Month: May 2012

FOSL, Fossil scores 5 on our checklist

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CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action. Continues to stabilize after recent pullback and could be poised for a jump; +1   ANALYSTS- read analyst reports but come to your own conclusions. 3 Strong buy, 5 buy and 4 hold (according to CNBC); +1   INSIDERS- if the people that know the company the best are not buying it, why should you? CFO, and other key directors purchased a total of 9800 shares at a price range of $72.86-$80.01 during the month of May 2012; +1 … Read more

Spain’s Banking Rescue Should Become Example for Europe – Bloomberg

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Spain’s Banking Rescue Should Become Example for Europe   Europe’s leaders can’t save their currency union without figuring out a way to salvage the region’s banks. Spain is a perfect place to start.Perhaps no country better illustrates the mutually reinforcing links among the euro area’s banking, sovereign-debt and economic crises than Spain. Its banks are largely paralyzed amid concerns about heavy losses on real estate loans that, by various estimates, could require as much as 120 billion euros $150 billion in fresh capital to offset. Tight bank credit has in turn deepened the country’s economic slump, increasing banks’ potential losses … Read more

RRTS, Roadrunner Transportation Systems socres 7 on the checklist

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CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action. No trends defined.  Looked as though it was poised for a rebound but has been kept down by the market; 0   ANALYSTS- read analyst reports but come to your own conclusions. 4 strong buy, 2 buy, 1 hold (according to CNBC); +1   INSIDERS- if the people that know the company the best are not buying it, why should you? CEO Scott Rued purchased 30,000 shares at 17.41 on February 10, 2012; +1   MANAGEMENT DISCUSSION 10Q AND … Read more

Technical Rally

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My indicators are showing bullish divergence on all of the major future markets.  We could have a very tradable rally here in spite of the ugly headlines.  As is always the case, how much is being priced in is key to the analysis.  The market now is poised to react violently to the upside with a whiff of good news.    

Venezuela best performing market

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This interesting table supplied courtesy of the Financial Portal points out some of the folly of trend following and the merits of contrary investing.   When I was a broker at PaineWebber I used to train other stockbrokers. Every week we would have mutual fund wholesalers come in to the office, buy us lunch and show us their funds. One day while we were finishing up lunch and the wholesaler was just getting into his dog and pony show, I interrupted him. I said today we want to hear something different. You come here month after month and tell us … Read more

Facebook IPO Seen Deepening Investor Distrust of Stocks – Bloomberg

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Facebook IPO Seen Deepening Investor Distrust Of Stocks By Elizabeth Ody and Margaret Collins – May 25, 2012 10:01 PM MT Facebook Inc. (FB)’s initial public offering, plagued by trading errors and a 16 percent drop in the share price, will push more individual investors out of a stock market they already distrust after the financial crisis. “This is clearly the latest in a long string of events that is eviscerating the confidence investors have in the market,” said Andrew Stoltmann, a Chicago attorney who represents retail investors. “The perception is Wall Street jiggered this IPO so the underwriters made … Read more

Is It Time To Switch Gears On The Short Best Buy And Long Amazon Pairs Trade? – Seeking Alpha

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Is It Time To Switch Gears On The Short Best Buy And Long Amazon Pairs Trade? I’ve been personally considering this trade. There was just a large insider buy of Amazon as well.  Amazon has been a tough stock to short because as long as revenue is rising, investors seem content to give it a pass on earnings. May 27, 2012  | 2 comments  |  includes: AMZN, BBY Pairs trades, going long one company while shorting another, provide outstanding returns for those that can identify trends in an industry or in the broader economy. To say a pairs trade is risky, … Read more

CHART OF THE DAY: The Biggest Driver Of Equity Returns Since 1970 – Business Insider

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CHART OF THE DAY: The Biggest Driver Of Equity Returns Since 1970 Dylan Grice, Societe Generale’s eloquent investment strategist and author of the Popular Delusions note, just introduced his “Quality Income Index.” His thesis is pretty straightforward: Invest in high quality companies with sustainable dividends. Here’s one of the key charts from his report.  It shows how dividends are the most important component of total equity returns. “The following chart shows that since 1970, dividends and dividend growth have been pretty much the whole story,” wrote Grice. via CHART OF THE DAY: The Biggest Driver Of Equity Returns Since 1970 … Read more

Miserable May bodes well for the future

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Although the S&P is down nearly 10% from it’s April highs, I’m more optimistic than I’ve been in some time.  Low interest rates really appear to be a long term fixture and not a financially engineered aberration.  The REAL  risk free rate of return is really quite low and based on the DCF model, many, many stocks are undervalued even with diminished growth prospects.  Insiders are beginning to acknowledge this with stepped-up buying.  The lesson from last year and perhaps every year is that you have to buy when despair is high and prices are cheap.  It’s important to do … Read more

LAYN, Layne Christensen Company scores -2 on checklist, look for earnings results Jun. 5

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CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action. Chart is tracking the market; 0   ANALYSTS- read analyst reports but come to your own conclusions. As of April; 1 strong buy, 3 buy, 8 hold, 3 underperform (according to CNBC); -1   INSIDERS- if the people that know the company the best are not buying it, why should you? Shares purchased by both the COO and the President purchased stock with a combined value of almost $2 million at prices of $21.22 and 23.75 respectively; +1   … Read more

Who Lost the Euro? – Businessweek

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Opening Remarks Who Lost the Euro? By Clive Crook on May 24, 2012 Tweet Facebook LinkedIn Google Plus 19 Comments   The arc of Europe’s postwar history is turning toward tragedy. It isn’t just that much of the Continent has fallen into a new Great Depression, or that in some countries things will get worse before they get better. It isn’t even that the whole mess was avoidable in the first place. It’s that the crisis is dividing Europe along the very lines the European project was intended to erase. Decades of clichés about European “solidarity” and “the European idea” … Read more

| Felix Salmon

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Morgan Stanley’s $2.4 billion Facebook short By Felix Salmon MAY 21, 2012 Matt Levine had a very wonky post on Friday afternoon about the dynamics of the Facebook IPO in general and of the very misunderstood greenshoe option in particular. Now that we’ve all had a nice relaxing weekend, it’s maybe worth revisiting that greenshoe, because it’s actually possible, given Facebook’s tumbling share price today, that Morgan Stanley will make a substantial amount of money on it. First, it’s worth explaining how the greenshoe option is meant to work. In the IPO, the underwriting banks — there were lots of … Read more

Bond exodus on a par with eurozone bank run – FT.com

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Bond exodus on a par with eurozone bank run By Richard Milne A great deal of attention is being heaped on the possibility of a bank run across the eurozone. But something just as important is currently happening: a bond run. Foreign investors have left the government and corporate bond markets of Italy and Spain in droves in the past year and there is little evidence of the selling slowing down. If anything, the worry would be that the process carries on for some time as it has done in Greece, Ireland and Portugal.   Bill Gross A whale in … Read more

CME Group scores 3 on our checklist, but provides strong dividend yield and growth potential

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CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action. Recent bullish divergence has been observed; +1   ANALYSTS- read analyst reports but come to your own conclusions. 4 strong buy, 4 buy, 9 hold (according to CNBC); +1   INSIDERS- if the people that know the company the best are not buying it, why should you? One director purchased 2000 shares on 4/27 at $274 as well as 400 on 3/14 at $275; +1   MANAGEMENT DISCUSSION 10Q AND 10K- this is the only truthful thing you will read … Read more

European Banks Unprepared for Greek Exit From Euro – Yahoo! Finance

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European Banks Unprepared for Greek Exit From EuroBy Elena Logutenkova, Liam Vaughan and Gavin Finch | Bloomberg – 1 hour 27 minutes ago Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro. While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europe, they remain vulnerable to the contagion that might follow a withdrawal, investors say. Even with more than two years of preparation, banks still are at risk of deposit flight and rising … Read more

NYX, NYSE Euronext scores a 3 on our checklist

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CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action. First bullish divergence seen since October of 2011; +1   ANALYSTS- read analyst reports but come to your own conclusions. 2 Strong Buy, 5 Buy and 12 Hold (according to CNBC).  Analysts remain neutral; 0   INSIDERS- if the people that know the company the best are not buying it, why should you? Positive balance of insider buying including action as of April 30th at a price of $25.48; +1   MANAGEMENT DISCUSSION 10Q AND 10K- this is the … Read more

JPMorgan Risk Chief Had History of Trading Losses and Sanctions – Wall Street & Technology

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PMorgan Risk Chief Had History of Trading Losses and Sanctions Goldman’s previous Wall Street firm received a slap on the wrist from regulators. By Melanie Rodier@mrodier MAY 21, 2012 Share on email Background checks, anyone? Irvin Goldman, the JPMorgan Chase risk chief who oversaw the unit that suffered a $2 billion trading loss in credit derivatives, was fired by Cantor Fitzgerald in 2007 for hemorrhaging losses that prompted regulatory action, according to Bloomberg. Goldman had only been at his job at JPMorgan since February. Yet according to Bloomberg’s source, the company’s chief risk officer, John Hogan, (who himself only became … Read more

‘s pain

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Although NYSE lost the Facebook listing, the way Nasdaq bumbled it is surely to help the NYSE long term. According to Barron’s article April 21st,  “Even as it invests in its technology and post-trade-services businesses, the firm has streamlined expenses, eliminating $670 million in costs since 2008. As a result, free cash flow last year was $870 million, on $2.7 billion in revenue. NYSE Euronext has signaled that its strong balance sheet can support a bit more debt, enabling it to steadily return cash to shareholders both through share buybacks and a generous dividend—which at the stock’s recent level near $27 … Read more

How bad was last week?

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Dow took its losing streak to six days, and has now fallen in 12 of the past 13 days. The WSJ points out that the last time the Dow suffered as many losses over a 13-day stretch was in October 1974, at the nadir of that decade’s bear market. What should also concern investors and market commentators is that this selling has occurred amid the heaviest trading volumes of the year. The NYSE had its fourth straight day in which at least four billion shares were traded.

PharMerica revisited

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April 13th we wrote that PharMerica was right to turn down Omincare’s $15 per share offer.  Since that time PMC has continued to underperform the market declining twice as much as the market as a whole. Is this just further proof that relative out-performance on the upside or downside is something to pay attention to or is there something wrong with PMC?  We attempt to answer this by revisiting the Stock Checklist.    They basically dispense medicines at long term care facilities. PMC gets paid by the pill which in turn is impacted on the revenue side by the number of … Read more

Do you believe a good company will come back from a 20% price decline?

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I certainly do.  I’m talking about Hess Oil.  HES.  Let’s revisit the stock checklist.  Hess Oil scores a 8, the highest rating I’ve yet to see any stock achieve.  Not only do I believe it will come back but double within 3 years or less.  Also check out Barron’s Article May 21st. This is a checklist I use to quickly come to a conclusion on a stock.  I score a stock, each line getting a 1, 0, or -1.  A stock  that scored 1 on each line would be a perfect 10. Unlike Bo Derek was,  it may be impossible … Read more

Magic Jack Redux (CALL) fails the smell test

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Fortunately, we don’t own any more Magic Jack stock and actually made money on it. I’m sorry I just can’t handle the bizarre way management treats their shareholders.  I never buy reverse merger stocks but the story and product on this was so compelling.    I’m not going to make any allegations here because bloggers have been getting sued left and right but let me say, I have to redo my checklist.   There is a flaw in the process as there is no way to account for the possibility of fraud.  Granted this possibility exists in almost any transaction. … Read more

Top Hedge-Fund Managers at Ira Sohn Investment Conference – Barrons.com

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Where Top Investors Are Putting Their Money Now By ANDREW BARY | MORE ARTICLES BY AUTHOR Top hedge-fund managers brought their best ideas to last week’s Ira Sohn Investment Conference. Why they like J.C. Penney and Kohl’s. Mixed tastes on Apple. The Einhorn effect was on full display at the annual Sohn Investment Conference last Wednesday in New York when David Einhorn, the head of Greenlight Capital, made a bearish mention of Martin Marietta Materials (ticker: MLM) and shares of the construction-aggregates maker dropped more than 10% in minutes. via Top Hedge-Fund Managers at Ira Sohn Investment Conference – Barrons.com.

A Miserable Week Leaves Stocks Down 4% – Barrons.com

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SLUMPING OIL AND NATURAL-GAS PRICES this year have taken a bite out of nearly all energy shares, and exploration and production company Hess (HES) is no exception. Yet a good portion of the stock’s recent 32% drop, to $44.60 from its 2012 high around $67, is self-inflicted. On April 25, Hess reported first-quarter net of $509 million, or $1.50 a share, down from $619 million or $1.82—a bit less than expected. (Both periods’ results exclude extraordinary items.) Meanwhile, revenue at the mostly oil-producing company—its output is 70% liquids and 30% natural gas—fell 7%, to $9.75 billion. Still, this wasn’t what … Read more

The world is coming to an end but we can share it on Facebook?

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Reasons why Facebook marks some kind of weird market top. 1.Round the clock coverage on CNBC and Bloomberg about the Facebook IPO and how much money everyone is making. 2.The largest tech (maybe any IPO) in history. 3. People you know that you didn’t know ever bought a stock, asking if you could get them some Facebook stock. 4.Savy insiders selling enormous stakes.  Who cares if Goldman keeps half. At the valuation they’re getting the 50% remaining is all a free toss of the dice. 5. Billion dollar side deals for companies with no revenue to speak of. 6. The … Read more

MCD, McDonalds Scores a 2 on our checklist, but looks undervalued

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A recent pullback in the price of MCD presents a good opportunity to buy this dividend paying stock; paying about 3.08%. CHART- know how to read charts. We firmly believe I can improve the price of buying or selling from an understanding of chart action.   +1; MCD is below both 50 day and 200 day moving averages but the RSI line is beginning to diverge which might indicate a near term reversal ANALYSTS- read analyst reports but come to your own conclusions.  +1; 3 strong buy, 13 buy and 10 hold (according to CNBC) INSIDERS- if the people that know the company the … Read more

Most technicals look poor

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I find few stocks in our portfolio that look like they are headed higher in the immediate future.   Even though oil has had a sharp and steep decline, prices still look like they have room to drop.  The test will come soon though as many oil services and some oil stocks like Hess  are trading at 2008 nadir levels.  At some point soon, these stocks will rise on declining crude prices and signal some kind of trading bottom.  This is the only sector of the market that has had significant insider buying of late. Buying is picking up in … Read more

Value at risk: time for more rigour – FT.com

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Value at risk: time for more rigourThat whooshing noise in the background is the sound of received wisdom crashing to the ground. One of the consequences of last week’s admission by JPMorgan that it had lost $2bn on credit derivatives trading is that it may spell the end of the notion of “value at risk”. VaR is already being given the once-over by the Basel Committee on Banking Supervision because of its inherent limitations as a way of measuring risk. That project has now become more urgent. Currently, VaR is essentially anything a banker thinks it is. It is time … Read more

"The insomniac hedge fund guy" is a moniker Harvey Sax, the portfolio manager for The Insiders Fund has used from time to time on email, blog , and social media posts. While Mr. Sax is the portfolio manager of The Insiders Fund, these posts are not communications from, nor endorsed by, Alpha Wealth Funds, LLC or any of its managed funds. References to Alpha Wealth Funds or its affiliates are for identification only and do not imply sponsorship or approval. All registered trademarks herein are the property of their respective owners.

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