follow up on this...this whole fiasco going on at NFLX has absolutely nothing to do with their strategy and what not...it has EVERYTHING to do with Redbox. They saw the writing on the wall with how Redbox was killing them and decided to use it as an excuse to split up the business and use the confusion to hide the real reason why the company is going down.
ReplyDeleteAlso, when Redbox does add a streaming service, I guarantee that people will be using Netflix less and less. The convenience that these kiosks offers people is a HUGE competitive advantage. Plus, their pricing strategy with no strings attached is just a no brainer.
Give me the ability to rent movies for $1 a night and also have the option to stream movies...why would I use NFLX at all? Redbox has already announced that it would be offering a streaming service by the end of the year.
Last post on CSTR I swear:
ReplyDeleteIn my opinion it doesn't even matter if Redbox offers a streaming option because I think the switch to streaming will take YEARS. In the meantime, Redbox will grow from 20% market share to 60% market share of the $6.5 to $7 Billion per year DVD rental market.
They generated $160 Million in Free Cash Flow over the past 12 months. They're trading at 9 times that cash flow. When they have finished growing the number of kiosks they have and they have a 60% market share of the DVD rental business they will be generating $600 Million a year in free cash flow (due to increase in market share and reduction in capex) and the stock will be trading at 3 to 4 times its current price. In 2 to 3 years they will have generated 3/4 of their market cap in cash.
I think a lot of people are missing the story on this company. It's a cash cow and growing tremendously fast. The NFLX debacle is clouding people's opinion of the company.
These small Chinese small caps are totally manipulated even intraday. Have you seen the morning spike up to $3.00 in ONP? That was my buy stop order getting hit.
ReplyDeleteI am not upset though. I intend to hold it until it gets to $10 at least. I hope ONP goes down to $2.50, 'cause in that case I'll sell a bunch of $2.50 puts on it for $0.75, so as to add more shares under $2 to my today's purchase.
I think a diversified portfolio of oversold Chinese small caps will do very well over the next couple of years.
Check out, guys, how well TLT is holding up! Nobody wants to sell TLT before tomorrow's Fed meeting. Thus, we may have an ultimate "sell the news" event tomorrow. I'll be watching TLT in real time tomorrow at 11:15 and will buy lots of puts on it, once again, the second it starts tanking.
ReplyDeleteI sold my TZOO at $31.7 and bought CSTR on the dip at $45.01.
ReplyDeleteI sold my CVV as well and bought CSTR at $45.6
ReplyDeleteWorking on TZOO. You guys see anything?
ReplyDeleteLots of ugly reversals today. How is this market holding up?
ReplyDeletewhoa that sucker collapsed. was pissed i sold at a small loss but glad i got out when i did.
ReplyDeletei see a lot of high flier momo stocks getting hit hard. the rotation to larger cap companies continues. i like OPEN a lot...at $35ish.
X/ANR/FCX/PCX are telling us something.
ReplyDeletefor what it's worth the Italy CDS spreads are crossing into the uncontainable category:
ReplyDeletehttp://www.cnbc.com/id/38451750
France ain't that far behind were Italy was when I began tracking it just 2 months ago.
Man, RAS is getting killed also.
ReplyDeleteMark - I noticed a lot of those mortgage reits taking a hit. I wonder if anything came of the SEC proposed changes to their structure, which hit them a couple of weeks ago. i don't know the details..
ReplyDeleteTZOO- Take a look what happened that last 3 times TZOO cracked it's lower BB.
ReplyDeleteSee I told you we were going higher. i forgot to mention we would also go lower.
ReplyDeletequite frankly i'm shocked that CSTR is down today, but i guess people are just selling and refusing to pay attention to their growth.
i was thinking more about the whole movie streaming thing...is it really easier? i mean, how freaking hard is it to walk down the street, pick out a movie, then pop it into a dvd player? and aren't there issues with the streaming thing not always showing a fluid picture (i.e, "catching" every once in a while)?
I just spoke with an investor rep from GMO and he said that in a few weeks they should finalize the 3M plan with the county and submit it to the state engineer for approval.
ReplyDeleteThe county, however, said that they will drop their appeal of water rights if GMO *both* agrees with them on the 3M plan AND reaches agreements with several farmers. The farmers, however, seem to be dead set on getting rich and are asking GMO to buy their farms for millions of dollars. So investor rep said they will most likely NOT reach agreement with those farmers. At that point, the county might set a court date for hearing their appeal and GMO might learn about the legal arguments the county is planning to make. Until GMO finds out these arguments, they won't be able to tell us how likely it is that they will win the case against the county. The county is keeping both the court date and their arguments in secret from GMO right now.
In case the Europe blows up in the near term, I just bought 3 November $37.50 puts on DB for $7.
ReplyDeleteIf you download the movie, you don't have to stream it. Plus, a lot of people live fairly far from a store, so it is easier. Or you could always just do a video on demand over cable or satellite.
ReplyDeleteWe haven't rented a movie from the video store in 3 or 4 years and it is only a 3 minute drive.
Wow - went out for a bike ride and the market got trashed. Not sure what happened there. Could be a lot of people just flattening out before Bernanke. I expect tomorrow to be quiet until the press release comes out.
ReplyDeleteBB - Why would I do a video on demand for $5 when I can get it from Redbox for $1?
ReplyDeleteAlso, I read this interesting exchange on Seeking Alpha and I think it's a great point:
"One of the things that attracted me to the CSTR stock is the same as dollar stores and laundromats. There are many minorities who will use these over having a subscription to something online or having a monthly bill. Even though Redbox units are debit/credit only there are many minorities who will use them. I have read many bull / bear articles and not a single one has mentioned this fact. Redbox is not done quite yet."
"You make some excellent points. One of my best recommendations over the past few years has been the pawn shops (specifically EZPW). Wall Street and its wealthy inhabitants (across the industry) typically don't understand that the whole world isn't exactly similar to them. The circumstances of the majority of people should give redbox a much longer tail than the experts predict. "
Since I use it I guess I'm a member of the minority class
I see there's been some solid insider buying at Ford. The company is actually looking REALLY cheap. They're trading at 5 times free cash flow. They now have $5 Billion in positive equity (from -$17 Billion at 12/31/08) after paying down a ton of debt. At this rate they could have $20 Billion in net equity in 2 years (versus $35 Billion mkt cap), not too shabby...they're definitely a lot better positioned for a downturn than in 07.
ReplyDeleteFair enough. I invest in lots of things I don't use.
ReplyDeleteI just look at what's happened to the CD industry and what is currently happening to the newspaper industry and wonder why the DVD rental business would be any different. Technology keeps improving and making things possible that weren't in the past.
Having said that, I did well investing in community newspapers recently as their stocks got cheap and local news is not available on the web or other fashion. Perhaps the DVD Coinstar model will also last a long time.
Nice reaction to the news out of Oracle and Adobe after hours. From one Analyst:
ReplyDeleteOracle Corp. on Tuesday reported a 36% jump in profit in its fiscal first quarter, posting results that one analyst said should dispel worries of a major slump in corporate tech budgets. “It was a solid quarter, but it was not spectacular,” Canaccord Genuity analyst Richard Davis said in a phone interview. “What it reflects is that the world is not coming to an end. It’s not great, but it’s not 2008 all over again.”
We don't need a booming economy to get stocks up. With valuations where they are, results like this will do fine.
WPRT - Crickets here, this one was $20 not so long ago...
ReplyDeleteThe one thing that always gets me when I start to get bearish on things:
ReplyDeleteWe're still growing 1-2% a year with housing completely absent. I could see if we were in a country where people don't aspire to be here. We have consistent population growth year after year. Those people need a place to live. It may not happen now or in the next year or two but eventually housing has to pick up to accommodate pop'n growth and new household formation.
The other thing to remember is world GDP is still going up by 4% this year. So, we've got that tailwind in a "bad economy" as well.
ReplyDeleteSince my sell limit order for 5 AUMN October $12.50 covered calls did not get triggered today (even though AUMN jumped up to $12.40 at some point), I decided to lower my sell limit order for these covered calls to $0.90, just below the current ask.
ReplyDeleteAlso, I just placed a sell to open limit order for 10 October $3.00 puts on GMO at $0.25. Continuing to scale in gradually in small batches...
ReplyDeleteMAJOR WARNING GUYS.
ReplyDeleteWe haven't seen anything like this since July 17th (ish). This is actually much worse than that day when I said market collapse w/in 2-4 sessions. Total collapse in all things momo today on a fairly flat day in the markets. I'm not putting money into puts, but be on high alert over the next 6 trading sessions.
MCP -22%
REDF -11%
JVA -10%
NFLX -9%
TZOO -13%
DTLK -9%
VHC -8%
IDCC -6%
LNKD -6%
STMP -5%
OPEN -4%
LULU -3%
PANL -5%
MITK -3%
RESOURCES
PCX -9%
MTL -5%
FCX -4%
X -3%
AKS -3%
....too many to list