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Dr. Duru

 
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  • Buy The Dip On LGI Homes [View article]
    It's the nature of the market right now. They are a relatively small company inside a very large market opportunity (primarily Texas). I expect the growth rates by next year to settle down to something more "reasonable", especially given the tougher comparisons. Any slowdown that cascades from the oil patch may also impact them. Otherwise, I still like the valuation and the longer-term play here. Staying patient as I think it will still take smoe more time for the selling pressures to subside.
    Dec 4, 2014. 09:56 AM | Likes Like |Link to Comment
  • Linn Energy: What To Do After Friday's Massacre [View article]
    I went back to your last article on LINE. I am surprised you are not even blinking at the possibility that LINE is particularly getting crushed because investors now feel LINE way overpaid for those energy assets from Devon. While LINE has been clobbered again to prices last seen in 2009, DVN cheerily participated in oil's one-day relief rally today. The RSI oversold indicator does not mean much here as oversold can get more oversold until the panic ends and/or someone demonstrates how the numbers now add up if oil remains at these prices a lot longer than any oil bull is anticipating... Moreover, RSI is mainly good for short-term trading. It can't support a longer-term thesis for holding on for dear life until oil markets recover.

    A related example is HAL. It too failed to participate in oil's nice bounce today. It recently purchased BHI right before oil's recent collapse.

    Having said all that, LINE is on my watch list. But I am in no rush here...
    Dec 2, 2014. 12:31 AM | 1 Like Like |Link to Comment
  • Gafisa: One Of The Cheapest Stocks In The World [View article]
    Thanks to John for making the commentary and alerting me to this article. Great stuff. I have been in and out of GFA like a trader as it has worked with the steep dips and sharp rallies. Seems like I should *finally* put down roots for a while.
    Dec 2, 2014. 12:00 AM | Likes Like |Link to Comment
  • Another Chocolate Scare - This Time Contrasting With Cocoa Price Action [View article]
    Yeah, the "oil curse." I am not sure of the situation in Ivory Coast, but I Ghana is still relatively new and is ramping up. I am betting the government has already incorporated a lot of very optimistic revenue forecasts that will now need to get tossed overboard. Net-net, lower oil should reduce costs for cocoa farmers. But the price of cocoa can easily get caught up in the general sell-off in commodities as big funds and institutions are forced into margin calls and generally flee these investments. I think it is an investment/trading opportunity for any commodity where demand remains strong on a long-term basis - like cocoa.
    Dec 1, 2014. 11:36 AM | Likes Like |Link to Comment
  • Another Chocolate Scare - This Time Contrasting With Cocoa Price Action [View article]
    No. They are not expected to get into a hot zone as the epidemic is now being brought under control.
    Dec 1, 2014. 11:34 AM | Likes Like |Link to Comment
  • Warning Signs Mount For Solar Lease/PPA Holding Companies [View article]
    Some Swiss are clamoring to repatriate gold. One European country (can't remember which) just announced successful removal of all its gold from the US. So, I am not sure what Germany's issue is/was. Mauldin is too much of a perma-bear (meaning he seems to always focus on finding the negative in everything and he has been wrong for far too long) for me so I haven't followed him in a long time.

    Regardless, today's action with commodities continuing to collapse demonstrates it is not crazy to think that rate hikes are getting pushed further and further into the future...
    Nov 28, 2014. 12:29 PM | Likes Like |Link to Comment
  • Solar, fuel cell stocks off sharply after OPEC stands pat [View news story]
    Momentum contains its own logic. While oil is not the major generator for electricity in the US (I can't remember numbers in some of the emerging markets solar companies have been going after), solar is suffering by "guilt by association" as the entire energy complex is essentially in freefall. Looking at prices, energy is cheap and abundant in every carbon-based form across the planet, making solar (and other alternative energy) less and less attractive on a relative basis. Traders and investors are probably trying to get ahead of what they think will be a renewed plunge in PV pricing as well. Yes, it may be short-sighted, but that is the pricing reality in the moment. Solar stocks have been very resilient up until now. If you are bullish, pick your entries carefully and stay patient....
    Nov 28, 2014. 11:52 AM | 3 Likes Like |Link to Comment
  • Warning Signs Mount For Solar Lease/PPA Holding Companies [View article]
    The U.S. dollar's secular trend over decades is weakness NOT strength. Check out St. Louis Fed data: http://bit.ly/1FraY5e

    Where did your data come from?

    I think your argument basically boils down to an argument that interest rates are artificially low and will not stay depressed much longer. The implications reach far and wide. But it is not clear how much the US economy can tolerate much higher rates. Just look at how the Bank of England has had to back down off its earlier brave talk about rates likely going higher sooner than the market expects...
    Nov 26, 2014. 01:15 PM | Likes Like |Link to Comment
  • Factoring Fear Into Canadian Solar Valuation [View article]
    I give you Netflix as a related example. It is currently selling off with no news until finally today an analyst comes out and downgrades saying low 300s is a safer entry point. Absent anything else, it will be natural for traders to think that "someone knew" about the downgrade and started selling ahead of it. But that conclusion is only possible because we simply have nothing else to go on. And I am guessing the huge irony could be that the analyst downgrade will finally mark a climax of the selling (to be seen).

    We are used to getting reams and reams of publicly available info on stocks. But sometimes sellers and buyers are doing things for reasons we may never understand or find out. One of the big reasons why I always check technicals - buying and selling patterns can't hide from the charts...
    Nov 25, 2014. 10:19 AM | 1 Like Like |Link to Comment
  • Factoring Fear Into Canadian Solar Valuation [View article]
    But a lot of stocks have since recovered and recovered nicely. So, the fact CSIQ was not able to jump over the technical hurdles in the rally makes holders/traders even more nervous. Moreover, CSIQ's last rally is now a lower high, adding more nervousness to folks following charts.

    This is of course all tea leaves and crystal balls since we will never be able to interview the sellers, but I like using the chart to check the story. Until CSIQ overcomes the technical hurdles, it will stay very vulnerable to what anyone interprets as negative news. In that sense, I definitely agree with you that it could take months for this chart to "heal."

    On the other side, CSIQ's ability to avoid sympathy selling after TSL's post-earnings selling is another sliver of good news, I think.
    Nov 25, 2014. 10:16 AM | 4 Likes Like |Link to Comment
  • Factoring Fear Into Canadian Solar Valuation [View article]
    I think you are giving Johnson too much credit for triggering the selling. I suspect it was much more coincidental. Johnson has gotten a LOT of solar calls wrong and is essentially a solar permabear, so no need to believe that this particular time someone (or people) with a lot of money at stake became willing to take such a large risk. Even moreso given the weight of positive commentary from the overall analyst community.

    Technicals could explain the selling much better: essentially selling at critical junctures can beget more selling (same on the bullish side with buying). And I am saying this because this is how I was trading CSIQ at the time. The stock rallied into its 50-day moving average (DMA) post-earnings, but did not break through. That is point #1 for selling assuming resistance will hold firm. The subsequent break through the 200DMA makes the stock look even weaker and makes any bad news available in the earnings stand out louder. By the second day, you have the rest of the "fearful" bailing in order to prevent further losses. The good news is that the selling ended almost as quickly as it began. No mass exodus is underway. But those resistance levels still loom overhead and don't be surprised to see a repeat (likely with lower volume), if buying strength fails to punch the stock convincingly through those levels.

    I will add that CSIQ is printing a classic pattern called a bearish "head and shoulders." I see more of these patterns fail to work than succeed, so I don't pay them a lot of mind anymore. However, when these patterns DO hold firm as tops, the subsequent selling can be pretty convincing.

    This whole episode certainly caught my attention as I ahve been trying to get back into the solar space (I used to follow FSLR and TSL in particular very closely). Good article on trying to address these events from the fundamental side of the fence.
    Nov 25, 2014. 01:06 AM | 1 Like Like |Link to Comment
  • Australian Dollar Loses Steam From Surprise China Rate Cut [View article]
    Maybe you were not surprised, but the rest of the market acted surprised at the time. I am judging based on market response.

    In other news, AUD/USD hit 0.86 by the time this got published. I exited my short AUD/USD position at that point in anticipation of the current range holding. A breakdown/breakout from the range will change my approach.
    Nov 24, 2014. 12:57 PM | Likes Like |Link to Comment
  • A Good Time For Adjusting The Bearish Trading Strategy On The Japanese Yen [View article]
    Agreed. They are dangerously close to losing control of the currency. This was always a risk given the massive nature of the QE and the overt comfort with massive printing. The only way to intervene at this point would be to dip into reserves and buy yen (I am not sure where reserves are right now) and/or hike interest rates. Neither are good options. A rate hike would be particularly damaging to an economy which is still having trouble moving with zero rates.
    Nov 23, 2014. 12:28 PM | Likes Like |Link to Comment
  • Go Where It Is Darkest: When Company, Country, Currency And Commodity Risk Collide! [View article]
    You should have compared VALE to RIO, not BHP which is a much better diversified miner. I am also surprised that you didn't take into account competition in your analysis. With global supplies ramping a doomsday scenario should include the possibility that the "big three" succeed in driving iron ore down to marginal cost of production before the bottom finally hits. In the rosy scenario, Chinese monetary policy loosens sufficiently to facilitate several more years of over-building and infrastructure spending and sending iron ore sky-high again...
    Nov 22, 2014. 01:35 PM | 2 Likes Like |Link to Comment
  • Buy The Dip On LGI Homes [View article]
    Thanks for the kudos. I almost missed this one. Hang in there though. As I mentioned, stabilization after this kind of selling on a low-volume stock could take a while. For example, LGIH is not participating in today's nice breakout for ITB. Regardless, I am in now and will look to accumulate shares over time. 2015 guidance will be extremely important.
    Nov 20, 2014. 03:07 PM | Likes Like |Link to Comment
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