Shooting for 100% Return in One Month 46 comments
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I think that if you’re a professional money manager and you don’t make 100% return in 1 year starting today --- you should look into other forms of employment.
Jim Cramer is right. I’m going to stand up and shoot for 100% in 1 month with a couple stocks. All of them are set for huge gains when the mutual funds grab them at $5.
Conseco (CNO) --- I’ve been yelling about this one since $0.33 when I backed up the truck. I came up with a 2009 EPS of $0.85 weeks before the analyst updated his estimate to include the restructure I forecasted. You too can ride this to $7 --- more than 100%.
Genworth Financial (GNW) --- They didn’t need the TARP. That’s a sign of strength. Just popped to $5. Next stop: $12. Get ahead of the curve and allocate your holdings where the money is heading next. Don’t wait!
American Capital (ACAS) --- I am anticipating a restructure of their current debt obligations. Note that this can bring back a huge yield if you sit tight. Odds are the restructure will eat out of short term (1-2 years) profit margins, but the stock price will soar. $8 is just around the corner.
I don’t respect people that recommend things that they themselves do not own. That’s why I’m long all the companies mentioned in this article. If you’re interested in banks, shoot the middle of the road and start with the ones that are down the most over the last 2 years and up the most over the last 2 months. That way you’ll pick up bargain banks that hopefully aren’t dead beats. A couple that I own are Fifth Third Bancorp (FITB) and Huntington Bancshares (HBAN).
Disclosure: Glen and his investors own CNO, GNW, ACAS, FITB, HBAN
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This article has 46 comments:
Looks pretty good Brad.
On the other hand, you can't have the "dump" before you do the "pump". For what period of time (or to exactly what price point) will you now lock in your ownership of your "recommendations"?
Love this statement: "I don’t respect people that recommend things that they themselves do not own. That’s why I’m long all the companies mentioned in this article."
I pay no attention to people who don't put their money where their mouth is.
The concern of pumping and dumping ought to be moreso with someone touting a stock who doesn't own it, because non-owning touts could easily take payoffs from companies or others who own the stock.
At least when someone offers a stock and owns it, you know for sure that for at least a while that person wants the stock to go up.
And surely, we ought not be so cynical as to think everyone who owns and touts the same stock is pumping and dumping.
To do so is near insanity!
Besides, our duty as investors is to take ideas and follow them up with our own research. Those not able to do so should either begin training themselves toward that end or put their money elsewhere. Stocks are not the only way to grow wealth.
Will check these companies out, GB. Thanks!
I don't plan on disclosing when exactly I sell positions. But, I will say that I'm up over 700% on Conseco. Call me long or short term but I want at least a 10-bagger just to say that I got one and I called it.
The time frame to me although important is not troublesome. The bottom line this time is to sort through the train wreck and find perfectly good companies with a tarnished reputation set for reappraisal as the market dusts them off and says, "Hey, you're not so bad off after all."
I might sell in a week, I might sell in a month, I might sell in a year (depends on the situation). If bad news comes out that changes my opinion on a company --- that might trigger selling. If the stock price appreciates significantly, that might trigger selling. Usually, if the stock price depreciates --- that triggers buying. Also, I may sell if another stock I'm watching is going down and I want to buy that as it is becoming a better deal.
The goal isn't necessarily to minimize taxes as much as it is to make money after taxes.
On May 11 08:24 AM logicalthought wrote:
> >>I don’t respect people that recommend things that they themselves
> do not own.<<
>
> On the other hand, you can't have the "dump" before you do the "pump".
> For what period of time (or to exactly what price point) will you
> now lock in your ownership of your "recommendations"?
On May 11 09:48 AM Glen Bradford wrote:
> logicalthought:
>
> I don't plan on disclosing when exactly I sell positions. But, I
> will say that I'm up over 700% on Conseco. Call me long or short
> term but I want at least a 10-bagger just to say that I got one and
> I called it.
>
> The time frame to me although important is not troublesome. The bottom
> line this time is to sort through the train wreck and find perfectly
> good companies with a tarnished reputation set for reappraisal as
> the market dusts them off and says, "Hey, you're not so bad off after
> all."
>
> I might sell in a week, I might sell in a month, I might sell in
> a year (depends on the situation). If bad news comes out that changes
> my opinion on a company --- that might trigger selling. If the stock
> price appreciates significantly, that might trigger selling. Usually,
> if the stock price depreciates --- that triggers buying. Also, I
> may sell if another stock I'm watching is going down and I want to
> buy that as it is becoming a better deal.
>
> The goal isn't necessarily to minimize taxes as much as it is to
> make money after taxes.
On May 11 09:48 AM Glen Bradford wrote:
> logicalthought:
>
> I don't plan on disclosing when exactly I sell positions. But, I
> will say that I'm up over 700% on Conseco. Call me long or short
> term but I want at least a 10-bagger just to say that I got one and
> I called it.
>
> The time frame to me although important is not troublesome. The bottom
> line this time is to sort through the train wreck and find perfectly
> good companies with a tarnished reputation set for reappraisal as
> the market dusts them off and says, "Hey, you're not so bad off after
> all."
>
> I might sell in a week, I might sell in a month, I might sell in
> a year (depends on the situation). If bad news comes out that changes
> my opinion on a company --- that might trigger selling. If the stock
> price appreciates significantly, that might trigger selling. Usually,
> if the stock price depreciates --- that triggers buying. Also, I
> may sell if another stock I'm watching is going down and I want to
> buy that as it is becoming a better deal.
>
> The goal isn't necessarily to minimize taxes as much as it is to
> make money after taxes.
So you're saying that if professional money managers can't double their money by this time a year from now, they're not worth being money managers? And what, bychance, is your yardstick for this determination? Why 100% and not, say, 112%?
And at what expected level of risk (feel free to use either beta or standard deviation, whichever you'd prefer)? Should money managers who target a market neutral strategy, or those managing, say, municipal bond portfolios, also leave the business if they can't achieve the "easy" 100% return over the next year?
It's that easy, is it? Right.
The primary point your comment misses is that there are a whole host of professional money managers out there whose investable universe consists of something other than just 100% long-only smallcap equities with an expected portfolio level beta of at least 1. Even those who do have that singularly focused mandate are likely to find it challenging to achieve the sorts of returns you apparently think are so easy without taking positively laughable amounts of risk.
Comments from ignorant commentators like this detract from the real value of these blogs on what is generally a reasonably respectable site...
Genworth Financial (GNW) --- They didn’t need the TARP. That’s a sign of strength.
On May 11 08:03 AM WarrenBluffit wrote:
> The credibility of some respondents (like "Glucose") is diminished
> by their poor grammar and bad spelling. I happen to agree with Brad,
> especially with regard to his comments about Genworth and American
> Capital.
Here are the first 5 picks from your previous article,
seekingalpha.com/artic...
VSE Corp. (VSEC) Your pick on Aug 11, 2008 at 40, now at 27
Sigma Designs, Inc. (SIGM) - Your pick on Aug 11, 2008 at 18, now at 14
Hurco Companies, Inc. (HURC) - Your pick on Aug 11, 2008 at 33, now at 15
Ebix, Inc. (EBIX) - Your pick on Aug 11, 2008 at 38, now at 29
Middleby Corp. (MIDD) - Your pick on Aug 11, 2008 at 53, now at 44
I believe you had 16 picks but they all seemed to have the same look; they got creamed along with the market and have had a recent runup but are still all losers since your suggestion to buy.
The lessons here are:
1. Never, ever listen to Cramer, except for his interview by Jon Stewart, which exposed him as a liar and a criminal.
2. Do not ignore the macro economy. It will determine the direction of the vast majority of stocks.
3. Learn to recognize historic patterns and valuations in the stock market and the economy.
4. Listen to the old timers. Start by subscribing to Richard Russell's newsletter. It's cheap and full of wisdom.
Last but not least, don't get too cocky towards the end of a bear market rally. The problem is not that you'll look like a fool in a month but that you'll be broke in a month and defending your decision to stay long as you get broker and broker.
Most of all, be objective and question every piece of data you hear. An example is the S&P 500's P/E ratio being 13 or 15 or whatever Bloomberg and CNBC say it is. Read this, www2.standardandpoors.... it is from Standard and Poor's and says the following, "425 issues (88.94% mkt val) rptd: initial good reports long gone, actuals are -18% off ests (see Energy note), and -36.1% behind last year" and this, "Sales down -13.7% with 109 beating last year and 315 falling short" and this, "As Rpt EPS for 12 Mo Sep,'09 estimated to be negative ($-1.83 EPS) - first time in index history". Things are not getting better, they are just getting worse more slowly.
Good luck!
The losses cited by Fred actually reinforce my conclusions; they have been modest relative to losses most others have endured at comparable levels of risk. But they should induce a proper respect for those macro factors mentioned by Fred. If Glen can see such continuing undervaluation and opportunity in stocks that have doubled or tripled since he first discovered them, it is reasonable to conclude that he might have recommended those same stocks PRIOR to their March lows at two or three times their ultimate lows at a time when reported and forecasted earnings were higher than they are today.
Glen will also learn that equity managers of hundreds of millions of dollars do not have the luxury of researching bulletin-board stocks having total market capitalizations of a few million dollars, not if they are doing a good job of allocating their time resources.
As a devotee of inefficient, "risky" markets whose retirement portfolios have almost doubled in value from their March lows, I understand where Glen is coming from. But I also understand that not all investment managers have the same freedom to speculate that Glen and I enjoy.
I can't believe some of the bravado that this bear market rally has instilled (Cramer included). Could be a good time to go short.
Anyone can make this mistake in a bear market rally.
100% is a good metric because I don't think most "professionals" will be able to get it. Risk comes from not knowing what you’re doing --- not from the volatility of a company’s price. It's just that in the land of academia, you can prove risk as it relates to volatility. Look into the assumptions and look to Eugene Fama. Even look to Wikipedia. There are many studies that suggest this methodology runs on incorrect assumptions.
Fred Voetsch: Thanks. I do my best research from listening to others. You’re right. I got crushed. That’s why I’m beating the market by 20% as it stands right now since June 2008. On a side note, I was down 75% at the worst of it because I wasn’t selling into a bear market. Those stocks you mentioned, VSEC, SIGM, HURC, and MIDD are going to outperform the market in to the next 2 years. Jim Cramer paid his dues in the '80s as a Goldman, Sachs & Co. (GS) broker, followed by 14 years at Cramer Berkowitz, his $450 million hedge fund, where he earned an average return of 24% a year after fees. And, I shouldn’t listen to him? I only listen to people that beat the market. Yes, now you’re right about the macro economy, I got toasted this last fall cause I ignored it partly because I was in 25 Credit hours of MBA/Industrial Engineering Coursework. I agree with your last 2 points. I realize that I come off as cocky in this article. The purpose was to illustrate that there are companies that are doing fine now and that they are cheap from a historical standpoint. The direction is up. Thanks for the pointers.
Kyller: Good luck, I was at their shareholder meeting this Tuesday I believe. Saw the new board member. He looked like he knew what he was doing.
Alphameister: You hit the nail on the head. I agree with your analysis of your and my maneuverability that the big money people don’t have.
PROXIMO: Nope, they sure wouldn’t. Buffett only pulled 60% a year back when he was managing less money. 100% a month sure catches the eye though, doesn’t it?
Ames Tiedeman: Running up 700% should be taken into the perspective of the fall off a cliff over the last 2 years.
Jayinasia: Good strategy, see you at $60,000. In 1 year you’ll probably be $100K
Ifuwish2: Wait for the Citi dilution and then I think it will rise.
Stonedinvestor: It’s Cramer.
Alan von Altendorf: Glad you’re following someone, cause it’ll keep you in the game.
Alan Young: Yes, I did that last June. I was up 30% in a month and then proceeded to get crushed.
Hot Richard: I don’t like those odds. If you know how to count cards though, I’ll bet in your favor.
Dean: No thanks.
Guymar: I buy companies that nobody likes that in my opinion are going to be liked more as time progresses into the future.
FloridaBoy2: Luck has a bit to do with it --- but not all of it.
Users: That would be up, glad the shorting is back.
Living4Dividends: Ponzi didn’t keep true to his word, hence the scheme addendum.
Hope this helps, Glad I could stir up some comments on some great investment opportunities.
That really says a lot.
On May 14 05:40 PM Glen Bradford wrote:
> Wildhawk: I don't think using beta or standard deviation is a good
> measure for risk.
> 100% is a good metric because I don't think most "professionals"
> will be able to get it. Risk comes from not knowing what you’re doing
> --- not from the volatility of a company’s price. It's just that
> in the land of academia, you can prove risk as it relates to volatility.
> Look into the assumptions and look to Eugene Fama. Even look to Wikipedia.
> There are many studies that suggest this methodology runs on incorrect
> assumptions.
> Fred Voetsch: Thanks. I do my best research from listening to others.
> You’re right. I got crushed. That’s why I’m beating the market by
> 20% as it stands right now since June 2008. On a side note, I was
> down 75% at the worst of it because I wasn’t selling into a bear
> market. Those stocks you mentioned, VSEC, SIGM, HURC, and MIDD are
> going to outperform the market in to the next 2 years. Jim Cramer
> paid his dues in the '80s as a Goldman, Sachs & Co. (seekingalpha.com/symbo...)
> broker, followed by 14 years at Cramer Berkowitz, his $450 million
> hedge fund, where he earned an average return of 24% a year after
> fees. And, I shouldn’t listen to him? I only listen to people that
> beat the market. Yes, now you’re right about the macro economy, I
> got toasted this last fall cause I ignored it partly because I was
> in 25 Credit hours of MBA/Industrial Engineering Coursework. I agree
> with your last 2 points. I realize that I come off as cocky in this
> article. The purpose was to illustrate that there are companies that
> are doing fine now and that they are cheap from a historical standpoint.
> The direction is up. Thanks for the pointers.
> Kyller: Good luck, I was at their shareholder meeting this Tuesday
> I believe. Saw the new board member. He looked like he knew what
> he was doing.
> Alphameister: You hit the nail on the head. I agree with your analysis
> of your and my maneuverability that the big money people don’t have.
>
> PROXIMO: Nope, they sure wouldn’t. Buffett only pulled 60% a year
> back when he was managing less money. 100% a month sure catches the
> eye though, doesn’t it?
> Ames Tiedeman: Running up 700% should be taken into the perspective
> of the fall off a cliff over the last 2 years.
> Jayinasia: Good strategy, see you at $60,000. In 1 year you’ll probably
> be $100K
> Ifuwish2: Wait for the Citi dilution and then I think it will rise.
>
> Stonedinvestor: It’s Cramer.
> Alan von Altendorf: Glad you’re following someone, cause it’ll keep
> you in the game.
> Alan Young: Yes, I did that last June. I was up 30% in a month and
> then proceeded to get crushed.
> Hot Richard: I don’t like those odds. If you know how to count cards
> though, I’ll bet in your favor.
> Dean: No thanks.
> Guymar: I buy companies that nobody likes that in my opinion are
> going to be liked more as time progresses into the future.
> FloridaBoy2: Luck has a bit to do with it --- but not all of it.
>
> Users: That would be up, glad the shorting is back.
> Living4Dividends: Ponzi didn’t keep true to his word, hence the scheme
> addendum.
> Hope this helps, Glad I could stir up some comments on some great
> investment opportunities.
They usually invest in "solid" stocks such as JNJ, WMT, KO, MCD, etc. Stocks that did not suffer significant panic selling and may even prove to be "over-priced" if the current recession continued longer than expected or was able to recover at snail's pace. Those stocks are not meant to rally 2x, 3x or more in a very short period of time.
Best candidates are still hammered-down stocks. Buying them during panic sell-offs and selling when the panic subsides can usually gain 2x to 20x initial capital depending on trade performances.
I've been doing that since July 2008 and have blogged them into SA.
It works much better than shorting them with limited capital since it is impossible to make more than 100% on capital shorting stocks. And extremely hard to play the short side these days with the almost unpredictable massive day-to-day tape fluctuations and government interventions.
You can't leave your shorts with no stop loss protection. One mistake and your capital can get wiped out in a matter of weeks if not days.
It is still OK to leave long positions without any protection at all at their extremely depressed prices. Some of them will go sour and not participate with any rally. But that is just a part of the game. Getting stopped out repeatedly with stop loss protections in place can more than mitigate the purpose of gaining 1x to 19x profits and may even result in a net loss.
This is not going to last long. Once this bear market is over and stock prices are up, price appreciation rate will deteriorate as volatility goes down and stock prices starts spending more time consolidating rather than rallying.
Also, buying hammered and damaged companies can become a very dangerous game once they start declaring banckrupcies if and when this downturn lasts much longer than expected.
It takes a lot more than fundmental analysis to do this type of game without getting badly burned. It takes a lot of knowledge and experience in technical analysis.
For these particular ones, I own CNO, FITB, GNW, and ACAS stock. I also own Call Options on FITB and HBAN.
Sorry for the confusion.
aarc: I agree entirely. Sounds like you're probably beating the market too.
On May 14 08:24 PM holmesnmanny wrote:
> All of that, and you didn't feel the need to respond to my simple
> one-line post asking you to define "long" as used by yourself in
> the article?
>
> That really says a lot.
It's simple. We all follow him so we can FADE his picks. In fact, since I posted above. I went all short in S/P, DOW, NSDQ. I consider a few young punks coming online and proclaiming their brilliance (including CETIN) as the beginning of the end.
I suggest everyone should do the same. At least until the end of Summer.
On May 13 06:41 AM guymar wrote:
> What interests me is: why does this young man have such a following?
> Part of the stocks he picks are roach motels with low volume, part
> are dogs.... So is this what people are after for their portfolios?
> Putting your money where your mouth is: good, but with some stocks
> on less than 1000 trades / hour .... Even if it is unintentional,
> the 100% could be a result of naive pump & dump .... My advice
> to the investor doing "their own research": don't buy the thing if
> during regular trading hours you have a majority of unchanged open
> and close candles (open/close/high/low all the same) in the 1 minute
> chart.
On May 15 10:15 PM jayinasia wrote:
> Guymar.
>
> It's simple. We all follow him so we can FADE his picks. In fact,
> since I posted above. I went all short in S/P, DOW, NSDQ. I consider
> a few young punks coming online and proclaiming their brilliance
> (including CETIN) as the beginning of the end.
>
> I suggest everyone should do the same. At least until the end of
> Summer.
>
>
Know what Im saying?
On Jun 02 04:58 PM bobleem wrote:
> You don't instill confidence when you say you listen to Cramer, someone
> with a 47% success rate. Know what Im saying?
"Genworth Financial (GNW) --- They didn’t need the TARP."
Not quite the way it was....
MetLife and a couple other insurance companies could qualify for TARP because they owned banks, and even though some owned banks not all went for the TARP money.
Knowing this Genworth went out and looked for a bank to buy to qualify for TARP. They couldn't get it together before the TARP deadline to apply. They might have gotten TARP funds, we'll never know.
Later the US Govt announced it was bailing out not only banks but insurance companies that needed money.
Nobody should blindly follow these recommendations, especially because there is so little accompanying analysis with the recommendations. However, it is useful to have a strating point for your own research.
I find Glen's articles most useful for highlighting small/micro caps that may not have good coverage elsewhere. Then I follow-up with my own research.
On May 11 12:24 PM realold wrote:
> It seems it depends a little on how much one owns. If you are trying
> to make a name for yourself, own 1 share and tout it - you may hit
> a home run and become a messiah, or lose thirty-three cents. Which
> stocks have you tried and didn;t work out?
When you’re a young non-professional with a few bucks in your pockets then rolling the dice and being bold is expected. That’s the way you learn. But you can’t duplicate that when managing a couple billion dollar book with a herd of regulators and compliance ‘professionals’ looking over your shoulder. Even Buffett (when your age) made the comment that he couldn’t believe how much harder it got the more money he was responsible for investing.
My guess is that at least 75% of retail accounts have no business being in a 'penny stock' (< $5, as defined by the regulators). You'll also learn that with the licenses and responsibilities that go with them (e.g., to "know your customer") do not allow for the spewing of possible returns and targets. God help the ‘professional’ who would even suggest he were shooting for a 100% return (over a month, year…).
Reality is that you are naïve. It is also naïve to assume that just because you give a monkey a typewriter, and he gets a word right, that he can write a book. You’ve got a 700% return on a stock. Great. Many of us have accomplished that may times over our careers. But we’re not so naïve (I hope) to assume that it had anything to do with anything other than ‘table luck.’ Just know that it is an entirely different game managing a few bucks versus a few billion. You're waaaaaaay off base about how things do and should work in the real world.
P.S. It's July so ditch the black shirt. It's a 'professional' thing.
Disclosures: Long ACAS where appropriate.