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  • Research In Motion: Market Has the Valuations All Wrong [View article]
    Conservatively, Adding their cash and patents you are looking at around $15 billion conservatively. If your gonna factor their current earnings and run that forward RIMM is worth more but I'm bearish on the future of their business.

    I also didn't add their enterprise side of the business which handles corporate email. I completely discounted that, since they have been giving that away for small businesses in the US to compete with Google. RIMM used to charge $5,000 for small businesses to use their enterprise program. If that business were to be sold, I don't think it would be sizable. This of course is hard to come up with an exact valuation since they don't report earnings separately.
    Aug 31, 2011. 12:25 AM | Likes Like |Link to Comment
  • Patents Aren't Eastman Kodak's Only Value [View article]
    They had $2.9 billion in NOL carryforwards at the end of 2010.
    Aug 30, 2011. 11:01 AM | Likes Like |Link to Comment
  • Microsoft: The Next Growth Opportunity [View article]
    Thank you for the comment. I agree with you, the enterprise side will be a big driver of their future growth and as more details are released about the new OS, share holders will benefit.
    Aug 29, 2011. 01:13 PM | Likes Like |Link to Comment
  • S&P 500 Strategy: Outsmart The Next Sell-Off [View article]
    Thank you for the comment. The last 10 years have been range bound and the strategy I mentioned is what I'm doing to profit from the swings until a new trend breaks out. If you bought this day in Aug 2001 you are just about breakeven, even after a 10 year hold.

    Following my example above you would have booked profits of $71,800 on half of your shares and would have 2,000 shares that are $60,000 in profits. If you were to liquidate the rest of the position then you would have a return of about 36%. Of course I would recommend some sort trailing method or plan to play the next selloff if you don't get your move up. Of course that is based on the traders individual plan. This was only from the time of your first buy in 10/2008 and doesn't include if you played it the same way in 01-02. If you would like a higher ROI, you could use options as mentioned above that would allow you to leverage up your position as well as lower your cost basis.

    Yes, I used the SPY in the example above because it is a simple guideline that new investors could use and it's harder for them to get in trouble. I actually like to invest in hard hit sectors that have been beaten up real hard. I played homebuilders and banks during the recovery and did real well. I'm looking at the banks and homebuilders once again but it's still not in an area that I'm comfortable building a long position in yet. Also watching retailers and small caps for great opportunities on the next move.
    Aug 29, 2011. 11:00 AM | Likes Like |Link to Comment
  • S&P 500 Strategy: Outsmart The Next Sell-Off [View article]
    Yes, there are periods when I have a large amount of cash. I do use swing trading strategies to trade in between those periods to generate returns. My belief is I don't have to be invested at all the times, I just want to make money. These last 10 years have been real volatile than normal and if you a regular buy and hold investor, you are probably beakeven or underwater depending on where you bought. I use a trailing method instead of the simple profit taking guidelines I posted. I use those in my trading but posted those conservative guidelines for new traders that may get in trouble with their positions. This is an open blog and the more complicated the strategy, the more people won't be able to follow directions. That's why I recommend to make adjustments as you get comfortable and learn the strategy. In a trending environment it would do amazing after pullbacks it just hasn't happened yet in the last 10 years.
    Aug 29, 2011. 10:39 AM | Likes Like |Link to Comment
  • Fortune Brands: Value Is About To Be Unleashed [View article]
    You could also read my article about the upcoming Kraft spinoff.
    Aug 29, 2011. 01:02 AM | Likes Like |Link to Comment
  • Research In Motion: Market Has the Valuations All Wrong [View article]
    The claim was based off the valuation that was recently allocated to the Nortel patents. Those patents were originally valued at $600 million in 2009 and now two years later were sold for $4.5 billion. Nokia originally wanted to buy it for $600 million but Nortel creditors wanted at least $1 billion. That is why it went to auction.

    RIMM doesn't disclose licensing revenues separately, so the only way to determine proper valuation is by evaluating each one of the 2,500 patents individually and estimating potential market valuation. That unfortunately, is not something I could do. So I looked at past valuations of the Nortel patents and based my valuation off that. Now of course there is a large room for error with that, but it's the same thing any patent attorney will tell you. There is no exact science to estimating patent value and any estimate is just that, an estimate. This is especially the case when you don't have access to licensing revenues.

    Now when talking about the network/service business are you excluding the hardware portion? Are you just talking about their network which they use for their exclusive services like BBM? If so, that is very tough to estimate because they also don't currently breakout any revenue derived from those streams individually. That network is also designed to carry data exclusively and cannot carry voice signals. I don't know if that could be converted, but if it can't, any value would be severely impacted if it was to be separated and sold as a separate service and not tied to a wireless carrier. I would estimate potential revenue at around $2 per subscriber, per month for just data services like BBM. T-Mobile currently charges their prepaid customers $10/mo to add Blackberry service to their phones. I would assume RIMM would get at least $2 of that. There are about 60 million users which could bring revenues of about $1.4 billion annually.
    Aug 29, 2011. 12:57 AM | Likes Like |Link to Comment
  • S&P 500 Strategy: Outsmart The Next Sell-Off [View article]
    Options are definitely a great variation to this strategy. Long dated LEAPS also allow you to leverage up your capital thereby increasing your ROI. I just used equities in this example so not to confuse readers but playing this strategy using covered calls with LEAPS is a great way to lower your cost basis while waiting for the move. One way I like to do this is buying deep in the money LEAPS a few years out and selling the current month call with a strike alittle over one standard deviation out.

    You could also play this strategy using covered puts as well as various other strategies. Thanks for pointing this out for other readers who may be interested in playing this with options.
    Aug 29, 2011. 12:52 AM | Likes Like |Link to Comment
  • S&P 500 Strategy: Outsmart The Next Sell-Off [View article]
    Thank you for the comment. Sorry for the confusion. It looks like I'm missing a part that's supposed to go right before that. Another variation to profit taking is using a set percentage that's based of the low instead of the average price. You could use 30% for this and use the same 20% increments after. The reason for this is to minimize your risk.

    Following the example above, we completed a third buy of 2,000 shares at $78. This now brings our position to a total of 4,000 shares with an average price of $89.75. If I'm using the low method to take profits, a 30% target from the low brings us to a sell price of $88.40. So what I would do is sell 2,000 shares at $88.40 thereby booking a $10 profit on my most recent 2,000 shares that I bought at $78. This also allows me up to buy again on the next pull back since I'm freeing up capital. Now on your P&L will show negative because brokers use FIFO method instead of LIFO to compute your average price so you might have to keep track of your P&L yourself until the position is closed. This is a much more complex method and I only recommend it once you are comfortable with the strategy and understand how average price works. The tricky part about this strategy is if you take off some of your risk early, your average price will move higher. You give your self more room to lower your average price if you get a move down but if you don't get that move down then you have to wait till SPY gets above your new average price which if using the example above you would have 2,000 shares left with a new average price now of $101.50 because you banked profits on the other 2,000 shares.

    As the postion moves in my favor I may add to the position as well but you have to be careful when doing this because if you are wrong you may be stuck with a large position at a high average price.
    Aug 29, 2011. 12:41 AM | Likes Like |Link to Comment
  • S&P 500 Strategy: Outsmart The Next Sell-Off [View article]
    I could see why you say that but it's not the same thing. The big difference is you have to have a defined risk which must be determined before you enter. In fact its almost like buying all your shares at one price. The only difference is I'm buying at multiple prices and once I'm fully invested I'm done. Its actually a variation of buy and hold but I just try to time a better entry for my position. Just to clarify as stated in my article I'm not recommending to buy indefinitely as most people will run out of money which is the problem with the martingale system. These percentages may not work well with individual stocks as well since some stocks have higher volatilities than the SPY.
    Aug 28, 2011. 04:14 PM | Likes Like |Link to Comment
  • S&P 500 Strategy: Outsmart The Next Sell-Off [View article]
    No, you aren't missing anything, that's the type of event I'm talking about. As mentioned in my comment, I only recommend starting your position at 50% only if you aren't comfortable with the risk. I use 30% and that allows me to catch more plays and build a larger position. Unfortunately this type of moves don't happen often and I have only been able to play this twice the last 10 years. If you are looking for a strategy that have more frequent plays then you should look for swing trading plays which I use but are much different than this.
    Aug 28, 2011. 03:56 PM | Likes Like |Link to Comment
  • S&P 500 Strategy: Outsmart The Next Sell-Off [View article]
    Thank you for the comment. That is where each individual investors risk tolerance comes in. You definitely could wait to purchase after a move above the moving average but you may end up buying at a higher price. For example if you waited for price to cross the 50 ma you would have made your first purchase around $94. If you look to add on pullbacks, your next buy would have been when the 50 was retested at around $105. Which depending on how much you add could bring your average to $100. This is compared to my average of $86 with almost a full position on. I usually look to add once I get an uptrend I am confident in. The additional add won't move my average price much because of the amount of shares I currently have.

    I recommend you wait for the price to cross then as you get comfortable with the strategy you could try different modifications.
    This strategy is very difficult for many investors due to the fact that it is buying a falling knife and as the position declines you are negative on your shares. The main difference we are not buying a single stock but the 500 largest companies in the US. The country has always seem to bounce back from difficult times, it was always a matter of how long.

    The modification I prefer is to start your position at a lower price like when the spy is down 40 or 50% to start your initial position. There isn't a time yet the SPY didn't recover, but that also doesn't mean that will always be the case.

    Good Luck
    Aug 28, 2011. 01:10 PM | Likes Like |Link to Comment
  • Whether The Regional Banks Recovery Has Legs [View article]
    I definitely agree that the banks aren't making new mistakes. In fact many banks aren't making new loans and have seen their loan portfolio's shrink. They're working through their troubled loans but that is where the issue may arise.

    If the economy were to slow down once again we could see the default rate increase, not only in the commercial and industrial loans but across the entire portfolio. The Mortgage Bankers Association recently announced that they see mortgage delinquencies worsening. You could read more about it in my recent banking article here.

    The challenge for regional banks, is raising capital to support issues that may arise. Many regional banks don't have the same access to capital that the larger banks have. This may cause banks to raise additional capital at unfavorable terms which will hurt shareholders.

    A good example is the recent capital raise by Bank Of America. Buffett recently invested in Bank Of America because he felt he was investing in a solid institution at a great price. Unfortunately for BAC shareholders the deal was completed at a high cost. Buffett received preferred shares paying a 6% dividend when 10yr bonds pay 2%. Buffett also received warrants for 750 million shares with a 10 year expiration. BAC definitely paid a high price and I feel if a regional bank needed to do the same type of raise, they would definitely have to pay a much higher price.

    A lot boils down to the economy. I'm using bank delinquency rate improvement and loan portfolio growth as my indicators when looking to buy back into banks.
    Aug 28, 2011. 01:11 AM | Likes Like |Link to Comment
  • Fortune Brands: Value Is About To Be Unleashed [View article]
    Thank you for the comment. I expect the Home & Security business to be worth around $2.5-3 billion based off the current EBITDA. FO has announced that they expect both companies to trade on a "when issued" basis on Sept 16th. This will give you an exact share price but I expect it to start around the $22 area. If you are just interested in the Home & Security business I recommend you wait till the spinoff to buy the H&S business. The company will usually selloff once the spinoff occurs because existing shareholders sell the company they don't want to hold. The company will often see the share price rise after. I think the H&S is a great business long term and will provide you a great opportunity to enter after the spinoff at a discounted price.
    Aug 27, 2011. 10:06 PM | Likes Like |Link to Comment
  • Buffett's Buy In BofA No Reason To Celebrate [View article]
    I'm a active trader and trade in and out of positions at a speed that is hard to update on a blog. I just liqudated my long term portfolio and currently 70% in cash. I was shorting JPM this morning and covered on a gap fill. I'm unable to trade BAC for the next 3 days due to my disclosure since I wasn't expecting a gap up to short so I traded another stock as a proxy. Market is very volatile lately and I can't predict exact future movements. My first call on BAC was actually covered by those that followed me at the low which was right before the gap. you could see it here.

    My posts are in NO WAY INVESTMENT CALLS OR ADVICE but more of my opinion on the stock and how I plan to trade it. I post to provide information to other investors that may agree or disagree with my thesis and I may use various ways to trade positions that many investors may not be familiar with. Please make your own decisions and if you like a trade that fits your own individual strategy then take it. Sometimes other investors may see angles that I don't and sometimes I may have an idea they may not have considered. Either way, all posts are informational so please use them as such.
    Aug 25, 2011. 02:24 PM | 1 Like Like |Link to Comment