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Lares Capital, a long/short fund that specializes in small caps, option strategies, and low-liquidity equities. The fund invests in both domestic and foreign securities. You can contact us at
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  • Biolase Is On The Move

    I recently wrote about Biolase, a laser dental equipment maker used for complex dental procedures such as placement of dental implants and bridges, bone grafting, and gum surgeries, in my "Top 5 Ideas for next year". I speculated that the company, which makes most of its money from selling very expensive Waterlase Systems may benefit from the expected expiration of Section 179 tax deduction which allows an immediate full expensing of capital purchases up to $500 thousand.

    I think the stock price was artificially depressed due to the end the year tax-loss selling. There is no news today but the equity is up almost 20% on more than 3 times the usual volume. Perhaps, the January "losers" rally arrived a few days early.

    (click to enlarge)

    Tags: BIOL
    Dec 27 3:45 PM | Link | 2 Comments
  • JBLU - My Quick Take On Its Fall
    Jet Blue is down over 7% today on heavy volume. The catalyst for this move is not bad publicity from a pilot's "medical" episode two days ago. Lufthansa, which currently holds 15.9% of Jet Blue, is planning to issue convertible bonds where the "kicker" is its Jet Blue stake:

    According to WSJ:

    "Deutsche Lufthansa AG (LHA.XE) said Thursday unit Lufthansa Malta Blues LP is planning to issue bonds maturing in 2017 which can be converted into up to 46.7 million JetBlue Airways Corp. (NASDAQ:JBLU) shares. "

    Doing a quick calculation:

    282.07 JBLU shares outstanding, 46.7 possible dilution in case of a conversion amounts to around 16%.

    Therefore, Lufthansa is essentially planning to sell a covered call on JBLU with an exercise date around 2017 (just a guess since no details are available yet).

    There are possible explanations: it needs money it can't easily raise with its Debt/Equity at 2.5, it doesn't think JBLU will appreciate much over next 5 years.

    Stay tuned. But my guess it's a former since the bonds will be privately placed.

    Disclosure: I am long JBLU.

    Additional disclosure: I'm also short JBLU call options.

    Mar 29 1:03 PM | Link | Comment!
  • Follow-up On Australia
    Since I published "An Epic Australian Bust" article 10 days ago, a few eye-catching economic reports came out that certainly strengthened my thesis (courtesy of

    Construction work done (Q4) - February 29:

    Actual: -4.6% Cons.: -1.0% Previous: 11.7%

    Private Capital Expenditure (Q4) - March 1:

    Actual: -0.3% Cons.: 3.2% Previous: 14.6%

    Company Gross Operating Profits (Q4) - March 5:

    Actual: -6.5% Cons.: 0.0% Previous: 4.7%

    GDP (Q4) - March 7:

    Actual: 0.4% Cons.: 0.8% Previous: 0.8%

    Employment Change (Q4) - March 7:

    Actual: -15.4K Cons.: 5.0K Previous: 48.2K

    And just a few hours ago...

    Trade Balance (Jan):

    Actual: -0.673B Cons.: 1.530B Previous: 1.325B

    These misses are not exactly round-off errors...

    Disclosure: I am short EWA.

    Mar 08 10:21 PM | Link | Comment!
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