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Reel Ken

 
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  • Hedging SPY With Options: The Not So Nuts And Bolts [View article]
    Hi Raduu,

    The strategy has been working as planned all year. I keep selling ITM weeklies for target extrinsic.

    Naturally there will be "temporary losses" on a drop...such as we recently had... but I keep to the plan, waiting for a bounce. The last few weeks represent the third time there has been a drop, just this year. It seems like it happens several times each year ...year in and year out. The only times I've actually lost money is when I strayed from the path and let fear take over. I've learned the hard way to not over-think-- just stick to a proven plan.

    The far-dated long puts keeps me invested without over-reacting. That's their purpose. It is essential to "protect" these long puts after a drop and stay as DITM as you can. Even if it means temporarily sacrificing some extrinsic.

    My "thesis" is ..... until there is some indication of a recession, market should be flat to up and that's how I play it. I believe, absent a recession, previous highs will be re-captured. I don't try to time the market ... just keep to the "manual" until there is a major trend turn.

    If it looks like a recession is on it's way, then I'll adjust to ATM or OTM weeklies to capitalize. Until then ... just business as usual.

    There's a SA contributor --- Jeff Miller--- that I follow. He's got excellent weekly updates on his view of the market. When he starts predicting a recession, I'll change course. I try to avoid all the other "noise".

    Good luck... if you need more ... juct let me know.

    RK
    Oct 18 09:44 AM | Likes Like |Link to Comment
  • Florida pension fund to pull Pimco investment [View news story]
    Hi Deja Vu,

    I've had quite a lot of experience with managers of these types of public pension accounts.

    Their primary objective is to "cover their behinds". They will move money away from PIMCO for one reason, and one reason only ......

    .......... When it comes to investing "the peoples money" their primary consideration is preserving their own jobs, titles and income ....... If they leave money with PIMCO and it underperforms they will be subjected to second guessing. When it comes to their own money, they use common sense investing. It doesn't matter what happens with future returns on "the peoples money", they are always safe in "following the leader".

    After all, their interests are in collecting their pension, much more so than investing your pension.
    Oct 8 02:23 PM | Likes Like |Link to Comment
  • Two charged with insider trading on Herbalife [View news story]
    Hi Dampflok,

    Not necessarily.

    Some insider trading cases are complex and the SEC treads very carefully and slowly. This is especially true when multiple positions are involved. Sophisticated "insiders" have many "tricks" up their sleeves. They learn to obfuscate their activity.

    For instance, placing numerous trades (some winning, some losing) all around the trigger date, making it appear more random, etc..

    This particular case seems like it was a slam dunk. A "nobody" all of a sudden buys lots of puts. Probably no previous trading pattern in the stock. SEC can goe to court not needing to tie lots of obfuscations together.

    Everything's a guess, but no one is in the clear until the Statute of Limitations runs out (5, or 6 years depending upon factors, as long as it's not patterned)
    Oct 1 10:17 AM | 6 Likes Like |Link to Comment
  • Two charged with insider trading on Herbalife [View news story]
    Hi Clayton,

    Many ways to find out, it would only be speculation.

    That said, try this on ... the SEC may be conducting a much larger insider trading examination. If so, they would look at sales/purchases around trigger dates. This one came up first, as it's pretty obvious.

    It may mean there are more to come.
    Oct 1 08:51 AM | 5 Likes Like |Link to Comment
  • Major Stock Market Selloff Looms As The Fed's QE3 Ends [View article]
    The market goes up....the market goes down.

    There will always be moves of 20% or more in both directions.

    So, simply stating what everyone knows provides no helpful information.

    Tell me WHEN the correction will come and then you've got something of real value. All this speculation about whether it will be 10%, 20% or more is not anywhere near as valuable as saying if it will be next week, next month, next quarter or next year.
    Sep 28 03:39 AM | 3 Likes Like |Link to Comment
  • Master Limited Partnerships And Your IRA [View article]
    Hi Philli,

    Agree.

    It has been my experience that the IRS goes 99-44/100% by reporting.

    If the item in question is not reportable (cash salaries and barter would be an example) then the likelihood of getting away with not declaring it is pretty good. Audit agents mostly just "match" up reported items with documentation. Comprehensive audits are few and far between

    The issue with recapture is that it is not currently reported. It is much like stock basis, which, until recently, was not reported (only sales proceeds). People got away with murder. That led to IRS changing reporting requirements and now basis is also reported.

    I think at some point the IRS will just require the MLPs to file the supplemental schedule with IRS and then the IRS can just do a simple computer "match-up".

    I know the IRS is looking at the whole MLP taxation issue and it is reasonable to believe that something will be done at some point. When and what... your guess as good as mine.
    Sep 11 03:19 PM | Likes Like |Link to Comment
  • Master Limited Partnerships And Your IRA [View article]
    Hi Philli,

    It seems that their answer is just "gobbely-goop". The ordinary losses are applied each year to shelter the distribution from tax. Only losses in excess of distributions end up being carried forward and they can be applied to offset recapture.

    Any way you slice it, the distributions end up being subjected to UBTI, either through the k-1 on an annual basis, or the 990-t, to the extent they were not reported on the annual k-1.

    Recapture is absolutely taxable, one need only look at the instructions to 990-T, it says so in plain language.

    You are also right, in that, most MLM's are structured in such a way to shelter current distributions and therefore cause sizeable recapture at point of sale.
    Sep 11 11:33 AM | Likes Like |Link to Comment
  • Master Limited Partnerships And Your IRA [View article]
    Hi Phili,

    Thanks.

    Currently the "reporting mechanisms" make it difficult for the IRS to catch-up. In this sense the link is accurate. The UBTI recapture is reported on the supplemental sales schedule and not the k-1, so you're "on your honor" to carry it forward and pay the tax.

    However...two things....

    1) It is an audit lottery

    2) The reporting requirements are likely to change in the future. They have recently changed regarding options, stocks, etc.. All the IRS need do is require the UBTI recapture be reported on the k-1 or require the supp.schedule to be filed with IRS. Then...party over.

    It isn't a matter of "if", but "when".

    Each individual investor must weigh this with the other considerations and be willing to face the good or bad.

    At least you have the info to make an informed decision.
    Sep 10 09:56 PM | Likes Like |Link to Comment
  • The Importance Of 'Suggested Retail Price' To The Herbalife Fraud [View article]
    Hi six,

    I think your reasoning is problematic. Anyone that truly understands what law suits require would easily understand why HLF does not sue.

    In order for HLF to prevail in a law suit it would have to prove, as a minimum, that the statements are false... for instance that it is NOT a pyramid but a lawful MLM.

    The determination of whether or not HLF is a pyramid is likely to be resultant from the current FTC and other agency investigations. If these agencies "clear" HLF, then HLF would be in a much better position to assert false statements and sue, if they wanted to.

    Furthermore, since these investigations may include criminal charges, no Judge would hear a civil case until such time as and when the criminal proceedings have been dealt with.

    So, in short, it would be premature for HLF to sue until the FTC, et al, are settled. To do otherwise puts the cart before the horse.

    Ones desire to keep the horse before the cart is not evidentiary of anything other than common sense.
    Sep 4 08:44 PM | 5 Likes Like |Link to Comment
  • The Bull's Self-Delusion [View article]
    .......".......People forget that interest rates are the heart, soul, and life of the free enterprise system, and that falling rates are reflective of the demand for money..........."

    This is not totally accurate.

    Whereas interest rates may be .."the heart....free enterprise..." ......

    Falling rates are a function of supply in relation to demand, not, as you suggest, diminishing demand. For instance, demand can remain constant and interest rates will go up/down by adjusting the supply.

    Now, as a matter of differing opinion, I would argue that "profit" not "interest rates" are the "heart, sole and life of the free enterprise system", but I acknowledge my opinion is not crafted with an intent to support an otherwise flawed thesis.
    Sep 2 08:57 AM | Likes Like |Link to Comment
  • Chapman And Hempton On Herbalife: The Blind Are Leading The Blind [View article]
    Hi QTR,

    ........"...........he will eat the premiums on a new set of options, if necessary, to continue his Herbalife short. Hey Bill, me too! ........."

    How's the call option premiums doing that you bought pre-earnings?

    Are these the premiums you're talking about "eating" or is it a new set of option premiums?

    Do you have a record of how much you've "eaten" so far and will you let us know?
    Aug 17 08:41 AM | 10 Likes Like |Link to Comment
  • Ackman's Gravitas Statistically Provable: Look Out Below [View article]
    HI QTR,

    How's the call option you purchased pre-earnings doing? Or was your article misleading?
    Aug 14 09:54 AM | 8 Likes Like |Link to Comment
  • Why It Still Makes Sense To Buy MLPs [View article]
    .........."........... large portions of the payments to investors from MLPs might not even be taxable until the units are sold. Not only does this enhance compounding by deferring taxes, this might also convert current income into a future capital gain,.........."

    Sorry, wrong.

    Whereas you're correct in saying that depreciation, etc., shelters current income payments form taxation, upon sale, these amounts are "recaptured" at ORDINARY INCOME rates, not capital gains.

    One needs to factor in the effect of paying a deferred ORDINARY INCOME rate vs. other investments that have the potential to receive qualified dividends at favorable rates.

    Those that are interested can visit (http://seekingalpha.co...)
    Aug 8 09:40 AM | 8 Likes Like |Link to Comment
  • Herbalife Insiders Are Buying, But I'm Not Buying It [View article]
    HI QTR,

    What ever happened to the call you bought pre-earnings?
    Aug 7 10:05 AM | 3 Likes Like |Link to Comment
  • Linn Vs. LinnCo: Is It All About Taxes? [View article]
    Hi Rip,

    Exactly, that's why he needs to keep copies of the k-1's so he can show what they were.
    Aug 6 01:28 PM | Likes Like |Link to Comment
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