DNA Decoder

Long only, growth, growth at reasonable price
DNA Decoder
Long only, growth, growth at reasonable price
Contributor since: 2012
-Economy is doing fine
-Forward S&P500 valuation is back to average
-Low inflation will hit the brakes on a second Fed rate hike for now
-Tertiary sector in China is largely offsetting the secondary contraction
-Market is oversold
A rally is due
I don't know if VRX is channel stuffing like Citron suggests, but something doesn't look right to me. YoY revenue goes up up up while cash goes down down down. Debt/equity is astronomical and they're not creating any value through ROIC or dividends. "Other investments" are higher in the CF statement. Why would I invest a single dollar in a stock like that? Something really looks fishy to me.
I like TRIP. It's a buy right now with fair value at $65.
The only thing I don't like about this stock is the short interest.
I stand corrected by UNP's CEO. I was too bullish on revenue. I revised my fair value down to $98.
We will know tomorrow about how it went for UNP in the 2nd Qrt, but right now, I agree that the slide in railroads is overdone.
UNP is worth $120 with the numbers we have right now. Not all coal is created equal.
DRL is going to rally big on Monday. Happy weekend to shareholders, enjoy!
It's just amazing how much commodities in general have fallen with the dollar rally. The Fed minutes came at a nice moment because stocks were already below 2 std deviations in relation to their 50dMA. They were primed for a bounce. If these minutes reverse the yield curve compression, the dollar will take a break and stocks will continue upward. Inflation expectations look so weak, that I would not be surprised if the Fed keeps buying $5 billions of treasuries per month for another year. Even if they do that for two more years, their balance sheet would still deleverage by simply holding the assets, as $216 billions in treasuries mature in 2016.
AMZN is a growth monster. The long-term capex expansion says it all and that's the most effective use for their cash. It breaks the traditional value or growth models and that's why some people don't feel comfy holding it. It's understandable, almost 100 years ago Einstein published his general relativity theory, but still today most people can't grasp the notion of spacetime bending because it's counter-intuitive. That doesn't mean it isn't valid.
Thanks for the article Benedict
I like SWIR, but I don't feel comfortable holding it long term right now. I sold my small position yesterday for a 19% profit. I may consider trading it again if it continues on this choppy $18 to $24 range.
Nice story from the author, thanks for the article.
My 2 cents... this is a Fed-based market, so Fed decisions will make a bigger impact on market direction than anything else. So rather than solely relying on technicals, other things need to be checked too.
On a YoY basis, building permits, home sales, orders, unemployment claims, etc, are slowly looking better. On that front one would think the Fed will raise rates soon, but...
Lately, commodities are going down (even oil a little bit), the dollar is going up (maybe suggesting that CPI will go down again) and what's really interesting... the yield curve keeps flattening. That could be why Yellen was kind of dovish, even in the face of improving numbers. If you compare corporate debt performance with that of treasuries, it's kind of worrisome because it contrasts with the rising stock market. The yield curve is driving that divergence.
So for good or bad what I decided to do in the last 2 months was to carefully buy specific stocks with catalysts or drivers, because ultimately, I think the "buy on dips and hold" strategy is not over yet, and also if a real correction happens, at least I know that there is a reason to potentially propel that stock upward after the fall. Just a thought when stock picking.
Small corrections are still more probable than big ones in my view. At least for now. Of course, my risk tolerance is very high, and I don't recommend anyone to buy speculative stocks without understanding the risks.
DRL 75% up yesterday guys. Congrats to all that profited on it. I didn't have the nerve to take that risk. It was the PR lottery like Zvi said.
Mr Craig Van Pelt, PR averages about 2.5 murders/day, not 100/week. Can you imagine having a 100 murders per weekend? Lord have mercy. It's hard to understand how a person that lived 18 yrs in the island could post a number like that.
The year has 52 weeks, so 52 * 100 = 5,200 murders/year. Not even the most violent city in the world, Caracas Venezuela, has so many murders. Crime rate in PR is high in the metro area though. I will make the same assumption the other commenter did, that you really meant that once in a while 10 murders in a weekend can happen.
Haha yes, it takes time, and a LOT of money, but it's all worth it and very interesting nonetheless. Just not long ago it was discovered that the universe is being expanded by dark energy (which nobody really understands yet), the Higgs boson was discovered (which needed a multi-billion dollar particle accelerator to be found), and it was concluded that the matter that compose us and everything we know only amounts to 5% of the whole universe (the rest is "hidden" and it's just being uncovered). There is so much complexity. I'm very hopeful though, regarding molecular biology. The CRISPR-Cas 9 complex seems to be the real deal for gene editing. I call it "genetic engineering on steroids". I hope we can all benefit from it before we die. Some smart guys already cured mice from a genetic disease by correcting a mutated DNA base pair in a liver gene. If that is not awesome, I don't know what it is.
Good for you and great trade!
"A general response to classic uncertainty is to design many different time dependent strategies."
I think that's very true, specially when it gets increasingly difficult to find obvious "bargains". To me, a catalyst adds great risk mitigation to a trade. It's easier when there's a driver, be it a sector-wide trend, a future development or an important event. I like an extra reason to buy besides the fundamentals.
"Currently, the ghost of the real estate bubble still haunts the collective psyche."
True true, it will take time, both psychologically and on housing recovery. Right now we are more on a "rental nation" state, which I don't think is a bad thing really, as it improves the mobility of the work force.
"At a deeper level, it's all part of an undecipherable fractal, which becomes more elusive when we attempt to understand by simply looking at the last few iterations."
Difficult, but not impossible to understand the clues. Real root causes are more complex to catch, but the "why" is not always as important. Developing meaningful prognosis is the tricky part.
"But, ponder this, as we either allow or merely witness heavy concentrations of leverage become ever more centralized, what risks are placed on the entire human eco system? Is there not a point where issues of domestic tranquility and national security become merged with the overall concentrate?"
IMHO I don't think the magnitude of the operation really adds risk or potential instability to the system as a whole, as in the end the switching of assets is generating profits for the FED (and transferred to the Treasury) with a large part of the holdings most probably left to mature.
I agree in the sense that I wouldn't go short on this market. I like the idea of taking some profits off the table and then put them back on short-term technical dips. The hold and buy on dips strategy is sill working and most probably will continue to work until there is no more monetary easing IMHO.
SA for me it's a place that I use to organize my thoughts through writing, also to learn ideas and strategies from others and to share mine. Any ideas are very welcomed if you can share them.
As a fun variant (talking specifically about risk sentiment in the consumer sector), sometimes I check the oversold/overbought levels of the TIF:WMT ratio. It occurred to me one day, "hey, why not use jewelry and unnecessary expensive stuff vs cheap basic goods?" Kind of a wealthy effect measurement (or impulsive buyer vs prudent buyer if you will). So I tried Tiffany vs Walmart. Right now for example, the ratio is very overbought. Sometimes I check retail, restaurants, etc
It has been definitely an abnormal period where risk-off sentiment has been answered by indifference in the big cap segment. Persistent allocation into low-beta, dividend-growing equity may have something to do with it.
Thank you John. Awesome pick for you. You hit the nail on the head at the right time with that one. Do you usually hold levered ETF's for long periods?
Lots of people are leaving PR, so I don't think that's going to be a problem for PR.
However, a counterweight on the east coast is needed when beach festivals start in the west...
Truffel, I see you're a biochemist. Do you invest/trade on speculative biotechs? Do you have something in mind? Let me know
I'm on ONCS again, hoping for a nice end of May. ASCO is coming. The first time I was fortunate to make a 150%+ profit in about 4 months. I should have made 200%+ but didn't sell when I had to. Woulda, coulda, shoulda right? But that's OK, a nice profit anyway.
I'm always looking for quality opinions from guys like you who have the education and/or the experience on the matter.
Just recently BMY announced some of their presentation for ASCO about their new son: Nivolumab (anti PD1). They are trying it in combination with the already approved ipilimumab (Yervoy) in trials. Results were a little disappointing for kidney and non-small-cell lung cancer. Response rate was 22%; rate of adverse events was 48%. Disappointing in the sense that people were expecting more out of this incredible PD1-PD1L mechanism.
This is another reason why many think ONCS could continue to be best-in-class, because electroporation has the ability to covert immunogenic tumors into responders. They will try anti-PD1's too and I think they'll get better results because of this. Better results than the big guys.
But anyway, for this year (and I'm looking for a short-term trade right now), I think results for their 3 phase II trials (Merkel Cell Carcinoma, Metastatic Melanoma, Cutaneous T-Cell Lymphoma) are going to be good. They use the IL-12 cytokine, not the substance itself, but the plasmid DNA.
So, what we have here is a small market cap stock, filled with pending catalysts, with good technicals, no debt, no SAE's (lower IL-12 concentrations means fewer side effects) with good results (and systemic results) from a great platform and with direct delivery (injection) of something that has been proven to work (also helped by a proven technology: electroporation). The combination seems to work like a charm. I think next week the stock can shoot up again leading into ASCO. A possible negative on the stock could be future dilution speculation after the rise.
That's my pitch in a nutshell. Let me know what you think. I'm long BLRX too. Considering adding more shares of SPHS and BLRX.
Yes Zvi, I think BPOP could end up buying DRL assets. It's a very real possibility.
I used to have a very nice link about bank stress and ratios that I can't find now. It included many banks, including the ones that went bust. It was an ongoing study by some university. Once the banks get over certain limit on the ratio, I think they are on a FDIC "watch list". Banks on the island used to be way over the national average on that ratio. It's so long since I invest in any bank that I can't remember though. It would be interesting to see where BPOP stands now...
Nice haha. I had to learn to do it myself to calm my cravings!
...y que buena historia la tuya, de mudarte desde Alemania a PR wow
Tu espaƱol es muy bueno de hecho
Zvi, the main bank on the island is Banco Popular (BPOP). If I were to take a less risky bet on PR, I would do it on BPOP. In my view, BPOP is PR. If BPOP fails, the whole island disappears basically.
Somebody recently made an article on SA that picked my curiosity. It's about BPOP's preferreds (BPOPN). If you are a dividend investor you may like the idea. I'm not interested but it could be an alternative for yield-hugry investors.
Nice Truffel, I was raised in Las Piedras and then lived like 5 years in San Juan. I'm missing a nice mofongo right now my friend
"Buenas Noches PR, el ultimo que esta saliendo la isla apaga la luz, por favor"
My opinion here is biased, both on DRL and the government, since I don't like the bank and I also think more pain is coming for the island. Plus I haven't checked the numbers on banks there, so my opinion is subjective at best. But for what is worth, here is what I think happened here from my recollection, and please correct me if I'm wrong:
During the first 4 or 5 years of the 2000's decade, the founder's nephew, Mario Levis, managed to quietly inflate some assets. He was later charged and found guilty (The CEO's (Salomon Levis) ex-wife, Nancy Hernandez, pleaded guilty on a NY Mortgage Bankers case by the way, but that's another story).
So when they caught Mario, the earnings were adjusted and the stock collapsed. But before all this came to light, DRL had to pay more in taxes to the PR's government because of the inflated earnings. Now the company is trying to claim those taxes paid in excess.
So can they have it both ways? I mean, the company committed fraud and many investors lost big. Because the book-cooking was uncovered, now they want to recover the taxes they paid for over-inflating the numbers. I know is two separate litigations and one of them already happened, but won't this affect Doral's efforts of collecting that money?
In my view, with all that happened in the past, and with all the cost-cutting that's happening right now on the government, it's going to be an uphill battle for DRL to collect. Bankruptcy looks likely to me if they can't sell assets for pennies on the dollar, but who knows. Will be watching.
Hey Truffel, nice knowing someone in SA that is living on the island, I'm from PR, now living on the mainland. Where are you located if I may know?
"After reexamining various indicators, the weight of evidence still suggests an April/May/June correction."
Agree... retail, financials, small caps, high-beta... everything shying away from risk, including bond market internals. Technicals are worrisome too. If a correction happens, the bounce could be fast though, since leading indicators are going up again.
Once again, disappointment. They turned a profit for Q1, but the outlook/guidance is weak. It gives the impression of "more pain to come" for the seismic market. I'm done with this one. Trowing the towel here finally. Maybe the stock will be back in a year, but I'm not coming back to this one. Good luck to all.
Greetings guys, I hope you're all doing well. Almost 10 months have passed since I started a position in TGE. The timing was horrendous. The stock has been a fiasco. I totally underestimated the weakness of the seismic market. Only thing good out of 2013 was the 1st quarter. After this, no matter how hopeful the CEO sounds, it's a gamble to try to forecast what will happen next.
Having said that, I bought some shares today @ $5.70. I'm gambling here based on a backlog of about 60 millions (about half the market cap), possible 10 to 12 crews working and hopefully a very low capex for decent fcf. 1st Qtr report is April 28 early morning I think (verify numbers and date). Good luck with your other investments. I've been very focused on biotech picks lately. So far so good...
I agree with you simpledata. What I'm referring to is not their whole model, just the index. Leading indicators work, and if we were to follow the major long-term trend of their WLI for investing purposes, anyone would have participated in the great rally that started in summer 2012, while the ECRI guys may have missed it, by basing their conclusions on their whole model or whole assessment of the data (which could have been data cherry-picking in the effort of defending their supposed "perfect" record). That's why their prediction is still wrong. They are ignoring the trend of the most important tool they have, which is the index.