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Moon Kil Woong
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Moon Kil Woong is currently a VP at a SME. Previously he was a tech stock consultant, VP of Research at ING, and sell side Director at Crédit Agricole Indosuez. Moon Kil Woong has a Masters in Public Administration from SJSU.
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  • Stock ideas for 2011
    I was thinking to put together a list of 20 stocks to track from my followers and 1 from me (although if you read my posts you can see my actions). To keep it simple, a person may make a trade from the stock no more than once per month and any announce the buy before the market closes. The trade takes effect at the begining of the next day (please post the price and I'll verify it). It wil be $1,000 value for each stock picked for a $21,000 portfolio and must be traded on a US tradable exchange (no pink sheets or overseas exchanges since thinly traded stocks are too affected by pump jobs and overseas trades are sometimes difficult for readers to buy). Any company under $10 million in market cap will be excluded from the selection.

    I'll start disclosing people's selections and start once I get a full selection. I plan to post the performance the end of every month after the picks are in. This is a intermediate trading selection, not a day trader forum since you can only trade max once a month and can't pick your price mid-day so you don't get to really pick your entry and exit point precisely. If you choose to sell you do not have to immediately select another. You can let it ride as cash with no interest. You may also short. Someone who stays in cash for over 3 months will automatically be replaced.

    I and others may be curious about the stock long term. For me I'll add SKM to the board 2/26/2011 at $17.52 even though it shows it traded lower after hours. I disclosed my buy into it last week as my most recent reccomend on SA as well as my exit from my 1 week NFLX short and sales of GLW. As people's reccomendations get posted I'll announce them and the price they entered at. Please send your reccomendations to my mail here. I'll post results ending March and announce picks and changes as we go along. If the post gets too long please watch for new posts and happy picking.

    In the future, if there are way more than 20 pickers I will cycle in and out of people based on performance and or compelling story. As the base gets bigger those that stay on will account for a bigger percent of the weighting and new entrants will start at the $1,000 mark. Hopefully, the total value of the fund will not need more additions from the $22,000 base. $1,000 of the tracking will be considered cash and is used to make up for the the loss of people leaving who have a net loss. Hopefully, we will not have to add any more. I will also accure a $15 cost to every trade and list it seperately so you can see how fees would accrue from trading since people always argue that trading cost is not taken into account. The issue of people saying you would manipulate the market with a buy is satisfied by the low value and the fact that trades are made at the openting where you are least likely to affect the price by a trade. Anyway, people are sticklers when it comes to stock tracking.   

    When issuing your stock picks please give an explaination.

    I'm bullish on SKT for a few reasons. It is aiming to dominate the higjh end of the mobile market in Korea. It trades at a very low PE. It has exclusive agreements to sell Galaxy in Korea and just got approved to sell iPhone next month in Korea even though the first award was given to its rival. Although this stock has languished as a dog for years, I believe it is waking up. I'm also not a bull on the US $ and think Korea will likely raise rates and bolster the Won's value to the US $ sooner than Bernanke, although that is not saying much. Bernanke's monetary policy is worse than just about anyone's. Korea's stock market has been rising as well. I expect the stock can appreciate a good 20% with very little risk. As you know, I take safety and risk into account and is one of the reason's my picks on SA don't lose $. For me the first lesson in the market is a good trade is a profitable one. Making large massive gains comes second to safety.

    I reserve full rights to add, remove, post or not post people's selections, etc. I also request people send me some info about themselves for vetting. My purpose here it to avoid day traders, stock promoters, etc. and provide decent selections to my followers. Furthermore, mty aim is to allow people I belive will provide positive results and prevent completely lopesided weighting, like all picks being gold moners for instance.

    Happy posting, reading, and picking.    

    Portfolio: $22,000


    SKM: 57.077 shares / $1,000
    Trading cost: 15
    Cash $20,985 
    Tags: SKM
    Feb 26 1:49 PM | Link | 129 Comments
  • Derivatives and Securitization: Is your life insurance about to become detrimental to your health?
     
    Take the mortgage derivative game, inject it with criminal organizations and death and you get the new incarnation of mortgage fraud, the life insurance derivative. The derivatives game just got worse, but in a very bad way.
    The basic framework of fraud was set up in the mortgage derivatives game in which people innocuously call unexpected counter party risk. In essence, the creation of companies with little to no assets guaranteeing billions or trillions in order to insure policies so they could be packaged and sold as “risk free” already affords a rich field in which to reap tons of money in derivatives policy fees for years with no expectation of payment. Even with such fiascoes, there is still not substantive policies today to close this loophole or illegalize it. And reserve requirements even at 1% are being balked at (most likely because the people who wrote these contracts don’t have or can’t even afford 1% of what they insured).
    Now inject the grim factor of death. Already the sales and securitization of life insurance policies are getting criminal organizations into the game of life and death. In this system you get people who can’t afford life insurance (eerily just like mortgage home policies) to buy life insurance. Then when they can’t pay you offer to buy them out asking them to switch the beneficiary to you in which you pay them a fee and take over their payments. It is funny how suddenly it pays for you to be dead. It is close to putting a contract out on your own head. I suppose that’s why organized crime likes it so much.
    Of course, the other side of the fraud is giving people you know will die insurance, packaging them, and then asking stupid companies like AIG to buy them. This works especially well when you somehow work out with the beneficiary a commission scheme or pocket the annual income and sales of the policy and then walk away knowing that life insurance claim will fall through. But that is just boring compared fast death payouts.
    You may think you are above being duped into being so foolish as to agree to something in which you know others can benefit off your death. However, the large scale securitization and derivatives premised on life insurance policies allows this fraud to be played on anyone who gets a life insurance policy.
    In essence, once a derivative is sold on your dying the person buying it can either keep it as an insurance against your death thus protecting a policy from early death, or they can sell it if they think they can get more than its worth. Also, the ones issuing death derivatives (derivatives insuring against early death) which is a lot like mortgage defaults, can issue derivative insurance multiple times over against your death if they feel like your risk of death is lower than the premium they receive or they just want the extra fee income (because they are running a ponzi scheme with an intention of going broke before payment). This is what AIG did but with home mortgages. Unfortunately for them, they bet against Goldman Sacs who sold the home mortgage bonds they bet against.
    Anyway, in both cases where the derivative is not being used to hedge against your insurance policy the person buying the insurance is gambling on your death. Or perhaps if something unfortunate has already been planned for you, it isn’t exactly gambling is it? In essence once again you have finance a hit on yourself.
    Since you will never know who wrote the contract, sold the contract, or who really holds your life insurance policy anymore good luck finding out if anyone is benefitting off your death. Since you might not be around there will probably be no one to find out after the fact.
    There is one big difference in mortgage derivative fraud and life insurance fraud. Mortgage derivatives fraud preys on the poor. Life insurance derivative fraud most likely will prey on the rich. In this macabre system the richer you are and the richer your insurance payout, the more profitable it will be for you to meet a bad demise. Thus no longer will criminal organizations need to con little poor old people to make trusts to them as they pay their insurance premiums. They can now go after the wealthy, buying up contracts profiting on their death legally without them even knowing. Likewise, the early demise of a rich payout will skew the value of a life insurance bond package and its derivative much more than a package of loans since larger loans like jumbo loans are usually separated from smaller loans by risk profile (life insurance is separated by life expectancy). Thus they can sell packages of life insurance policies in full knowledge they are getting the better end of the deal (since they might already have bought the derivatives on some people in those packages).
    Sadly once securitization takes hold there is almost nothing you can do to prevent fraud being perpetrated upon you short of cancelling your life insurance policy.
    Since this is such a rich, yet morbid field in which crime of the worst type can occur, the barring of securitization and the subsequent derivatives that follow should not just be regulated but outlawed. Seeking to thwart the criminal organizations that coerce people to buy insurance they can’t afford and then set up trust funds and sell their life insurance to them is just the tip of the iceberg. Even then, since like so many other things, the legal aspects run into multiple legal jurisdictions (trust/inheritance law and insurance law) stopping even this has been impossible up to this day. Can we trust the government to create an overarching death panel to tie all insurance and death benefits law under one roof top prevent fraud and abuse that will undoubtedly plague it? I am guessing not.
    I hope regulators read and become aware of the very large dangers of securitizing life insurance. Thinking insurance companies know better than to engage in shady and unprofitable life insurance and derivatives dealers is laughable (look at AIG for instance). Likewise believing that fly by night companies that engage in selling derivatives are on the up and up is also ridiculous. You are just asking for it when you allow the payout from death to be separated from the liability from death. Especially if you allow it to be sold and packaged in a way in which only the criminal elements misusing them for their own nefarious purposes can quickly and easily figure out who actually owns your life insurance policy and who benefits from your death.
    Oct 07 11:05 PM | Link | 2 Comments
  • Stocks that you haven't missed the boat on.
    I am not a lover of buying stocks that have had 20-30-50-or 100% runs up on. Especially in a market like this. Because of this I can't really add to my CAT or XIDE holding.

    Recently I bought two very decent stocks that have yet to run up significantly. DHR and AMGN. DHR is a conglomerate with decent management and an aquisition strategy which hasn't participated in the run-up but has not melted down either. I suppose stability doesn't pay as much as blind reckless business models in this run-up. AMGN is a laggard in the pharma area due to lack of recent wonder drugs. It's osteoperosis drug should get approval soon which will help out but the main issue is that it's revenues are acceptable as well as it's gross margins. It is not a sexy stock, but that's why it's still a good value.

    So why haven't I added to SYT which has only moved up marginally. Actually Cramer is absolutely wrong in saying farmers will not pay for good seeds before paying for other things. Good seeds add to grop yield and often add to the price they can sell their crops for. Although I'd like to buy more just to spite him, I prefer diversity when I see multiple good values.

    Which leaves my laggard, IXYS. Although I was recently dissapointed in their drop in sales, I still like exposure in this field and will look to buy at a lower price once management becomes confident that sales will accelerate again provided the price does not rise accordingly. All thinks in life are not certain and even i am fallible (although I still feel that I will do ok holding this position in the long run). 

    I appreciate people who are interested in my positions and welcome any rational feedback or opinions on them. If you wish to buy any of these I suggest you check up on them thoroughly. I completely hold to the view not to take other people's word for the responsibilities in investment I should do myself and advise others to hold those views as well.

    All other holdings of mine predate disclosure on Seeking Alpha, thus I will only feel the need to disclose them if I should decide to comment on them in the future.
    Aug 12 2:27 AM | Link | 1 Comment
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